Thousands of tamariki risk losing access to ECE as funding shortfall deepens 5 November 2025 Thousands of families across New Zealand could lose their childcare options in the next 12 months as a gaping funding hole is making it harder for early childhood education (ECE) centres to meet rising costs. It follows the Government’s 2025 Budget’s 0.5 per cent cost adjustment, which falls short of what is needed to cover Government-mandated pay parity increases and escalating operational expenses. Newly released industry analysis from the ECE Sector Partnership incorporates the experiences of 500 ECE centres, shedding light on the dire situation, with a sector-wide yearly shortfall of $104 million, and some centres grappling with individual forecast deficits as high as $167,000. The analysis shows that a 3 per cent increase in parent fees would cover just 21 per cent of the shortfall. The analysis includes verbatim comments and examples from ECE centres (see attached). Barnardos Aotearoa Chief Operating Officer, Heather Taylor, says the funding of ECE in New Zealand has long been seen as a partnership between Government and parents. Ms Taylor says many of the centres most at risk are in regional and low-income communities, where alternatives are limited or non-existent. “For many centres, especially those serving vulnerable communities, raising fees is simply not an option,” Ms Taylor says. “Services with no or low fees, which often support New Zealand’s most at-risk children, rely on government subsidies for as much as 90 per cent of their income. “At Barnardos Aotearoa, many of our children come from families living on limited or no income. They access ECE through our unique 30-hour no-charge model, which blends government funding with Barnardos’ own fee exemptions through our Barnardos fundraising efforts. “It’s how we work to remove barriers and ensure every child can access quality teacher led early learning, regardless of their background. Increasing these fees is not an option for us, as these tamariki would miss out on accessing education,” she says. Kathy Wolfe, CE of Te Rito Maioha, says a centre the organisation recently supported with pay parity decisions is in shortfall and will need to increase parent fees to make up the $20,000 per annum shortfall to stay afloat.” New Zealand Kindergartens’ CE, Jill Bond, says the ECE sector fully supports pay parity and recognises the need for regulatory improvement and financial discipline. However, she says the unintended consequences of underfunding in Budget 2025 risk long-term damage to the ECE system and wider economy. “Every child deserves equal access to education. Without intervention, the consequences will be severe and wide-reaching, from reduced child participation, record centre closures and loss of workforce participation, to teacher attrition and disruption for families. “Action must be taken now to avoid eroding decades of investment in early learning, with long-term impacts on quality education, equity, and economic productivity.” In an urgent effort to help fill the gap, the ECE Sector Partnership has identified a potential short-term solution – redirecting the expected underspend from the Government’s Family Boost programme to the ECE sector. Montessori Aotearoa New Zealand Chief Executive, Cathy Wilson, says the funding redirect would help keep centres open, stabilise fees for families, and prevent widespread closures, bridging the gap as longer-term funding solutions are developed. through the reviews that are underway. “If the Government does not act, the risk is that up to 400 centres could shut their doors, leaving families without options and children without access to quality early learning,” Ms Wilson says. “We urge the Government to address this funding mismatch until the Funding Review is complete and the fundamental costs and funding mechanisms can be thoroughly explored.” The ECE Sector Partnership represents nearly 60 per cent of the ECE sector. The group has come together to advocate for a better operating environment for tamariki, whānau, staff and centres. Analysis Analysis of 503 services centre-based private and community ECE services was completed collecting wage increase and modest operating expense data compared to 0.5% funding increase. This analysis revealed: Total funding shortfall of $104 million when extrapolated across the sector. Average per centre shortfall of ~$41,000 (range $15,000-$167,000) A realistic 3% parent fee increase would only cover 21% of the shortfall, on average. Parents in low-fee centres face the greatest difficulty where the government subsidy makes up a larger proportion of the service’s revenue. One multi-site provider expects a quarter of its services to close and is evaluating sustained viability. Another provider would have 10 services at risk of closure, impacting approx. 628 children and their families. Many of the services tagged for closures are in the poorest or most remote towns and suburbs. ECE centres in this analysis identified for possible closure are located in: o Northland o South and East Auckland o Waikato o Taranaki o Hawkes Bay o Bay of Plenty o Manawatū o Tasman o Canterbury o North Otago Media Contact Rob McCann - Lead Communications Advisor | Kaitohutohu Whakapā Matua 022 411 4560 rob.mccann@ecnz.ac.nz
