Swings + Roundabouts Spring 2020

on significant risk in making property purchasing decisions without any guarantee that the MoE will grant a licence for that specific location. With the process for establishing a new centre becoming dependent on being able to demonstrate a lack of supply within the existing network for that type of service, existing services within an area will be sheltered from new competition entering the area. Whilst this may seem like a short- term positive for many centre owners, it may lead to a scenario where poorer quality centres are artificially protected from healthy competition. This in turn leads to less choice for parents and less incentives for existing centres to maintain and increase quality standards in established areas. Parental choice has been a fundamental part of the New Zealand ECE sector and an active network planning approach may undermine this. The details around active network planning are still relatively vague; with the ETA providing for the creation of the regime, not for the specific detail around how it will be administered. Given this, the Act provides a timeline for the implementation of the pre-approval process and the Ministry states that: “ commencement of the additional licencing criteria will be delayed by up to two years from the enactment of this Act to allow time for regulations to be developed. This means that providers who are ready to apply for a licence can still do so under the existing criteria, while future potential providers will have time to prepare their applications. ” However, given the time that a new centre takes to establish, from site purchase through to a licence being issued, centre owners really need to start considering network capacity matters from now. I am already seeing a number of experienced centre owners undertake more network capacity and demographic assessments prior purchasing new sites or signing up to new leases. The key information to consider when establishing whether there is capacity for a new centre within a community includes: ● Existing population within a geographic area; ● Demographics of this population – age, family sizes, income, ethnicity, employment; ● Future population projections; ● Changes in land use and upcoming new areas of growth; ● Type, location, size and occupancy level of existing ECE services; and ● Future ECE centres in the planning or construction phase. With this information, centre owners will be able to determine whether the proposed new location will be both viable from a business perspective and likely to receive pre- approval under the new network planning regime. The same information is valuable to support funding applications from banks and we are seeing far more scrutiny over location ABOUT THE AUTHOR Establish founding director and CEO, Logan Whitelaw, has a particular interest in the development of early childhood education throughout New Zealand. Together with Paul Rodgers, he formed Establish to address the problems he and his clients were experiencing – simplifying the development process for operators and raising the quality of centre design. Logan comes from a planning background, having worked in the resource management sector as a qualified planner for over ten years, including a leadership position at Auckland Council. As CEO and head coach, Logan applies his strategic and tactical skills to the team and to ensuring clients achieve their goals. decisions from funders than in previous years. Whether or not you agree with the concept of active network planning, one thing is clear – it’s on its way. The active network planning approach is a clear inflection point for the sector. Those operators that embrace data-driven decision making will be in a good position to continue with well- planned growth into communities that would benefit from additional services. Those that have been selecting new sites in areas with low occupancy rates and high levels of competition will find themselves locked out of the market. So in short, here are the key takeaways: ● The ETA was enacted on 1 August 2020; ● The active network planning regime comes into effect two years from the above date; ● A new pre-approval phase is added to the licence process; ● A significant part of the pre-approval process proving demand for the service in the community based on network capacity, population demographics and needs of the community; ● A granted pre-approval will last for two years, within which you must obtain your licence; ● Data-driven decision making will become a critical practice for centre owners establishing new services or expanding exiting centres. September 2020 { 29 }