Childcare Costs in Fresh Zealand Rise, Pressuring Families
Parents returning to work in New Zealand are facing substantial childcare expenses, with some bills reaching $15,000 to $20,000 annually. The early childhood education (ECE) sector warns that these costs are likely to increase, creating a significant financial burden for many families.
Financial Strain on Families
Stephanie Pow, founder of Crayon, a company supporting parental wellbeing in the workplace, highlighted the escalating costs, stating that childcare is now comparable to private school fees. This is particularly challenging for families who would not otherwise consider private education, and the expense multiplies with each additional child. According to data from the Organisation for Economic Co-operation and Development (OED), New Zealand is among the least affordable countries globally for childcare as a percentage of household income.
For two parents earning average full-time wages with two children in full-time daycare, childcare expenses can exceed one-third of their total income.
Rising Costs Over Time
Data from the Household Economic Survey illustrates a consistent increase in ECE costs:
- 2007: $25.71 per week
- 2013: $85.18 per week
- 2019: $95.45 per week
- 2023: $90.62 per week
Between the March 2025 quarter and December 2025, ECE costs increased by 2.5%.
Government Support and Funding
The Family Boost payments, introduced in July 2024, have partially offset rising costs, resulting in a 22.8% decrease in expenses through the same period the previous year. Family Boost provides coverage of 40% of childcare costs, up to a maximum of $1560 per quarter for households earning up to $35,000. Households earning between $35,000 and $57,286 per quarter can claim either 40% of their ECE fees or the maximum $1560, minus 7 cents for every dollar earned over $35,000, whichever is less.
the 20 Hours ECE scheme provides subsidies for up to 20 hours of childcare per week, equivalent to six hours per day. Some centers offer up to 30 hours through additional subsidies.
Variations in Costs and Quality
The Office of Early Childhood Education notes that home-based education fees can range from $5 to $12 or more per hour, while Playcentres are the most affordable option. Kindergartens, benefiting from the 20 Hours ECE scheme, can charge as little as $3 per hour for care exceeding the subsidized hours. Most other centers charge between $5 and $8 per hour for children not receiving 20 hours funding.
Amanda White, a researcher at the NZ Council for Education Research, emphasizes that costs can vary significantly. She argues that high-quality ECE should be accessible to all children, and that higher fees do not necessarily equate to better care. Factors such as teacher qualifications, teacher-child ratios, and group size are critical indicators of ECE quality.
Industry Concerns and Potential Solutions
The Early Childhood Council, representing ECE operators, warns that without changes to the current funding model, costs are likely to rise further, or centers may be forced to close. Between March 2022 and July 2025, 443 centers closed due to pay parity requirements and sustained underfunding.
The Government established a Ministerial Advisory Group in June to review ECE funding. Yet, the Early Childhood Council’s chief executive, Simon Laube, notes that implementing changes to the funding system will take time. He urges the government to provide immediate support to assist centers remain operational and retain teachers, as the current funding doesn’t keep pace with rising teacher salaries.
Despite the challenges, some centers, like childcare charity Best Start, have reported profits, with Best Start making $32 million in 2023.
Demand and Accessibility
Stephanie Pow notes that parents are already finding it difficult to secure childcare places, often needing to begin their search 12 months or more in advance. Occupancy rates vary by region, with Canterbury experiencing high demand and Auckland potentially having an oversupply of providers.
The Importance of Early Childhood Education
Otago University economist Murat Ungor emphasizes the critical role of ECE in human capital development, noting that the first five years of life are crucial for brain development. Investing in ECE can break cycles of poverty, reduce inequality, and boost long-term productivity. Recent UNICEF reports indicate that New Zealand ranks low in child wellbeing compared to other OECD and EU countries, highlighting the need for increased investment in early childhood education.