20 Hours ECE – It’s Not Free

The Government’s Budget announcement to expand the 20 Hours early childhood education and care policy to include two-year-olds will see $1.2 billion in funding injected into the early learning sector. While we’re all for showcasing the important role that early learning plays in setting strong foundations for life, it is necessary for the sector to be actively involved and consulted with as a part of any new policy or change. There is a cost to 20 Hours ECE, so branding it as ‘FREE’ to parents is not only misleading, but also unfair to providers and educators who are struggling to understand how they can close the gap between what is funded and the cost of delivery.

While extending the 20 Hours policy to include two-year-olds will promote greater access and participation in early learning, it does not address the fundamental issues that face providers who are being forced to do more with less. It adds to unnecessary red tape and bureaucracy associated with 20 hours enrolments, creating an additional administrative burden and layering more compliance requirements on educators and teachers in an environment that is already over-regulated and under-funded. Many providers and educators will be forced to increase fees for under two-year-old enrolments, reduce spend on quality programme initiatives, or close their service altogether if this proposed policy goes ahead in its current form. The additional funding rate increase of 4.6% that accompanies the 20 Hours expansion announcement does not adequately cover the inflationary pressures that service providers face, let alone contribute to the actual cost of delivery for 20 Hours ECE enrolments. The Ministry of Education also state that the increase in the rate of the subsidy will come with ‘new funding conditions’ that will apply to enrolments for both two-year-olds, and also three to five-year-olds. This has significant impacts for every early learning provider across the country.

The home-based early learning service type was once lauded as the fastest growing service type in the sector. As an alternative to centre-based early learning options, educators work from their own home, or the family’s home, with up to four pre-school children in care at any one time. Home-based is known for its small ratios, it’s authentic environments and the one-on-one attachment relationships that are enabled through a primary care model. There is a strong evidence base that supports home-based early learning as being incomparable in terms of the long-term benefits it fosters by focusing small groups and responsive, reciprocal relationships. Creating more policy that prevents educators from being able to earn a sustainable living from the incredibly important work that they do just serves to undermine the sector and erode the intentions of creating better quality conditions and increased pay for educators.

Educators who work in the home-based early learning sector are self-employed contractors, with parents paying fees directly to them for the childcare and education they receive. The 20 Hours Policy is already fraught with issues for home-based educators, as the funding that is passed through for the delivery of care does not generally come anywhere close to covering the cost associated with delivery. This means that if educators do not request a donation or optional charge from families, they are largely unable to deliver a viable service. Most educators receive pass-through funding of between $5 and $6 per hour for 20 Hours enrolments from their service provider. In contrast to this, most qualified educators have hourly rates for non-20 Hours enrolments that are more than $7 per hour, resulting in a shortfall between the funding received for this initiative and the actual cost of delivery.

Extending this policy to include 2-year-olds and referring to it as ‘FREE’ childcare, creates an unsustainable environment and expectation for many educators and providers in the sector as there simply isn’t enough funding to be able to deliver on this promise. It also does nothing to support growth in the sector and enable higher quality provision by providing a viable pathway for qualified educators and teachers to work from home. There is important work to be done to attract more high quality educators and teachers to the sector to meet ongoing family demand. The extension of the 20 Hours ECE policy will be counter-productive to achieving this as it restricts educators’ earning ability.

The sector is tired. It is grappling with yet another new policy that will have a serious impact on the ability for providers to be able to meet demand while also being able to deliver on quality provision. The extension of the 20 Hours initiative involves more comprehensive understanding – and support - of the diverse services that make up the fabric of early learning in Aotearoa. There must be a way that all early learning services can be supported to make early education and care more accessible to families, while also delivering on indicators of high quality and holding our children – and the importance of their early experiences – at the heart of the matter.

Early learning services are still waiting to receive the detail behind this policy, and this presents an opportunity for Government to actively consult with the sector to understand how to best implement a childcare funding policy that will be a win/win for both families and service providers.

Early learning requires investment that is targeted and thoughtful, that strengthens the commitment made by Government across all early learning priority areas, and that celebrates and supports the diversity of the sector. Our children and educators deserve it.

Home-Based Educator Survey Findings

A sector-wide survey was recently conducted with almost 300 home-based educators across the country in response to the Government’s announcement around extending the 20 Hours ECE Policy to include two-year-olds.

The survey responses showed that more than 74% of educators believed that the current 20 Hours Policy is unclear to families, despite service providers’ best attempts to communicate the cost of the scheme.

When asked about their normal hourly rates (for enrolments outside of 20 Hours), 63% have an hourly rate of more than $7 per child, with some charging more than $15 per hour, per child. Many of these educators are qualified in early learning with significant experience. 76% of the educators surveyed already request a donation or optional charge from families who are accessing 20 Hours funding to support them to cover the actual cost of delivering their education and care service. An additional 12% said they don’t currently ask for a donation or optional charge for these hours, but would intend to if the 20 Hours policy is extended to include 2-year-olds.

“In order to meet even something close to minimum wage, I would need a donation. It’s not sustainable otherwise. I am a fully registered and qualified teacher. Want to keep good teachers? Rethink things around the wording of ‘free’ 20 Hours. It should be subsidised, not free.” – Educator

“My families think that educators get paid our full rate for 20 “free” hours. Upon hearing about the 20 ECE hours for two year olds, I even had one family tell me I should raise my rates. I couldn’t work out why until it clicked that they assumed we get paid our full rate." – Educator

“Families are expecting to have to pay nothing, so a great win for them… but they don’t see the additional cost unless it’s explained – we are getting pay decreased.” - Educator

This clearly shows that home-based service types just aren’t funded enough to cover the cost of care, particularly for 20 Hours ECE enrolments. There is a revenue shortfall for most educators, and this is something that they must be prepared to cover if families opt out of paying a donation or optional charge. The irony here is that educators will no longer be able to set their own rate under the extended 20 Hours Policy, this rate will be set for them as a result of the funding pass-through from their service provider and not being able to request any additional parent fees for these hours. This makes it incredibly difficult for educators to predict their income and be able to budget accordingly. It is yet another example of home-based services being required to fit into the mould created for centre-based counterparts, without consideration for its own unique operating model.

"I am the main income provider in my home, and this would be a huge drop in my current income, which is already stretched as far as it can go. I love my job and I love my care families, but I would have to make a financial decision based on the loss of income and look for work elsewhere. This change would take me to below minimum wage which is just unfair on my own family for the amount of blood, sweat and tears I put in.

73% of educators surveyed feel concerned about 20 Hours being extended to include two-year-olds. Many of them commented on how worried they felt for their service providers and their ability to remain open. There was an overwhelming indication from surveyed educators that they did not feel like this policy has been thought through and it would have a lot of unintended consequences. Educators reiterated the need they have to be able to request a donation or optional charge for their services to remain viable. If this is removed as an option as a part of the review of 20 Hours conditions, delivering home-based services will no longer be viable for educators.

“Why would anyone work for $5.00 per hour in these times?! It makes me so angry...as educators we put so much time and effort into our care children. We are also passionate about our tamariki and pay for so much out of our own pockets. If only the broken education system could really see how important home-based childcare really is! A job in McDonald's is looking pretty good right now.” - Educator

“As an in-home educator, if I did not ask for the additional donation, my income would take a substantial drop. My income is relying on only the four children I have in my care at any one time and I could have all four families using the 20 Hours ECE.” – Educator

"Come March next year, if families aren’t prepared to help support the care and education of their child in niche home-based care and education services, I will sadly make the choice to remove myself from the education sector and change careers." - Educator

"Home-based childcare is such an important and worthwhile early childhood education option for children and their parents. Decisions around 20 ECE hours will make a big impact on this sector and we need to be able to carry on with offering home-based care. Please, please make decisions that support us rather than make it harder and impossible for our little home-based environments to survive." - Educator

Erin Maloney is the Founding Director of Tiny Nation, one of the largest home-based learning providers licensed by the Ministry of Education. With 15 services operating nationally, Tiny Nation partners with qualified and experienced educators to ensure high quality early learning experiences for children and families.

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