Why some parents can’t afford to send their kids to ECE and others can’t afford to stop
Childcare in Aotearoa/ New Zealand is believed to be more expensive than in any other developed country. But why? Senior reporter
When is it more cost effective to stay home with your tamariki, instead of working and paying for childcare? It’s a question many a parent has asked themselves.
Although there’s probably no single answer, modelling by the OECD suggests that many lower income families with more than one child under the age of 5 would likely be financially better off living on one full-time income and having one partner stay home, than if both parents worked full-time.
At the same time, many parents on average incomes say they want to cut back their hours, but that they can’t afford to.
While it may seem paradoxical, both situations are the result of the same problem: because in Aotearoa early childhood education (ECE) is believed to be more expensive (relative to income) than anywhere else in the developed world.
While neither the Ministry of Education, nor any other Government agency keeps tabs on the cost of ECE, the OECD report, which analysed wages, tax rate and benefits of more than 25 countries, estimated that in 2019 a New Zealand household with two preschoolers and two parents working full-time at the average wage spent 37% of their net income on daycare.
This was nearly triple the OECD average of 13%. its own database on ECE costs, puts the going rate at $60.16 per day (or $300 per week, on average for full time care for one child).
This rang true when The Post conducted to a straw poll on the topic this week.
Even some higher-earners (those from households with annual incomes upwards of $130,000) described the cost of ECE as being “prohibitive”, saying their budgets were stretched by paying bills for everyday items, such as new car tyres or to replace or repair a broken appliance, on top of ECE invoices.
“Daycare is so expensive and they increase the price every year. I want to pull them [my kids] out and stay at home with them but ... we need both incomes to come in to cover our basic living costs,” a parent of a 4-year-old and a 1-year-old, living in Karori, said.
Another mother, who is pregnant and whose eldest child is nearly 2, said she and her partner would paying be close to $800 a week in daycare costs when her second period of maternity leave finished: “If I don’t go back, we would not be able to afford our mortgage and we get no assistance because we fall just above the threshold but are by no means well off”.
Many of the 60-odd Wellington-based parents who were surveyed said, unprompted, that they wanted to have more children, but the cost of ECE had forced them to reconsider this aspiration.
Jessie Barwick would love to give her son Ned a sibling.
But, as a single mother, she doubts she’ll be able to afford to.
When Ned, now 2½, started daycare 18 months ago, almost every cent she earned working part-time in communications went towards paying for him to attend a local daycare three part-days a week.
The first six months were challenging, Barwick, said. Not just because of the financial pressure. It was difficult to grapple with the fact that for a net gain of $150 to $200 per week, she was missing out on 20 hours per week with her child at a really formative time in his life.
And although Ned is thriving at the centre now, he had trouble settling in initially.
“I didn’t have the time or emotional bandwith [to work], but I really needed the money,” Barwick, who lives in Wilton, said.
When Ned “turned a corner” and started enjoying going to daycare, Barwick was able to change his hours and increase the amount of consulting work she took on.
He now goes to daycare from 9am to 4pm three days a week, for $312 in fees. Last year, Barwick earned $72,000.
As a single parent on a relatively low income she was entitled to a childcare subsidy from Work and Income of $120 a week. (The subsidy has since increased to about $160 a week).
While the subsidy definitely helped make sending Ned to ECE more affordable, she found the process of accessing it to be “demeaning”. In her view, it seemed as though the system had been “designed to ensure you're not taking advantage of support you shouldn't be able to access, rather than – for a single moment – giving you the benefit of the doubt”.
From July 1, further financial support for childcare costs will be available to low and middle-income parents like Barwick when the National-led Government’s FamilyBoost policy comes into effect.
Under the scheme, households with annual incomes of less than $180,000 will get up to 25% of their ECE fees returned to them through a tax rebate paid by IRD each quarter.
However, Barwick, who did some contracting communications work for the previous government before the election, said she would rather see the money from such schemes be invested directly into frontline ECE services. This, she said, would be more equitable and do more to drive down childcare costs for all young families – whatever their income.
Show me the money – and, more importantly, where it’s going
Barwick is not alone in her scepticism of whether FamilyBoost will actually make any significant dent in many families’ ECE costs.
A first-time parent living in Kelson, Lower Hutt, who pays between $500 and $600 a week for their 2-year-old daughter to be cared for by an in-home educator in
Alicetown for 30 to 40 hours a week told The Post that claiming the $30 a week they and their partner could get from FamilyBoost wouldn’t be worth the time and effort they’d need to spend doing paperwork to access it.
“We’re both working full-time and already struggle to find time to do anything that isn’t directly related to keeping our kid alive, healthy and happy,” they said.
Sector leaders, including chief adviser to the Office for Early Childhood Education, Dr Sarah Alexander, have also voiced concerns that the roll-out of FamilyBoost could lead to childcare providers to raise fees, knowing that parents were getting a rebate. “I expect that childcare fees will continue to rise, unless fees controls are introduced or the government radically alters who and what it funds,” she, said.
While Simon Laube, chief executive of the Early Childhood Council, which represents more than 1300 owners of ECE providers, was opposed to measures like fees controls, he agreed that FamilyBoost would not be the a silver bullet to curbing rising fees.
Instead, he said, the entire funding model for ECE needed to be overhauled: “Is this all about just investing more? Yes, probably it is about investing more money, but in the right places.”
Nikki Parsons, who is the general manager of learner and workforce engagement at Te Rito Maioha - Early Childhood New Zealand, echoed Laube’s comments.
She said the ECE funding system was created in the 1960s and was now “very broken”.
While providers received government funding to provide tamariki with only six hours of care and education per day, many daycares operated for nine to 10 hours to line up with a typical working day and had to pass the full cost of these extra hours onto parents.
Her organisation, which is a member organisation representing both individuals in the sector and service providers, and also trains teachers, was advocating for the funding model to be redesigned so that it was “fit for purpose” and more flexible.
Both Parsons and Laube said under the ECE pay parity scheme, private daycare providers were expected to match the salaries of their teachers to those of kindergartens, but did not receive the same level of funding to do this. So this was another cost that was passed on to the consumer (parents).
A spokesperson for Education Minister Erica Standford said her office was unable to answer questions about ECE funding by deadline because that information was “Budget sensitive”.