Cash-strapped Kiwi parents are spending almost twice as much raising kids as they were five years ago, according to new research.

The average spend on the three biggest rising costs - childcare, footwear and clothing - is estimated to be $5028 per baby this year compared to $3034 in 2013/14.

Childcare is still by far the biggest expense for New Zealand parents, according to industry research company IbisWorld.

The latest figures are conservative compared to data released by the BNZ last year which estimated the cost of preschool care per child was $8750 a year for one child. Clothing a toddler was estimated to cost $800 a year, up from an average of $220 for the first year of a child's life.


A Wellington mum told the Herald the cost of putting her two young children in childcare was crippling her family financially, while others have noticed a sharp rise in childcare fees.

IbisWorld senior industry analyst Hayley Munro-Smith said the fact people were spending more on childcare would come as no surprise to parents working longer hours to provide for their families.

New Zealand's childcare industry earned more than $1.1 billion in revenue in 2018/19, up 94 per cent on the $582.6m it raked in 2014/15, the research found.

"On-going early childhood education funding and growth in household incomes has permitted parents and guardians to make greater use of childcare facilities, which in turn has driven strong growth in fees for services."

Munro-Smith said the additional funding from the Government for parents enrolling their children had also increased demand for childcare.

But the Wellington mum, who spoke to the Herald on the condition she was not named, said after spending $550 a week on full-time childcare for both her 4-year-old daughter and baby son, $100 on petrol and $75 on parking, there was nothing left from her wages.

The cost of childcare had definitely increased since she had enrolled her daughter and she had recently received a letter from her childcare centre informing her of another fee hike, she said.


Clothing was less of a strain on the finances because she purchased clothes and footwear relatively cheaply from places like Kmart, T&T Childrenswear or second hand from online buy and sell pages.

Other mothers commenting to the Herald on an online forum agreed shoes and clothes could be bought pretty cheaply if they shopped around.

Early Childhood Council chief executive Peter Reynolds was not surprised that parents were having to pay more. He blamed it on a diminishing government subsidy funding provided for each child and the rising costs of running a business in the past 10 years.

The subsidy had been cut back incrementally since 2011 and the subsidy's most significant increase was in the last Budget when it was increased by 1.6 per cent.

This paired with an average 2 per cent increase in labour costs each year and a higher proportion of qualified teachers operating in the sector, which also came at an additional cost, meant parents were picking up the bill.

"I think the findings are quite typical for the experience the centre has had over the past 10 or 11 years... Unfortunately the picture is that the only place most services can increase their price is in the fee that goes to parents. We don't really want to do that, but it's the only option that's left."

Reynolds, however, was hopeful the next Budget would improve the per child subsidy rate and provide relief for centres and in-turn parents.

The increasing costs involved in raising children is putting a serious dent in many Kiwi parents’ pockets. Photo / 123RF
The increasing costs involved in raising children is putting a serious dent in many Kiwi parents’ pockets. Photo / 123RF

In the meantime the council's advice to parents concerned about high childcare costs was to shop around for the best fees.

One mum said, via the forum, the cost of daycare had been consistent at around the $5 to $8-per-hour mark in the past 10 years, while another estimated it had gone up about $3 per hour in the past few years and was now over $9 per hour at her children's centre.

The research also found the amount being spent on the footwear and clothing industry had risen - but not as much as the childcare sector - with revenue up 11 per cent in the past five years.

Munro-Smith said the revenue growth was less dramatic in these sectors because of strong competition generated from online stores and discount department stores offering a wide range of affordable clothing.

The research company also identified toys and insurance as other areas where costs had risen, adding to the cost of raising children.

A spokesperson for Education Minister Chris Hipkins the government subsidised children attending early childhood education (ECE) childcare up to 30 hours per week.
Children over 3 attracted a higher level of funding for 20 hours a week.

"The government pays the funding to services, most of whom also charge fees or seek other contributions from parents. While services are regulated and funded by government, they are independent entities which make their own operational decisions."

Funding was demand driven. The current appropriation for early childhood exceeded $1.814 billion.

Wellington mum Stephanie Sharrock struggles to pay for 10 hours of childcare a week for her 2-year-old son and was counting down until he could attend kindy.

The stay-at-home mum can't fault the quality of care he receives at the privately run centre, but said even paying $46 a week after the government childcare subsidy she was eligible for was still hard.

The centre had recently put up the fees by 50 cent per hour which meant she still paid $8.50 an hour for her son to attend two five hour days.

"It's not horrendous, but when you are on a single income it's pretty bad for a moment's sanity."

Her son is on the waiting list for a public kindy where she will only be required to pay a donation for him to attend.

"I don't think they charge anything for under 3s."

Sharrock wondered how parents who stayed home with a sick child but had no leave owing coped when they still had to pay childcare fees.