Early childhood leaders in the Bay of Plenty have warned of scaled-back services, waitlists and staffing issues as “unhelpful” and “inflexible” new Government subsidy conditions put pressure on a struggling sector.

An extension of the 20 hours free early childhood education (ECE) to 2-year-olds, announced by the Government as part of Budget 2023, will come into effect on March 1 next year and cost $1.2 billion over four years.

The changes were welcomed by parents and education leaders when first announced but sector leaders have since objected to the condition changes, saying the policy was pushed through without consultation.

Early Childhood Council chief executive Simon Laube told the Rotorua Daily Post he believed the extension itself was “great”, but the “fine print” could spell “the end of ECE as we know it in New Zealand”.

“But we’re not going to go away quietly.”

Early Childhood Council chief executive Simon Laube.

The Early Childhood Council was one of 17 organisations representing 4579 early childhood services that signed a letter to Minister of Education Jan Tinetti, objecting to new rules that meant ECE centres could not ask for co-payments for things like food and nappies.

Services would also not be able to require enrolment for more than 20 hours a week.

Laube said the conditions meant centres would not be able to recover teaching costs.

Laube said the ECE sector was hit hard by Covid-19, vaccine mandates and staff shortages.

“We were nearly dead and not in the position for lots of parents wanting to get back to work after the pandemic.”

Early Childhood New Zealand said 91 centres closed nationwide in the 10 months to May.

Central Kids operates 19 kindergartens in the Bay of Plenty. Kaihautū/chief executive Christine Hall said the proposed subsidy came with “unhelpful” and “inflexible” conditions.

“Our financial viability depends on tamariki reliably attending our services for at least 30 hours per week, however, the subsidy conditions require that we allow enrolment of only 20 hours,” Hall said.

“The funding for 2-year-olds is underpinned by a minimum regulatory ratio of one kaiako [teacher] to every 10 2-year-olds.”

Hall said the sector would like to see a minimum funded ratio of one kaiako to every five 2-year-olds.

“As a sector, we feel that funding the 1:10 ratio is unsafe. It is based on a funding model developed in the 90s but times have changed.”

Hall said that in 2022 staff costs took 83 per cent of Central Kids’ income and in the financial year to June this was expected to rise to 85 per cent.

“The only way to make up the shortfall is through charging whānau higher fees, which we are trying really hard to minimise as it goes against our belief that all tamariki should have access to quality ECE services.”

Hall said the financial squeeze meant Central Kids was reviewing whether it would need to scale back its services in some communities.

“The proposed model needs to go further than reapportioning already constrained funding and redesign the funding model to meet the actual needs of the sector.”

The operations manager of Tauranga’s Lilliput Preschool, Matt Dol, said the subsidy would “help parents a lot” in the community and could lead to a “spike in interest”.

The Fifteenth Ave preschool could have nine children 2 and under, with Dol saying “spots go really quickly”.

BestStart Educare operates 21 early childhood education centres in the Bay of Plenty.

Deputy chief executive Fiona Hughes said the change could increase demand for their services, potentially “putting pressure” on centres that were already short-staffed.

The scheme would make early childhood “more affordable” for families, which may encourage “more parents to send their 2-year-olds,” she said.

Hughes said the move was “fantastic” from an educational and cost-of-living viewpoint, but some centres were already facing “real difficulties getting adequate staff” with fewer people training.

“It’s going to put pressure on the staffing which is a major concern for us.”

Associate Minister of Education Jo Luxton said the Government’s ECE package in Budget 2023 was designed with families front of mind. Photo / Mark Mitchell

Associate Minister of Education Jo Luxton said the Government’s ECE package in Budget 2023 was designed with families front of mind and aims to take the pressure off the cost of living by removing barriers to services.

“We want the 20 hours free to be genuinely free,” Luxton said.

“The new funding conditions will require services to be transparent about their fees. This is not a new policy. The subsidy has been in place for 3- to 5-year-olds for more than a decade.”

Luxton said the Budget included a minimum 80 per cent increase to funding rates to help centres implement the changes.

 “I am very happy to meet with the sector and plan to do so on this matter as soon as they are available.”

She told the Herald that given the 20-hours-free expansion wasn’t coming into force until March next year, she was confident a solution could be reached.

“There’s plenty of time to have these conversations and work through this.”