Child Poverty Action Group Report On ECE Sector

EMBARGOED PUBLICATION – NOT FOR CIRCULATION 14 JULY 2020
Investing in children? Privatisation and

early childhood education in Aotearoa
New Zealand
A Child Poverty Action Group Backgrounder
Caitlin Neuwelt-Kearns and Dr. Jenny Ritchie
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About Child Poverty Action Group

Child Poverty Action Group (Inc) (CPAG) is a non-profit group formed in 1994, made up of academics,
activists, practitioners and supporters. CPAG has a strong education and research skills base which
enables it to contribute to better informed social policy to support children in Aotearoa New
Zealand, specifically children who live in poverty. CPAG believes that the country’s high rate of child
poverty is not the result of economic necessity, but is due to policy neglect and a flawed ideological
emphasis on economic incentives. Through research, CPAG highlights the position of tens of
thousands of New Zealand children, and promotes public policies that address the underlying causes
of the poverty they live in. If you are not already supporting CPAG and you would like to make a
donation to assist with ongoing work, please contact us at the address below or through our
website: www.cpag.org.nz
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Contents
About Child Poverty Action Group.......................................................................................................... 2
Acknowledgements................................................................................................................................. 4
List of abbreviations ................................................................................................................................ 4
Introduction ............................................................................................................................................ 5
The current state of ECE in Aotearoa...................................................................................................... 6
ECE funding ............................................................................................................................................. 8
Privileging mainstream teacher-led providers.................................................................................. 10
ECE participation, quality and privatisation .......................................................................................... 11
Quality ECE teaching ......................................................................................................................... 12
Privatisation and ratios ..................................................................................................................... 13
Privatisation, cultural responsiveness and accountability ................................................................ 15
Conclusion ............................................................................................................................................. 16
Full list of recommendations ................................................................................................................ 18
References .............................................................................................................................................. 5
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Acknowledgements
The authors would like to thank CPAG’s Janfrie Wakim, Gerard Cotterell, and M. Claire Dale, as well
as Marianne Kayes, for their input on this report.
About the authors

This report was written by Caitlin Neuwelt-Kearns and Jenny Ritchie.
Caitlin Neuwelt-Kearns is a researcher for CPAG and the Auckland City Mission. She has previously
completed a Master of Arts at the University of Auckland examining the use of crowdfunding
platforms for health-related costs in Aotearoa. She has research interests in equity of access to
health and social services.
Dr Jenny Ritchie is an Associate Professor in Te Puna Akopai, the School of Education, at Te Herenga
Waka Victoria University of Wellington, New Zealand. She has been involved in early childhood care
and education since the 1970s, as a childcare worker, kindergarten teacher, parent, kōhanga reo
whānau member, teacher educator, education researcher, and grandparent. Her research and
teaching focus on social, cultural, and ecological justice in early childhood care and education.
List of abbreviations
ECE Early Childhood Education
MoE Ministry of Education
NZ New Zealand
OECD Operation for Economic Co-operation and Development
4
Introduction
Access to quality early childhood education (ECE) is crucial for children, families, and society at large.
ECE services can provide foundational learning experiences for children, but also provide emotional
and parenting support for families.1 In particular, the gains from attending quality ECE services are
greatest among children from low-income households.3 For instance, access to ECE services can
provide parents with the ability to engage in paid employment, and forming reciprocal relationships
with ECE staff may provide them with confidence in their parenting and relief from isolation.2 For
this reason, ECE has the potential to act as an ‘equaliser’,3 and a vehicle for mitigating child poverty
in Aotearoa.
However, attendance at an ECE service is not universally beneficial for all children. It is imperative
that the sector is providing good quality and culturally appropriate services, particularly as children
are spending increasingly more time in care.3 Poor quality ECE can have a detrimental impact on a
child’s wellbeing, and in some cases may be worse than attending no early learning service at all.3
Reports of bad treatment from other children, or from teachers themselves, including physical and
verbal abuse, have made headlines in recent years and illustrate a sector under significant stress.4
Yet in spite of unequivocal evidence of the importance of quality ECE, in Aotearoa the sector is
widely understood as providing private investment opportunities rather than a public good.
Increasing privatisation has meant that many centres prioritise profit margins over the needs of
children and families, with funding directed towards property expansion or other means of creating
capital gain, rather than being invested into reducing fees or paying staff at better rates.5 The trend
towards private provision in the sector is concerning given the relationship between for-profit
services and poor quality service provision.6 Indeed an exposé of the sector published in July 2020,
informed by the experiences of teachers, staff and parents, highlighted concerns with an
“overemphasis on occupancy rates and making money, rather than providing quality care and
education”.11
This relentless pursuit of profit within the sector has become particularly evident in the face of
Covid-19. In light of the economic uncertainties associated with the pandemic, investors have faced
challenges in predicting where their funding is best placed, and the ECE sector has been framed as a
‘smart’ place for investment. For instance, one article published in the NZ Herald in May 2020
argued that the ECE sector will be at the “top of the list” for smart investors, as the sector “allows
investors to gain exposure to an industry backed by government funding”. 7
Despite many centres remaining shut during the Covid-19 lockdown, all ECE providers were still
receiving government subsidies. Many were in addition claiming the wage subsidy, anticipating that
their losses would exceed 30 percent.8 Commentators have highlighted the lack of scrutiny given to
these claims of diminished revenues in regards to claiming the wage subsidy; BestStart, for instance,
which has 260 centres around the country, claimed $25 million in wage subsidies despite reporting
profits of $46 million over the last two years.9 The Ministry of Education (MoE) did not prevent
providers from billing parents, instead asking providers to ‘seriously reconsider’ charging parents
fees.8 While many centres did follow the MoE’s advice and waive fees for parents, there were
reports of some centres still expecting parents to pay, reflecting a tension between the MoE’s high-
trust governance model for the sector and the neoliberal ideology of privatisation for profit that
drives many providers.
While the current corporatised system was dysfunctional prior to Covid-19,10 this pandemic has
exposed major failings in the market-based provision of ECE services.11 The experiences of teachers,
staff and parents point to “a sector and a workforce at breaking point”,11 a system in need of urgent
5
change. In this report, we highlight some of the challenges within the sector at present, arguing that
Covid-19 has presented an opportunity for long-needed reform. With occupancy rates expected to
decrease in the face of an economic downturn and rising unemployment,11 now is a prime
opportunity for reconsidering the trajectory of the sector prior to Covid-19, and its future.
Rather than propping up the existing system – whereby ECE is treated as an investment opportunity,
not a public good – the Government should be looking to nationalise ECE provision in its response to
Covid-19. If we accept the evidence that access to quality ECE is a crucial determinant of children’s
wellbeing and provides significant opportunities for whānau support – gains which are the greatest
for children from low-income households – then it follows that this sector is too important to be ‘left
to the market’.5 Market-based provision increases inequities in access and quality according to
socioeconomic status,6 and thus we should be incentivising the growth of not-for-profit centres
while reducing government subsidies for corporates.
The current state of ECE in Aotearoa

In New Zealand (NZ), the ECE sector operates under a market-based approach. While the MoE
provides support and guidance to the ECE sector, it does not administer services as it does with
schools.12 Instead, providers operate independently, either as private businesses or not-for-profit
community-based organisations. While community-based providers – which can be owned by
kindergarten associations, charities,i churches, or community groups – cannot distribute financial
gains to its members, private services – owned by private or publicly listed companies, private trusts,
partnerships or individuals – are able to make a profit and distribute this to their members.12
The classification of ECE services is contentious. Under the previous Labour led government, the
MoE’s 2002 Strategic Plan for the sector (Pathways to the Future: Ngā Huarahi Arataki) classified
ECE services in NZ according to two types – teacher-led, and parent-led.13 Under this classification,
teacher-led services include education and care services, home-based services and kindergartens,
while parent-led services include playgroups, Playcentres, Ngā Kohanga Reo and Pacific Language
Nests. This classification is somewhat arbitrary however; for instance, Ngā Kohanga Reo and Pacific
Language Nests can be either teacher-led or parent-led. Further, while home-based services are
classified as teacher-led, only the network service coordinator must be qualified, not the home-
based educators themselves (of whom, in 2013, only 3 percent were qualified14). While education
and care and home-based services are often privately-owned, all kindergartens, Playcentres,
playgroups and Pacific Language Nests are community-owned, or in the case of Ngā Kōhanga Reo,
owned by a national trust.
i
Major early learning chain Best Start Educare is an exception. While technically a charity, the chain is privately
owned by the Wright Family Foundation with $20 million in tax-free income paid to its founders each year.
That this arrangement is permissible under current tax and charity laws has been a source of significant
controversy, with the chain running 260 childcare centres for 15,000 children nationally (see Nippert,
“Kidicorp's metamorphosis to Best Start Educare raises tax questions”, 2020).
6
Figure 1: Enrolments in licensed ECE services by service type, 2000 to 2019. Data sourced from Education Counts, 2019,
https://www.educationcounts.govt.nz/statistics/early-childhood-education/participation
Proportionately, education and care services make up the majority of ECE providers in NZ. In 2019,
68 percent of licensed services were education and care services, while 14 percent were
kindergartens, and home-based and Kōhanga Reo constituted 10 percent of services respectively.15
Further, based on enrolments, education and care services are the largest growing service type – up
from 58 percent of enrolments in 2010 to 68 percent in 2019. Home-based enrolments are also
increasing, up from 6 percent of enrolments in 2000 to 9 percent in 2019. Meanwhile, attendances
at community-based providers such as kindergartens and playcentres have steadily declined over
the last decade. Enrolments in kindergartens have decreased from 20 percent of attendances in
2010 to 14 percent of attendances in 2019, while at playcentres, enrolments have decreased by 3
percent in this period (see Figure 1).
This changing face of the ECE sector reflects the trend towards privately-owned ECE provision. In the
1990s, the introduction of a market-based approach to funding in the sector meant that any service
Proportion of private- vs community-owned licenced ECE

services 2002-2019
100%
90%
80%
70%
60%
50%
40%
30%
20% 41%
10% 23%
0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Figure 2: Proportion of private- vs community-owned licenced ECE services 2002 to 2019. Data sourced from Education
Counts, 2019, https://www.educationcounts.govt.nz/statistics/early-childhood-education/services
Private providers Community providers
7
that met licensing requirements could be eligible for ECE bulk funding.5 The ability to access
significant sustained government funding made the sector desirable for private investors, and as
such, the number of privately owned centres has proliferated over time; while in 2002, private
providers accounted for 23 percent of all licensed ECE services, by 2019, this figure was at 41
percent (see Figure 2).
This proliferation of private centres has suited successive governments, both National and Labour,
who have been largely equivocal about the role of the state in providing opportunities for early
learning.16 A neoliberal framing of parents-as-consumers of self-governing services absolved the
government of responsibility in providing ECE services to enable parents to engage in paid work. As
such, privatisation in the sector has been effectively sanctioned by successive governments who
have been reluctant to fund and regulate ECE alongside the compulsory school sector.The economy
and profits of individuals have thus been prioritised over young children’s rights to access high
quality, culturally sustaining early learning.
Community-based providers have struggled to keep pace with rising participation rates and
expansion of the sector in the policy environment of the last three decades.6 Whereas private
providers were able to raise funds quickly and were often experienced in property development,
community providers had to navigate a complex and over-subscribed grants scheme, at the end of
which funding was not guaranteed.6 In some cases corporate chains have also bought out
community-owned centres, often with detrimental impacts on the quality of service provided.18 It is
in this context that enrolments in community-owned services – including kindergartens, playcentres,
and Kōhanga Reo – have gradually declined.
ECE funding
The main form of funding for licensed ECE services is the ECE Funding Subsidy. This subsidy
contributes to the operating costs of services by paying for part of each hour a child spends in ECE,
to a maximum of 6 hours per day, 30 hours per week.17 Independent providers can establish
themselves and receive child-based government funding as long as they meet licensing and
requirements and regulations.
The other core funding mechanism for ECE is the 20 Hours ECE subsidy. The 20 Hours policy was
implemented in 2007 under a Labour-led government, and provides participating ECE centres with a
higher subsidy rate for 20 hours per week per child. The intention of the policy was to improve
participation rates by reducing the financial burden of accessing ECE by providing 20 hours fees-free
for parents. Providers do not have to opt into this scheme, however those that do receive a higher
subsidy rate than the ECE subsidy.18 While this subsidy was initially for 3 and 4 year-olds, this was
later extended to 5 year-olds.ii
The 20 Hours policy has been popular; however, ‘optional fees’ and donations have undermined the
principle of reducing financial burdens for families.12 It was initially named ’20 hours free’, though
this was later revised to ’20 hours’ under a National government, reflecting an acknowledgement of
these ‘extra’ fees charged by many centres.19 Critics have argued that the 20 Hours reimbursement
rate does not reflect the real costs of running an early learning service.20 Initially, following its
introduction, some services chose not to opt in to the funding regime as they wanted to charge
ii
In New Zealand, early learning is for children ages 0-5, with most children starting school at age 5. Schooling
is compulsory from age 6.
8
more than the subsidy provided;13 however, many have found loopholes in order to break even, or
turn a profit.20
Cost remains a barrier to accessing ECE in NZ. While additional fees on top of the 20 Hours subsidy
are monitored by the MoE, and can only cover ‘extras’ such as increased staff ratios or outings, these
fees can still impede access among families seeking to enrol their children in an ECE centre. A 2019
evaluation reported that despite government subsidies, cost remains the biggest barrier to accessing
ECE faced by parents of 3 and 4 year olds.12 Beyond extra fees, some providers also require families
to enrol their children full time, or for hours longer than the 20 baseline, charging high fees for the
additional hours.12 These are challenges exacerbated under a for-profit model of service provision.
For parents looking to go back to work before their child turns 3, the cost of ECE without the 20
Hours subsidy may negate any earnings, thus disincentivising workforce participation.21 Indeed, as a
proportion of average wages, gross childcare fees are significantly higher in NZ than the Organisation
for Economic Co-operation and Development (OECD) average.22
Recommendation #1: Recognising the public good provided by high quality,

culturally sustaining ECE, and the prohibitive costs that prevent low-income
families from accessing ECE, the Government should fund community-based,
not-for-profit services, including kindergartens, in order to provide fees-free
ECE to all families.
In spite of the challenges faced by families in meeting childcare costs, ironically, NZ is lauded for its
public expenditure on ECE, ranking above the OECD average.23 Public spending on ECE has risen
significantly over the last two decades, increasing by nearly 203 percent in 2013 dollars between
2002 and 2013, in part due to the 20 Hours policy.24 However, this spending does not necessarily
indicate improved quality or outcomes for children. As is discussed later in this report, the
proliferation of for-profit providers that has occurred alongside this increase in government
expenditure may be having an adverse impact on the quality of service provision. Without strict
regulatory oversight, this increase in expenditure may simply be propping up business entrepreneurs
and stakeholders.
Beyond core ECE funding, there are also funding mechanisms that seek to improve equity in access
to ECE. Equity Funding was established in 2002 and is available for centres that serve lower socio-
economic communities, families from non-English speaking backgrounds, children with special
needs, or isolated communities.17 These funds are calculated according to the child’s address, or by
application from the centre. The government also provides an Annual Top-Up for Isolated Services
for those providers that still fall short of funding due to their isolated location.
Despite this Equity Funding, which serves as a financial incentive for providers to establish
themselves in under-served areas, reliance on market-based provision nonetheless creates uneven
geographies of access to ECE services. The 2007 NZ Council for Educational Research survey found
that private providers were more likely to establish themselves in areas already well-serviced.6
Unlike in other jurisdictions where ECE needs have long been mapped and forecasted in order to
ensure the needs of communities are met, in Aotearoa, the Government had no direct role in the
planning of ECE services until the introduction of the Education and Training Bill in 2019.12 This Bill
has provided the MoE with more control over the proliferation of service providers with poor
records, giving them the power to refuse licences where providers are underperforming.25 Given its
recent introduction, it is yet to be seen how well this will work in preventing the oversupply of poor
9
quality providers; however, the recent closures of Auckland’s Discover Educare branches suggest
that the MoE may be finally exercising some teeth.26
Despite this legislative change, the MoE still does not play an active role in planning and mapping
ECE provision. The need for coordinated oversight of the sector has been recently acknowledged by
the Ministry; objective 5 of the 2019 Early Learning Action Plan (He taonga te tamaiti – Every child a
taonga: Early learning action plan 2019-2029) highlighted some of the challenges associated with
the MoE’s lack of engagement in network planning.45 It laid out a staged approach to developing the
Ministry’s capacity for more active management of the network, including ensuring that under-
served communities have access to quality ECE services. For instance, the Action Plan stated that
setting up state-owned services would be considered in communities where there is insufficient
supply.45
Advancing this objective is crucial, and it must be progressed with urgency, particularly in light of any
Covid-19-related closures. In lower-income areas, services tend to be smaller, community-based
providers that have been chronically underfunded.10 In the period 2000-2019, over 60 percent of
centre-based closures were community-based providers, such as Pacific Islands language nests who
are best positioned to offer culturally and linguistically relevant provision.27 Without significant
government support, these centres are those most likely to collapse in the face of Covid-19
closures.10 This means that Māori, Pasifika, migrant and other vulnerable communities living in low-
income areas – who have the most to gain from quality ECE – are the most likely to suffer from the
impact of the pandemic on the sector.
Recommendation #2: With urgency, the MoE must implement Objective 5 of

its 2019 Action Plan, taking a more active role in overseeing the early
childhood sector to ensure communities have access to appropriate, high
quality culturally relevant early childhood services. In particular, the Ministry
should ensure that low-income communities are not disproportionately
affected by Covid-19-related closures.
Privileging mainstream teacher-led providers
Funding for ECE centres differentiates between teacher-led and parent-led services. Policies favour a
teacher-led environment by better-funding teacher-led services, and designing regulations such that
parent-led services often struggle to meet administrative requirements.28 Parent-led providers such
as Playcentres and Kōhanga Reo must meet the same regulatory requirements as teacher-led
centres, despite providing significantly different services and learning environments.
The administrative burden of meeting the MoE’s requirements, meanwhile receiving a fraction of
the funding that teacher-led services receive, has undermined the viability of alternative models
such as Playcentre and Kōhanga Reo. Following the announcement of Budget 2020, Playcentre
Aotearoa reported in May that Playcentres educate more than 7 percent of NZ’s preschoolers, yet
receive less than one percent of the Government’s funding for the ECE sector.29 Faced with the
reality of closing one quarter of its centres, Playcentre Aotearoa later received an emergency
funding injection in June 2020, giving it ‘breathing space’ to ensure the viability of the model long-
term.30 This precarity and need for emergency measures reflects 14 years of underfunding of the
organisation.
Parent-led approaches provide invaluable support for the wider family by involving parents in the
education of their children. They enable capacity-building not only for the children enrolled but their
10
parents who are provided with the opportunity to gain skills and confidence through their
engagement with the early learning process.28 The preferential treatment of teacher-led services in
the Ministry’s approach to regulation and funding thus overlooks the unique contributions of
alternative models such as Kōhanga Reo and Playcentre, and undermines their viability.
This one-size-fits-all approach to ECE policy has been severely detrimental for the Kōhanga Reo
movement. Kōhanga Reo provide young children with an immersive early learning environment in
which to learn via te reo and tikanga Māori. 31 The programme emerged in the 1980s as a response
to the declining number of te reo speakers, and provides an important means of language
transmission not only for tamariki, but for whānau who learn alongside. The opportunity that
Kōhanga Reo provides for immersive learning is unique, and has bolstered the revitalisation of te reo
Māori in recent decades. Evidence has also demonstrated improved educational outcomes for
mokopuna emerging from Kōhanga Reo versus mainstream ECE services.31
However, despite its importance for both the education of tamariki Māori and the broader project of
te reo survival – a responsibility of the Crown under Article Two of Te Tiriti – the design of ECE policy
has been at odds with the aims and objectives of Kōhanga Reo. In 2013, a Waitangi Tribunal report
found that the Crown had breached the Treaty by assimilating the Kōhanga Reo movement into its
early childhood system, overlooking the specific needs of these services.31 This privileging of
mainstream, teacher-led services – a Western framework of ECE provision – has undermined the
ability of Kōhanga Reo to flourish. The current trajectory for Kōhanga Reo services is grim, with
enrolments steadily declining over the last two decades, threatening their viability.32 Indeed the
Tribunal report warned that the Crown “must act to avoid the looming disaster in the ability of
kōhanga reo to function”, with the movement facing the “very real prospect that effectively a third
of the kōhanga reo operations will have to cease.”31
Whānau-led Kōhanga Reo services are poorly funded compared to mainstream teacher-led services.
These providers are classed as ‘parent-led’ despite the kōhanga movement having its own
(unrecognised by government) training system that provides a qualification after three years of part-
time study while working in a kōhanga.33 Budget 2020 has seen a well-overdue funding injection,
including increasing child funding rates, repairing buildings and lifting staff wages; however, even
with this much-needed boost, Kōhanga Reo will still struggle to achieve equity with other ECE
centres. As the Tribunal highlighted, these services need a more appropriate regulatory and licensing
framework, and a supportive funding regime that recognises its unique contributions.34
Recommendation #3: The Ministry’s regulation and funding mechanisms

should be tailored to ensure diversity in ECE provision, rather than merely
bolstering mainstream teacher-led models. Reforms should reflect a
recognition of the unique contributions of models of early learning such as
Kōhanga Reo and Playcentre.
ECE participation, quality and privatisation

Acknowledging the significant social and economic benefits to be gained through engaging in ECE,
successive governments have prioritised increasing child participation rates. For instance, the 2002
Pathways to the Future: Ngā Huarahi Arataki strategic plan included promoting participation as its
first of three overarching goals for the sector.13 As a consequence of government subsidies, such as
the 20 Hours programme, as well as other factors such as sustained increases in female labour force
participation,35 participation in ECE has been increasing over time. NZ ranks higher than most other
11
OECD countries for participation rates;36 while in June 2011 94.6 percent of children starting school
had attended ECE, in June 2016 this figure was 96.6 percent.37
However, critics dispute whether participation is a useful metric for evaluating the efficacy of our
ECE sector.3 Increased participation rates are not necessarily a measure of progress when children
are engaging with poor quality services. Participation in ECE may in fact be detrimental for children
and families where these services are poor quality,3 and ironically, the MoE’s push for participation
may have an adverse effect on the quality of service, for instance through promoting maximum
occupancy.38 Maximum occupancy at a centre can mean that children who are sick or poor
attendees due to costs, for example, are removed from the rolls in order to free up space for
another child, disproportionately disadvantaging children from lower-income households.
Quality ECE teaching

The quality of ECE has been affected by the trend towards private provision in the sector. On
average, not-for-profit services offer higher quality services than for-profit services, findings which
are consistent across various international contexts.6 A 2007 survey conducted by the NZ Council for
Educational Research highlighted significant problems associated with many for-profit services,
including poorer working conditions for teachers and higher incidence of excessive workloads. 6
Further, for-profit centres tend to pay their staff lower wages and have lower ratios of qualified
staff, both of which are strong predictors of quality in ECE provision.5 All of these factors contribute
to higher staff turnover in many for-profit centres, which is problematic as it is disruptive for
children but also for the roles and relationships of teaching staff who remain at the centre.39
The qualification of teachers is crucial for ensuring the quality provision of ECE. Qualified teachers
are able to draw on their understandings of pedagogy to create constructive learning environments
involving sustained interactions, collaboration, and engagement,40 and as such, the observed quality
of ECE providers markedly increases as the ratio of qualified teachers increases.13 The 2002
Pathways to the Future: Ngā Huarahi Arataki strategic plan set out a target to have a fully qualified
workforce in teacher-led ECE by 2012; however, the election of a National government in 2008 saw a
reduction in requirements for teacher qualifications from the then 80 percent of staff to 50 percent
of staff in teacher-led services, where it remains today.41 While, on average, more than 50 percent of
teaching staff are qualified – as of 2019, this figure was at 68 percent15 – the erosion of these
requirements is concerning given unequivocal evidence of the relationship between teacher
qualification and quality of ECE.
There have been some promising announcements in the current Government’s 2019-2029 Early
Learning Plan and the 2020 Budget. The Coalition Government has reinstated the higher funding
band for teacher-led centre-based services that employ a 100 percent qualified workforce as of 1
January 2021.42 This change is expected to incentivise more teacher-led services to operate with a
fully qualified workforce. However, the minimum requirement for a degree level qualification
remains at 50 percent of staff in teacher-led centres, despite the current Labour-led Government’s
pre-election policy promises for a return to the 80 percent qualified requirement for ECE services,
and the stated commitment of eventual regulation of 100 percent in the 2019 Early Learning Action
Plan.43 Further, recent changes to allow primary trained teachers to be the designated ‘person
responsible’ means that there can now be periods of time where there are no qualified ECE teachers
on site.44
Fair pay rates for ECE teachers are imperative to retain quality staff. The government sets minimum
pay rates for the sector, with funding rates contingent on centres paying all qualified teachers at or
above certain minimum salary levels. ECE centres often struggle to attract and keep qualified staff,45
12
with some ECE teachers currently earning up to 49 percent less than their school colleagues with
comparable qualifications and responsibilities.10 There are large disparities in pay between different
types of ECE services. In 2002, the MoE agreed to maintain pay parity for kindergarten teachers with
teachers in primary schools; however, this pay parity has yet to be extended to teachers in other
types of ECE services.18
In an attempt to boost ECE teacher salaries and improve retention, the Government’s 2020 Budget
also included a funding boost to lift the minimum pay rate for newly qualified teachers in education
and care centres.46 This boost reflects a first step towards closing the gap in pay rates between
kindergartens and education and care services. However, consequent Budgets must continue this
work in improving salaries for all qualified ECE teachers. Due to profit incentives, private ECE
providers tend to have lower pay rates than community providers.5 Beyond continuing to raise these
minimum pay rates, therefore, an active commitment to prioritising not-for-profit community
provision of ECE may help to address challenges around pay parity.
Recommendation #4: Require the Government to ensure that qualified

teachers in all services – both for-profit and not-for-profit – are paid at the
same rate as kindergarten teachers, recognizing the importance of fair pay
rates in retaining quality staff.
Privatisation and the learning environment
Another key determinant of quality in ECE provision is the nature of the learning environment. ECE
services need appropriate physical spaces in order to foster a quality standard of care.38 The physical
environment of the centre is important both for facilitating positive learning experiences, but also
for minimizing risks such as disease spread and noise levels.47 Important considerations in ECE
environments include, but are not limited to, adequate heating and ventilation, sufficient outdoor
space to run, and the inclusion of green space.
Despite ample evidence of the importance of layout and space of ECE environments for children’s
learning,48 NZ falls behind international recommendations of best practice. Research suggests that
indoor requirements should be between 3.25 and 5 metres squared per child, and outdoor space
between 7 and 25 metres squared per child.50 At present, NZ regulations specify that licensed
centres must have a minimum of 2.5 metres squared per child indoors, and 5 metres squared per
child outdoors.49 Regulations were changed in 2008 to reduce the space-per-child requirements,
which some have attributed to commercial pressure on the MoE.38 While international comparisons
can be difficult due to specifications for different age groups, adjusted calculations suggest that NZ’s
standards for physical space compare poorly with other OECD countries.50 51 In Australia, for
instance, an ECE premises must have at least 3.25 square metres of indoor space per child, and 7
square metres outdoors.52
Reports from ECE teachers of overcrowding in centres highlight the urgent need for change to these
regulations.47 Indeed poor quality environments based on the minimum space-per-child
requirements have been highlighted as a key issue affecting quality in the sector.38 Objective 1 of the
MoE’s 2019 Strategic Action Plan includes ‘developing advice’ about centre design and
environmental factors, reviewing environmental health standards and developing design principles
to guide services;45 however, this plan has not specified an increase in minimum space requirements.
This increase is crucial in order to bring NZ up to speed with international best practice, particularly
in the context of increasing numbers of for-profit centres who have a profit incentive to meet the
bare minimum requirements.
13
Recommendation #5: Increase the minimum indoor and outdoor space

requirements of licensed ECE centres from 2.5 m2 and 5m2 respectively to
3.25m2 and 7 m2 to meet international standards.
Beyond the physical environment of an ECE service, the quality of the learning environment is also
determined by child-to-staff ratios. The number of staff to children is crucial to ensuring quality in
early learning environments.3 Higher ratios of children to teachers can constrain teachers in their
ability to be attentive to the needs of children, and increase the prevalence of children’s negative
behavior towards their peers.53 Adult-child ratios are gradually declining in ECE centres in NZ; while
in 2010 the national average was 6.0 children per adult, in 2019, this had dropped to 5.6.15 However,
this improvement is only slight, and NZ continues to rank below the OECD average for ratios of
children to teaching staff.
Given the profit incentives within private ECE provision, it is perhaps unsurprising that many private
providers are reported to have poorer ratios, as cutting back on staff is a way to minimise costs. 5 As
such, it is community providers who are more likely to aspire to improve ratios beyond what is
formally required of them.5 At present, regulations for teacher-to-child ratios prescribe that services
catering to children under two years old must meet a 1:5 minimum ratio, while for children two
years old and over this ratio is 1:10;54 however, the 2019 Action Plan set out aspirations to change
these ratio requirements over the next decade.
The 2019 Action Plan proposed new ratios according to three brackets (under two years; two years
old; three years and over), rather than the two brackets previously used (under two years; two years
and over).45 The new ratios to be introduced are 1:4 for under two years, 1:5 for two year-olds, and
1:10 for three and older. The plan states that “a ratio of 1:3 for under 2 year-olds will remain an
aspiration in the longer term”, which is touted by experts as the ‘ideal’ ratio for this age group;
although this is an aspiration that has been in place since the 1980s under the Lange government’s
Before Five framework.55 Given that lower child-to-adult ratios improve the quality of ECE, it is
important that this 1:3 ratio for under-two year olds is brought to fruition in a timely manner to
improve outcomes for children in Aotearoa, particularly so as it has been on the agenda for almost
four decades.
Recommendation #6: Improve adult-to-child ratios in the ECE sector by

urgently implementing a 1:3 ratio for under two year-olds.
Group size also affects the quality of the early learning environment. Research suggests that smaller
group sizes are beneficial for early learning, with large group sizes identified as a key barrier to
positive experiences in ECE.57 Children require one-on-one time with adults in their early years, and
this can be harder to achieve in larger groups, where it is harder to establish responsive
relationships.5656 While low child-to-staff ratios can help to ensure children get sufficient one-on-one
time in larger groups, there are challenges even where staff-to-child ratios are good.
For instance, large group sizes are associated with heightened noise levels, which can overwhelm
both children and teachers.56 Quiet environments are crucial to maintaining a low-stress
environment, which is correlated to healthy brain development in children.57 Heightened noise can
limit a child’s ability to hear and fully comprehend language, which is problematic given the
developmental importance of a child’s early years.58 Further, exposure to excessive classroom noise
can have detrimental consequences for early childhood teachers, exacerbating work-related stress
and increasing job dissatisfaction.59 Thus while group size should not be considered an indicator of
14
quality in isolation of other factors, such as staff-child ratios and classroom design, it can have both
direct and indirect implications for quality of ECE delivery.
As NZ has no regulations specifying the number of children within each group within a facility, the
maximum centre size serves as both the maximum number of children that can be together within a
building, as well as in a room as a group.61 Current regulations in NZ state that a centre cannot have
more than 150 preschoolers or 75 under-twos, figures that were significantly increased – from 50
and 25 respectively – in 2011.60 This change in maximum group size was ostensibly to enable centres
to provide ECE at a lower cost, as well as to do away with excess paperwork where centres had to
apply for multiple licenses.61 However, the increase has undermined the quality of care in some for-
profit early learning settings where the ‘bottom line’ is closely adhered to in order to maximize profit
margins.62
The 2019 Strategic Action Plan stated that the MoE would be ‘seeking advice’ on group size in early
learning services, which may lead to the development of new standards.45 Given the potential harms
of large group sizes, this review is important, and should include a definitive time-frame for both the
delivery of this advice and the resulting regulatory changes. As the New Zealand Educational
Institute highlight, the smaller group sizes and larger space requirements under Covid Level 3 are
comparable to the non-Covid norm in many overseas settings.63 As such, the Ministry should be
using Covid-19 as an opportunity to review capacity for physical distancing in ECE settings both as a
pandemic-related infection-reduction measure, but also as it relates to quality of ECE provision.
Recommendation #7: The MoE should urgently seek advice on group size in
ECE centres, with a definitive time-frame for the delivery of regulatory
changes.
Privatisation, cultural responsiveness and accountability
Unqualified ECE teachers are less likely to be culturally responsive in their teaching.3 With lower
ratios of qualified staff in many for-profit centres, private providers are also less likely to prioritise
culturally appropriate services for Māori and Pasifika families. 6 There is a need for ECE providers to
be responsive to the cultural contexts of the children and families they serve, and indeed the
availability of culturally appropriate services is an important factor that shapes parental decisions
about whether to enrol their child in an ECE centre at all.64
The demise of community-based providers is therefore particularly concerning for ethnic minorities
whose needs are less likely to be met through private provision. In 2013, the Education Review
Office had found that only two fifths of services had considered Māori-specific concerns, and one
fifth had considered Pasifika concerns.3 Overall participation rates also obscure variances in
participation rates across ethnic groups, and while the gap across groups is narrowing over time,
significant disparities remain. 2015 saw 91.2 percent participation among Pasifika children, and 94
percent among Māori children, compared with 98 percent among NZ European children.35
Publicly listed businesses are obliged to act in the best interest of the company and its shareholders.
As such, the priority typically becomes profits, as opposed to the children and families served by
these providers.12 For-profit ECE providers are more likely to make decisions based on cost-benefit
analyses, rather than quality of service per se, and parents tend to be less involved in these centres,
meaning that their ability to weigh in on decision-making processes that affect the services accessed
by their children is limited.5 Proponents of market-based provision of ECE have argued that private
provision of ECE is beneficial as parents do not have the time or do not want to be involved in
15
governance. However, parent involvement in governance of ECE services provides a mechanism for
accountability, and contributes to higher quality through the cultural resonances that parents can
support within the programme.5
Advocates of market-based provision of ECE services argue that competition between providers will
result in high-quality services that meet the needs of families, because if they do not, people will
‘vote with their feet’ and choose a different provider.12 However, for many reasons this ideal market
scenario does not play out in the ECE sector. Parents may find it difficult to assess the quality of the
centre environment as they are not the ‘consumer’, the child is, nor may they have the background
knowledge to ascertain what high quality provision looks like.38 Further, and importantly, in some
areas parents may have few choices of providers. Lower socioeconomic areas are overrepresented
in the number of ECE services that have received Education Review Office reports indicating poor
quality provision.3 These low quality ECE centres are most likely to be found in areas where there is
the least ECE provision, and as such, families in poor areas may be choosing between sending their
child to a low quality ECE centre, and no ECE centre at all.
Market-based provision and the notion of parental choice is also at odds with the obligations placed
on beneficiaries to enrol their children in ECE services. As part of meeting “social obligations”,
people in receipt of a core benefit are required to enrol children in an approved ECE programme.65
Introduced in 2013, this policy was designed to “reinforce social objectives relating to child
education and child health”;65 however, such a policy assumes that ECE attendance is universally
beneficial for children. There are few high-income countries where similar such social obligations are
applied within welfare systems, and there is little evidence on the effectiveness of imposing such
requirements.65 With evidence to suggest that poor qualilty ECE can in fact be detrimental for
children, and that such services are more likely to be located in low-income areas,3 this requirement
may be doing more harm than good for children in low-income households.
Recommendation #8: The MoE and the Education Review Office must be
tougher on services that continue to deliver poor quality provision, noting
the disproportionate impact this has on low-income families. This should
include spot visits rather advanced-warning visits. The MoE should provide
supported pathways for unsustainable for-profit centres to become
community-owned, for example by being annexed to existing local
kindergarten associations or primary schools.
Conclusions and the way forward

Over the past two decades, we have witnessed a shift away from community-based provision of
early learning to an increasingly privatised for-profit model of provision in Aotearoa. This market-
based approach to the sector has led to the proliferation of what NZEI Te Riu Roa describe as
“atomized services operating in a highly competitive market”,63 many of which are owned by large
corporates. Community-based providers have struggled to keep pace with rising participation rates
within the sector, exacerbated by a policy environment that has favoured private rather than public
provision. As such, there has been a gradual decline in enrolments for community-based models
such as Kōhanga Reo, Playcentre, Pacific Islands Language Nests and other not-for-profit community-
run early childhood centres.
16
Declining enrolments in Playcentre, Kōhanga Reo, and Pacific Islands Language Nests are of
significant concern due to the unique contributions of these models. Parent-led services such as
Kōhanga Reo and Playcentre create important opportunities for supporting caregivers by involving
them in the early learning process. Further, through its immersive early learning environment,
Kōhanga Reo has produced recognised educational outcomes for tamariki, and has been an
invaluable component of the broader revitalisation of te reo and tikanga Māori. As such, current
funding mechanisms and regulations that favour teacher-led, centre-based providers threaten to
undermine diversity within the sector, at great cost to families and society at large.
This report has highlighted many challenges associated with an increasingly privatised and profit-
oriented sector. Despite the emphasis of successive governments on increasing participation in ECE
– and despite NZ being internationally lauded for its high rates of ECE participation6 – attending a
poor quality ECE service is potentially worse than not attending ECE at all. As this report has
discussed, private for-profit providers are less likely to provide quality services across a range of
indicators, including teacher qualifications, workloads and retention, teacher-to-child ratios, and
cultural responsiveness. The profit incentive inherent in the private and corporate models means
that the financial gain of investors, rather than the rights and needs of children, are prioritised. Poor
quality services are more likely to be located in lower socioeconomic areas, which is troubling when
we consider that gains from access to quality ECE are greatest among children from low-income
households.
Access to quality ECE is important not only for children’s wellbeing, growth and learning, but also in
providing support to families. Indeed, beyond their educational function, ECE services could be
providing a more holistic and integrated response to the needs of families. Given high levels of
participation, ECE presents an opportunity – in many cases, unrealised – to connect families with
services that could help to mitigate the drivers and effects of child poverty. In 2011, the MoE’s ECE
Taskforce recommended that selected centres in low-income areas be resourced to serve as
‘community hubs’ to facilitate access to other community and/or government services for families
who are facing challenges.66 They recommended that these community hub settings be funded by
the government, which would be money well spent, for instance in reducing costs associated with
child ill-health by pre-emptively connecting families to health services.66 The 2019 Strategic Action
Plan stated that the Ministry would investigate possibilities in facilitating wrap-around health and
social services in the early learning setting,45 an objective that should be advanced with urgency due
to the potential gains in improving child and whānau wellbeing.
Recommendation #9: The MoE should support the development of selected

high quality ECE services in becoming ‘community hubs’ to provide wider
family supports.
Fixing the ECE sector is a crucial piece of the broader puzzle of addressing child poverty in Aotearoa.
As public debate emerges over investment in physical infrastructure in the wake of Covid-19, we
must also be considering the importance of social infrastructure such as early learning services and
the role that the sector plays in shaping the wellbeing of our youngest citizens.67 Rather than
providing opportunities for wealthy investors, ECE services must be providing opportunities for
families and communities to enhance child wellbeing through access to learning and support
services that are of a high standard. In this way, ECE must serve as a public good alongside the
schooling sector, rather than an instrument for individual and corporate profits.
17
Full list of recommendations

Recommendation #1: Recognising the public good provided by high quality, culturally sustaining ECE,
and the prohibitive costs that prevent low-income families from accessing ECE, the Government
should fund community-based, not-for-profit services, including kindergartens, in order to provide
fees-free ECE to all families.
Recommendation #2: With urgency, the MoE must implement Objective 5 of its 2019 Action Plan,
taking a more active role in overseeing the early childhood sector to ensure communities have
access to appropriate, high quality culturally relevant early childhood services. In particular, the
Ministry should ensure that low-income communities are not disproportionately affected by Covid-
19 related closures.
Recommendation #3: The Ministry’s regulation and funding mechanisms should be tailored to
ensure diversity in ECE provision, rather than merely bolstering mainstream teacher-led models.
Reforms should reflect a recognition of the unique contributions of models of early learning such as
Kōhanga Reo and Playcentre.
Recommendation #4: Require the Government to ensure that qualified teachers in all services –
both for-profit and not-for-profit – are paid at the same rate as kindergarten teachers, recognizing
the importance of fair pay rates in retaining quality staff.
Recommendation #5: Increase the minimum indoor and outdoor space requirements of licensed ECE
centres from 2.5 m2 and 5m2 respectively to 3.25m2 and 7 m2 to meet international standards.
Recommendation #6: Continue to improve adult-to-child ratios in the ECE sector by implementing a
1:3 ratio for under two year-olds.
Recommendation #7: The MoE should urgently seek advice on group size in ECE centres, with a
definitive time-frame for the delivery of regulatory changes.
Recommendation #8: The MoE and the Education Review Office must be tougher on services that
continue to deliver poor quality provision, noting the disproportionate impact this has on low-
income families. This should include spot visits rather advanced-warning visits. The MoE should
provide supported pathways for unsustainable for-profit centres to become community-owned, for
example by being annexed to existing local kindergarten associations or primary schools.
Recommendation #9: The MoE should support the development of selected high quality ECE services
in becoming ‘community hubs’ to provide wider family supports.
18
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Child Poverty Action Group Report On ECE Sector

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EMBARGOED PUBLICATION – NOT FOR CIRCULATION 14 JULY 2020

Investing in children? Privatisation and

A Child Poverty Action Group Backgrounder

Caitlin Neuwelt-Kearns and Dr. Jenny Ritchie

About Child Poverty Action Group

About the authors

MoE Ministry of Education

OECD Operation for Economic Co-operation and Development

The current state of ECE in Aotearoa

Proportion of private- vs community-owned licenced ECE

Recommendation #1: Recognising the public good provided by high quality,

Recommendation #2: With urgency, the MoE must implement Objective 5 of

Recommendation #3: The Ministry’s regulation and funding mechanisms

ECE participation, quality and privatisation

Quality ECE teaching

Recommendation #4: Require the Government to ensure that qualified

Recommendation #5: Increase the minimum indoor and outdoor space

Recommendation #6: Improve adult-to-child ratios in the ECE sector by

Conclusions and the way forward

Recommendation #9: The MoE should support the development of selected

Full list of recommendations

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