The number of working parents receiving childcare subsidies has dropped by 4300 in the past five years, despite more parents going back to work.
The decline appears to be mainly due to a Government decision during the global financial crisis to cut the income limits for the subsidy from September 2010, and to freeze them since then at $1400 a week for parents with one child in childcare, $1600 with two children and $1800 with three or more children.
Early Childhood Council chief executive Peter Reynolds said it also reflected Work and Income offices failing to publicise the subsidy.
"The numbers have always been completely low compared with the segment of the population you would think are eligible to receive it," he said.
He said some early childhood centres gave parents application forms for the subsidy, but others didn't.
"Some Work and Income offices frown on it because the handing over of an application form, some Work and Income staff believe that should be part of a conversation between a case manager and a parent," he said.
Statistics provided by Social Development Minister Anne Tolley in response to a written question from Labour MP Carmel Sepuloni show that numbers receiving the subsidy peaked in June 2010 at 52,576, or 28 per cent of all early childhood education (ECE) enrolments in that year.
Numbers have dropped in every year since then to 46,361, or 23 per cent of enrolments, in June this year.
Subsidies going to beneficiary families have dropped by 13 per cent from 14,841 to 12,926, reflecting declining numbers on benefits as the job market has recovered from the financial crisis.
But Ms Sepuloni said it was unexpected that subsidies going to working families had also dropped, by 11 per cent from 37,735 to 33,435, despite the growing numbers of working parents.
"If more people are going to work, we should see some kind of increase in the number of people not on benefits receiving childcare subsidies," she said.
She said the amounts budgeted for the subsidy were underspent in each of the past three years, apparently to make cost savings.
"We know that at an operational level Work and Income are making it as hard as possible for parents to access their childcare subsidy entitlement," she said.
"One of my own staff, for example, was given incorrect advice whereby she was told that the reason she wasn't eligible was because the centre her daughter attended offered 20 hours ECE, even though she was attending that centre for 32 hours a week so should have been eligible for the childcare subsidy for the 12 hours above and beyond the 20 hours free."
However Mrs Tolley said there had been no increase in the proportion of applications for the subsidy that were turned down, which has been consistently 9 to 10 per cent each year since 2009-10.
"We are well aware that this type of support is important to families, which is why Work and Income promotes it across the country, and why the Government announced in Budget 2015 that the childcare assistance rate will increase from $4 to $5 an hour for low-income families in 2016," she said.
Total spending on the subsidy increased dramatically a decade ago under the former Labour Government's Working for Families policy, which raised both subsidy rates and the income limits.
The income threshold for a family with two children jumped from $1130 a week in April 2006 to $1600 from April 2007, when it was estimated that 60 per cent of couples with children would be eligible to receive the subsidy.
The income limit for a two-child family was raised further in line with inflation to $1698 by April 2009, but was cut back to $1600 in September 2010.
Spending on the subsidy rose from $58 million in 2003-04 to a peak of $190 million in 2010-11, but has declined slowly since then to $184 million in the year to June this year.
It is forecast to rise again to $193 million in the year to next June, and to $230 million by 2018-19, because of this year's Budget decision to raise the subsidy rate from $4 to $5 an hour for families earning below $800 a week.
• Apply for the subsidy online at: http://www.workandincome.govt.nz/individuals/a-z-benefits/childcare-subsidy.html