KEY POINTS:
Two of the biggest early childcare providers are to join the Government's programme offering 20 hours each week of free early childhood education for 3- and 4-year-olds.
Barnardos and KidiCorp, which run about 80 centres, have said they will join the programme, which is set to begin on July 1.
The sign-up of the two is a victory for Education Minister Steve Maharey.
However, other providers in high-demand, inner-city areas are still struggling to decide whether they will follow suit.
The scheme can be opted into, but many providers claim the funding offer of up to $212 per child a week is well below what they currently earn from Government subsidies and parent fees and will not cover their costs unless they cut services.
KidiCorp chief executive Wayne Wright said all his centres would offer the free hours, including the highly popular Top Tots Daycare in Ponsonby and 28 other sites.
He said fees charged by all KidiCorp centres averaged about $185 a week.
The highest fees were at a Wellington centre which charged $230 because of high rent.
"There are some of those higher-priced companies that are going to have difficulties with it.
"In certain areas, people think it won't make a difference if centres don't sign up, but people who live in Remuera like to save money just as much as the next person.
"If there is a centre down the street where it's free, they will go there and it will put pressure on."
Barnardos chief executive Murray Edridge said the decision was not reached lightly, but it meant cost was not a barrier for children.
"It does come at a cost to us as an organisation. We are concerned that the rates set by the Government do not cover the full cost of providing quality early childhood education.
"Barnardos will be picking up the shortfall to ensure quality is maintained under the new funding regime."
Glennie Oborn, managing director of Kindercare, which has about 30 centres, said she was hoping the Government would amend its criteria, including an increase in funding, rather than leaving centres reliant on parent "donations" to meet the extra costs not covered by the policy.
Sue Thorne, chief executive of the Early Childhood Council, said the centres that were struggling to accept the level of funding were not just at the top end.
"Those rates come in well under the average fees that we've surveyed. To say it's only about people at high incomes is incorrect."
She said smaller providers with just a few centres would find it harder to afford the policy because they did not have a spread of centres to subsidise those in expensive areas.
It remained to be seen whether parents would decide whether to continue paying fees at favoured centres or look for free centres nearby.
However, demand at inner suburban centres contacted by the Herald remains high. Some report waiting lists of up to 18 months and parents enrolling their children before they are born to avoid missing out on a place.
Bear Park, which has popular centres in suburbs close to town and charges up to $313 a week for children aged over 2, is yet to decide.
Sue Steveley-Cole, director of Bear Park, said most of its nine centres had waiting lists ranging from six to 18 months.
A new centre opening in Herne Bay in March was already about 40 per cent full, purely by word of mouth.
Ms Steveley-Cole said the centres were considering the policy. "It's something that has been offered to parents, and every parent should have the right to it, but we haven't made the decision yet."
National's spokeswoman on early childhood education, Paula Bennett, said it was good news for parents at those centres that had signed up, but others would have trouble.
"I think it is going to be less likely in areas like Grey Lynn, the city centre, Ponsonby, where costs are much higher but the services are where the parents need them."
