What will the Budget hold for the early childhood sector and what funding in which areas might be reduced or removed?
On Thursday 21st May Finance Minister Bill English delivers the National-led NZ Government’s seventh Budget.
The ECE Management National Forum for centre and home-based owners, leaders and managers will be held on the Friday following the Budget release to discuss it and economic, financial and quality matters.
This article has been prepared to give information on:
1. The Government’s main focus
2. Relevant pre-Budget 2015 announcements made so far
3. What changes and new spending on ECE might be in Budget 2015
But before reading further, first refresh your memory on where ECE policy was heading before the last general election. View the 2013 post-Budget ECE Management Forum notes from the briefings given by the Ministry of Education and Minister for Social Development by clicking here. The directions set in 2013 along with what we know about the Government's main focus in 2015 signal what the Government is working to get from its spend in ECE and the type of conditions it may be looking at placing on the ECE services and parents going forward.
1. The Government’s main focus
“Government’s focus remains front and centre on ensuring the economy continues to perform well,” say the Prime Minister and Minister of Finance in a press release.
A key concern of government is employment, creating more jobs, and lifting wages.
Its approach is one of social investment – explained as improving services for New Zealanders and those most in need.
The Government’s over-arching goal is to ensure that the billions of dollars it allocates to vulnerable children and families in health and education achieve results. It has been looking at how this money could be better spent.
Education is one of only two areas where there is likely to be new spending in Budget 2015. To date information released indicates that new spending is going into schools (see the next section).
2. Relevant pre-Budget 2015 announcements
Pre-Budget announcements have so far included an additional $244 million over the next four years to go into building new schools and extra classrooms. There have been no early announcements yet of what might be contained in Budget 2015 for ECE.
Government has also announced that it will reduce taxation for low and middle income earners from 2017.
A reduction in ACC levy costs will help households and businesses (this includes ECE services).
When families have more money in their pocket, ECE fees become more affordable and families may use more ECE. But if ECE services increase fees and charges (which is possible should funding not keep pace with expectations) families will be no better off.
3. What changes and new spending on ECE might be set out in Budget 2015
- An increase in ECE funding to cover cost adjustments and increased child hours is an almost certainty - if this doesn't happen it will be unusual and there will be a lot of disappointment.
- The Ministry of Education was in the process of formulating a new ECE funding system back in 2013. It would have been too hot politically to bring in any major changes before the 2014 general election. However, the Minister of Education has now given more than a hint that a new funding system remains a priority and is going to brought in - likely this year or within the next two years (click here to read discussion about this on the MY ECE Facebook page)
- Should additional funding for ECE services be contained in Budget 2015, a large proportion of this may be designated for equity funding increases to services or to Work and Income childcare subsidies – in line with the government’s focus on targeting vulnerable children and increasing participation by children of families less likely to use ECE.
- The 20-Hour and 30-Hour payment amounts per child per hour could be secure. To date the Government has shied away from reducing subsidy payments (apart from dropping the 100% qualified teacher funding band) as it does not want to put families off from using ECE when it still has the target to meet of 98% of all children attending ECE regularly for the six months before starting school.
However while not cutting actual funding rate amounts there is a chance that the Government could apply greater targeting to free up some money and ensure better and more affordable access to ECE for vulnerable children and families (see the next section for examples of how spending may be targeted more).
What Australia does NZ often follows – or so it is said
NZ currently has a policy of 20 hours Free ECE for 52 weeks a year for 2 years before children attend school (and continuing up to age 6 for 5 year-olds who stay in ECE)
Australia has a policy of 15 hours Free ECE for 40 weeks for the year before attending school.
The Abbott Government is keeping the 15 hours Free ECE policy going but has announced it will link taxpayer support to parent employment.
Parents who are not working, in study or looking for work are set to get a lower rate of subsidy under a new "activity test". The subsidy will be paid directly to ECE providers. Parents can receive up to 100 hours of subsidised care per child, per fortnight, subject to an activity test.
Up to 24 hours help will also be offered to low-income families (with incomes less than $65,000) who do not meet work or study test requirements
Wealthy families will also face higher out-of-pocket expenses as means testing will reduce access to taxpayer support by families who are most able to afford fees and charges.
Postscript 21/05/2015 4pm
What the Budget actually delivered
Read about the Budget announcements for ECE by clicking here to go to the news article.
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