Free care may increase prices, documents say

The Government's planned 20 hours of free care for children aged 3 and 4 could drive up childcare costs for younger children, documents reveal.

National education spokesman Bill English released papers from the Treasury, Ministry of Social Development and the Department of Labour, obtained under the Official Information Act, that show a fee increase could be a side-effect of Labour's policy.

A Treasury document states: "We know about the possible increase in fees for hours over the free entitlement. As we've all discussed at length over the last few months, the overall cost to parents may in fact increase or decrease only slightly."

A select committee report says: "There is a risk that prices for 0-2-year-olds, and all age groups above 20 hours in community-based services will be pushed up to cover any shortfall caused by average cost funding for 20 hours free care for [those aged 3 and 4]."

Mr English said the papers showed the 20-hours-free policy was more a product of Labour ideology than what was best for families.

Education Minister Trevor Mallard said the Government would need to monitor the free childcare when it was introduced in 2007 to make sure it did not force up childcare prices for younger children.

Mr Mallard said that if prices did rise he had the option of introducing fee controls.