Family budgets at breaking point

17:00, Apr 14 2012
Karen Waters and Connor, 3
BIG BILLS: Karen Waters, with Connor, 3, says childcare is her biggest cost.

Last year, when Karen Waters was paying almost $900 a fortnight for her two boys to go to childcare, she was delighted when one of them was finally old enough to attend school.

"Otherwise we would have still been trying to trudge along," the associate principal said. "It puts you in a position where there aren't any choices."

The Howick family is just one of many paying as much for daycare as it costs to send children to some of the country's elite private schools.

With the May Budget looming, the impact of funding cuts on the early childhood sector is set to become even worse, as the government looks to reallocate funds to other target groups.

Prime Minister John Key has indicated there will be no new money for a sector it cut more than $400 million from in the previous Budget. When those cuts took effect, the cost of early childhood education rose nearly 12 per cent.

"It's our biggest cost, and with other costs increasing, that didn't help," Waters said. "Children are expensive creatures."


Her experience reflects the increasing financial pressures involved in raising children, says Early Childhood Council president Maria Johnson.

A 2009 Statistics New Zealand childcare survey showed only 18 per cent of parents had to pay more than $100 a week for formal childcare education, but Johnson said that situation was now a memory.

"Parents are under huge pressure just to live," she said. "There is still a perception that it's free, but that's just not possible."

Labour introduced "20 hours free" in 2007 but National altered that to "20 hours ECE", a change that meant the scheme paid for only the minimum, for example, a ratio of one teacher to 10 children. Providers opting to offer more could charge "optional fees".

A recent Organisation for Economic Co-operation and Development study found New Zealanders spent 28 per cent of their income on childcare – the fourth-highest out of 32 industrialised counties, at a time when the $550 median weekly income had been static over the past five years.

Johnson, who owns a Wellington childcare business, said families responded by cutting the hours their children attended, or pulling them out altogether and having one partner quit work to stay home.

"It's not a small issue, it has far-reaching implications."

Waiting lists were also a thing of the past, Johnson said.

Last year's Gluckman Report on adolescence recommended early childhood education should be "near universal". The government has talked of increasing participation in the sector to 98 per cent by targeting underprivileged families.

Auckland's Penguins School of Early Learning owner Theresa Dodd said that was a noble goal, but with no new money available, middle-income households would have to foot the bill. "Something has to give. Some families have moved to Australia, some are reducing their hours, others have pulled out completely."

She said the government's goal was likely to push out middle-income families, so overall participation rates would not change.

Waikato University Early Childhood Education associate professor Linda Mitchell said the growing private childcare industry was not blameless either.

She said when 20 hours free came in, some providers required parents to enrol their children in hours that fell outside the 20 hours free.

"So, in fact, there were no benefits at all to parents. Some have done it and are still doing it."

Her colleague, Margaret Clark, said that as costs increased, the quality of childcare was diminishing as centres looked to cut qualified staff to be eligible for government funding. Centres also cut back on professional development.

To make sure her 3-year-old son could continue going to childcare three days a week, Megan Watson made cuts too. "You don't go out, that's the first thing," she said. "Then you are looking at what you are eating, and making sure you don't make your costs more than you need."

She has looked to increase her work hours but admits it is a balancing act between deciding whether to work more to be able to afford more childcare, or not work at all and keep her son at home. "I have a lot of friends in that position too."

Labour's early childhood education spokesperson, Sue Moroney, said further cost increases were inevitable. "More and more the costs of childhood education are being put on to parents. It will be a blow to families."


All 3, 4 and 5-year-old children are able to go to early childhood education (ECE) services for six hours a day, 20 hours a week, at no charge. You can choose any hours your child is enrolled to attend. ECE services can't charge fees for the 20 ECE hours, but can charge for your child's other enrolled hours.

ECE services may request optional charges for additional features above regulation. You can choose whether or not to pay these. ECE services cannot refuse your child 20 hours' ECE if you don't agree to pay optional charges.

Sunday Star Times