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National proposes more childcare funding

In brief

  • Chris Luxon announced a tax rebate for early childhood education, on top of Labour’s increased support.
  • Luxon says he will save the full cost and more of the new program by reducing Government spend on consultants.

Fewer consultants for more early childhood teachers is a popular trade

Opposition leader Christopher Luxon announced National’s Family Boost policy – a 25% rebate on licensed early childhood education, up to $75 per week.

In November Jacinda Ardern announced an increase in income thresholds for childcare support to families earning up to $140,000. This comes into effect next month (1 April 2023). The threshold hadn’t changed since 2010. National’s Family Boost would be on top of this, and includes a gradually reducing rebate for families in the $140,000 to $180,000 income range.

National estimates the program will cost the taxpayer $250m per year, and plans to pay for it by saving $400m from cutting public service consultants. National says spending on consultants has jumped to $1.7b per year. They promise to reduce consultants by cutting bureaucratic restructures and working groups, directing agencies to reduce consultant spending, and requiring them to report quarterly instead of annually. When asked whether he would sack a quarter of Labour’s consultants, Luxon replied “I feel very good about that.”

ACT’s David Seymour says these cuts don’t go nearly far enough.

Social Development Minister Carmel Sepuloni criticised the policy for being less targeted to those on lower incomes. However Labour instituted 20 hours a week of free childcare for 3-4 year olds that isn’t income tested.

NZ Herald’s Thomas Coughlan called Luxon’s policy a “deep foray into Labour territory” with a speech that could “have been lifted from Ardern herself.” Many left-leaning commentators spoke in favour of the policy.

Public-funded private companies have replaced community centres

There’s concern that Family Boost would lead to childcare centres further increasing prices. Ironically this is the same criticism National levelled at Labour’s increase to the student allowance (that it would lead to increased rents). Market forces will ultimately dictate that.

Private providers have replaced community-run not-for-profit daycares, from 25% to over 60%, and smaller operators are increasingly swallowed up by large companies.

Room for improvement

Last year over 240 childcare centres were found to be in breach of licensing rules, and the chief advisor of the Office of Early Childhood Education says the Ministry of Education’s system for investigating services is “ineffective”.

The Government is currently conducting a review of the sector, and Luxon also said National would have more to say about the childcare cost structure in the future. Simon Laube, chief executive of the Early Childhood Council of private providers, says the Government needs to focus on properly funding what they already have.

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