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Analysis of Pre-Budget Announcements for ECE

money budgetDr Sarah Alexander
Chief Executive

The 2020 Budget announcements for ECE are unsurprising and reflect that Labour has not planned to meet all its pre-election promises.

The announcements also reflect changes in participation in ECE and the childcare market, before the Covid-19 crisis and probable changes over the coming year and possibly 3 – 4 years.

Already before the Covid-19 crisis there were problems in the ECE market. I heard that investor interest in centre purchases wasn’t there anymore. 

The market had become over-supplied. Profitability was declining. And, child attendance in ECE has been declining (65.7% in 2017, 63.9% in 2019).

Now, unemployment is going up because of the effect of the lockdown on the NZ economy. That means some parents won’t be needing childcare.

Moreover, employed parents may now be considering if they really need as many hours of childcare as they used before, and will look for any savings to make up for wage cuts, loss of overtime and bonuses and to service mortgages.

There may be fewer parents returning to work, because employers who thought it impossible for their employees to work from home or flexibly have seen that it is possible.

Unemployed people, looking after their own children will logically look to supplement their household income by taking in a few more children. This could also be anyone who loses their job and has time on their hands.

The money allocated for the ECE sector in Budget 2020 is unlikely to all be spent due to the above reasons; and the government will know this. In the 2018-2019 financial year, spending on Early Childhood Education was $44.1 million (2.3%) under budget, mainly due to lower demand than forecast. Demand is likely to be lower again in the coming year and possibly for the next couple of years after that.

With higher unemployment the government will feel no need to massively increase subsidies to the ECE sector to make it more affordable for new parents to take up paid employment.

Parents who are not in employment or who are looking to see where they can make some savings, will be interested in whether ECE adds value to what they or the grandparents, or next-door neighbour can provide for their child.

For our ECE sector this means that we will have to:

  • Establish a qualified home-based educator workforce as quickly as possible.
  • Stop devaluing early childhood qualifications and as quickly as possible move to keep staff who are fully-qualified and pay them their professional value as teachers. Funding parity is essential. Movement is underway to achieve this – find out more here
  • Improve standards and parent ratings of services, because parents will be choosier and there is unlikely to be any shortage of choices. There may be a lot of spare capacity/ empty spaces particularly in education and care centres. See service standards and ratings at www.myece.org.nz national register.

Key Budget Points

  • The Ministry of Education is instructed to increase the salary attestation rate that teacher-led centres must at least pay all their qualified and certificated teachers at in return for receiving funding from $21.87 to $23.97 hr. (This will benefit new graduates and those only receiving the minimum and not all teachers)
  • Teacher led centres to receive a 2.3% increase in funded child hour subsidy rates from 1 July 2020 and a 1.6% increase in subsidy rates from 1 January 2021 to meet cost pressures over the past year. The Minister used the phase “education and care services” – and this is confusing because kindergartens are already on the highest funding rate and there is no separate licensing category for kindergartens.
  • Home-Based ECE funded on the ‘quality rate’ to get $36.2 million spread over 4 years to increase the subsidy rate by 3.8% from 1 January 2021 and a 1.6% cost pressures adjustment.
  • Home-based ECE funded on the ‘standard rate’ who have educators completing a Level 4 ECE qualification will be subsidised for five additional hours of visiting teacher support per week. Tertiary fees assistance for up to 2,646 educators not eligible for fees free will be available.
  • Playcentres will get $3.1 million spread over four years. The very low child hour rate will rise by 6% with a 1.6% cost pressure adjustment added
  • The Ministry of Education’s Early Childhood Education Provider Assessment Group will get $7.8 million to work on improving quality and safety standards in the sector.
  • Nothing specifically is stated for ngā kōhanga reo, playgroups and kindergartens. For kōhanga reo especially, this will be a big disappointment. These services may get the 1.6% inflationary adjustment.

Some promises Labour made in 2017 that it would achieve during its first term in government that it has not achieved yet were:

  • Improve group size and teacher:child ratios for infants and toddlers
  • Put the “free” back into the policy of 20 hours free ECE
  • Reinstate extra funding for ECE centres that employ 100 per cent qualified and registered teachers.
  • Require all ECE centres to employ at least 80 per cent qualified teachers by the end of the first term in government.
  • Look at creating a smoother pathway from parent teacher qualifications (e.g., Playcentre qualifications) to initial teacher education programmes.

Budget 2020 announcements have focused mainly on giving small increases in the subsidy rates, and inflationary adjustments, and supporting unqualified home-based educators to obtain a level 4 qualification.

The increase in the attestation rate that centres must at least pay all their qualified and certificated teachers at least at in return for funding, is very welcomed and much needed because the pay is low compared to other jobs that don’t demand qualifications and experience. However, contrary to what Minister Hipkins stated this is not yet a real step toward pay parity for all ECE qualified and certificated teachers with school teachers. 

What the minister’s announcement on this means in effect, is that a highly qualified teacher who works in a centre that is not funded on the higher kindergarten rate need only be paid at the new graduate rate for a teacher in a school or kindergarten. When there are increases in the pay scale for kindergarten and school teachers there is no obligation on the Ministry of Education to similarly increase the attestation rate for other teachers. (See a book on pay parity written at the start of our campaign) 

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