MESSAGE CEO's DO THE 20 HOURS FIGURES ADD UP? WE'RE STILL CHECKING... ● According to Treasury’s Supplementary Estimates, the extension to 20 Hours costs: $123 million (m) in 2023/24, $365m in 2024/25, $370m in 2025/26, and $374m in 2026/27. This is $1.232 billion over four years. ● However, according to the Ministry of Education’s Budget communications: “Government is investing almost $1.2 billion over five years to fund this extension.” This is a concerning misalignment– while it doesn’t look like much, if the Ministry is adding another year’s costs and implying the total would be less than $1.2 billion – that equates to a whopping discrepancy of about 30% (~$370m) if they added another year. Because the Budget process is secret, problems with the quality, clarity and consistency of government communications are really important to the sector. BUDGET 2023 – ECE WAS THE FOCUS – BUT THERE’S CAUSE FOR MUCH CONCERN This year, a few early learning sector leaders got invited to the Government’s Social Sector “lock-up” on Budget Day. It’s called a lock-up because you used to get literally locked in a room but these days it means no use of cellphones to share the sensitive information that gets pre-shared in the lockup about an hour before Minister Robertson reads the full budget in the House. Our lock-up was held in the Theatrette – the room where the Prime Minister does official announcements and usually holds the postCabinet press conference (see pictured). Leading up to Budget Day I was priming ECC members that we should expect a surprise for ECE. This was the first lock-up where ECE sector leaders had been invited in recent years. When I arrived there were no leaders at the lock-up from any other parts of the education sector – like school principals etc. This further confirmed my suspicions. With flight mode now on, little did I know how much of a big surprise I would get in the Budget. Even the Ministry of Education website describes the Budget as having a “major focus on early childhood education”. With a total of $1.8 billion over four years, they are right - it is massive. For people not in the ECE sector, they will marvel at the focus and attention ECE got at the expense of every other priority, during the cost of living crisis and in an Election Year. That level of total new investment is roughly equivalent to a ~20% increase to the “baseline” funding for ECE (baseline means funding already in the ECE appropriation). The benefits of quality ECE generate valuable future returns to our country and the opportunity cost of not investing in ECE is akin to whole generations missing out on these benefits. We should invest more – and expect more. Education is essential to economic recovery and it feels like all the indicators are pointing the wrong way. THE MAIN HEADLINES IN THE BUDGET PACKAGE FOR ECE WERE: • the Extension to 20 Hours ECE (at $1.2bn over four years) – a funding increase and extension to 2 year olds (who are currently ineligible); • a further pay parity instalment titled “Delivering Pay Parity for Teachers in Education and Care Services” (at $322 million over four years) plus a top up for an overspend earlier this year; and • a Cost Adjustment at 5.3% (basically an inflation adjustment to all the ECE funding rates). For most of our ECC members, the relevant increase was applied to 55% of their funding rates meaning a lower effective rate increase of 2.9%. Applying the adjustment in this way was explained by the Ministry as because of the salary-based increases, which are increases driven by their Pay Parity policy, and not by inflation. Why would you increase the salary increases based on inflation? The way to judge inflation-adjustments is to look back on previous years. In Budget 2022, the Government applied a Cost Adjustment rate of 2.75% and the increase was paid from 1 January 2022 (halfway through the budget period). Treasury had forecast inflation would be 6.7% in that budget period – but they were proved wrong - it ended much higher at 7.3% (actual). The sector got short-changed in terms of both the timing of increased payments and the rate applied. We now know this is a fact. Gaps in funding create real problems. They translate to ECE centres having an inability to keep up with “discretionary” parts of their operations – first things to go are food for children, transport, discounted childcare to staff, and good luck to teachers that want to get external professional development (which is not funded directly to employers by the government, but should be). June 2023 { 8 }
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