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What is happening now?

The Ministry of Education subsidises ECE through two main subsidies: the ECE Subsidy and the 20 Hours ECE subsidy.  Both subsidies are intended to reduce the cost of ECE for parents and to support the delivery of quality education and care.  The ECE Subsidy is a partial subsidy for all children aged 0-5, while the 20 Hours ECE subsidy covers the full average cost for children aged 3-5. 

Information from 2013 indicates that Government covers approximately 80% of the cost of ECE across all service types and parents cover 20% of the cost.  However, in home-based services parents are covering around 40% of the cost.[8]

Following discussion with parts of the sector, we have found that some home-based providers retain the ECE subsidy in full, with no part of it passed on to the educator.  Where this is the case, the educator’s income only comes from parent fees.  Services generally pass on a portion of the 20 Hours ECE funding to the educator.  However, the amount passed on is sometimes lower than the hourly rate that educators usually charge parents.  Where this is the case, educators often request a parent ‘top up’. 

All services that have been in operation for a full financial year are required to provide the Ministry of Education with copies of their audited financial reports.  Community-based services are required to provide a relatively detailed report.  Privately-owned services can choose to submit a report that provides a high level breakdown on how they have spent funding from the Ministry of Education, with no information on income from other sources. 

Why is it a problem?

In some cases, parents may be bearing most of the cost of home-based ECE for their children under the age of three, and may be being charged for 20 Hours ECE.  This situation may occur because parents are unaware of the government funding providers are receiving for their children. 

Government lacks oversight on how much parents are contributing and how service providers are using funding.  This limits the ability of Government to monitor whether government funding is being used as intended.  For example, the annual financial reports for private services have broad categories that do not provide oversight of educator wages or coordinator salaries.  Because the annual financial reports exclude parent contributions, the Ministry lacks information on the extent to which government funding covers the cost of ECE. 

What changes are we proposing and why?

  • Make funding conditional on services disclosing to parents the level of government subsidy funding each child attracts as part of invoicing, including the Childcare Subsidy and OSCAR subsidies paid in addition to Ministry of Education ECE funding.

This would ensure that services are providing full and correct information to parents about how much subsidy funding their child attracts.  This may help parents make informed decisions about their child’s ECE.

  • Require services to publish information on government subsidies based on examples of an average child. 

This would help potential users of home-based ECE make informed decisions about their child’s ECE. 

  • Require all services (whether community-based or private) to report on income and expenditure per licence, with additional prescribed categories on expenditure and income. 

This would give the Ministry more information about the costs faced by home-based ECE services.  It would also will give more information, for example, about the proportion of income spent on educator wages and professional development.

What we would like from you

We are seeking your views on the proposed options to increase transparency of funding.  In particular, we are interested in hearing from:

Parents

What is your experience with fees charged by home-based ECE providers?  Does your home-based ECE provider give you information about the Government funding it receives?

Service Providers

How do you currently inform parents of ECE subsidies?

How would your service adapt to meet additional financial reporting requirements?

 


[8] This information is drawn from the 2013 Survey of Income, Expenditure and Fees.