The 20 hours ECE budget announcement

The government announced an extension to the 20 hours ECE in the budget. Most in the sector were wrapped with the announcement, and initially this did appear to be good news, with increases to base funding for the sector, costs previously born by parents now subsidised by government. But like an internet deal, if it’s too good to be true it often is and there were some extremely concerning conditions which we raised in the media, and directly with the government.

A key issue was that the government pitched the policy as ‘free’ for parents without funding the real costs of delivering the programme. Additionally, the government then specifically signalled new conditions would prevent any cost recovery. They also intended parents to be able to opt into only the 20 hours, which for many providers, removed the opportunity to cross subsidise a loss-making programme, especially if providers were operating above the minimum teacher child ratios.

This would have provided an unwelcome incentive for providers to move towards minimum ratios, something we know is not beneficial for kaiako or tamariki. Additionally, the government had intended on creating an ‘all-in’ system, so there was little opportunity for ECE centres to make informed choices to meet the needs of their whānau and tamariki.

ECE sector leaders spoke directly to media and wrote an open letter to the Education Minister, calling for an urgent meeting. This action was not a knee jerk response, but followed significant concerns that arose with the problematic Pay Parity consultation, that were then exacerbated by the 20 hours announcement. 

After considerable media attention, the education minister and associate minister agreed to a meeting with sector leaders.

At the meeting on 01 June with the Associate Minister, sector leaders presented two required outcomes.
  • For the additional 20 hours to be delivered under the current guidelines
  • For a full independent funding review

On Monday 19 June sector leaders wrote to the Prime Minister, Minister of Education and Associate Minister because neither of these requests had been fully met.

That afternoon the government backed down partially on the requirement that centres would no longer have the option of requiring children to be enrolled for more than 20 hours per week, and perhaps enabled cross subsidization through ‘voluntary contributions. At the time sector leaders thought the government response was as ‘clear as mud’, and further consultation was required. This was raised in Parliament during Question Time.

On Friday 23 June, the MoE held an online meeting with Early Childhood Advisory Committee (ECAC) sector leaders. The main points have been summarized here.

  • The “free” has been dropped from the 20 hours policy language.
  • 20 hours will be offered on the same current conditions as the 3-5 years with the addition of the following 3 new conditions which will apply 2-5 year olds
  • -Services are to publish their fee information on their website
    -Services to publish fees by the hour
    -Services to provide hourly fee information data to the Ministry of Education.
  • MoE will work with the sector on the logistics of providing the data to MoE to also take into account we cannot have this becoming an onerous administrative requirement.
  • The Homebased sector will receive a response from the Minister relating to 20 hours. This issue is still under consideration.
  • ECAC members requested to view the draft changes to the funding handbook prior to it being published. MoE confirmed this would happen.
  • MoE will be calling expressions of interest for a technical advisory group to do the mahi on the changes to the funding handbook relating to changes to 2-5yo 20 hours.
  • MoE will also work with the sector to consult on how to collect the fee data to ensure the ‘why, what and how’ works for the sector and MoE.
  • Minister is considering funding review request and would respond in due course.
  • Next steps from MoE
  • - Form a technical group
    - Draft changes to handbook to reflect new conditions relating to 20 hours
    - Fee transparency data collection.

Sector leaders will continue to advocate for a full independent funding review, as the model is broken and tinkering around the edges of siloed policy is causing significant risk for ECE provision in the sector.
Under the catchphrase of ‘transparency’, hourly rates, rather than just day rates will be required as of March next year when the new rules become operative. While the conditions have yet to be confirmed, these rates will need to be made available to parents and the MoE. The sector will continue to work with the MoE on this requirement to ensure this does not become too onerous.
There is no doubt this has been a difficult time for many in the sector with the uncertainty created by the announcement causing many sleepless nights. Hopefully we can now move forward, and we will continue to advocate to the Minister and Associate Minister to work with the sector to avoid such uncertainty in the future.