Rising daycare costs are putting pressure on families. Illustration / Paul Slater
Rising daycare costs are putting pressure on families. Illustration / Paul Slater
Parents of young children are questioning whether returning to work is financially worth it as the cost of daycare in Aotearoa bites.
While the Government has promised to tackle the growing costs with its FamilyBoost childcare tax credit, Education Minister Erica Stanford is waiting until Budget day on May 30 before announcing when it will kick in.
Anna*, a young lawyer who asked not to be named, recently moved to Auckland with her partner and said they are looking at paying around $700 per week for their two children to attend daycare.
She said this is about $100 more a week than their previous daycare in a smaller city, which was “quite a bit nicer”.
The amount the pair will pay has made them question her decision to return to work. She said career progression was the “only reason” she decided to go back.
Some parents are weighing up whether it's worth going back to work due to rising daycare costs.
“It isn’t worth it [financially] now. I’m just hoping that it will be eventually. For women who aren’t in careers with growth, if they’re on a standard rate and not really increasing, I can 100 per cent see why people aren’t going back to work.
“It’s a massive barrier and it’s not really supporting women back into the workforce.”
She said the cost-of-living crisis has highlighted that the price of daycare was something people should consider before they have children.
“If our eldest was already 3, it would be okay because we would be getting the 20 hours’ subsidy. But because we’ve had two under 3, that’s where it’s become a major expense.”
Anna told the Herald that before having children, she hadn’t put significant thought into the cost of childcare, as she had assumed her work would easily pay for it.
“With centres $600, $750 a week [for two children] - you really need to be taking home enough after that for it to be worth going back to work.”
She said the alternative is stepping out of the workforce until your youngest child is 5, but that can make getting back into work difficult.
“You’re competing with candidates who have relevant, up-to-date experience.”
Anna felt it was “insane” that supplementary government support was not offered to most primary caregivers beyond the 12-month mark.
“I’m shocked there’s nothing to help women at that point. I guess if you’re eligible for other subsidy top-ups, you do get a bit of support there.
“You just sort of pay what it costs and have nothing left over - or don’t go back to work.”
Minister of Education Erica Stanford. Photo: RNZ / Samuel Rillstone
Other parents spoken to by the Herald expressed similar concerns over the cost of daycare, but many felt they had no choice but to swallow the rising fees as other childcare options did not provide hours that fitted their work schedules.
National unveiled its FamilyBoost policy last March, which promised some families up to 25 per cent rebate on their childcare expenses, capped at $75 a week ($3900 a year) for families earning up to $180,000.
Whereas families earning up to $180,000 a year would qualify for the policy, family incomes of more than $140,000 would receive less of a rebate. Maximum weekly rebates for families earning $150,000, $160,000 and $170,000 were promised at $56.25, $37.50, and $18.75, respectively.
Education Minister Erica Stanford told the Herald the Government was “very conscious” about the cost pressures facing New Zealanders, particularly those families with young children and childcare costs.
Last year, Labour proposed expanding the 20-hours-free scheme to include 2-year-olds from March this year.
The move was one of Labour’s attempts in the Budget to ease the cost of living pressures on families and was accompanied by a 4.6 per cent increase in the funding rates for those 20 hours.
The Government has promised to ease the burn of daycare costs on families.
Fulltime fees at one childcare centre in central Auckland seen by the Herald were $450 a week for a child under 2 and another centre, also in Auckland, charges $430 for the same service.
Early Childhood New Zealand learner and workforce general manager Nikki Parsons said the rising costs were caused by the increasing cost of living, red tape, teacher shortages and a broken funding system.
Parsons said the Government should provide more funding so prices would stop increasing for families.
“We’ve been saying for years and years about this teacher shortage and it’s at crisis point.”
Parsons said they were optimistic the FamilyBoost policy would make a difference, especially for families with children under 2 years old.
Early Childhood Council chief executive Simon Laube.
Early Childhood Council (ECC) chief executive Simon Laube told the Herald the sector was awaiting more detail on the FamilyBoost package and it was possible some providers could increase prices as a result of the scheme.
“The top question would be: when exactly does the Government plan to deliver it?”
Katie Harris is an Auckland-based journalist who covers social issues including sexual assault, workplace misconduct, crime and justice. She joined the Herald in 2020.
