A BROKEN GOVERNMENT COST ADJUSTMENT REGIME? If we compare Budget 2022 to Budget 2023, the cost adjustment appears more generous this year. Treasury has forecast inflation in 2023/24 at 6.2% so 5.5% is a lot closer. But if you look at the difference across the two budgets the sector remains short by about 5.25% in terms of rates alone (not factoring-in the six-month delay, each time, on the increased payments – it matters when inflation actually occurs – a six month delay is a great way to halve the cost of a government policy). I think the conclusion we take from this is that while it appears Government was more generous to ECE in Budget 2023, they actually needed to be even more generous if they were trying to protect the real value of ECE funding. The other new investments in ECE are all for different costs that have specifically increased or for new delivery that needs to be paid for – those other investments can’t be used to offset or cross-subsidise this broken government cost adjustment regime. PROPOSED CHANGES TO 20 HOURS ECE – WHAT DO PARENTS NEED TO KNOW? Initially sector leaders, including ECC, were quick to welcome this large ECE investment in Budget 2023. There are centres where the policy will work. However, we expressed serious concerns about some of the details in the changes to the conditions – and the negative impact of those would be felt by the majority of the sector. [Late update - on 19 June, the Government has confirmed it has dropped the changes to 20 Hours ECE conditions – some welcome progress indeed]. may become unviable if that didn’t happen. ECC is pleased to see how the various sector organisations have been able to work together on raising this issue to try to get it resolved. The sector is grateful to the Government for saying they will consider our concerns (if you’re interested – the open letter and various press releases are available on our website ecc.org. nz/news&media/news). Consideration is the most we can really expect, short of the policy change having been tested with the sector prior FALSE CLAIMS OF FREE ECE Hidden in the budget fine-print was Labour Government’s intention to change 20 Hours ECE. Out of the approximate $2 billion spent every year on ECE, more than half is spent on 20 Hours ECE. People on Facebook will have seen the Labour Party material that has described 20 Hours ECE as “20 Hours Free ECE”. At this stage the name of the policy hasn’t officially been changed...It doesn’t cover costs currently – that’s why centres need fee schedules that charge fees for additional hours. Parents effectively have to pay for what government won’t cover. The main sticking point was that by imposing conditions that allow parents to only enrol children for 20 hours per week (or six hours per day), this could leave ECE centres with no way to cover the additional teacher costs that government doesn’t fund (for additional hours etc). The ability to set daily and other fee schedules enables un-funded costs to be recovered through parent fees. But if the ability to have parent fees was removed then there would exist no other way for an ECE service to meet those un-funded costs. That’s why the sector called for the 20 Hours ECE conditions to be dropped – a very large number of centres to being announced, of course. Surprises in Budgets have become a norm – and it is training the sector’s psychology to expect massive policy changes as part of the secret budget process with no real followthrough after the announcements to try to get major new policies right. Hopefully that will prove different this time. It means engagement between the government and the sector to get things right – how hard can that be? My view is there is a time for secrecy but afterwards you need to make up for it and work with those outside of government to refine things so they can actually work. Budget 2023 delivered a major shock to the sector and meanwhile there is still no solution in sight for the pay parity funding gap which ECC has been loudly outspoken about. Don’t let’s forget that. If you are not an ECC member I’d advise you to join ECC to get access to its pay parity guidance and advice alone (there are loads of other benefits of being a member too). Things are looking very shaky indeed so that means things are shaping up for a really exciting ECE policy debate between politicians at the ECC Conference. Labour has advised us they will not be sending a Minister. Get your tickets here by following the link on our website bit.ly/ecc2023 June 2023 { 9 }
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