Budget 2012: Funds frozen on early childhood subsidies

Photo / APN

Parents in relatively well-off areas could end up paying more in early childhood education fees after the Budget put a funding freeze on universal subsidies for early childhood centres and instead targeted extra money at areas where participation was lowest.

Education minister Hekia Parata said the current 20 Hour subsidy rates for all childcare centres would continue but there would be no increase. In the past the rates have increased in line with inflation.

In the current fiscal climate, we have to weigh up costs and benefits. Better targeted funding this year will help the Government achieve its goal of providing support to those with the greatest need.

Ms Parata said recent research had shown the current rates more than meet the average cost of delivering high-quality ECE. Government subsidies for ECE had already doubled from $617 million in 2006/07 to $1.3 billion this year.

However, although centres set their own fee levels on top of any subsidies, the freeze in funding could force many to increase their fees to keep up with increasing costs if they cannot absorb it themselves.

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Ms Parata said there was an extra $110.9 million of funding for the sector over the next four years about $28 million a year. That included $47.9 million to centres in areas where participation was lowest. A further $43.9 million was to provide ECE for the children of solo parents affected by the welfare reforms. Those parents will be required to return to work when their youngest child turns five and will be given a higher level of support for early childcare as part of that.

There was also $19.1 million to improve access to Maori immersion services such as kohanga reo.

The Government announced a new target of increasing the rate of participation in early childhood education to 98 per cent by 2016 up from 94.7 per cent now.

Ms Parata said achieving the 98 per cent participation rate would be challenging and made it critical to target areas where there were problems

These children often do not attend ECE for a variety of reasons. By targeting resources to these learners, we will raise participation to give them a strong platform for their compulsory school years.

Finance minister Bill English said the new target for ECE added to other targets already announced which the Government will report on annually - including ensuring 85 per cent of all 18-year-olds have at least NCEA Level 2 up from 68 per cent now.

Early Childhood Education:

* No increase in current subsidies for most centres.
* $110.9 million over four years for high priority communities.
* Includes $47.9 million for centres that support children and communities where participation is low, $43.9 million for extra subsidies for solo parents affected by welfare reforms, and $19.1 million for Maori immersion such as kohanga reo.
* New Government target of 98 per cent of participation in ECE by 2016. Current level is 94.7 per cent.