Limiting the Number of New ECE Services

licensing of early childhood services3 May 2021


National management of the supply of ECE services

It is set to become harder for a new ECE service to open.  A need for a new service will be required to be proven, before approval is given to proceed to applying for a licence. 

This will help to encourage people, community groups, and companies to look more toward establishing services in geographical areas where there is a proven undersupply - instead of establishing a new service in an area where there are already many services for the number of children. 

Ensuring ECE supply is one part of network management. A second part is to encourage diversity and choice of service offerings for families and meet the needs of children. Services currently operating in an area may not be meeting a specific need or may be under-utilised by families because they do not provide the quality or approach to caring for and teaching children that families are comfortable with or prefer.


This was a proposal that came out of the government's EL Action Plan.  


The Education and Training Act 2020 came into effect on 1 August 2020. Part 2 of the Act introduces a new pre-application licence stage.

This means that a person must apply to the Minister of Education for pre-approval to apply for licence. The Minister of Education has the power to decline any proposed service at pre-application level.


Decisions are currently being made on the settings for 'market' entry for any new ECE service.  The Ministry of Education is working on changes to the Education (ECE Services) Regulations. So while it is not happening right now, it is going to happen. 

How the market might react

The implementation of ECE network management could see the emergence of a great market for sellers. Any ECE service (no matter what condition) could be snapped up by buyers very quickly within days or weeks of going on the market.  Buyers could be prepared to pay an arm and a leg to purchase a licence. 

Commercial entities and private operators could see it as easier, and less risky, to buy an existing service, regardless of licence status (e.g. probationary, full, provisional, or suspended), than setting up from scratch and going through the pre-application for a licence process. 

Financially struggling community groups and single or small owner-operated services may look at what prices the bigger companies will pay to snap up existing services and sell to them - thus reducing the supply of small stand-alone private services and community-based ECE provision in communities.  

The Ministry of Education will need to be mindful of all this. "ERO advises that stand-alone services are over-represented in their very high-quality category. Favouring consolidation in a systematic way may sacrifice diversity and innovation." (MOE agenda, ECE Strategy session, 2019)

What the process for getting a licence for a new service might look like

The process is likely to look something like the following.

Stage 1: Planning and research stage. The matters that the Minister must by law consider when approving a pre-application are:

  • The demography of the area and the needs of the communities in the area (e.g. birth rate in the area, socio-economic profile, growth or decline of industries and employment in the area, new housing developments). 
  • Children's needs in the area (e.g. for a service located in school grounds, for a service located in their parent's workplace).
  • What other services in the area offer/ don't offer (for example, in an urban area do any of the services provide children with a good outdoor/rural experience? are currently available services set-up to be breast-feeding friendly?  is there a need for a service that teaches exclusively in te reo Māori?).  
  • The suitability of the applicant and of every person involved in the governance of the proposed service, which, as a minimum, requires the Minister to determine whether each person—is a fit and proper person; and has obtained a satisfactory Police vet for the purposes of the application.
  • The applicant's/applicants' financial position.
  • The licensing history of any other early childhood services previously or currently owned, operated, or managed by, or otherwise connected with, the applicant; and every person involved in the governance of the proposed service.

Stage 2: Put forward a pre-application based on research and business plan.

Stage 3:  Should the Ministry approve the pre-application then you have up to two years in which to establish the proposed service and pay the application fee for a licence.

Stage 4: Providing the service meets regulatory requirements and the fit and proper test for persons who are the service provider or otherwise connected with the service (e.g. company director) then a probationary licence is then issued.    

Wait and see matters

We will see if hospital-based ECE services and family and whanau centered services, such as Playcentre and Kōhanga Reo, are automatically granted pre-application approval.  At most, they should only need to show that they have surveyed their community and found there is an unmet demand for their type of service. 

We will see if criteria for approval of pre-licence applications for an education and care/kindergarten or home-based service will be given when the:

  • The applicant has not first checked there are people on hand to staff it. (Network management should not mean approval of services that do not have adequate staffing or that will subsequently rely on government grants to assist with staff recruitment and bringing in labour from overseas.)
  • The proposed service does not tick all the boxes for meeting the health, social, educational, cultural, and spiritual needs of children/ families.
  • The proposed service does not support the right of parents/ caregivers to be recognised as their child's primary educators, for example it does not provide for flexible hours of enrolment.
  • A local community group or organisation would have been willing to step in and meet the need, but are prevented from doing so because a pre-application was put in first by a private individual/s or commercial group. 
  • The location places children and adults at unnecessary physical risk, e.g. it is beside a location of possible terrorist interest, within a high-risk Tsunami area, or where there is a high level of air and/or noise pollution from traffic or industry.  

Finally, there is a very real chance of hindering progress on the EL Action Plan, unless a person/s or company is required to show before they establish a new service, that it will be designed and built to meet higher than current regulatory standards on things such as group size, teacher-child ratios, and space per child.  And the povider/ owners agree to higher standards on other core standards such as having teaching staff who are ECE qualified working daily with children. 


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