The Early Childhood Council has warned that education centres might be forced to raise their fees, effectively counteracting the Government's new rebate, due to existing funding challenges.

This week, Finance Minister Nicola Willis unveiled the FamilyBoost policy - which will let parents and caregivers claim back up to 25 per cent of childcare costs, up to $75 a week.

Parents are being told to start collecting invoices from July to begin being refunded every three months from October.

The announcement was received warmly by the Salvation Army's Ian Hutson, who said the potential $4000 a year would make a difference to the lives of many families.

"We really welcome that, especially for women getting into the workforce - it's often been a huge block," he told Newstalk ZB this morning.

However, he also agreed there was a concern that fees might increase among learning centres, stating: "You can't know until it happens."

Talking to Newstalk ZB Plus, the Early Childhood Council's CEO Simon Laube said the FamilyBoost policy didn't address the problem of centres being able to cover their core costs.

Many centres across New Zealand are struggling to operate without significant revenue support from either higher fees charged to parents or Government support. The amount of targeted funding from the Ministry of Social Development has decreased 31 per cent since 2016, according to the council's stats.

Laube said there is a possibility some centres will need to increase their prices to meet their increased running costs, which would lessen the impact of the new policy.

"A large number of centres are closing or on the margins of sustainability, and some fee increases may be inevitable because of poor policy, like Pay Parity," he said.

"Low- or no-fee centres are less likely to increase fees because families can’t afford to pay at all."

The funding that many centres receive under the Pay Parity policy isn't enough to cover the wage increases of experienced teachers and other cost increases such as building leases and higher loan costs, Laube said.

With the shortfalls eventually being absorbed by centres or passed onto parents in fees, Laube's answer is for the Government to follow through with something it had previously agreed to carry out.

"The solution is to undertake the promised funding review to address the fundamental flaws in the system," he told ZB Plus.

"Universal funding, targeted funding and parent fees and other sources all contribute to making ECE services possible. You can’t just review one – the Ministry of Education tried that last year with universal funding and that approach would have just resulted in parents paying higher fees."

Laube said the promised review, which he said is "needed urgently", is the opportunity to get the funding model correct and check certain aspects such as the balance of government and parent contributions.

"[We need] to make sure today’s young families are not being treated unfairly," he said.

"How much of the financial burden should they pay for government policies that increase service costs? They are the ones raising our next generation and they deserve acknowledgement and better support."

Early Childhood NZ chief executive Cathy Wolf called the policy "great news" but said the proof would be in the pudding when it comes to parent uptake.

She said many families live in areas of limited provision, which means the rebate still wouldn't be enough to cover the costs of the families sending their young ones to a learning centre for the week.

"Some families won't have access to computers to get onto the internet to get onto the IRD website," she said.

"The other thing is affordability - because these families ... won't they have to wait three months before they get the rebate? So, you know, they can't afford ECE - they still need to pay for three months."