How we got there

The New Zealand early learning sector has historically enjoyed freedom when identifying and selecting locations to establish new services. Service providers have been able to select locations based on community needs, parental demand, land availability, and appropriate Council zoning. Provided the locations were suitable from a child health perspective, the Ministry of Education (Ministry) had to refrain from involving itself in locational decision-making.

This historical approach has resulted in both positive and negative outcomes for tāmarki, whānau and the early learning sector.

On the positive side, there has been an increased supply of services and therefore licence places. This provides parents with more choice and the ability to find a service that meets their specific needs. Additionally, competition in the market drives the need for providers to maintain or increase quality to ensure that they remain appealing to new families.

Conversely, some argue that a lack of Ministry intervention in the distribution of the network has created an oversupply of services in parts of the community and undersupply in others. This may result in pressure on centres through increased competition for the same pool of children and teachers, therefore driving down the viability of centres.

The change

However, from 1 February 2023 (recently shifting from 01 August 2022) – this will all be academic because, from this date, early learning service providers will no longer have sole discretion over where to establish new centres. Section 17 of the Education and Training Act, and the proposed amendments to the Act, establish a ‘Planned Network Approach.’ In simple terms, it’s the introduction of a new pre-approval step that providers will need to pass through before being eligible to submit any licensing application. This requires anyone considering starting a new service to submit a pre-approval application to the Ministry where the appropriateness of the location of the service will be subject to:

“(a) a high-level assessment of the relevant attributes of the area to be served, including (without limitation) the demography of the area, the needs of the communities in the area, the needs of the children in the area, and the availability of licensed early childhood services in the area with different offerings (for example, the provision of te reo Māori).” s17(2)(a) Education and Training Act Bill (No 2).

The impact

The Minister of Education will make a determination on the pre-approval application and, if granted, you will have two years to:

  • Secure financing;
  • Buy the land;
  • Design a centre;
  • Obtain resource consent;
  • Obtain building consent;
  • Construct and fitout the centre;
  • Employee teachers; and
  • Apply for and obtain your licence.

That’s a tight timeline and, as we’ve seen over the last two years, external events beyond your control can slow down consenting and construction.

Should the Minister decline your pre-approval application, your only appeal is through a judicial review of the decision through the Courts – an expensive, untested and daunting prospect.

Get involved

To provide guidance to the sector, and to form a base against which to assess pre-approval applications, the Ministry will be producing ‘National and Regional Statements.’ The intent of these statements is to indicate where the Ministry wants to direct growth in the network and where it wants to discourage new proposals. These statements are a critically important component of the network planning regime as they form one of the main elements the Minister can consider when assessing applications. As such, it is vital the early learning sector engages with, and provides feedback to, the Ministry when these draft statements are released for consultation (in March 2022).

“17D Minister may issue statements relating to network of licensed early childhood services

(1) The Minister may, for the purpose of providing potential applicants for approval under section 17 with information about the network of licensed early childhood services, issue 1 or more statements that set out information relating to the network, at either a national or regional level, including—

(a) the Government’s strategic priorities for the establishment of licensed early childhood services; and

(b) information about the supply, forecast growth, demand, and need for licensed early childhood services; and...

...(2) If a proposed statement relates to the Government’s strategic priorities referred to in subsection (1)(a), the Minister must, before issuing a statement, consult with the licensed early childhood services sector and with Māori.” s17D Education and Training Act Bill (No 2).

These statements will materially affect where new services will be permitted or declined from 01 February 2023.

If you have any intention of establishing a new service or expanding an existing licence in the future, it’s in your interest to take a much closer look at this new regulation and how it impacts on your plans and I suggest you provide feedback on these statements when released for consultation.

But I’m already building my new centre...

Several early learning providers will be caught in a situation where a project is underway, but the centre will not be licensed by 01 February. Delays with consenting, construction and related supply chains due to Covid-19 means that projects have timelines that extend beyond the control of the provider. For these people, the new pre-approval process is creating uncertainty and stress with little Ministry guidance on how their proposals stack up under the network planning regime.

For those able to submit a licence application in full prior to 01 February, these applications will not be subject to a pre-approval assessment.

However, for those already under construction but not complete, the requirement is to prepare a pre-approval application under the new provisions of the Act. This includes an assessment of need/demand under the network planning provisions. There are no transitional provisions, and each application will be assessed against the provisions of the Act and either approved or declined. You can imagine the stress that this causes for those in this situation. Further, the Act does not allow the Ministry to accept any pre-approval applications prior to 01 February – meaning those with projects under construction cannot front-foot this matter through an early application.

Our advice to anyone caught up in the above situation is to get in touch with Establish as soon as possible as we are able to prepare independent reports that identify the need for your specific service in the community using demographic, consenting, demand and population forecast data which may go along way to helping your case come 01 February.

Five key takeaways

  • Network planning takes effect on 01 February 2023;
  • A new pre-approval step is introduced – the Ministry decides where ECE’s can go;
  • New National and Regional Statements will be produced to guide where growth is to occur;
  • Consultation on these Statements will happen in March – it's important to be involved;
  • If you’re currently in the middle of a new-build, seek the advice of the ECC and have an independent demand report prepared to support your pre-approval application.

Location Analysis Report

If you have any intention of establishing a new service or expanding an existing licence in the future, it’s in your interest to take a much closer look at this new regulation and how it impacts on your plans and we suggest you provide feedback on these statements when released for consultation.