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Funding Review, Pay Parity Increase, And Changes To Home-based Funding Conditions Confirmed For Early Learning Sector

Hon Jo Luxton

Associate Minister for Education

  • Government to provide ECE services new full pay parity rate to opt into this year
  • ECE teachers in centres opting in will receive pay increases of up to $6,850 from their current salaries
  • Funding review of the ECE funding model announced
  • Support for home-based sector with confirmation of new 20 hours funding conditions

The Government has confirmed a raft of early learning funding changes to boost teacher pay, address systemic issues in the ECE funding model, and to support the home-based sector, Associate Education Minister Jo Luxton announced today.

Pay parity increase for education and care service teachers

“A new funding rate will be introduced on December 1 to maintain full parity rates for early learning centres that choose to opt in. This will see some pay increases from current salaries of up to $6,850 for those working in a teacher role, and $7,353 for those working in a management role,” Jo Luxton said.

“This builds on the Budget 2023 pay parity initiative which introduced a third set of opt-in funding rates for education and care teachers to be paid in line with the pre-settlement kindergarten salary steps from 1 November 2023.

“New Zealand is facing a tight fiscal environment and the Government needs to be responsible in its spending. Further salary increases after December 2023 to continue to maintain parity with school and kindergarten teachers as further settlement adjustments roll out in 2024 will therefore need to be determined in future budgets. That said, the introduction of the new rate as it stands will make a big difference in the pay of many of our hardworking early learning teachers.

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“This major step follows our Government in 2020 committing to move towards pay parity for certificated teachers in ECE education and care services with their kindergarten counterparts. The extra investment of over $450 million we’re making to meet this milestone follows the $909 million our Government has already committed to pay parity over the last four budgets.”

Services will be able to opt into the new pay parity funding rate for their certificated teachers from November 1. The salary changes following on from the secondary teacher settlement will then be passed onto opted in services on December 1. Full funding rate details will be published on the Ministry of Education’s website tomorrow by 12pm.

Review of the ECE funding model

The Government is also announcing a commitment to a long term, multi-year, funding review.

“It has been clear for a long time our current ECE funding model is not serving the ECE sector well and is no longer fit for purpose,” Jo Luxton said.

“In my many conversations with the sector and in the submissions to the Pay Parity Funding Review Consultation, I’ve heard loud and clear that a funding review is something that the sector wants and knows is necessary.

“Work on determining the shape and scope of the review will be done alongside the early learning sector and will begin in the next term of government.”

Changes to 20 hours ECE funding conditions for home-based services

“In Budget 2023, the Government announced that the 20 Hours ECE subsidy will be extended to two-year-olds from 1 March 2023. This is an important initiative to help ease cost of living pressures for many parents of young children doing it tough,” Jo Luxton said.

“We recognised that home-based services faced specific issues with this change, and that is why the Government has now agreed that home-based educators may charge a nominal amount on top of the 20 Hours ECE to support their income.

“These ‘top-up payments’ for home-based educators will have limits to ensure a good balance between affordability of ECE for parents and fairness for home-based educators.

“This change will come into effect on 1 March 2024. Families eligible for the Childcare Subsidy, the Guaranteed Childcare Assistance Payment, and Early Learning Payment from the Ministry of Social Development will be able to use these subsidies to help pay this new charge,” Jo Luxton said.

Editors’ notes:

Pay parity for certificated teachers in education and care services that have opted into the scheme

  • From 1 November 2023, as part of the Budget 2023 initiative: services can opt into a new set of pay parity funding rates for their certificated teachers
  • The funding rate adjustment announced today matches the kindergarten funding rate from 1 December 2023, and the associated salary scale matches the kindergarten salary scale effective from 1 December 2023.
  • Breakdown of the pay rise from 1 December 2023
    • The minimum salaries for steps 1-6 in all parity funding bands (parity, extended parity, or full parity) increase by at least $6,000.
    • The minimum salary scale for experienced teachers (steps 7-11) and for managers increases by between $5,882 and $6,049 for extended parity funding rates.
    • The minimum salary scale for experienced teachers (steps 7-11) and for managers increases by between $6,221 and $7,353.
  • The new funding rates and salary scales are being published in the ECE funding handbook on Friday 1 September 2023 by 12pm. They will be found here.
  • The pay parity opt-in scheme addresses the disparity in pay between certificated teachers working in education and care services and hospital-based services, and their equivalents in kindergartens. More information can be found here.
  • Services will not be required to pass on pay increases specified in the Kindergarten Teachers, Head Teachers and Senior Teachers Collective Agreement applying after December 2023.

20 Hours ECE funding conditions and the new category of allowable payments for home-based services

  • Home-based services provide early childhood education (ECE) in an educator’s home, the child’s own home, or a home nominated by the child’s parent.
  • The new category of allowable payments for home-based services will include some conditions.
    • This new payment must be no more than the difference between the service pass-through and the educator’s usual hourly fee.
    • To ensure transparency for parents, home-based providers will be required from 1 March 2024 to publish their 20 Hours ECE pass-through to educators.
    • The funding conditions will be finalised and published in October 2023.
    • Parents who are eligible for the Childcare Subsidy, Guaranteed Childcare Assistance Payment, and the Early Learning Payment will be able to access these for the new payments from 1 March 2024. They will need to apply through Work and Income.
  • Home-based services will still have to adhere to the 20 Hours ECE funding conditions that were announced at Budget 2023, which will require all early childhood services opting into the scheme to:
    • set fees by the hour only, for 2- to 5-year-old children
    • publicise their hourly fees
    • provide the Ministry with fee schedule data
  • Both the new category of allowable payments for home-based services and the new 20 Hours ECE funding conditions for all services will come into effect from 1 March 2024.

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