24 June 2007

Scrapping 20 Hours Free ECE would cost families thousands a year

The 20 Hours Free Early Childhood Education (ECE) policy can save mums, dads and their children thousands of dollars a year, and will benefit a wide range of different families, says Education Minister, Steve Maharey.

"From this Sunday, tens of thousands of three and four year olds will be able to access 20 hours of free ECE in teacher-led centres across New Zealand.

"However, the National party's Paula Bennett made it clear on Radio New Zealand National at the weekend that they will scrap the policy, offering a measly tax deduction instead. 20 Hours Free ECE is worth up to $4500 a year for Kiwi families, but National would take this away from them.

"National's 'childcare deduction' is not available to families where only one parent is working, or to beneficiaries. It would be given to families up to a year after they pay for ECE, and requires them to hang on to all receipts and fill out copious forms.

"The Labour-led government's 20 Hours Free ECE policy will lower the cost of ECE for tens of thousands of families. It is available to all parents, regardless of their income or whether they work outside the home.

"As the attached scenarios show, some parents will save $3600 a year with 20 Hours Free ECE, which is a huge amount of extra money for a young family. National's policy would halve that saving, leaving the family with a bill of $5500 a year for ECE.

"The 20 Hours Free ECE policy marks a huge milestone in education in this country. The Labour-led government is recognising the importance of starting public education from the age of three, funding 20 hours of quality ECE.

"This is one of the most significant extensions to the education system since the rollout of free secondary education by the first Labour government in the 1930s."

Funding claims for 20 Hours Free ECE are currently being processed by the Ministry of Education, and more information about the number of children who will benefit from this policy will be released around the start date of 1 July.

Family scenarios – 20 Hours Free ECE v's National's childcare tax deduction

James – 3 years old

James goes to a full day education and care service for 8 hours a day, 3 days a week. Currently James's fees are $144 per week.

With 20 Hours Free ECE, James will:
 Receive 18 hours Free ECE
 Agree to pay an optional charge of $2 an hour for a cook and 2 extra teachers ($36 per week)
 Pay fees for remaining 6 hours of $36 per week
 James's parents will now pay $72 per week.

James parents will save $72 per week and $3,600 per year.

National's Policy
The cost of ECE for James would be $7200 a year so they would get the maximum Childcare Tax Deduction of $1650 a year (33% of $5000). The net cost of early childhood education would therefore be $5550 a year.

20 Hours Free ECE National's tax deduction Extra cost under National
Cost of ECE (a year) $3600 $5500 $1950
Saving to family (a year) $3600 $1650 Lose 54% of saving

Note:
50% of children aged 3 and 4 in teacher-led centres are enrolled at education and care centres. 23% are enrolled for 21 hours a week or more (40% of those in education and care centres.)

Sila – 4 years old

Sila goes to kindergarten for 15 hours, consisting of five 3-hour sessions a week, 40 weeks a year. Sila's father is working, and her mother is not. Currently, her parents pay a donation of $3 per session, $15 per week, $600 a year.

With 20 Hours Free ECE, Sila will:
 Pay nothing to attend kindergarten, as it will no longer collect donations
 Still help the kindergarten with fundraising from time to time.

Sila's parents will save $15 per week and $600 a year.

National's Policy
Sila's family do not qualify for a Childcare Tax Deduction because her mother is not working.

20 Hours Free ECE National's tax deduction Extra cost under National
Cost of ECE (a year) 0 $600 $600
Saving to family (a year) $600 0 $600 – lose all savings

Note: 46% of children aged 3 and 4 in teacher-led centres are enrolled at kindergartens.

ENDS

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