A major focus on early childhood education

Budget invests around $1.8 billion into early childhood education (ECE), to help ensure our youngest learners and their families can access affordable, quality ECE.

$1.2 billion to extend 20 Hours ECE to two-year-olds

The largest element of this investment is an extension of the 20 Hours ECE subsidy, which is currently available for three- to five-year-olds, to include two-year-olds from 1 March 2024. Government is investing  almost $1.2 billion over five years to fund this extension. 

Why extend 20 Hours ECE?

This will lower the cost of ECE for parents and caregivers with two-year-olds by reducing ECE service fees. That in turn will help with their day to day living costs and reduce barriers for two-year-olds to enter ECE.  

Are any other changes being made to the 20 Hours ECE subsidy?

The rate of the subsidy is also being increased by 4.6 percent. New funding conditions will also be introduced to help provide transparency on the fees parents and caregivers are being charged and ensure they receive the benefits of this funding. 

What are the new funding conditions?

The broad parameters of new funding conditions would require services that opt into 20 Hours ECE to:

  • set fees by the hour only, for two to five-year-old children, so that any fee charged would clearly set out the number of hours being charged for. The 20 hours associated with 20 Hours ECE would have to be specified as $0 per hour,
  • publish their hourly fees,
  • provide the Ministry of Education with fee data.

The Ministry will also review the existing 20 Hours ECE funding conditions relating to optional charges and donations. The existing 6 hour per day limit for 20 Hours ECE funding remains.

The Ministry will confirm the exact wording of the 20 Hours ECE funding conditions as soon as possible.

$322 million for pay parity for teachers in education and care services with their counterparts in kindergartens

This funding continues the Government’s commitment to pay parity between qualified and certificated teachers in education and care services, and kindergarten teachers. It builds on the $587 million investment from previous Budgets.

Why is pay parity important?

Pay parity is an issue of fairness. Improving teacher pay may also support teacher recruitment and retention.

How much is actually going to teachers?

$322 million is going towards teachers’ pay. This funding creates a third opt in funding rate that is the same as the kindergarten funding rate. Services that opt into this funding rate must attest to paying their teachers the full kindergarten pay scale. 

An additional $10.4 million is set aside to create allowances for teachers working in Māori and Pacific immersion and bilingual education and care services.

Which education and care teachers will this cover?

The funding will be available to services who attest to paying their teachers at all of the Kindergarten Teachers, Head Teachers and Senior Teachers’ Collective Agreement (KTCA) pay steps (steps 1-11 and management steps K2-K4).

When will they get the money?

The new funding rates will be available from 1 November 2023.

The allowances for teachers working in Māori and Pacific immersion and bilingual education and care services will be available from 1 January 2024.  

A range of subsidy increases to manage cost pressures

There is also an increase of 5.3 percent to a mix of full and partial early learning subsidies from 1 January 2024, and to Targeted Funding for Disadvantage from 1 March 2024.

Why is this funding required?

This will aid services to manage the increasing costs of provision and maintain quality and affordable early learning for children, parents, and whānau. This initiative provides almost $257 million over five years. 

Which services receive these cost adjustments?

All early learning services will benefit from a cost adjustment to funding rates.

There is also an additional one-off sustainability grant for Playcentre Aotearoa of $3 million. 


Appendix one of the Funding Handbook has an outline of all of the rates.

Appendix four provides the updated pay parity salary scales. 

Last reviewed: Has this been useful? Give us your feedback