The Government has paid about $2.5 million in grants and subsidies to a multi-million dollar child care company.
Documents released by the Education Ministry show Kidicorp has been paid to establish early-education centres in "high-priority" areas.
But the Greens have labelled the payouts "kickbacks" and are questioning why a company should be paid to grow its business.
The information provided by the ministry shows Kidicorp got four "Targeted Assistance for Participation" (TAP) grants totalling $1.3m in the last financial year.
The programme is aimed at setting up "new child places in communities where they are needed most". Kidicorp agreed to create 251 new places.
It received a further $1.2m under a new "relationship agreement" to increase early childhood education (ECE) participation.
The ministry said the company also invested "significant sums" to create 500 new child places in areas of low participation.
The Tauranga-based company owns centres across the country after buying out ABC Learning in 2011. It operates Topkids, Firststeps, Edukids, Early Years, Kids to Five, Montessori and Community Kindy.
Greens MP Catherine Delahunty said the company should not be receiving "corporate welfare" from the Government.
She said she would quiz Education Minister Hekia Parata about the funding in Parliament.
"Public money should not be given to businesses to make a profit out of educating kids, especially when quality not-for-profit centres like kindergartens are struggling to stay afloat," she said, adding it was an attempt by the Government to privatise education.
"We've got serious concerns about what the 'relationship agreement' with Kidicorp means, and why the National Government thinks a corporate like Kidicorp needs a $1.2m subsidy to expand its business on top of the $1.3m it got through the regular funding channels," she said.
"This just looks like the Government giving handouts to big business and undermining quality public education in the process."
Rawiri Brell, ministry deputy secretary for early learning, defended the subsidies.
The TAP programme had created 4500 new places through 118 grants, he said.
Thirty three vans operated by Kidicorp transported 500 children and the company had invested $4m, he said.
"The ministry grants provided to Kidicorp are at a significantly lower cost per child place than the average cost across the TAP programme, and represent high value for money for the ministry," he said.
Kidicorp chief operating officer Fiona Hughes said the agreement with the ministry was to provide at least 500 new child places in high-priority areas.
That meant it would establish 10 new centres, Hughes said, but the ministry funding was only a fraction of the total cost.
"The ministry has invested $1.2m for that, but that capital cost to us will be more in the vicinity of $15 to $16 million," she said.
Hughes said that under the relationship agreement, Kidicorp had already built a new childcare centre in Otara for 80 new places, 14 new child places had been added in Kaikohe and 30 new places had been opened in Whanganui.
Five other centres in high-need areas were either under construction or in the resource-consent process.
- Fairfax Media