The cost of early childhood education went up 11.7%  over the past year according to the latest Consumer Price Index.  

This is the largest annual increase in ECE charges Statistics NZ say they have recorded.   

The graph below shows the annual % change for early childhood education between March 2009 and March 2011 (see the orange line) and contrasts this to the compulsory education and higher education sectors. 

J, S, D = June, September, December quarters.  9 = 2009, 10 = 2010, 11 = 2011

The biggest single increase for ECE was over the last quarter (a 5.3% increase).  The drop in funding for teacher-led services with 80% or more qualified registered teachers on 1 February 2011 is likely to have contributed to the increase as some services increased charges to offset a reduction in public funding.  However, this can't be the sole reason for the increase as more than half of all ECE services were not affected by changes in the funding rates, and only around 760 of the 2,000 services who were affected had a sizeable drop in funding (from $12.73 per child hour to $11.12). 

Other contributors may include:

• GST increase - Services that billed families by the term may have held passing on the GST increase until the new year. 
• Annual wage increases.
• Decisions to pass on more and absorb less of the operational costs.  Many services held off passing on increasing costs (e.g. for rent, electricity, food, resources, etc) to parents during 2009-2010, understanding that the recession was hitting many families hard.  
• The impact of the Ministry's funding error - made known in May 2009 resulting in many teacher-led services getting an 8% funding increase instead of the 4% due in the July 2008 funding adjustment.  The Ministry did not reclaim the additional money in 2009 and services who received this had extra cash.  But now in 2011 services are finding that they can't count on continuing funding increase adjustments and must therefore look more toward changing the price charged for ECE.

One might argue it is just a catch-up following 2009 and 2010 when the other two education sectors saw costs increase more than ECE did.  The graph below shows the percentage change over the past three years.  It shows that compared with three years ago all three sectors have seen similar cost increases facing households.  Early Childhood Education does not stand out as having significantly higher cost changes than the other two education sector groups when looked at over a three year period instead of only over the last year.

The graph below shows index levels since 2001.  In 2007 20 Hours ECE funding was introduced and this had a dramatic effect in lowering costs but cost has otherwise continued to rise in early childhood as it has for the other two education sectors. 

According to Statistics NZ, ECE charges are now at the same level they were in the March and June 2000 quarters. 

And, ECE charges are still 23.7 percent below their peak in the March 2007 quarter (before the introduction of 20 Hours ECE funding).  This means that while we might be alarmed by the massive percentage increase in ECE cost over the past year, and particularly in the last quarter, the cost is still a lot lower in 2011 than in 2007.