Christchurch couple Anthony and Vanessa McDonald both work full-time to cover the bills but it's barely worth it after paying 18-month-old Chloe's daycare fees.
Anthony and Vanessa McDonald are not even entertaining the idea of having a second child with the cost of daycare for their daughter so high.
New data from the Consumer Price Index has revealed the cost of daycare in New Zealand has increased by 12.8 per cent in five years with a third of that increase coming in the last year. Other data shows the country’s childcare fees are the most expensive in the world relative to income.
Some families report paying over $360 a week for one child to attend daycare.
In the McDonalds’ case, for two days a week, wife Vanessa juggles working from home and looking after 18-month-old Chloe so the couple can afford to pay the bills.
For the other three days, the administrator goes to the office while Chloe is in daycare, costing $200 a week.
Anthony, an inventory and logistics coordinator, said after paying all the bills they had about $250 left a fortnight between the two of them - assuming there were no unexpected expenses.
As things stand, the Christchurch couple could not entertain the thought of another child because of the cost of daycare and the other expenses involved in having a child, he said.
An Auckland mum told the Herald on Sunday she pays $315 a week for her 2-year-old son to attend a Westgate daycare for just four days. The fee had gone up twice since he started in February last year when it cost $291.
If he were to attend five days a week, it would cost $360. She said she had enquired about home-based care which may have been cheaper depending on the carer’s individual rate but there were no providers in her area. She also needed a provider that could keep her son until 6pm if needed as her office was based in the city - about 20km away from Westgate - and she often gets stuck in traffic on the Northwestern Motorway.
“You can see why some mums don’t go back to work after having a baby. By the time you pay for childcare and petrol, most of your wage is gone. It’s like the system doesn’t want us to work.”
She said it was not an option to try to work from home with her son.
“He’s a raucous 2-year-old - could you imagine trying to do a serious Zoom with him throwing food in the background? Plus, daycare is a great place for him to learn and get a nutritious meal. They have activities I can’t compete with at home and I wouldn’t be able to give him the attention he needs.”
A Tauranga mum of five went back to work part-time after her first four children but by the time her fifth was born three years ago, childcare fees made working a “waste of time and money”.
Jemma, a swim instructor, was planning to go back to work for eight hours a week over two days after her youngest was born, but when she did the maths, found her family would have been worse off.
“It would have cost $90 a week for two days of daycare. I would probably have made $120 and we would have lost the family tax credit.”
And with another child on the way, she can’t see a way to get back to work until they are three and can get the 20 hours free.
She said the family was able to get by because her husband worked 90 to 95 hours a fortnight.
“Unfortunately it’s all on him at the moment,” she said. “We’re in that middle-income bracket. I would happily go out and work if it made sense.
“Everything goes up but wages don’t go up.”
The issue of daycare fees flared up again last week after Napier mum-of-three Anna Catley went viral after sharing a TikTok of the cost of going back to work.
The situation is the same for many families - and not just those at the lower end of the income spectrum.
According to a 2022 OECD report, the net cost of full-time childcare for a two-earner couple in Aotearoa was 38 per cent of their wages based on 2018 figures - the most recent available.
That made New Zealand childcare the most expensive in the world relative to income, especially given the data from other countries was from 2020 or 2021.
The Office of Early Childhood Education estimates the cost at most early childhood education centres is between $4.50 and $7 an hour for children not receiving 20 hours free.
That makes the cost of childcare as much as $280 for a 40-hour week when the median weekly income from salaries and wages was $1189 before tax and other deductions in June 2022. But it’s a lot more for some.
After paying tax, ACC levies, Kiwisaver contributions and childcare costs, an average earner would be left with just under $600 a week.
Early Childhood Council (ECC) chief executive Simon Laube said parents had been facing the same challenges for some years now.
“It’s just so ludicrous for parents right now.
“You’re easily paying $15-$20,000 depending on what exactly you need from ECE.
“How did that happen? That’s nearly private schools costs. There are private schools in Wellington that are significantly less than that.
“That’s just what you have to pay for standard ECE.”
He said nobody liked increasing fees and centres were avoiding it for as long as possible but many had been forced to hike the cost already because of high inflation and not enough Government funding.
Laube said many centres opting in to the Government’s pay parity scheme, which aimed to close the pay gap between teachers in early learning centres and their colleagues in kindergartens, were having to put fees up because Government funding only covered part of the pay rise for senior teachers. The ECC is suing the Government over the scheme on the basis the way it is funded is unreasonable and irrational.
In Wellington, waiting lists were long and fees were quite high, Laube said, but, in Auckland there was “massive disengagement from families for ECE” and plenty of spots available because of the long lock-down periods.
Laube explained people got used to working from home with kids around during lockdown and were in no hurry to send their kids back to daycare.
In general, fees tended to be higher in more densely populated areas like Auckland and Wellington, although that was largely because travel time meant parents needed longer daycare hours, he said.
He believed the only way to make early childhood education more affordable was for the Government to invest more in the industry, particularly if they wanted more people in the workforce.
Early Childhood New Zealand chief executive Kathy Wolfe said she was hearing of plenty of parents facing the same struggles at the moment.
Wolfe said many centres were “stuck between a rock and a hard place” and were being forced to put fees up while trying not to lose students.
“Parents are being caught in the middle because the fees of the service will go up but for parents who want to return to work, it’s just not viable for them because of the cost of kindergarten and early childhood.”
Wolfe said many of the community-based centres which were part of her organisation did not charge a lot and did not want to increase the price but were struggling to stay afloat however large providers had been impacted less so far because of the economy of scale afforded to them.
“At the end of the day early childhood is about providing choice to parents about where they want to send their children and some parents are happy to pay the fees but there are many, many, many New Zealanders who can’t do that.
“For the vast majority, it is about affordability.”
Wolfe said the increase in childcare subsidies brought in by Labour this month would not help the situation a lot. She estimated under 10 per cent of the community would benefit from it.
Auckland Kindergarten Association chief executive Pauline Winter said a recent “ one day free” promotion had seen another 500 children enrol in the region’s kindys.
“That suggests cost is a factor, but not the only reason they come to us.”
While cheaper, kindergartens operate on school hours meaning it doesn’t work for many working parents.
Fees ranged from $50-$80 for a week of six-hour days - 20 free ECE hours plus an additional 10 hours at $5-$10 a day, she said.
But they too may have to look at an “adjustment” to fees, Winter said.
As a charitable organisation they relied on grants and fundraising but currently faced a 30 per cent increase in material costs for property maintenance alone.
“We have not increased fees for some time. We want all tamariki to access early childhood education, so we want to keep fees down as much as we can,” she said.
Office of Early Childhood Education chief advisor Dr Sarah Alexander said the cost of childcare was definitely high in New Zealand because there was no regulation around fees or how the 20 hours free was administered.
She agreed it was not a new issue in New Zealand but said since about 2019 costs had started to creep up and parents were feeling the pinch at the moment because fees were inflation driven.
Alexander said parents needed to be more creative and shop around when looking for childcare solutions.
For a family with three or more kids, a nanny was often more affordable, more convenient and more reliable, she said. Other families took up the 20 hours free at a kindergarten and were in home-based care for the rest, went to community-based centres, or looked to pay friends or family to care for their children.
She said affordable options were out there but warned parents not to just look for the cheapest option but also to consider the quality of care to ensure children were well looked-after.
Alexander said the Government need to look at tightening the rules around the 20-hour free to actually make it actually free and explore other policies that could support families including the possibility of paying the WiNZ childcare subsidy directly to families rather than to the centres where they were often quickly absorbed by fee increases.
Tomorrow: We look internationally at what governments do and how New Zealand stacks up.
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