Education ministry admits $20m error

The Ministry of Education has admitted a mistake resulting in "about $20 million" too much being paid out to early childhood education centres.

"I don't yet know all of the detail, but I do know that the Ministry of Education made a serious mistake and I'm very, very sorry for it," said Secretary for Education Karen Sewell.

"It's a significant amount ... It's certainly unprecedented in the time that I have been here," she told The Press.

The over-payment to about 2000 early childhood centres -- two-thirds of all centres in New Zealand -- has thrown the sector into turmoil.

Ms Sewell said she believed the figure involved was "about $20m" and that the ministry would not try to directly recoup the funds.

The error occurred in July last year when the salary component of some early-childhood education funding rates was adjusted by 8 per cent instead of the 4 per cent intended. The error was not found until last month, when an internal audit was started.

The investigation has spanned a number of branches of the ministry.

Education Minister Anne Tolley said she had ordered an inquiry into how the error occurred and why it took so long to pick up.

The blunder prevented the announcement in Thursday's Budget of the rates the Government will pay to teacher-led early-childhood services in the years ahead.

That has led to doubt over whether the Government can afford increases in line with inflation and whether it will be able to honour its new collective agreement with kindergartens.

"Obviously, the money is not there. The Government doesn't have the money and they've recognised that services have been overpaid, so no-one knows what will happen with the collective agreement," a source said.

In a bid to calm nerves, Ms Tolley told the Early Childhood Council and Playcentre conferences yesterday that proposals would go to the Cabinet within the next two weeks to confirm the inflation increase.

Ms Sewell said several staff had tendered personal apologies for the mistake and that she had not ruled out firing staff over it.

- NZPA