Early childhood centres are having to make drastic changes to their businesses because of a lack of Government funding and many say they expect operating conditions to get worse.
A national survey carried out by the Early Childhood Council shows a majority of owners or managers who take care of about 320 centres feel that things are only going to worsen in the next year.
Of 167 owners and managers surveyed, 57 per cent expected conditions to worsen.
Twenty-nine per cent surveyed expected conditions to stay the same while 14 per cent expected conditions to get moderately better. No one felt conditions would get significantly better in the next 12 months.
The survey follows Government's controversial $400 million funding cut to the sector in 2010. That meant a slash to financial incentives for centres to employ qualified staff, with Government offering to fund for up to 80 per cent of qualified teachers rather than 100 per cent.
Staff at Pukeko Preschool, in Mangere East, are raising funds for a new playground and other resources, including new toys.
Manager Judy Keung said staff ran several raffles throughout the year to help raise funds for a new playground, plants, a new shed and shelter at the preschool.
"We bake cakes and have cake stalls. Where else will we get the money from? We have to do this to improve the centre for the benefit of all."
Ms Keung said it was imperative that the Government look at increasing funding into the sector in this year's Budget.
"This is where we need it. If we don't put the money into the children at this young age, imagine what they're going to be like in 15 years' time. We set the foundation for learning from here - at preschools."
Other findings in the survey show that 20 per cent expected to invest less in their centre(s) in the next year, 12 per cent said they had invested more, while 68 per cent expect to invest "the same".
Up to 23 per cent of centres surveyed also said they had decreased the number of full-time teachers.
The Penguin School of Learning, based in Howick, caters for up to 160 children and has 38 teachers - 32 of whom are qualified.
Centre director and co-owner Theresa Dodd said they had managed to keep all their staff and also not make any pay cuts. But the Government's funding cuts meant they had had to raise their fees by $25 a week for each child.
Mt Albert's Minimarc Childcare Centre staff say they are no longer pushing for staff to become qualified teachers, as they work on saving money rather than spending it.
Head teacher Meg Moss has been working at Minimarc - a community-based not-for-profit centre - for several years, but has been in the sector for around 40 years.
She said although early childhood education had improved over the past four decades, in the last year it had been difficult to keep their centre afloat.
"I'm really aware [about] spending money on resources or professional development. We used to spend a lot more on staff professional development. We would support teachers to get further qualifications, but now we're not. That's sad, but we just can't afford it."
Early Childhood Council chief executive Peter Reynolds said there was an air of uncertainty within the sector. "They know Government cut early childhood education revenue for many centres in their last term ... and they believe Government is planning to pay for this by taking money from existing centres."