Parents will be bearing increasing costs for childcare as the Budget will push up early childhood education charges, the sector says.
The Government has announced new spending of $155.7 million over four years to be invested in early childhood education services.
Education Minister Hekia Parata said a $53.6 million boost to subsidy rates would help keep fees affordable, which was vital to increase early childhood participation, especially for children from Maori, Pasifika and low-income backgrounds.
The extra funding would support an estimated 5800 children to access early childhood education by June 2018, with more than a third from areas where participation is low, she said.
The Government has a target of increasing participation in early childhood education to 98 per cent of children starting school in 2016.
Parata said spending on early childhood education has almost doubled from more than $800 million in 2007/08 to $1.5 billion in 2013/14.
But early childhood educators say the funding is failing to keep pace with rising costs and is doing nothing to improve the quality of education children are receiving.
Early Childhood Council CEO Peter Reynolds said while the non-salary part of the funding subsidy had been increased by 2.5 per cent, as salaries were the "lion's share" of costs, the increase actually equalled about 1 per cent overall.
That was below inflation, and meant pressure would fall on centres to either increase their parent fees or reduce staffing to make up costs.
"Childcare centres are falling further behind in terms of the funding input that Government gives," he said.
"It's just getting harder and harder to offer a good, quality service to parents and their children."
While he was pleased the Government was targeting some of the children most in need, it was at the cost of middle income childhood education, he said.
"That's the backbone of the system, and that's what keeps those centres going."
New Zealand Educational Institute president Judith Nowotarski described the funding announcement as underwhelming.
"It's disappointing the focus is still on participation... It's not about getting them in the door and that's the end of the matter, it's about making they get the best teachers in front of them and the best learning experiences.
"At the end of the day, community [childcare] services will continue to struggle."