Green Party election priority

2

Summary ............................................................................................. 2

Situation .............................................................................................. 5

Solution ............................................................................................... 8

Benefits ............................................................................................. 13

Authorised by Jon Field, Level 2, 17 Garrett Street, Wellington.

3

1. The Green Party will extend the 20 Hours free early childhood education subsidy to cover two-year-olds, at an initial cost of $297 million, rising to $367 million in four years’ time. As the benefits of this successful scheme are opened up to at least another 40,000 children, more kids will get a good start in life and the burdens on their families will be eased.

2. The Green Party will also provide $32 million a year to restore funding for 100% qualified teachers, as part of an ambitious plan to boost the quality of early childhood education and make sure every child gets the right care and support.

The first years of a child’s life are crucial. Their brains are developing

rapidly and their personalities are being shaped in ways that will determine

their happiness and well-being for the rest of their lives. But these early

years can also be the most stressful for their parents, as they balance the

demands of raising young children with the need to be back in the

workforce. And in doing so, they face very high childcare costs.

All this makes subsidising early childhood education (ECE) one of the most

powerful and effective forms of investment we can make in our children

and their future success. And we all benefit: for every dollar spent now on

ECE, society saves anywhere between $3 and $16 down the track.1

Subsiding high-quality ECE is a powerful equaliser, helping compensate for

the harder start in life that many children face, and making a bigger

difference to low-income families. It also smooths the path for families that

have both parents in work because they cannot afford to have one at home

fulltime with their child. According to a 2010 OECD study, New Zealand

working families pay 28 per cent of their net income on childcare - the

fourth highest percentage of family income in the group of 32 industrialised

nations belonging to the organisation. Extending ECE subsidies addresses a

shortfall in the support provided to some young families. Paid parental

leave, for some families at least, helps those with very young children, and

children aged under two get significant ECE subsidies. Children aged three

to five, meanwhile, benefit from the flagship 20 Hours ECE policy. But two-

year-olds receive relatively little support.

1 An Agenda for Amazing Children: Final Report of the ECE Taskforce, Part One, June 2011,

Wellington, p21.

4

Widening the 20 Hours pledge to cover two-year-olds therefore plugs a

major gap in our system of support for young families. Strengthening the

quality of that support ensures it will provide lasting benefits to children.

Extending the benefits of high-quality ECE to children in their most

formative years therefore marks a major step towards a comprehensive

and joined-up ‘from cradle to 18’ system of support for our nation’s next

generation.

- Metiria Turei

Metiria Turei GREEN PARTY CO-LEADER

Contact: Metiria.Turei@parliament.govt.nz

5

The system of family support has a big gap for parents of

two-year-olds. Many parents of younger children benefit

from paid parental leave, the parental tax credit or other

forms of support (even if these schemes are too short and

discriminate against beneficiaries). Children under two also

attract generous ECE subsidies of $12 per hour.2

Once children reach three, they become eligible for high levels of ECE

subsidies. New Zealand spent $1.64 billion on ECE in 2012, up from $540

million in 2002.3 The bulk of this spending, some $800 million, goes on the

20 Hours guarantee, which provides extra subsidies to ECE providers that

offer 20 hours of nominally free ECE per week to parents of three to five-

year-olds. Around 60,000 three-year-olds and 60,000 four-year-olds are

enrolled in ECE.4

The standard subsidy for two-year-olds, however, is $6.70 per hour,

around half the rate for children under two.5 Work and Income provides

support to families with younger children through the Childcare Subsidy

Scheme (CCS), which operates independently of the 20 Hours policy. But

the CCS is highly targeted according to work hours, family size and income.

It is normally available for a maximum of nine hours of ECE a week.6 The

subsidy also has to be applied for rather than being available as standard,

meaning take-up is likely to be poor and the support is delivered

inefficiently.7

2 Ministry of Education, ‘Early Childhood Education Handbook’, Appendix One, available

at:http://www.lead.ece.govt.nz/~/media/Educate/Files/Reference%20Downloads/Lead/Files/Funding/FundingHandbook/AppendixOne2014FundingRates.pdf (accessed 14 July 2014). 3 Gilling, Don, 'The Financial Parameters of extending the 20 Hours entitlement to two-

year-olds', research report for the Green Party, July 2014. 4 New Zealand government, ‘Participation in Early Childhood Education’, available at:

http://www.educationcounts.govt.nz/statistics/ece2/ece-indicators/1923 (accessed 2 July 2014). 5 Ministry of Education, ibid.

6 Work and Income, ‘Childcare Subsidies’, available at

http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/extra_help_information/childcare_assistance_tables/childcare_subsidy_income_limits_and_rates.htm (access 3 July 2014). 7 Wellington Kindergartens, personal communication, July 2014.

6

Despite this relatively low level of subsidy, around 40,000 two-year-olds are

enrolled in ECE, significantly more than a decade ago.8 This reflects the

fact that many parents either want or have to return to work once their

children are two years old (or indeed earlier). In two-parent families,

having both parents in work is increasingly the norm.9 In addition, a

number of parents will be studying or want to be studying. Two-year-olds

in ECE are typically placed there for around 21 hours a week, the same as

for three to five-year-olds.10

Being able to have their child in high-quality ECE makes it easier for

parents to resolve the competing demands of home life, transport and work

or study.11 However, the childcare fees parents face can be very high. At

an average of $9.55 an hour (based on 2011 data), parents would be

paying on average $200 a week for 20 hours childcare, or $400 a week full-

time, creating a major financial strain and reducing the extent to which

work actually pays.12 Subsidising that care, through extending the 20 Hours

scheme, is essential to ease the burden on those families.

There are, however, financial issues with the 20 Hours scheme as it

currently applies to three to five-year-olds. In many cases parents are

unable to access truly free ECE because centres require extra ‘donations’ or

insist that parents enrol their children for more than 20 hours.

As well as financial problems, there are issues with the quality of ECE

services, including undesirably high child-to-teacher ratios, limited

professional development for teachers, and the Government’s decision to

only fund ECE centres to have 80 percent qualified teachers. These issues

limit the benefits that children will derive from being in ECE. Indeed, the

8 New Zealand government, ‘Participation in Early Childhood Education’, available at:

http://www.educationcounts.govt.nz/statistics/ece2/ece-indicators/1923 (accessed 2 July 2014). 9 Around two of every three two-parent families were dual-earner families from 2007 to

2013, up from one in two in the early 1980s. Perry, Bryan, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013, Ministry of Social Development, Wellington, July 2014, p15. 10

Gilling, Don, ibid. 11

http://www.neon.org.nz/documents/p67_ece.pdf 12

New Zealand government, '2011 Survey of Income, Expenditure and Fees of Early Childhood Education Providers in New Zealand', available at: http://www.educationcounts.govt.nz/publications/ECE/income-expenditure-and-fees-of-ece-providers-in-new-zealand (accessed 9 July 2014).

7

evidence is that being in poor-quality ECE has a negative effect on

children’s development.13

13

Ministry of Womens Affairs, ‘Influences of Maternal Employment and Early Childhood Education on Young Children’s Cognitive and Behavioural Outcomes’, Wellington, 2004, p20.

8

The Green Party will extend the 20 Hours scheme to two-

year-olds, helping at least 40,000 extra children – and

probably significantly more. Modelling shows that an extra

30 percent or 12,000 children could eventually be enrolled,

taking the total to over 50,000. As with the current 20

Hours scheme, the extension will be available to all ECE

centres that choose to provide it, whether kindergartens,

private centres, Playcentres or kohanga reo.

The administration of the scheme will be relatively straightforward, as it

simply extends an existing policy. Parents of two-year-olds will only need to

fill out an enrolment agreement, as they currently do for three to five-year-

olds, to ensure that their ECE centre receives the subsidy for their child.

And to help centres with the change to providing 20 hours for two-year-

olds, the Green Party will provide $10 million in transitional funding, to be

allocated in consultation with the sector.

This extension will make a huge difference to the lives of parents juggling

work, study and childcare. But to ensure that children get the full benefit

from the extension, the Green Party will accompany it with an ambitious

plan to further raise the quality of ECE services.

Key policies to improve quality include having more qualified teachers,

lowering staff-child ratios and group sizes, and improving professional

development opportunities. As a starting point, the Green Party will restore

funding (scrapped by this Government) to centres to employ 100 percent

qualified staff, rather than just 80 percent as at present. (Centres, such as

kindergartens, that continue to employ 100 percent qualified teachers have

to bear the cost of having the remaining 20 percent be qualified.)

There are clear benefits to having 100 percent qualified teachers, because

only a fully trained teacher can respond to the variety of learning and

developmental needs that different children have, and bring to bear the full

range of the profession’s knowledge, skills and strategies for working with

children. Recent evidence shows that having 100 percent qualified teachers

9

makes a “significant” difference to children's learning – and even their

success in later life.14

As well as making it easier for centres to voluntarily lift their qualified

staffing levels, the Green Party will also raise the mandatory level for

qualified staff. Currently, the mandatory level is just 50 percent, so half of

all staff in a centre can be unqualified. There is widespread opinion that

this level is too low, and indeed the average level is already over 70

percent. The Green Party will therefore look to make having 80 percent

staff qualified mandatory by 2016, subject to government finances. In

Government we will also consider other incentives for centres to raise

quality. And we will re-start the inquiry, halted by the current Government,

into widespread problems with the quality of home-based ECE services.

The Green Party supports a more joined-up approach to the ECE sector. To

that end, we will be willing to work with the Labour Party on ideas for

encouraging centres to become part of a public ECE system. We will also

ensure that new ECE centres can be set up only where a network review

showed a genuine need for a new centre in that area, so as to ensure ECE

subsidies are spent in the most efficient manner possible.

A range of other issues affect the quality and availability of ECE provision,

but are beyond the scope of this policy. In Government, the Green Party

will establish a ministerial review committee to examine these issues, which

could include staff-child ratios and group sizes, the costs to parents of the

current 20 Hours scheme, the ways in which parents can split up the 20

hours, and the opportunities for ECE teacher professional development.

The extension of the 20 Hours guarantee will build on existing Green Party

policy to construct at least 20 new ECE centres onsite at low-decile primary

schools, and develop a long-term plan for onsite ECE in more schools. This

targeted assistance complements the universal nature of the 20 Hours

extension.

14

Meade et al, cited in May, Helen, ‘New Zealand: A narrative of shifting policy directions for early childhood education and care', in Gambaro et al, An Equal Start? Providing quality early education and care for disadvantaged children, Policy Press, Bristol, 2014, p160.

10

1. The Costs

The total cost of this policy is $297 million in the first year, rising to $367

million in four years’ time.

This is made up of

1. $255 million for extending the 20 hours ECE subsidy in the first

year, rising to $335 million over 4 years due to increased

enrolments.

2. $32 million a year over 4 years to restore 100 percent qualified

teachers. 15

3. $10 million as a one off transition cost to assist the sector in the

first year.

In 2012-13, the Government spent $805 million on 20 Hours ECE, to cover

125,400 enrolments of three to five-year-olds.16 In the same period, the

number of two-year-olds enrolled was 39,900.

Extrapolating the data on the 20 Hours subsidy available to 3 and 4 year

olds, and extending it to cover the 39,900 two-year-olds in ECE, assuming

the same subsidy rates, will therefore cost approximately $255 million in

the first year.

With the extension of 20 Hours, the increase in ECE enrolments is likely to

be in the order of 30 percent over a period of several years, based on past

experience and projected enrolment increases. This will over time add an

estimated $80 million to the cost of the policy over four years, taking the

cost in the fourth year to $335 million (the one off $10 million transition

cost is deducted from the baseline cost after year 1).

We have budgeted for the full cost of the additional 20 Hours subsidy, and

have not factored in significant savings that will be made from not having

to pay the current amount of Childcare Subsidy (CCS) to two-year-olds

whose parents choose to participate in 20 Hours, rather than access the

current childcare subsidy.

15

Labour Party, ‘Fact Sheet - Best Start Fiscal Impact’, January 2014, available at: https://www.labour.org.nz/beststart (accessed 9 July 2014). 16

New Zealand government, ‘Public expenditure on early childhood education (ECE)’, available at:http://www.educationcounts.govt.nz/statistics/ece2/ece-indicators/public-expenditure-on-early-childhood-education-ece (accessed 3 July 2014).

11

The CCS is at the moment available through Work and Income. As is the

case with three and four year olds, parents and caregivers will be able to

choose between receiving CCS or 20 Hours ECE or, in some cases, a

combination of both payments.

Due to a lack of information from the Government about the exact amount

of CCS provided to 2 year olds in ECE we have not been able to adequately

calculate the full savings.

A significant reduction in CCS payments is likely to offset the overall cost of

this policy by tens of millions of dollars, therefore the overall costs will be

able to be revised down once we have that additional information.

It is not anticipated that increased demand for ECE will require significant

additional spending on teacher training, given that large numbers of ECE

staff were already trained in anticipation of the 100 percent qualified

teachers policy being maintained.

12

How early should 20 Hours ECE Go?

The Green Party's decision to extend the 20 Hours subsidy to two-year-olds, but no further, is based on practical and financial reasons.

On a practical level, two-year-olds are largely treated the same as three to five-year-olds in policy terms: they are expected to have the

same teacher to children ratios, for instance. In contrast, ECE centres are expected to provide different teacher to children ratios for children

aged under two, and a range of other policy settings are different for

those children.17 Extending the 20 Hours subsidy for children aged under two would therefore add significant administrative complexity

to a sector already dealing with major change.

On a financial level, extending the subsidy to children aged under two would likely be extremely costly, especially given the ratio issues

mentioned above. The Green Party is committed to managing

government spending within reasonable limits.

Extending ECE subsidies also raises the question of whether children should spend their earliest years at home with their parents or in ECE.

The Green Party believes that parents are best qualified to make the

crucial decisions that concern their children. We absolutely support those parents who decide that the best place for their young children

is with them, at home. It is not, however, the role of politicians to make judgements about these kinds of decisions that families make,

especially when the evidence suggests that it is the quality of ECE, not the time spent in it, that determines its effect on children’s

development.18 In extending subsidies to two-year-olds, the Green

Party is simply responding to the reality of parents' lives, which is that very large numbers of them are already enrolling their two-year-olds

in ECE, but struggling with the financial burden that imposes. These families need immediate and practical support, and extending ECE

subsidies is the simplest and most effective means of providing it.

17

Parliamentary Counsel Office, ‘Education (Early Childhood Services) Regulations 2008’, available at: http://www.legislation.govt.nz/regulation/public/2008/0204/latest/DLM3902730.html?search=ts_regulation_education+2008_noresel&p=1 (accessed 3 July 2014). 18

See, for instance, Zachrisson, H. D., Dearing, E., Lekhal, R. and Toppelberg, C. O. ‘Little Evidence That Time in Child Care Causes Externalizing Problems During Early Childhood in Norway’, Child Development, 2013, 84: 1152–1170.

13

The benefits of extending 20 Hours to two-year-olds will be

significant for both families and their children.

Families with young children will benefit from a major increase in

government support, one that allows them to move back into work or study

knowing that they will be better off financially from doing so and that their

children will be well looked after. The financial burden on families will be

significantly eased, especially in households where both parents need to

work. This is increasingly the reality for families, especially as wages

continue to lag behind general economic growth and it remains difficult for

families to support themselves on a single income.

The first years of a child’s life are crucial for their future happiness and well-being.

The 20 Hours policy is already very popular among families, and as a well-

recognised scheme will have high take-up. Being universal and simple to

administer, it will be an efficient and effective means of providing support

to young families.

Children, meanwhile, will benefit from being in a high-quality learning

environment that sets them up well for the rest of their lives. Good-quality

ECE helps children reach their full potential, both in education and in

14

leading healthy and productive lives.19 It can even make the difference,

according to recent research, between being in or out of poverty in later

life.20

Finally, society benefits from this collective investment in our children's

health, well-being and development. Detailed cost-benefit evaluations of

ECE spending suggest they provide long-term returns of $3 to $16 further

down the track, in reduced health and justice costs and increased

productivity.21 This makes investment in ECE one of the best possible uses

of government spending.

The policy will also be an important piece in the jigsaw puzzle of support

for young families. Building on Green Party policy to extend paid parental

leave, and other initiatives, it will be a vital step towards creating a

genuinely comprehensive and joined-up system of family support for young

children.

19

An Agenda for Amazing Children: Final Report of the ECE Taskforce, Part One, June 2011, Wellington. 20

Ibid. 21

Ibid, p21.