The Castledine family in Rarotonga. Photo / Instagram
In the second part of the series on high childcare costs in New Zealand, Isaac Davison looks at what other countries offer. You can read part one here.
The Castledine family gave up on Auckland when they had their second child.
Louisa and Mark Castledine had a new mortgage after buying a house in Hillpark in Manurewa. It took Louisa between 90 minutes and two hours to get to and from work in the CBD, where she was in a corporate role managing two manufacturing companies.
She and her husband, a sports co-ordinator at a primary school, were paying $160 a week for their son Zion’s childcare and had a baby daughter on the way. They both needed to be working and could not face paying twice as much for daycare - which would amount to around half their mortgage.
“We looked at the numbers and at maternity leave, and whether we could live on one income - and it just wasn’t affordable,” said Louisa, who worked in a corporate role for a manufacturing company.
Their experience was echoed by many families after a New Zealand mother’s video went viral last month. The TikTok video, by Napier woman Anna Catley, highlighted how she was better off not working than sending her three children under 3 to an early childhood centre for more than $1000 a week.
The public discussion of that video often touched on other countries’ policies and why New Zealand’s was so expensive.
New Zealand families face some of the highest costs in the world for childcare. A typical couple with two children would need to spend between one third and a half of one of their salaries to cover childcare, according to a Unicef report published in 2021.
While that report was based on outdated data, more recent analysis by the Ministry of Social Development has confirmed that New Zealand is one of the least affordable countries in the world in this area.
The reasons for this are varied, but include underfunding of the sector, significant growth of private providers and complicated fee structures used by providers.
The Government offers 20 hours of free childcare for 3- and 4-year-olds, though families are increasingly finding that this does not lead to a significant discount.
Families who earn below a certain threshold can also get childcare subsidies. On April 1, the income cap for accessing these subsidies was raised from around $87,000 for a two-child household to $127,000. A family with two parents who work 40 hours a week and earn $26 an hour can get around $250 a week in subsidies.
In households where one parent stays home with the kids, they can also access tax credits.
New Zealand ranks relatively poorly among developed countries for paid parental leave, with six months’ paid leave ($661/week) for the primary caregiver and no paternity leave.
There are some upsides: New Zealand ranks near the top countries in the world for quality of childcare, with low child-teacher ratios and relatively highly qualified staff.
Across the ditch, the cost of childcare is very high - around A$109 (NZ$118) a day on average, and is often even higher in big cities like Sydney and Melbourne.
But Australia also offers a relatively generous childcare subsidy scheme which is available to a broader age group than in New Zealand.
As of June, Australian families earning less than A$80,000 will get 90 per cent of their childcare paid for by the government - no matter the age of the child. For every $5000 earned over that level, the rate is cut by 1 per cent (up to earnings of $530,000 for a household). Most families get at least half of their childcare costs free. There are higher payments for families with more than one child.
Australia’s paid parental leave period is shorter than New Zealand’s, at 20 weeks, but the payments are slightly more generous. They are based on the minimum wage and amount to around A$812 a week (NZ$877).
British parents of 3- or 4-year-olds can get 15 hours of free childcare a week, 38 weeks a year, no matter how much they earn. Working families can get 30 hours of free childcare, a subsidy which is income-tested but only disqualifies the wealthiest families.
British households also get 30 hours of free early childhood education, but it will soon be available to all children aged 9 months to 4 years.
Paid parental leave is available for a longer period than in New Zealand, lasting for nine months. It is also initially more generous - 90 per cent of weekly earnings for the first six weeks - before dropping to around NZ$350 a week.
Scandinavian countries are routinely held up as the most generous countries for childcare and paid parental leave.
The Unicef study (which placed New Zealand 33rd out of 41) ranked Sweden fourth. It has an extremely generous paid parental leave policy, lasting for 16 months and paying up to $150 a day.
Most Swedish children do not attend preschool until the age of 1. The costs are means-tested, but also capped at either $250 a month or 3 per cent of household income.
The relatively generous childcare policies are made possible by high tax rates.
Faced with unsustainable costs, the Castledine family considered leaving Auckland for Papamoa, where house prices and commute times were lower. They also considered a move to Australia, where they would earn more and childcare subsidies were more generous - up to 90 per cent free.
They settled on Rarotonga in the Cook Islands, where Louisa had family and spent much of her childhood.
After moving there in 2019, they have started two businesses, a foodtruck and eatery and a tour company that offers swimming with turtles. Their incomes are lower than in New Zealand, but costs are far lower too.
Daycare for their daughter Niva costs $40 a week. It is open fewer hours (7am to 2pm), but people also worked fewer hours in the Cook Islands, Louisa said, and there was a relaxed approach to having kids in workplaces. The commute is also very different - Zion’s school is literally over the fence.
“So it’s a very different lifestyle now. We have the luxury of being able to spend the afternoon at the beach with our kids.”
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