$1.2 billion to extend 20 Hours ECE to 2-year-olds

The largest element of this investment is an extension of the 20 Hours ECE subsidy, which is currently available for 3- to 5-year-olds, to include 2-year-olds from 1 March 2024. Government is investing almost $1.2 billion over 5 years to fund this extension.

Why 20 hours ECE is being extended

This will lower the cost of ECE for parents and caregivers with 2-year-olds by reducing ECE service fees. That in turn will help with their day-to-day living costs and reduce barriers for 2-year-olds to enter ECE.

Other changes to the 20 hours ECE subsidy

The rate of the subsidy is also being increased by 4.6%.

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.

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 2- to 5-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.

Pay parity

$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.

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

$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.

Who is covered and when they get the money

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).

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.

Subsidy increases to manage cost pressures

There is also an increase of 5.3% to a mix of full and partial early learning subsidies from 1 January 2024, and to targeted funding for disadvantage from 1 March 2024.

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 5 years.

All services benefit

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.