20 Hours ECE

Dec 3, 2023

Kia ora te whanau,

It has been some time since the Twenty Hours ECE was introduced. This article is to explain the Twenty Hours ECE and how it impacts on us here at ECOS.

Our position as centre owners has always been that this is a wonderful initiative and we endorse any act from the government that reduces the costs of childcare.  As such we offer the 20 hours to all our whanau. Originally it was called "20 Hours Free ECE", but as the workings became clear, the use of "free" became problematic and was hence dropped.  At present this initiative is known as 20 Hours ECE.  So this is how it works

20 Hours ECE entitles all whanau, when their child turns 3 years of age, to have 20 hours fee free each week. The Government funds all children for 6 hours per day only.  So if your child is attending for longer than this, they will not get funded for more than 6 hours for each day.

The government will only fund ECOS for days the centre is open. Just as we don't charge for public holidays and centre closures - the government will not pay 20 hours if we are closed - just like winz payments.  That is why we never encourage parents to select Mondays as a day of receiving 20 hours as this is the day of most public holidays.  To access the 20 hours we encourage parents to select Tuesday (6 hours) Wednesday (6 hours) Thursday (6 hours) and Friday (2 hours).  There will however be weeks with public holidays that fall on one of the days selected above, which will result in a reduced allocation of 20 hours ECE being received.

The fee rate for children who are eligible for 20 hours is different than the Under 3 rate.  It is not just a straight $8.50 per hour.  The fee scale for over three-year-old children has an added cost built into this to help subsidise the costs of implementing the 20 hours ece. Why is this necessary?  The 20 Hours ECE simply does not pay enough to cover our costs.

Our fees are $8.50 per hour. To meet our costs, we need to receive $17.98 an hour per child from government subsidies and fees.  The day the children turn 3 and access 20 Hours ECE,  we receive only $15.46 per hour subsidy from the Government.  We also cannot charge fees for the 20 hours of booked time that the parents have stipulated.  That leaves a shortfall in our operating budget of $2.52 per hour for 20 hours.  Over a week this amounts to $50.40 per child.  Over a year this means our budget is $2419 dollars per child in the red.  We have an average of at least 34 children at a time accessing the 20 hours which over a year means our budget is $82253 dollars in the red.  When this was first introduced we met with our whanau and discussed this and it was agreed to add an additional charge to our fee structure  to help mitigate some of this.  This reduces the deficit to $16973 per year. We do not have optional charges as some other centres do - we have built the cost into the fee structure the parents agree to pay.  It is a cost of doing business and therefore all must agree or the enrolment agreement with us will be void.

As stated above we like the 20 Hours ECE as parents benefit (saving up to $8000.00 in childcare cost per annum), but we also had to make sure we meet budgetary responsibilities so this fee structure was created.  Every child who is three is not charged for the chosen 20 hours that parents stipulate on their enrolment agreement.  Once they surpass the 20 Hours ECE, the fee structure then kicks in - hence if your child is attending 30 hours you will receive an invoice for $125.00 per week - weekly fee being $255 (30 hours x 8.50) less $170 - (20 hours x 8.50) = $85 + $40 = $125.00 . Over a year if your child is attending for 30 hours you will save $6240 per year ...

Just an aside - we also pay GST on all income, so the government immediately takes back 15% of these subsidies.

We apologise for the complexity of this info.

Updated: 6 May2024

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