National’s childcare announcement

Written By: - Date published: 1:43 pm, March 6th, 2023 - 21 comments
Categories: benefits, child welfare, Christopher Luxon, national, tax, welfare - Tags:

Remember November last year when then Prime Minister Jacinda Ardern announced this policy?

Today I can announce that the Labour Government will significantly expand childcare assistance to New Zealand families.

From April we will lift the household income thresholds on our Childcare Assistance subsidies for those with children under 5 in early childhood education, and aged 5 to 13 at an approved before or after school and holiday programme.

Our changes will mean 54 per cent of all New Zealand families with children will now be eligible for subsidised childcare assistance.

Over 10,000 additional children will become eligible for support.

And nearly every sole parent in New Zealand will be eligible for childcare assistance

To give you an example of what this will mean, a family with two parents both working 40 hours per week on $26 per hour with two children under five, who would not have been eligible for childcare assistance previously, will now be eligible for $252 per week.

These changes are on top of the 20 hours of early childcare education provided by the Government for those aged 3 to 5 and are a pre-Budget commitment that will take effect from April next year, at a cost of $48 million a year.

The cost of the policy was estimated to be $190 million over four years.  At the same time Ardern announced increases to the Family Tax Credit.

Well yesterday National had its chance to reach out to its base in election year and appeal to the things that matter to them.  Instead of this it chose to join in the bidding wars and it came up with this policy:

To support Kiwi families bearing the brunt of the cost-of-living crisis, National will introduce FamilyBoost – a childcare tax rebate of up to $75 per week on the costs of childcare.

This means more than 130,000 lower and middle-income families could keep up to $3,900 more of what they earn every year.

Families earning up to $180,000 will receive a 25 per cent rebate on their early childhood education expenses, up to a maximum of $75 per week paid directly into their bank account every fortnight.

All families earning up to $180,000 with childcare costs are eligible. However, to ensure support goes to families who need it most, the maximum weekly rebate will gradually reduce for families earning over $140,000. Maximum weekly rebates for families earning $150,000, $160,000 and $170,000 are $56.25, $37.50, and $18.75, respectively.

The cost is $249 million per year.  The policy is essentially a mini Working for Families adjustment, something that John Key famously described as Communism by Stealth.

The announcement is interesting.  National says that it will be paid directly to the bank accounts of the families.  Currently the subsidy is paid to the provider.  Having part of the payment paid direct to the provider and the other part to the family who will then have to pay it to the provider is very messy and, dare I say it, will require more public servants to be employed.

The subsidy will likely cause charges to increase.  I can’t see the likes of National Party Donors and Sean Plunkett sponsor the Wrights passing on the chance to improve profitability.

I suspect that David Seymour agrees with this comment.  He criticised Labour’s policy and said that any increase would be inflationary if the Government did not make it easier to get more early childhood teachers and workers into New Zealand.

Carmel Sepuloni has pointed out the problems.  From RNZ:

Social Development Minister Carmel Sepuloni said it was “good to see National finally recognising the importance of childcare assistance”.

National’s policy was “not very well thought through and doesn’t target those who need the most help, particularly those on the lowest incomes”, Sepuloni said.

She accused National of not properly considering how they would pay for the policy.

“When we introduced 20 Hours ECE in 2007 there was an increase in average hours attended per week for three and four-year-olds of around 8 -10 percent,” Sepuloni said.

“If just a quarter of the 130,000 households increase the number of hours their child spends in childcare by five hours a week, their policy blows out by around $70 million a year – and that’s likely to be a conservative estimate.”

National claims that it has done the modelling and disputes this.  I would question the quality of National’s modelling generally.

National claims that it will fund the change by employing less consultants.  That is an option, if they want to employ more public servants, or do nothing.

All in all the policy choice was a strange one to make and suggests that it was chosen for political strategic reasons rather than as a statement of principle.  It really feels like middle class welfare rather than an attempt to address poverty.  It is comparable to Labour’s proposal but costs more because more wealthy people will receive it.

21 comments on “National’s childcare announcement ”

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  1. James Simpson 1
    6 March 2023 at 2:11 pm

    As far as National Party policies go, this isn't a bad one.

    I was expecting them to cut this kind of expenditure. A promise to provide funding is a pleasant surprise.

  2. Mike the Lefty 2
    6 March 2023 at 2:12 pm

    My questions for National on this one would be: Why would you need consultants to implement this policy at all? Surely it would only take a dedicated team of public servants to work through the financial details and set up a mechanism for direct credit to bank accounts?

    And if you don't need consultants to do this anyway then how are you saving by NOT having them?

    National's funding model seems to be based on variables rather than realistic financial facts so it does call into question how much thought has been put into it aside from populist vote gathering.

  3. Barfly 3
    6 March 2023 at 2:48 pm

    I remember the rightwing's attacks on the Green Party 'magical money tree' – the National Party has its equivalent – its the 'magical efficency tree' where the National Party can pay less but get more – the latest instalment of this fairy tale is

    https://www.stuff.co.nz/national/politics/131407675/christopher-luxon-promises-childcare-rebates-for-any-family-earning-less-than-180000

  4. Ad 4
    6 March 2023 at 2:57 pm

    Labour will be quite unconcerned.

    They can easily outflank them with a counteroffer closer to election, or Budget 2023. In fact on record of this government since mini-budget December 2017, they always do.

    Any primary caregivers who would change their vote on this policy?

  5. Muttonbird 5
    6 March 2023 at 3:06 pm

    Giving $3000 cash a year to households on $140000k seems like tax cuts for the rich.

    Apart from the profit hungry corporate ECE racket, Air New Zealand and Tourism Fiji will be popping the champagne because that's where the middle-class will be spending this bribe.

  6. Robert Guyton 6
    6 March 2023 at 3:48 pm

    Yesterday, Muttonbird said this (It bears looking at a second time, imo)"

    Muttonbird5.4

    5 March 2023 at 7:47 pm

    Early Childhood Council CEO Simon Laube loves the idea. Of course he would, he and his child farming industry like The Platform owners, the Wright family, and National Party member, Tony Stuart, will be mainlining another $240m a year from the taxpayer.

    In fact, one suspects the policy was written by Simon Laube himself…

    Meanwhile, the Early Childhood Council applauded National's move, saying this policy offers more children the education and social benefits of ECE and will be a "welcome relief" for parents struggling to pay rising fees.

    "More investment in early learning is fantastic for our tamariki and their families, even more so for children from disadvantaged backgrounds," said CEO Simon Laube.

    "This initiative would offer Auckland centres struggling after lockdowns and the summer's weather events an urgently needed boost at re-engaging early learners in particular."

    He added that for parents, National's announcement would be "much more significant" than last year's childcare subsidy threshold changes and it avoids stigma about accessing social welfare support.

    "The policy recognises that more children in ECE means more parents able to work, and more children getting their education off to a great start to build the capability of our future workforce."

    https://www.newshub.co.nz/home/politics/2023/03/labour-lambasts-national-s-not-very-well-thought-through-childcare-tax-rebate-policy.html

  7. Robert Guyton 7
    6 March 2023 at 3:59 pm

    "The other big question is whether the childcare policy will result in higher prices and bigger profits for childcare providers. When the state increases subsidies for provision of social services from the private sector, those businesses will likely just charge much more.

    Luxon’s answer to this is that childcare prices won’t go up because childcare is a “competitive market”.

    However, this isn’t so clear. On Saturday, Stuff published a report on for-profit early childhood providers which suggested that state subsidies just end up in big profits for the owners of those businesses. Further debate and research is clearly required. More regulation might be required in this sector if it’s going to be the recipient of even more taxpayer funds. As Thomas Coughlan argues,

    “A regulatory eye on childcare providers’ margins would not go amiss.”

    It’s hard to see how much of a change this big policy announcement will make on the election, but it shows just how much “bread and butter” concerns are now driving New Zealand politics."

    https://pointofordernz.wordpress.com/2023/03/06/dr-bryce-edwards-political-roundup-nationals-progressive-childcare-consultocracy-switch/

    • Muttonbird 7.1
      6 March 2023 at 5:00 pm

      If Dr. Bryce thinks a policy with no change in rates for income below $140000 is progressive then he's not fit to be a political commenter. This policy is only progressive over $140k, so hardly progressive at all.

      Also interesting to see the Nats wage war on the very definition of private sector, the management consultant. They are literally what makes the private sector tick…

      …meanwhile they are subsiding bosses of a baby-sitting racket which has blown out to be a poorly regulated behemoth industry over the last 20 years.

      • Robert Guyton 7.1.1
        6 March 2023 at 5:51 pm

        "meanwhile they are subsiding bosses of a baby-sitting racket which has blown out to be a poorly regulated behemoth industry over the last 20 years."

        Yes. That's the nub of the issue.

        • Muttonbird 7.1.1.1
          6 March 2023 at 6:08 pm

          It's what all education would look like if ACT were the government.

          Luxon's answer claiming childcare is competitive is rubbish because the competition model breaks down when people are tied to a location. Families are dependent on proximity to the nearest childcare, and being profit driven, owners will price-fix in those locations.

  8. bwaghorn 8
    6 March 2023 at 5:42 pm

    Bloody idiots funding private child care, all child care should be run like public schools ,fully funded by the government.

    • Nic the NZer 8.1
      7 March 2023 at 7:44 am

      I don't think thats necessarily a good policy. In general public child care will have to be less than a full school day in length (because kids don't cope with longer). Some families will want more or less full work day care however. If its public funding it will be a flat amount per child per session, so it won't be full day care.

      On the other hand, I don't think Nationals policy can be used for parent lead childcare groups, which is terrible, and likely because National doesn't know they exist.

      • IMESS 8.1.1
        7 March 2023 at 11:05 am

        This policy can’t be used for parent-led childcare groups because this funding isn’t for childcare, it’s for early childhood education which requires qualified teachers.

        • Nic the NZer 8.1.1.1
          7 March 2023 at 12:41 pm

          Your probably right in regard to my comment and Nationals policy. However, I know due to close proximity, that some forms of parent lead ECE generate the qualified teachers by training the parents involved. I was unfortunately overly simplisticly referring to these as childcare.

          • IMESS 8.1.1.1.1
            7 March 2023 at 1:52 pm

            Yes, Playcentre is great and offers training for parents up to a Level 4 certificate, but early childhood education requires teachers to be qualified with a bachelor of teaching or post graduate diploma in teaching, like primary and secondary school teachers. A level 4 certificate is not considered to be a teaching qualification by the Ministry of Education, although it's a good introduction to ECE.

            • Nic the NZer 8.1.1.1.1.1
              7 March 2023 at 3:03 pm

              The very large number of kids who go through only Playcentre and have no contact with "qualified" ECE teacher practice says a lot about whats the important part of ECE, IMO. But if the attitude of your comment is reflected at the MoE I would say that is not a surprise to anybody involved on either side.

  9. bwaghorn 9
    6 March 2023 at 5:46 pm

    It's of interest that national has inadvertently told us it believes that $180,000, is adequate to raise a family un assisted, I expect they'll be moving heaven and earth to help those that don't even get close to that sum.

  10. psych nurse 10
    6 March 2023 at 7:03 pm

    25% of tax payers earn less than $14,000 PA , no rebates available when your tax rate is 10.5 %.

  11. Stuart Munro 11
    6 March 2023 at 7:33 pm

    Having some experience of language mills, I'm inclined to skepticism of for-profit education.

    From National's own agitprop, NZ childcare/ECE is among the world's most expensive.

    Throwing further finance into that imbalance seems unlikely to resolve it. More likely it will create another opportunity for rent-seeking non-performers on a par with the accommodation supplement – ie an ongoing drain on government finances with limited and declining social utility.

    A responsible government should reject it with great force. Guess we'll find out if we have one pretty soon.

  12. Corey 12
    6 March 2023 at 11:50 pm

    Ahhh election year, Every three years politicians have to pretend to care about what New Zealanders think!

    Every three years politicians will say over and over and nauseam "kiwi families" "parents" "kiwi kids"

    Always with the families.

    While ignoring the always growing 31% of New Zealanders including the majority of gen y and gen z who have no kids and no interest in ever having them.

    We'll get ignored as usual, while politicians promise the world to the ever decreasing numbers of breeders who already get an insane amount of perks and us ignored childless adults will be expected to pay for these targeted breeder progams.

    As usual we won't hear about poverty we'll hear about childhood poverty and kiwi families doing it tough. Childless adults in poverty or childless adults doing it tough can pay their taxes and stfu.

    There will be no universal policies offered that will benefit families and the 31% of team no kids like universal dental, there will be no housing policies that will benefit everyone only targeted programs for those who breed.

    There will no discussion of class or detailed economic policies (not that there's much economic difference between the two worth debating ) there will be no serious discussion other than buzzwords, debates on identity politics and lots of politicians in hard hats nodding and looking concerned and lots of politicians telling us they have to get stuck in on health housing and the economy until the day after the election when they can go back to pretending we don't exist and claim to media they can't do whatever they said they were gonna do cos of some unforeseen crisis.

    Then three years later repeat the whole damn thing while ignoring even greater percentages of childless adults.

    Oh and labour die hards will defend to the death that we should be giving billions to corporate consultants, hiring more middle management bureaucrats instead of more gps, doctors and nurses or keeping their promises on their own policies of universal dental or free higher education.

    Apparently those consultants advice and expertize has been valuable and well worth the money in helping roll out the governments extremely popular reforms. Lol.

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