Investment confidence undermined by funding cut fears, says survey of early childhood centre business confidence

Fear of further Government revenue cuts is undermining the confidence of those running early childhood centres, according to a new survey.

The survey of both community and privately run centres is the first in what is to be a six-monthly survey of early childhood centre business confidence.

It portrays a sector grappling with both the revenue cuts of the Government’s last term and the widespread fear of new ones, excessive red tape, ‘unaffordable’ pay demands from teachers, and struggling parents unable to pay their fees.

The survey finds early childhood centre operators have found the going tough in the past six months, and are expecting conditions to worsen in the next 12.

Undertaken in March (2012), it finds 57% of respondents expecting operating conditions to worsen in the next 12 months. Twenty-nine per cent expected conditions to remain the same and 14% to get ‘moderately better’. No one expected things to be ‘substantially better’.

When asked to identify their ‘top threats’ to operating a successful childcare centre in the next 12 months, a ‘further decrease in Government funding’ was by far the most prominently identified threat. Other prominently identified threats included ‘state of the economy’, ‘level of Government bureaucracy’, and ‘complexity of the funding system’.

When asked to identify ‘the three key limiting factors that your centre(s) is(are) facing’, the most commonly cited factors included the inability of struggling parents to pay their fees, Government funding cuts and/or the fear of further cuts, the poor quality of some graduate teachers, increasing competition from other centres and/or home-based early childhood workers, and the demand from teachers for ‘unaffordable’ pay increases.

Twenty per cent of those surveyed said they expected to invest less in their centre (or centres) in the next 12 months, 12 % said more, and 68% ‘the same’.

This grim 12-month outlook follows a six-month period in which many of those surveyed said they had cut back on staff numbers and not invested in their centres.

Almost half said they had made ‘no investment’ in their centres in the past six months, and a quarter said they had invested ‘just on the things we had to’.

Twenty-three per cent said they had decreased the number of full-time employees while only 9% had increased numbers. Probably as a result of this, 39% said they were finding it easier to get staff, 41% ‘the same’ and only 20% ‘harder’.

The average pay increases they awarded over the past 12 months were 2.53% for teachers, and 1.58% for other staff.

Early Childhood Council CEO Peter Reynolds said the survey showed operators were both delaying the building of new centres and the improving old ones because they did not believe the revenue they received from Government was secure.

‘They know Government cut ECE revenue for many centres in their last term. They know Government wants now to invest in new centres in order to get low-income children into ECE.

‘And they believe Government is planning to pay for this by taking money from existing centres.’

The resulting uncertainty was undermining the confidence required for new investment. And the result was ‘lower quality services than we would have otherwise’, Mr Reynolds said.

The survey of early childhood centre business confidence was undertaken in March 2012 by 167 centre owners or managers responsible for running about 320 centres nationwide. Sixty-four per cent of survey respondents were from privately owned centres and 36% from community-owned centres.

Seventy-one per cent of respondents came from organisations with one centre only, and 28% from organisations with two to five centres. Two respondents came from organisations with more than ten centres.

The survey, undertaken by the Early Childhood Council, is the first in what is to be a six-monthly survey of early childhood centre business confidence.

The Early Childhood Council is the largest representative body of licensed early childhood centres in New Zealand. It has more than 1100 member centres, 38% of which are community-owned and 62% of which are commercially owned. Its members employ more than 7000 staff, and care for tens of thousands of children.

ENDS

© Scoop Media