Source: Radio New Zealand
123RF
Some parents returning to work are facing childcare bills of $15,000 or $20,000 a year, and the industry is warning bills could rise.
Stephanie Pow, founder of Crayon, which helps employers with staff wellbeing, particularly around support for parents, said the cost of childcare and early childhood education was a big pressure point for a lot of families.
“It’s equivalent almost to private school fees. A lot of them are parents who would not otherwise be putting their kids in private school. And that’s per child, so if you have twins or you have two or more young children, it multiplies from there. When you look at the OED data, New Zealand is one of the least affordable countries in the world for childcare as a percentage of income.”
She said two parents earning full-time average wages in New Zealand with two children in full-time daycare would spend more than a third of their income just on childcare.
Data from the Household Economic Survey shows that the average cost of early childhood education has risen from $25.71 a week in 2007 to $85.18 in 2013, $95.45 in 2019 and $90.62 in 2023.
Between the March 2025 quarter and December 2025, early childhood education costs increased by 2.5 percent.
Family Boost payments took effect in July 2024, which contributed costs falling 22.8 percent through the same period a year earlier.
Family Boost covers 40 percent of a household’s childcare cost, up to $1560 for households earning up to $35,000 a quarter.
Households with income between $35,000 and $57,286 a quarter an claim either 40 percent of their ECE fees or the maximum $1560 minus 7c for every dollar earned over $35,000 – whichever is less.
Centres are also funded through the 20 Hours ECE scheme, which provides a subsidy for up to 20 hours a week of childcare, at six hours a day. Some centres offer 30 hours using other subsidies.
Costs vary
The Office of Early Childhood Education, an advisory body for the sector, said home-based education fees could range from $5 an hour to $12 or more.
Playcentres were the most affordable. Kindergartens received more money under the 20 hours scheme and could charge as little as $3 per hour for care beyond that, it said.
Most other centres charged $5 to $8 an hour for children not receiving 20 hours funding.
Amanda White, a researcher at the NZ Council for Education REsearch, said the cost could differ a lot.
“Sadly this variation does exist, and can be very costly for some parents and whānau. High quality ECE should be a public good for all children to access. A higher cost does not in any way reflect the quality of education children receive in a particular centre – there is no evidence that private centres offer better education/care than non-profit ECEs like community-based and kindergartens.
“Teacher qualifications, teacher-child ratios and group size are critical factors in terms of ECE quality.”
Fee warning
But the Early Childhood Council, which represents operators, said if changes were not made, the costs were likely to increase, or more centres would close.
It said 443 closed between March 2022 and July 2025 as pay parity requirements and “sustained underfunding” affected the sector.
The Government established a Ministerial Advisory Group in June to review funding for early learning. A paper as part of the review noted that the intention of the 20 hours scheme was for regular reviews to adjust funding to reflect increases in the cost of providing care.
“Many EE service providers say that the funding received for the 20 hours free does not cover the cost of delivering the service. While this may be correct, it is largely anecdotal.”
Services can require kids to attend more than 20 hours and charge for the additional hours, as well as asking for top-up payments.
Early Childhood Council chief executive Simon Laube said since 2019 there had been an 11.5 percent gap between the cost adjustments of the subsidy and inflation.
“We’re saying to the government that they need to, to try and just keep the lights on, put a bit more money into the system.
“If they don’t put in a significant cost adjustment this budget it’s going to lead to either parents having to pick up some of the rising costs through increased fees or more providers are going to fail.
“Our view is yes you can always afford to lose a few centres, overall there are thousands of centres in New Zealand… but the trend has kind of turned and we are losing more centres than we are opening… it’s not really in the interests of parents to lose these options.”
He said because centres were funded on a demand basis, they were sensitive to things like changes in the job market that could mean more parents staying home.
“If you’re putting up your fees, anyone who can do that should have already done that… so now you’re in the real crunchy period where every time you put up fees you’re going to lose enrolments.
“Every time you do it you’re just going to trigger a demand change because they don’t have the ability to pay.”
He said the funding review needed to consider centres’ ability to pay higher salaries. “The Government funding doesn’t actually try to keep up, it’s just set at a certain rate and it never increases. Whereas the obligation we’ve got is that every single teacher moves up an increment every year. Some of those increments are 7 percent between steps once you’re on the scheme.. there’s a real pressure on providers to increase fees just so they can retain their teachers.”
He said the government’s review was a good opportunity to address the problems and find a solution. “But solutions take time and changes to the funding system will take years to design and implement… I can’t just go ‘oh you know, it’ll be okay in the future’. Providers today need a bit of help just to keep the lights on.”
Some centres are making the numbers work, however. It was reported in 2024 that childcare cahrity Best Start made a profit of $32 million in 2023.
Occupany questions
Pow said parents were already finding it tricky to find care in some places.
“When we’re coaching parents we often tell them they should look into it 12 months or more before they intend to put their child into care because it can be so difficult to ge ta spot. There are a lot of wait lists and you don’t want to be in a position where you return to work and you haven’t secured childcare or weren’t able to get your first preference.”
Laube said centres had the highest occupancy in areas like Canterbury, where they could be up to 80 percent full.
“Whereas Auckland, you know, if you talk to the providers, they think that there are too many providers in Auckland. But that’s not really what the data is showing. The data is showing there are, you know, thousands of children up in Auckland who don’t even participate…Auckland’s challenge is something that we’re really trying to drill into.”
Otago University economist Murat Ungor said it was something that the country should address.
“ECE plays a critical role in human capital development. The World Bank notes that the first five years of life are the fastest period of human growth and development, with around 90 percent of brain development occurring by age five. Investing in these early years helps break cycles of poverty, reduce inequality, and boost long-term productivity.
“Recent UNICEF reports rank New Zealand fourth lowest out of 36 OECD and EU countries for child wellbeing, and lowest for mental wellbeing specifically. These statistics show the urgent need to prioritise early investment in the health, education, and wellbeing of New Zealand children.
“Today’s children are tomorrow’s labour force, so by investing more in our children, we will have a healthier and more skilled labour force and thus, a more productive Aotearoa.”
What are parents paying for childcare?
Khandallah Nursery School: One child, 8am to 4.30pm five days a week: $452.40
Chelsea House, Raumati Beach: One child, 35 hours a week: $150
University Kids Fairlee Terrace:: Two children, 28 hours a week: $474.64
Krafty Kidz, Ranui, Auckland: One child, four days a week: $105
High Five Early Education Centre, Hataitai: One child, 8.30am to 5.30pm five days: $275
Busy Bees Westgate: One child, 26 hours a week: $236.60
Little Minds, Whalers Gate, New Plymouth:: Two children, 28 hours a week: $584 a fortnight
Kindercare Belmont: One child, three half days: $218 a week
Busy Bees Daycare, Dargaville: One child, 35 hours a week: $136.50 a week
Royal Oak Childcare Centre, Auckland: One child, 9.5 hours a week: $115
Grey Lynn Kindergarten: One child, two full days: Free
BestStart Ponsonby: One child, 37 hours a week: $254
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
