By the numbers: The true cost of childcare

A plan to increase access to subsidised childcare could bring relief to thousands of families struggling to keep up with increasing costs.

Read this story in te reo Māori and English here. / Pānuitia tēnei i te reo Māori me te reo Pākehā ki konei.

From next year, the Government will start paying for up to 10,000 more children to go to after school care and pre-schools while their parents are at work.

The expansion of the subsidy scheme is expected to cost $189.4 million over four years and mean just over half of all families would be able to receive subsidised care.

Here’s a by-the-numbers breakdown of current childcare costs and how they’re set to change.

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23%

New Zealand has some of the highest childcare costs in the Western world. A typical couple – both earning the average wage and with two kids – spends 23% of their income on childcare, according to the latest data from the OECD, from 2018.

20 hours

The Government provides 20 hours of free early childhood education (20 Hours ECE) for all three- and four-year-old children in approved formal childcare centres. But just how “free” those hours really are has been the subject of debate.

50%

Although the 20 Hours ECE policy drove costs down by more than a third when it was introduced in 2007, they’ve since risen by 50% and are almost back to pre-20 Hours levels, according to an investigation by Stuff based on analysis of consumer price index data from Stats NZ.

Under the scheme, parents can choose how many of the 20 hours they use, up to 6 hours a day and 20 hours a week.

That leaves a loophole for providers, which can require a minimum period of enrolment, like 6.5 hours, then charge a flat fee for the day. In some cases, these fees can be more than $60 a day or $300 a week.

Providers can also charge “optional” fees for additional extras and ask for donations.

$59.72

According to childcare comparison website Care For Kids, the average cost of childcare in New Zealand is $59.72 per 10-hour day or $298.60 for a 50-hour week.

However, costs vary significantly depending on region and individual provider. While the average in Johnsonville, Wellington, is $402 a week, it’s much cheaper to have your child looked after in Kaitaia, where the average is $268.75 a week.

$87,100

While Work and Income provides childcare subsidies to help low-income families meet those costs, the current annual earnings limit for a couple with two kids is set at $87,100.

$125

Many families where one parent stays home to look after the kids get some financial help though Working for Families (WFF). A couple with two kids under five and one parent bringing in $1476 a week (the latest average weekly earnings figure from Stats NZ) currently qualifies for $125 a week, made up of a $53 family tax credit and a $72 in-work tax credit.

$0

However, if the second parent returned to work and also earned $1476 a week, the couple would no longer qualify for any WFF assistance.

In fact, the second parent could earn only $467 a week before all WFF tax credits would be lost. That additional amount would also take their combined annual income to $101,036, making them ineligible for any childcare subsidies – for now at least, because…

$125,000

…From April, the income cap for families with two children will increase to about $125,000, while the cap for three-child families will rise from $130,105 to $140,244.

As an example, a two-income family, earning a combined $108,000 a year, with two children under 5, would be eligible for $252 a week to pay for early childhood care.

Once those children started school, the family would receive $118 a week for after school care and $319 a week for school holiday programmes.