BUDGET 2004: Landmark budget for educating young kiwi kids
Education Minister Trevor Mallard today announced a landmark package for New Zealand's youngest children and their
families through the provision of free early childhood education and significant new funding to ensure early childhood
education of the best possible quality.
The package will implement a comprehensive plan for early childhood education that will be completed by 2012.
“Our government is firmly committed to giving all young New Zealanders the opportunity to have the best possible start
in education and to develop a lifetime love for learning. Research tells us that intensive and regular early childhood
education is critical to ensuring our kids do well later in life," Trevor Mallard said.
"We are investing new funding of $365 million over the next four years in early childhood education, bringing total
annual funding by 2007-08 to approximately $660 million. Funding will increase to around $750 million annually in
"From the middle of 2007, three and four-year old children will be entitled to 20 hours free attendance per week at a
community-based early childhood education service. This is a significant step, extending the tradition of free early
childhood education from kindergartens to other community-based centres.
"This investment will make quality early childhood education available to more New Zealand children, while at the same
time keeping a lid on costs to parents.
"Budget 2004 marks the start of a new era for early childhood education in New Zealand, and is the first major change in
the funding of early childhood education since 1989.
"It is a significant foundation that we will build on as we continue to train our sights on getting more children into
early childhood education, and on delivering education that is of the best quality possible. "This major new investment
means by 2008 this government will have increased its investment in early childhood education by 79 per cent compared to
"From 1 April next year a new resourcing system will support the different ways early childhood education is provided.
It will benefit the entire sector - from community-based centres to private providers. Significant extra funding will
better support the costs of providing quality early childhood education, such as improved staff to child ratios and the
hiring of staff who have early childhood education qualifications.
"Rural early childhood education services will for the first time have a guaranteed minimum amount of funding, of either
$15,000 or $20,000 annually depending on size, to support sustainable services in our most isolated areas."
Trevor Mallard said there would also be more help with childcare costs through the Working for Families package
announced by Social Services Minister Steve Maharey today.
As part of Working for Families, childcare subsidies provided through Work and Income are being increased to make
quality early childhood education and care more affordable. From October 2004 more families will qualify for a subsidy
and subsidy rates will increase significantly.
The package includes:
An extra $307 million over four years to implement the early childhood education strategic plan which is aimed at
lifting quality of education and increasing participation; An extra $22 million over four years for an
inflation-adjusted increase to early childhood education funding rates to ensure funding keeps pace with cost increases
until the new funding system is in place; An extra $13 million over four years for programmes to help teachers better
assess children's learning ability and needs and to implement professional standards in kindergartens; and An extra $23
million over four years to increase specialist support for special needs children in the early years and to provide
better information and support for specialists, teachers and parents.
More details about the funding system, including the funding rates, will be announced later in the year as the new
funding system is rolled out.
A fact sheet giving more detail about this budget package is available on http://www.beehive.govt.nz/families
and on http://www.minedu.govt.nz/goto/ecefundingchanges
Fact sheet: Budget 2004 - Affordable, Accessible and Quality Early Childhood Education
Quality early childhood education has a dramatic impact on a child. Research shows that intensive and regular
participation in quality early childhood education delivers long-term educational benefits for children. In tota,l
Budget 2004 will see an additional $365 million spent on early childhood education over the next four years.
A new funding and regulatory system for early childhood education $307 million over four years will help make quality
early childhood education more accessible and affordable to families. It is the first instalment in delivering on
Pathways to the Future: Ngâ Huarahi Arataki – the 10-year strategic plan for early childhood education.
Free early childhood education From 1 July 2007, three and four-year-old children who attend teacher-led community-based
early childhood education services will be entitled to 20 hours free education each week. This is a first step towards
the government’s vision of low cost early childhood education for all. This will more than double the number of services
parents can go to to get free early childhood education, and opens up free education at full day community-based
services. A three or four-year-old who attends early childhood education for more than 20 hours a week will also get
government funding for another 10 hours of education a week so that they continue to receive up to 30 hours of education
subsidy a week.
Cost-drivers based funding From 1 April 2005, a completely new resourcing system will support the different ways early
childhood education is provided. Funding will continue to be paid through a subsidy based on a per-child, per-hour,
basis for up to 30 hours a week. New funding has been specifically earmarked to deliver quality - particularly to meet
the cost of lifting teacher qualifications and improving teacher:child ratios. The subsidy will be more precisely
calculated to reflect the costs of different service types. It will be linked to the major cost drivers faced by
particular types of early childhood education services.
For example, in teacher-led services funding rates will increase as the proportion of registered teachers increases. It
will benefit the entire sector - from community-based centres to private providers.
A top-up for rural services Small rural early childhood education services, both community-based and private, will
receive additional top-up funding to maintain access to quality services for parents in isolated rural communities.
This will be a two-tier annual top-up system for services with an isolation index greater than 1.65 (the same as for
equity funding). Services generating between $5,000 - $10,000 funding annually would be ‘topped-up’ to $15,000 per annum
and services generating between $10,000 - $20,000 funding annually would be ‘topped-up’ to $20,000. The top-up is an
interim measure to support rural early childhood education while the Ministry of Education carries out the review of
rural early childhood education that is signalled in the strategic plan.
Sustainability – Inflation adjustment to funding - $22 million over four years The current early childhood education
funding rates are to be inflation adjusted (a 2.4 per cent CPI increase) from 1 July 2004 to ensure that services are
compensated for the increased costs they face as reflected by inflation until the new funding system is in place.
Kindergartens will receive a total additional increase (6.55 per cent) to compensate them for the introduction of the
third stage of pay parity as well as inflation; The new per child per hour funding rates from 1 July 2004 are:
Under Twos Over Twos
Licence-Exempt (general) 1.18 1.18
Licence-Exempt (MOE) 1.15 1.15
Rate 1 5.70 2.86
Rate 2 6.51 3.26
Special Education in the Early Years - $23 million over four years Funding for early childhood special education -
$14.35 million over four years - to provide extra support for the existing numbers of high needs children and for
approximately 400 more moderate needs children. This will be approximately a 17 per cent increase in funding when fully
implemented. Improving Learning for Children with Autistic Spectrum Disorders - $5.8 million over 4 years - to increase
understanding and skills of parents, teachers, and specialist staff to support the learning of children and young people
with Autistic Spectrum Disorders. This has a focus on early intervention. Additional Positions for Resource Teachers
Vision - $1.2 million over 4 years - to increase the provision of services by RTVs across the school and ECE sectors.
Better Information to Address Barriers to Learning - $1.8 million over 4 years - to design, implement, trial and
roll-out early needs identification and co-ordinated intervention systems in ECE settings and the first three years of
Implementation of Early Childhood Education Exemplars - $12 million over four years The government is providing funding
for a programme of in-depth professional development to support the effective implementation of the early childhood
education Assessment for Learning Exemplars. The first set of Exemplars books will be distributed to all licensed and
chartered early childhood education services this year. There will be in-depth professional development for
approximately 3,500 services over five years. This provides comprehensive coverage of the sector and an annual
monitoring and evaluation of programme effectiveness.
Lifting the quality of education - teacher training targets Initial teacher education provided through centre-based
programmes is an important pathway for early childhood teachers to gain the qualifications they need to become
registered teachers. The strategic plan has a goal of having all regulated staff in teacher-led services registered by 1
January 2012. The strategic plan also signalled the need to develop a mechanism to allow services to continue to employ
staff studying for teacher registration qualifications. To do this the government has decided to create an exemption to
the 2012 goal for services employing teachers who are undertaking approved teacher education courses for teacher
registration. This will also apply to the 2010 target of 80 per cent registration. From 2012 services will be able meet
the target by having up to 30 per cent of teachers enrolled in such programmes. This change will provide services with
more flexibility in staffing, maintain the strong tradition of centre-based teacher education and ensure all staff in a
service are either registered or working towards qualifications to become registered. Kaumatua or elders who have
valuable language skills play an important role in bilingual and immersion early childhood education services. Teacher
registration requirements may make it more difficult for services to employ kaumatua or elders, as many do not have
qualifications. This issue will be discussed soon as part of the early childhood education regulatory review, with a
view to considering including language leaders in the 30 per cent group of teachers who are not registered.
Working for Families Budget 2004 also delivers more help with childcare costs through the Working for Families package.
Childcare subsidies provided through Work and Income are being increased to make quality early childhood education and
care more affordable. From October 2004 more families will qualify for a subsidy and subsidy rates will increase
significantly. New Childcare Co-ordinators are being employed by the Ministry of Social Development to help families
access the care and subsidies they are entitled to.
Questions and Answers
on Budget 2004 Early Childhood Education (ECE)
When will free education for three and four-year-olds come into force? In July 2007. The government is taking an active
approach to managing the early childhood education network, so the sector is strengthened to the level where it has the
capacity to deliver free education to as many three and four year olds as possible. It takes time to train extra staff
and to build and acquire the necessary buildings.
Who will benefit from the free early childhood education? The ECE Strategic Plan is a blueprint to lift quality of early
childhood education and make it more accessible and affordable. The government is committed to backing the plan with
additional funding. Providing funding to deliver free early childhood education for 20 hours a week for three and
four-year-olds in teacher-led community-based services is a major step towards delivering on the strategic plan.
How much free early childhood education will be available? Up to 20 hours per week for three and four year olds in
teacher-led community-based services. Research shows that intensive and regular participation in quality early childhood
education delivers the strongest benefits for children. Providing 20 hours free education a week for three and
four-year-olds in teacher-led community-based services is a major step towards providing regular and intensive early
childhood education for children.
What’s the difference between community-based and private services? The key difference is that community-based services
cannot be run for profit.
Community based services are not-for-profit services, often run by church or charity organisations, or groups of
parents. They are usually charitable trusts, community organisations or incorporated societies and include both
parent-led services (eg, playcentres, kohanga reo and playgroups) and teacher-led providers. Private services are
for-profit services and are run as companies, partnerships, sole traders or private trusts.
The teacher-led community-based services that will be funded to offer free early childhood education include all
kindergartens, and many early learning centres, pre-schools, family daycare providers, childcare centres and creches.
How much funding do kindergartens get now? Kindergartens receive $94 million a year in funding from the government.
How does Budget 2004 affect kindergartens? Funding rates will increase over time under the new funding system as the
cost drivers in kindergartens increase, for example, higher teacher:child ratios. Kindergartens will also benefit from a
6.55 per cent increase to their current subsidy to meet the latest step in pay parity and increased costs from
How does Budget 2004 affect other community-based providers? Other community-based providers include both parent-led
services (eg, playcentres, kohanga reo and playgroups) and teacher-led providers.
For teacher-led community-based providers the new funding system will better support the costs of providing quality
early childhood education. For example, a teacher-led service that offers higher quality through employing more
registered staff will receive a higher rate of funding. From 1 July 2007, three and four year-old children will have 20
hours free attendance per week at teacher-led community-based early childhood education services.
Under the new funding system, parent-led community-based providers will continue to be funded at a rate that means they
can charge low fees. Parents can choose a parent-led service as well as being able to access up to 20 hours free early
childhood education a week for their 3 or 4-year-old in a teacher-led community-based provider.
All community-based services, outside of kindergartens, will receive a 2.4 per cent increase to their current funding
rates from 1 July 2004, to compensate them for increased costs until the new early childhood education funding system is
in place in 2005.
How much funding do private early childhood education services get now? Private centres receive $151 million a year in
funding from the government.
How does Budget 2004 affect private services? The new cost-drivers based funding system will apply in the same way to
both private and community-based centres. This system will better support the costs of providing quality early childhood
education, such as improved staff to child ratios and staff who have early childhood education qualifications. For
example, any teacher-led service that offers higher quality through employing more registered staff will receive a
higher rate of funding, regardless of whether they are private or community-based.
Private services also receive a 2.4 per cent increase to their current funding rates from 1 July 2004, to compensate
them for increased costs, until the new early childhood education funding system is in place. Private centres will
receive nearly half (an estimated 47 per cent) of the $307 million extra funding.
I’m affected by these funding changes, when will I know more? The Ministry of Education will soon provide early
childhood education services with a general guide to the new funding system. This will be followed by regional meetings
with services during July and August and more detailed information later in the year. More information is available on
the new early childhood education funding system at www.minedu.govt.nz/goto/ecefundingchanges.
What is a registered teacher - how does this benefit children? A registered early childhood education teacher is a
person who holds the appropriate qualification and is registered with the New Zealand Teachers Council, just like
primary and secondary teachers. The minimum qualification requirement for registration is a Diploma of Teaching (ECE)
from a course approved by the New Zealand Teachers Council.
Research shows that teacher qualifications are a key factor in delivering quality early childhood education for
children. That's why the government has set teacher registration requirements.
What is the deadline for early childhood education centres to ensure their "persons responsible" are qualified and
registered? The deadline is 1 January 2005. The qualification requirement was established in 2000 and the changes have
been phased in over several years to give centres and home-based care networks time to respond. The teacher registration
requirement was established in the strategic plan for early childhood education.
The requirement means that a centre must have at least one "person responsible" on site at any time, who is a registered
teacher, either provisionally or full registered. The government has also introduced a number of initiatives, such as
incentive grants and the recognition of prior learning scheme, to help centres and teachers as they work towards teacher
How will new teacher trainee numbers assist in meeting teacher registration goals? The number of people studying towards
a Diploma of Teaching (ECE) or higher early childhood education qualification has increased from about 1,500 in 1999 to
over 4,000 in 2003. This will increase the number of people who hold the necessary qualification to become a registered
teacher in an early childhood education service and assist in meeting the teacher registration targets.
What are the current teacher:child ratios in early childhood education services? Teacher:child ratios set the current
minimum required number of staff needed in a centre for a particular number of children, depending on how long children
stay in a centre (ie sessional or all day) and their age. The current requirements are:
Service Type Ratios
Under 2 years old Over 2 years old
Education and Care, Kindergarten & Kohanga Reo 1:5 All day or sessional 1:10 All day
Home-based Care 1:4 (maximum of two children under two years) 1:4
Licensed Playcentre Children under 2 ½ years are with parent 1:5 (children over 2 ½ years)
Licence-exempt playgroups ½ the children have a parent present
Budget 2004 provides funding to improve the quality of education, and this will include improvements to the staff to
child ratios. The best ways of improving these ratio settings will be discussed as part of the early childhood education
regulatory review – which will be consulted on in the next few months.