NZ govt broadens childcare assistance services to cover more families

• New Zealand government has decided to extend its childcare assistance to more families
• More than 10,000 children will get assistance to go to school or pre-school.
• The move may cost the exchequer NZ$189.4 million.

The New Zealand government will now be extending its childcare assistance to bring relief to thousands of Kiwi families struggling with the increased cost of living.

As per an announcement made on Sunday (6 November 2022), from 1 April 2023, the government will start paying for more than 10,000 more children to go to school care and pre-schools while the parents go to work.

While this extension of the scheme is expected to cost the exchequer NZ$189.4 million over four years, it would mean that a family with two children under five years of age will now be eligible for NZ$252 per week from 1 April 2023.

New Zealand Prime Minister Jacinda Ardern, while announcing the policy said that the government was making childcare more affordable for low-income and middle-income families.

She added that at a time when the cost-of-living pressures were rising, the government was investing in childcare to make sure that families have more support in this direction so that they can cover other costs. 

The main points of the policy are:

• 54% of all Kiwi families with children will now be eligible for subsidised childcare assistance.
• This move makes more than 10,000 more children eligible for support.
• All single parents will be eligible for childcare assistance.
• Family tax credit to increase by NZ$9 for the eldest child and by NZ$7 for subsequent children per week.

Cost of childcare in NZ

PM Ardern specifically said that Kiwi women cannot afford to work even if they want to due to high childcare costs and they are foregoing a substantial portion in wages every year.

As per an OECD report titled “Net Childcare Costs” released in 2022, NZ has some of the highest childcare costs. A family ends up spending 23% of their income on childcare, according to the report.

Ardern said childcare assistance has been underinvested in since income thresholds were frozen in 2010. The prime minister added that in 2021 the government started to reverse that by indexing childcare assistance to average wage growth. But the recent policy announcement is more significant, she said.

This policy is also expected to address the disparities in the Maori and Pacific communities, the announcement said.