Responding to cost and demand pressures

The last year has seen the education sector impacted by the same cost pressures as other parts of the economy, including rising inflation. Budget 2023 responds with a range of increased funding levels and one-off supports. 

$257 million towards early learning subsidies

There is 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.

Which services receive these cost adjustments?

All early learning services will receive a portion of the cost adjustment to their funding rates.

There is also an additional one-off sustainability grant for Playcentre Aotearoa.

To see the other key early childhood initiatives visit A major focus on early childhood education.

$234 million for school operational funding

The Budget provides $234 million additional operational funding over five years for schools.

What’s that money going to fund?

This is in response to their increased operational costs, such as supply purchases, utilities and other essentials. This represents a 3.5 percent increase. 

Is it meant to cover teacher costs?

No, teaching costs are funded separately.

Is that enough to keep up with inflation?

It’s based on forecast inflation for the year ahead.

$521 million for tertiary tuition and training subsidies

Budget 2023 applies a 5 percent increase to tertiary tuition and training subsidies to support providers to manage increases in delivery costs and help them maintain the quality and accessibility of tertiary education and training.

In addition, the Budget recognises the particular cost pressures facing the delivery of te reo Māori and other courses that promote the learning of mātauranga Māori, by providing a further 15 percent funding rate increase for targeted delivery at level 3 and above.   

These initiatives provide an average 5.3 percent increase to tertiary tuition and training subsidies, at a cost of $521 million, over five years.

Do these increases only apply to universities?

No, the 5 percent increase is available to all tertiary education and training subsidies paid by the Crown, these also include: Foundation and Community Education (Adult and Community Education, Delivery at level qualification level 1-2, English for Speakers of Other Languages); vocational education and non-degree delivery (levels 3-7); and for degree-level and above qualifications (level 7 and above).

Why is there a larger increase for the delivery of te reo Māori and other courses that promote the learning of mātauranga Māori?

The targeted funding supports the specific goal of growing Māori Medium and Kaupapa Māori education across the education sector; and supports language revitalisation efforts of Aotearoa, New Zealand.

$181 million for tertiary education and training providers to help meet forecast demand

Budget 2023 provides an additional $180.7 million to tertiary education and training providers, to help meet the forecast level of demand up to 31 December 2025. 

What is this money for?

This funding enables the Tertiary Education Commission (TEC) to fund a similar level of enrolments in 2024 as there were in 2022 and slightly below that level in 2025. 

What if the funding wasn’t available?

Without this funding the TEC would have been unable to fund the currently expected volume of enrolments in 2024 – it would have had to decline funding for a significant number of enrolments. That likely would have resulted in tertiary education and training providers restricting access to some courses and programmes.  

How many students will that help?

We estimate this enables the TEC to fund approximately 15,000 more full-time equivalent learner enrolments in 2024 across provider-based and work-based tertiary education and training than it otherwise would have been able to, and around 10,000 more in 2025.

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