A revamp of Family Boost is offering higher rebates and expanded eligibility, but experts say the ECE affordability crisis needs more than quick fixes, writes Catherine McGregor in today’s extract from The Bulletin.

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Family Boost gets a top-up

The government’s Family Boost rebate for early childhood education has been expanded, with finance minister Nicola Willis announcing that families can now claim back 40% of their ECE fees, up from 25%. At the same time, the income cap for eligibility has risen sharply, from $180,000 to $229,000 a year, meaning thousands more families now qualify. Willis says this tweak is designed to ensure unspent money in the scheme’s pot actually reaches families, after figures revealed surprisingly low uptake: around 60,000 families have claimed Family Boost so far, well short of the original estimates of 130,000 additional households supported.

The changes mean a family paying $100 a week in childcare fees could now get an extra $15 back each week, but the bigger question is whether this extra support will be easy enough to access to make a difference.

Red tape still ties parents in knots

For many families, the real barrier to Family Boost hasn’t been the income limit but the paperwork. As Vernon Small wrote in the Sunday Star Times in April (paywalled), the rebate was pitched as an easy “money in the bank” promise but has turned out to be an exercise in bureaucracy: families must keep invoices, submit them to IRD, and wait for the refund. It’s hardly the “back pocket boost” National advertised during the election.

Writing in The Spinoff in 2023, Aisling Gallagher explained how countries like Australia have abandoned similar rebate models precisely because they burden parents with extra admin while delivering little on affordability. Although Willis has promised to look at direct refunds – paying rebates straight to providers – no fix has been confirmed. Until then, the burden remains on parents to chase money they’re entitled to, which many simply don’t have time or capacity to do.

Who really benefits?

Another sticking point, Gallagher argues, is that rebates can backfire if providers simply raise fees. In New Zealand’s mostly privatised ECE market, any extra cash for parents risks being swallowed by price hikes. It seems the government believes that fees can be kept in check by parents’ ability to “talk with their feet” and choose a cheaper option, but that’s unrealistic, says Gallagher: “Childcare markets do not work under textbook supply and demand imperatives.” Without stronger controls on prices – or more ambitious investment along the lines of Australia’s recent billion-dollar boost – the rebate risks acting more as a subsidy for the sector than real relief for parents.

Family Boost does at least give IRD better access to fee data, allowing officials to track “service provider behaviour around fee charging immediately following subsidy increases”, according to the government. But many providers say they have little choice but to raise prices, with or without the Family Boost rebate. As Cate Macintosh reports in The Press (paywalled) small independent operators were already stretched thin by rising teacher pay, inflation and patchy government funding. With the budget’s meagre 0.5% funding increase failing to keep pace with costs, some centres are cancelling free hours or hiking fees just to survive.

An overhaul of rules – but will it ease costs?

Some hope rests on recent regulatory changes, which saw associate education minister David Seymour pushing through an overhaul of the tangle of ECE rules. As we discussed back in April, the rule changes primarily involve merging or removing outdated licensing criteria, with the aim of lowering operating costs for centres and, in theory, preventing endless fee hikes.

But with ECE in New Zealand more unaffordable than anywhere else in the developed world, according to the education ministry’s own 2022 figures, many argue these tweaks won’t go far enough. For parents still paying up to a third of their income for childcare, the promise of affordable, accessible ECE remains just that: a promise.

More from The Spinoff:

• Heather Taylor: A once-in-a-generation chance to transform early learning