Childcare

Childcare Subsidy

The Childcare Subsidy programme assists with the costs of childcare faced by low- and middle-income families. It provides assistance with the cost of licensed childcare, family day care, home-based care and chartered Te Kōhanga Reo, and is paid directly to the childcare provider.

A Childcare Subsidy is available for children aged under five years, and for children aged under six years if the caregiver also receives a Child Disability Allowance for their child.

People can receive a Childcare Subsidy for up to 50 hours per week if:

• they are in employment, in training, or participating in an activity approved by Work and Income
• they or their child has a disability or serious illness.

Other people can receive Childcare Subsidy for up to nine hours per week.

In October 2004 and again in October 2005, the income limits entitling families to receive a Childcare Subsidy were raised under the Working for Families package.

Childcare Subsidies can't be paid for hours which are covered by the free early childhood education hours introduced from July 2007. The subsidy can, however, be used for additional hours or used instead of free early childhood education hours, as long as the combined total of hours covered doesn't exceed the client's maximum entitlement to subsidised hours (either nine hours or 50 hours as above).

Please note that information in this section indicates the number of children covered by a Childcare Subsidy received and granted. This information may therefore differ from other published information giving the number of clients receiving or granted a subsidy for one or more children.

---

Trends in the number of children covered by a Childcare Subsidy

The number of children covered by Childcare Subsidies has decreased over the last year, following increases over the previous three years (see table 4.10). Increases between 2004 and 2007 reflect the impact of increased Childcare Subsidies and widened eligibility under Working for Families. The decrease in the last year reflects the impact of the introduction of 20 hours free early childhood education, which resulted in a number of clients receiving the Subsidy for less than 20 hours per week ceasing the subsidy in order to take up free early childhood education.

Seventy percent of the children covered by these subsidies in 2008 had caregivers who were not receiving any pension or main benefit, compared with 30% in 2004 (see table 4.10). There was a corresponding decrease in the proportion who had caregivers receiving a carer's benefit (from 62% to 27%).

Table 4.10 Trends in the type of pension or main benefit paid to caregivers of children covered by a Childcare Subsidy

Type of pension or main benefit paid to carer at the end of June	Children covered by a Childcare Subsidy1
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Unemployment-related benefits2	698	614	506	334	200
Carer's benefits3	14,988	14,457	13,948	13,768	9,377
Sickness-related benefits4	438	493	542	553	300
Invalid's Benefit	581	631	722	719	518
Widow's Benefit	101	90	95	67	44
Emergency Benefit	153	158	159	150	65
New Zealand Superannuation	34	41	54	51	29
Veteran's Pension	3	0	0	1	1
No pension or main benefit5	7,241	16,846	20,889	26,909	24,346
Total	24,237	33,330	36,915	42,552	34,880

Notes

1. Numbers of children recorded in SWIFTT as being covered by a Childcare Subsidy at the end of June. Please note that the timing of this extraction may be altered in some years shown, to avoid school holiday periods.
2. Comprises Unemployment Benefits and Unemployment Benefits - Hardship paid to unemployed people and to trainees, and Independent Youth Benefits.
3. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.
4. Comprises Sickness Benefits and Sickness Benefits - Hardship.
5. Includes clients entitled to a Childcare Subsidy through receiving an Orphan's Benefit or an Unsupported Child's Benefit.

---

Trends in the proportion of children aged under five years covered by a Childcare Subsidy

The proportion of all children aged under five years in the New Zealand population who were covered by a Childcare Subsidy at the end of June has decreased over the last year, following three years of increases (see figure 4.5).

This pattern reflects the combined impact of:

• widened eligibility of low-income working families for the Subsidy, resulting from the Working for Families package implemented in October 2004
• the introduction of 20 hours free early childhood education from July 2007, which reduced the use of the Subsidy by clients with children receiving 20 hours early childhood education or less per week.

figure 4.5 Trends in the proportion of children aged under five years covered by a Childcare Subsidy

Note

1. Proportion shows:
   1. number of children aged under five years recorded in SWIFTT as being covered by a Childcare Subsidy at the end of June, divided by
   2. Statistics New Zealand final estimate of the resident population aged under five years at the end of June.

See table A3.16 for a summary of the SWIFTT data underlying figure 4.5

---

Trends in Childcare Subsidies granted

The number of Childcare Subsidies granted each year has decreased in the last year after increasing over the previous three years (see table 4.11). The reduction in the last year reflects the introduction of 20 free hours early childhood education, which reduced demand for the Subsidy among clients with children receiving 20 free hours or less early childhood education per week.

Sixty-four percent of the children covered by Childcare Subsidies granted in 2007/2008 had caregivers who were not receiving any pension or main benefit, compared with 26% in 2003/2004. There was a corresponding decrease in the proportion of caregivers receiving carer's benefits (from 64% to 32%) (see table 4.11). Over the last year, the proportion of these children with caregivers in employment increased (from 36% to 43%), while the proportions of caregivers who qualified for the subsidy on grounds of low income decreased (from 42% to 33%) (see table 4.12). These changes reflect the introduction of 20 hours free early childhood education. Because recipients of main benefits are only eligible for up to nine hours subsidy per week per child, unless they are in training or undertaking approved work-related activities, most beneficiaries who took up free early childhood education used it to replace the subsidy. As a result, the proportion of subsidy recipients who were receiving main benefits declined, while the proportion in work increased.

Table 4.11 Trends in the types of pension or main benefit paid to caregivers of children covered by Childcare Subsidies granted

Type of pension or main benefit paid to caregiver when Childcare Subsidy granted	Children covered by Childcare Subsidies granted1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Unemployment-related benefits2	1,693	1,376	1,178	1,007	569
Carer's benefits3	24,665	23,019	23,156	21,988	17,369
Sickness-related benefits4	704	832	817	863	621
Invalid's Benefit	858	871	924	892	712
Widow's Benefit	136	111	126	95	103
Emergency Benefit	281	279	271	279	152
New Zealand Superannuation	44	54	65	62	51
Veteran's Pension	0	2	0	1	0
No pension or main benefit5	10,099	24,023	26,565	32,864	34,460
Total	38,480	50,567	53,102	58,051	54,037

Notes

1. Numbers of successful applications for Childcare Subsidies recorded in SWIFTT during years ended June.
2. Comprises Unemployment Benefits and Unemployment Benefits - Hardship paid to unemployed people or to trainees, and Independent Youth Benefits.
3. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.
4. Comprises Sickness Benefits and Sickness Benefits - Hardship.
5. Includes clients entitled to a Childcare Subsidy through receiving an Orphan's Benefit or an Unsupported Child's Benefit.

Table 4.12 Trends in reasons for granting Childcare Subsidies

Reason Childcare Subsidy granted	Children covered by Childcare Subsidies granted1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Disabled parent	665	601	681	846	930
Parent in employment	9,172	17,682	17,738	20,768	23,416
Child receiving Child Disability Allowance	1,120	1,448	1,810	2,176	2,232
Sibling receiving Child Disability Allowance	687	842	1,190	1,540	1,592
Sibling in hospital	13	13	10	20	18
Illness or injury	208	179	178	172	194
Parent in training or education	8,762	8,575	8,441	8,025	7,572
Insufficient income	17,852	21,227	23,054	24,504	18,083
Unspecified	1	0	0	0	0
Total	38,480	50,567	53,102	58,051	54,037

Note

1. Numbers of successful applications for Childcare Subsidies recorded in SWIFTT during years ended June.

---

OSCAR (Out-of-School Care and Recreation) Subsidy

An OSCAR Subsidy pays for out-of-school care for children aged 5-13 years. These subsidies were introduced in February 1999, to assist low- and middle-income families with the cost of approved out-of-school care and holiday programmes, and are paid directly to the provider of the childcare.

People can receive an OSCAR Subsidy for up to 20 hours per week in term time, and for up to 50 hours per week in school holidays if:

• they are in work or study, or
• they or their child have a disability or a serious illness.

In October 2004, the income limits entitling families to receive an OSCAR Subsidy were raised under the Working for Families package. The hourly subsidy rates were also increased from 4 October 2004 to equal Childcare Subsidy rates, as well as being raised in line with inflation from 1 April 2005. Hourly rates for the subsidy were raised again from 3 October 2005.

Please note that the information given below shows the number of children covered by an OSCAR Subsidy received and by subsidies granted. This information may therefore differ from other published information showing the number of clients receiving or granted a subsidy for one or more children.

---

Trends in the number of children covered by an OSCAR Subsidy

The number of children covered by an OSCAR Subsidy has increased rapidly since 2004 (see table 4.13). This reflects the widened eligibility and increased subsidy levels under the Working for Families package (which increased the attractiveness of the subsidy as well as widening eligibility for it).

Eighty-three percent of the children covered by an OSCAR subsidy in 2008 had caregivers who were receiving no pension or main benefit, compared with 52% in 2004. Over this period, the proportion with caregivers receiving a carer's benefit decreased (from 47% to 16%) (see table 4.13). This reflects the widened eligibility of low-income working families under the Working for Families package.

Table 4.13 Trends in the types of pension or main benefit paid to caregivers of children covered by an OSCAR Subsidy

Type of pension or main benefit paid to caregiver at the end of June	Children covered by an OSCAR Subsidy1
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Unemployment-related benefits2	4	5	5	17	12
Carer's benefits3	990	1,273	1,276	1,352	1,531
Sickness-related benefits4	5	8	7	14	18
Invalid's Benefit	6	10	30	42	59
Widow's Benefit	8	11	13	19	12
Emergency Benefit	3	3	2	3	12
New Zealand Superannuation	1	2	5	4	5
No pension or main benefit5	1,094	2,973	4,308	5,924	7,817
Total	2,111	4,285	5,646	7,375	9,466

Notes

1. Numbers of children recorded in SWIFTT as being covered by an OSCAR Subsidy at the end of June.
2. Comprises Unemployment Benefits and Unemployment Benefits - Hardship paid to unemployed people and to trainees, and Independent Youth Benefits.
3. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.
4. Comprises Sickness Benefits and Sickness Benefits - Hardship.
5. Includes clients entitled to an OSCAR Subsidy through receiving an Orphan's Benefit or an Unsupported Child's Benefit.

---

Trends in the proportion of children aged 5-13 years covered by an OSCAR Subsidy

Each year since 2004, the proportion of all children aged 5-13 years in the New Zealand population who were covered by an OSCAR Subsidy at the end of June has increased significantly (see figure 4.6). This reflects the impact of widened eligibility of low-income working families under the Working for Families package. Since 2004, children aged 5-9 years have been more likely than children aged 10-13 years to be covered by a subsidy.

figure 4.6 Trends in the proportion of children aged 5-13 years covered by an OSCAR Subsidy, by age

Note

1. Proportion shows:
   1. number of children in age group recorded in SWIFTT as being covered by an OSCAR Subsidy at the end of June, divided by
   2. Statistics New Zealand final estimate of the resident population in age group at the end of June.

See table A3.17 for a summary of the SWIFTT data underlying figure 4.6

---

Trends in OSCAR Subsidies granted

The number of OSCAR Subsidies granted has increased since 2003/2004 (see table 4.14), reflecting both receipt of subsidies by clients who are in training or employment and the widened eligibility for subsidies since 2004 under the Working for Families package.

Since 2003/2004, there have been increases in the proportions of children covered by OSCAR Subsidies granted whose caregivers were:

• receiving no pension or main benefit (from 45% to 80%) (see table 4.14)
• in employment (from 74% to 85%) (see table 4.15).

Table 4.14 Trends in the types of pension or main benefit paid to caregivers of children covered by OSCAR Subsidies granted

Type of pension or main benefit paid to caregivers when OSCAR Subsidy granted	Children covered by OSCAR Subsidies granted1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Unemployment-related benefits2	60	58	39	61	54
Carer's benefits3	5,115	5,775	6,573	6,387	6,684
Sickness-related benefits4	25	33	37	89	125
Invalid's Benefit	55	85	131	244	302
Widow's Benefit	48	61	77	75	80
Emergency Benefit	9	15	10	23	36
New Zealand Superannuation	6	4	12	12	28
No pension or main benefit5	4,385	9,380	14,950	20,730	29,253
Total	9,703	15,411	21,829	27,621	36,562

Notes

1. Numbers of successful applications for OSCAR Subsidies recorded in SWIFTT during years ended June.
2. Comprises Unemployment Benefits and Unemployment Benefits - Hardship paid to unemployed people and to trainees, and Independent Youth Benefits.
3. Comprises Domestic Purposes Benefits - Sole Parent, Domestic Purposes Benefits - Care of Sick or Infirm, Domestic Purposes Benefits - Women Alone and Emergency Maintenance Allowances.
4. Comprises Sickness Benefits and Sickness Benefits - Hardship.
5. Includes clients entitled to an OSCAR Subsidy through receiving an Orphan's Benefit or an Unsupported Child's Benefit.

Table 4.15 Trends in reasons for granting OSCAR Subsidies

Reason OSCAR Subsidy granted	Children covered by OSCAR Subsidies granted1
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Caregiver in employment	7,174	12,347	18,033	23,018	31,208
Caregiver in training or education	2,529	3,064	3,796	4,603	5,354
Total	9,703	15,411	21,829	27,621	36,562

Note

1. Numbers of successful applications for OSCAR Subsidies recorded in SWIFTT during years ended June.

---

Trends in combined expenditure on Childcare Subsidies and OSCAR Subsidies

Significant increases since 2003/2004 in combined expenditure on Childcare Subsidies and OSCAR Subsidies largely reflect the impacts of the Working for Families package and of the introduction of 20 hours free early childhood education from July 2007. These impacts included:

• widened eligibility for these subsidies since October 2004
• an increase in October 2004 in the hourly rate for both subsidies, which was additional to the regular Consumers Price Index (CPI) adjustment
• an increase in October 2004 in the rate of OSCAR subsidies, which made these rates equivalent to those for Childcare Subsidies
• an increase in October 2005 in the hourly rates of both subsidies, which was additional to the regular CPI adjustment
• increased income thresholds in October 2006 and increased income abatement thresholds in April 2007 (the first was to make 60% of couples with children eligible based on Census 2001 data, and the second to do so based on Census 2006 data)
• substitution of free early childhood education for Childcare Subsidies by clients whose children were receiving Childcare Subsidies for less than 20 hours a week.

Changes between 1995/1996 and 2003/2004 in combined annual expenditure on Childcare Subsidies and OSCAR Subsidies (see table 4.16) reflect:

• annual CPI adjustments to the rate of Childcare Subsidy payments
• the introduction of the OSCAR Subsidy from 1 February 1999
• increases from 1 July 2001 and from 1 July 2003 in the maximum number of hours per week for which subsidies may be paid.

Table 4.16 Trends in combined annual expenditure on Childcare Subsidies and OSCAR Subsidies

Year ended June	Expenditure on Childcare Subsidy and OSCAR Subsidy1,2,3 ($m)
1995/1996	34
1996/1997	37
1997/1998	40
1998/1999	49
1999/2000	51
2000/2001	52
2001/2002	56
2002/2003	57
2003/2004	59
2004/2005	79
2005/2006	111
2006/2007	141
2007/2008	158

Notes

1. Expenditure on Childcare Subsidies and OSCAR Subsidies in years ended June.
2. Expenditure shown is adjusted to payment periods based on a standard 22-day working month and smoothed using a two-month moving average. Childcare Subsidies and OSCAR Subsidies are not subject to taxation.
3. Expenditure data in this table differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

The strong seasonal pattern in combined monthly expenditure on Childcare Subsidies and OSCAR Subsidies (see figure 4.7) reflects higher demand for this assistance during the school/academic year and a decrease in demand over the summer vacation period.

figure 4.7 Trends in combined monthly expenditure on Childcare Subsidies and OSCAR Subsidies

Notes

1. Expenditure is adjusted to payment periods based on a standard 22-day working month, and smoothed using a two-month moving average. Childcare Subsidies and OSCAR Subsidies are not subject to taxation.
2. Expenditure data in this graph differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

---