The rise and rise of corporate childcare

The current boom in large-scale for-profit early childhood centres is shaping up as a disastrous experiment in the care of the very young. Jane Blaikie investigates. Key points A boom…

The current boom in large-scale for-profit early childhood centres is shaping up as a disastrous experiment in the care of the very young. Jane Blaikie investigates.


Key points

  • A boom in industrial- scale childcare centres is pushing high-quality, small-scale centres to the brink.
  • Reports are emerging of vulnerable children being subject to poor quality care and education in large, for- profit centres.
  • Hundreds of millions of dollars of public money is going to private-sector operators who put profit first.

It’s like kiwifruit,” says Peter Monteith of the Tauranga Kindergarten Association. “Everyone thought there was big money in it and lots of people got into it.”
From Auckland to Invercargill, early childhood teachers report the same thing” glitzy, industrial- scale childcare centres springing up in their area or large operators making aggressive offers to buy struggling, small-scale centres, which are then rebranded in corporate colours, employing fewer qualified staff.

Some 43 percent more children are attending early childhood services than a decade ago, according to the latest Ministry of Education figures. But more striking is that all this growth has been in for- profit, all-day services.

A total of 91,207 children now attend for-profit services, while the number of children in kindergartens run by non-profit associations has fallen slightly to 24,949. Since 2011, when regulations that limited the size of centres to 50 children were changed, 124 centres have been licensed to cater for up to 150 children. One for- profit operator owns 28 of these large centres.

EA‘s investigations found that this radical experiment is leading to dire outcomes, including reports of very poor quality practice with young children, despite the best efforts of overworked and underpaid staff.

Teachers raise the prospect of a social time bomb as children in their most critical years of brain development spend long hours in care that is little more than “crowd control”.

However, Monteith thinks that private providers per se aren’t the problem” “If you’ve a mum-and- pop operation, they can be quite nice. If the people are really committed to early childhood education and they’re working in it themselves, it’s a different quality than a large private provider.”

Big-screen TVs

In South Auckland, two former professional rugby players are opening centres. A parent visited one and found that each year-age room features a big screen TV. A teacher later visited to confirm the report and found there were relatively few other resources or activities for children.

To entice parents to enrol in the new centres, the operators ran events outside a supermarket offering free food to families and large free toys to the children. Parents at the new centres pay no fees and their children get free nappies, formula and lunches. A door-to-door pick up service for children means parents do not have to go to the centres” breaking a cardinal rule of good practice in the sector: positive, ongoing, daily relationships with parents.

But even with no fees, government funding means the new centres are very profitable, says Monteith, who’s done some back-of-the-envelope calculations” if you employ a minimum of qualified teachers and plenty of low-paid, unqualified relievers.

“These centres are like supermarket chains,” says Monteith, who many years ago worked in retail. “You have a core of professional staff and they’re usually reasonably well paid because you’re exploiting them severely, and outside of that is a casualised, unskilled workforce, working on what are essentially ‘zero hours’ contracts.” These contracts are just one way that operators “extract value” from centres (see copy below).

Heartbreaking tales

  • But that’s just money. What about the children? NZEI surveyed 22 staff working in large, for-profit centres and their comments are stark:
  •  “I have heard children and babies being denied food because the budget is going over.”
  • “The manager expects all children to get themselves to sleep.’They have to get used to it'” this was said about an infant four months old and used to being nursed to sleep” there’s no allowing for a nurturing practice.”
  •  “Never enough teachers to effectively take care of the children.”
  •  “We end up spending the day more as a glorified babysitter and cleaner, and don’t really get time to do any meaningful teaching.”
  •  “Blindspots on the floor.”
  •  “Lack of bicultural competencies.”
  • “I really worry for little babies in with 25 other little babies, with one teacher to five babies. Ratios are worked out to bare minimum staffing. You have to consider who can change nappies, prepare meals, be inside, be outside, be able to go to the loo. Children are at risk.”


Not surprisingly, confidence in the sector is plummeting. An online survey by the Child Forum Early Childhood Network found that 63 percent of respondents believed things would get worse in the coming 12 months” and most of the 7 percent who thought things would improve believed this because they had anticipated a change of government at the election.

A large number of official complaints has also been made against centres. Information released by the ministry under pressure from the sector last year showed that in 2012, 247 complaints were made against services, mostly about fees but 26 alleging physical or verbal abuse.

But the actual number of complaints is likely to be much higher because centres are not required to report complaints against unqualified staff. A recent Education Review Office (ERO) report called on the government to investigate how services might report on the conduct and competence of unqualified staff.

The ERO report also found that 41 percent of education and care services had “minimally effective or ineffective practices for managing and developing staff” compared to just 4 percent of kindergartens. Some 91 percent of kindergartens supported staff development “very well” compared to 37 percent of education and care services.

It’s all a long way from what the pioneers of early childhood education had in mind when they fought tooth and nail through the latter part of last century so they could offer parents high quality education for their young children and the chance
for parents to learn more about child development and parenting.

“Early childhood has been gutted,” says Janet Dixon in Wellington. “I reckon we’ve lost 30 years of work in the last few years. We were just beginning to get the status” the recognition of our degrees and specialised training to work with children in their most formative years of life.”

A long-time teacher, Dixon worked for Victoria University in Wellington delivering professional development to early childhood centres, but when the funding was cut, she lost her job. She now facilitates Professional Networks, for groups of non- profit centres. “Most teachers find it hard to get PD” it’s quite scattered and it’s often watered down primary stuff.”

She says, “We are having a big social experiment without considering the possible outcomes. Why are we not taking any notice of the reliable research which is very clear about the need for strong ongoing attachments and trusting relationships for healthy brains?”

No time for PD

In for-profit centres, teachers appear to be struggling against impossible odds to keep up their professional practice. According to Peter Monteith back in Tauranga, and the NZEI survey, the norm in large centres is for 38-40 hours of teacher contact time a week.

“We have a maximum of 26 hours a week of contact in our kindergartens,” says Monteith, “and when I see teachers at the end of the term they’re wrung out. I challenge anybody who’s responsible for 40 hours a week for eight to 10 children, not to be wrung out almost all the time.”

The atrium test

Monteith also backs concerns noted by staff about the small size of the outdoor areas at new centres. He has what he calls the “atrium test”” if there’s a big atrium in the front for parents then it’s time to worry.

He visited a new centre in Auckland with a big atrium (one is reported as having a machine dispensing coffee, popcorn and slushies for parents)” but “the outdoor area, and it’s licensed for about 150 kids, was smaller than some of ours with 40. I would have significant issues about group size in those circumstances because once you’re outdoors, a child would get lost” among 150 others. The areas [for different ages] aren’t separated off either” in marketing terms it would look horrible. You’d be in these quite small pens.”

Other centres have babies asleep in columns of pull-out drawers, in order to save space.

Struggling to survive

But great marketing, snazzy colour schemes, and shiny new premises seem to be making the right impression from a business point of view. “At first we thought it was funny,” says Julie Brice, Head Teacher at a centre in Manurewa. “People would ring me up and say ‘guess what I saw’, all these free chickens and donuts outside supermarkets – we all burst out laughing because it was so ridiculous. But it worked.”

Brice has worked at the Finlayson Park Centre for 17 years. When two large new centres opened in her area, small centres noticed an immediate effect on their rolls and waiting lists.

“Some small centres were wondering how they were going to survive. They’d had the funding cuts [for 100 percent qualified staff] and then this. We’re passionate about quality” we won’t compromise on things like qualified staff and good ratios, but they didn’t know how they were going to survive.” Adding salt to the wounds is that the new centres are believed to be opening with millions of dollars of government set-up money as part of the “targeted assistance for participation” (TAP) programme, which is meant to encourage participation in early childhood education in areas of low participation.

The idea of TAP seems good but the reality is that some licences are being given to new operators to open centres without regard to local need. New centres are opening where good centres already exist and where these have capacity.

“There doesn’t seem to be any planning” there might already be four within walking distance of where they choose to open. What we think is happening is˜recycling'” children who already go to centres are just moving to the new ones.

“And if you get families in by offering free stuff and a pick-up service, how do you prove that your childcare is a quality service? Are parents ever going to know that” if they use the pick-up service? You can’t see their staffing levels. You can’t see interactions between children. To my way of thinking, they’re actually short-changing those families.”

Terrible ratios

Brice has a lot of sympathy, however, for the teachers working at for-profit centres, having mentored several for their registration. “Those teachers are as passionate as we are about providing quality, they’re just not able to.

“They’re overworked, they’re undervalued. They have terrible ratios. They’re legal on paper but in fact they operate nothing like that. I say to them sometimes ‘that is actually illegal and very bad for you and the children.'”

“There may be two people with 12 toddlers or infants, stressed out and they can’t get breaks and they can’t provide any quality for the children. I get so upset thinking of them working like that and thinking of the children and what their days are like.”

These are children, too, who need the best quality, says Brice. They are often behind in oral language, as is well recorded in research on children living
in poor communities” and in desperate need of quality, small-group interactions in ECE.

“Those teachers [in large, for-profit centres] turn themselves inside out trying but there aren’t enough of them on the floor to provide any of those small group interactions. They feel like they’re just policing.”

They also fear losing their jobs if they speak up. So what about ERO then” isn’t the Education  Review Office able to weed out poor quality? Apparently not. ERO looks at how “well- placed” a service is to deliver learning” it doesn’t actually monitor whether the learning is going on. There are no spot checks, and it seems easy enough to wing an ERO review as centres are given plenty of notice of a visit. “You make sure your paperwork is in order, all your resources are tidy and out, and you’ve got your staff ratios there on the day,” according to one practitioner.

Otago University Professor Richie Poulton has put it this way, “You’ve got people out there who are not monitored carefully enough, doing whatever they please, and they may put a poster of [the curriculum] Te Whariki on the wall” and do something completely different. If you’re a consumer “if you’re a parent” you’re thinking your child’s getting X yet they’re getting Y.”

Good business

How then has this situation has been allowed to develop? For most of last century, progressive groups promoted ECE while conservatives tended to resist the idea of ECE, preferring a more traditional model of at-home mothers. However, when the Labour government introduced the 20 hours free policy, with the intention of not offering the funding to for-profit services, it came under immediate and intense pressure to do so, and it succumbed.

In turn, the National-led government elected in 2008 swallowed any remaining doubts it might have had about mothers in paid work and now appears to see the sector as a good business opportunity.

This attitude certainly favours the large private providers. A series of Official Information Act requests and Google searches by EA indicate the government has close and positive relationships with the private ECE sector. They also show that private providers are extending their businesses into neonatal care, with one opening a publicly-funded birthing centre. Another has extended its ECE programme to include six year olds in at least one of its centres, with “primary education” beginning for children at four-and-a-half years. This appears aimed at parents who want to keep their children in a centre for longer rather going to school at age 5.

A senior ECE professional who worked for a large private provider said the experience was “a long way from the early-childhood focussed, ethical and collaborative world of most ECE organisations.” She said the company put business priorities ahead of education.

ECE is rocket science

Private providers are strong advocates of what they call the “nana factor” in defending the use of unqualified staff in ECE – a sentiment that often goes hand-in-hand with the idea that ECE “isn’t rocket science”.

But that’s exactly what it is, says NZEI’s president Judith Nowotarski, herself a kindergarten teacher. “The workings of brain development still defeat researchers involved in neuroscience” yet ECE teachers are tasked with developing those minds in their most vulnerable stages.”

The “nana factor” is essential, says Nowotarski, “but loving and emotionally warm relationships are just the beginning. Then you get to the important stuff like engagement and exploration” and in quality centres that happens in small groups with qualified teachers. That’s where you get the learning in numeracy and literacy but more importantly in the competencies that will set children up as lifelong learners.”

Nowotarski shares the profession’s concerns about the undermining of quality in the sector and believes an independent inquiry is needed in order to safeguard very young children.

Follow the money

Profiteering from early childhood by the private sector appears to be widespread. Methods to “extract value” include:

  • enrolling children for long hours, forty or fifty a week, and then claiming funding for those hours even when the child does not attend (a child has to be away for a three-week block before the ministry has to be notified). Having relievers as regular staff means their days can be cut according to the number of children “on the floor”.
  • recording qualified teachers, who attract a higher funding rate, as being on the floor even when they are not. NZEI has had several reports from staff working in large, for-profit centres that qualified staff are recorded as being on “contact” time when they are not.
  • one large private provider buys up struggling centres, sells the properties to infrastructure investors, then leases back the facilities to run their centres. The listed Australian Education Trust notes that 12 percent of its $A233 portfolio comprises New Zealand centres. It made a net profit of $A40 million in 2013.

Special needs child thrives after leaving large-scale centre

Penny White’s concerns about the centre her granddaughter attended grew over time. “Amy came home with a plaster on her leg. We thought she must have had a cut so we left it on but it turned out the sticking part of the plaster was on the wound.” The wound became infected, meaning a trip to the doctor. Penny asked about the wound at the centre Amy attended” but she couldn’t find anyone who knew about it. She rang the company who owned the centre but was told, “It’s just one of those things, don’t worry about it.”

Penny and husband Bob raise Amy and Grace full-time, and Amy has developmental delays, including limited speech. Another time, Penny was given artwork and told it was Amy’s. “You could have framed it and put it on the wall” there was no way Amy could have done it.” Amy was in a group of about 40 children and Grace in a large group of younger children.

The final straw was the centre’s Christmas performance. “It finished me” I saw red,” says Penny. The children were on stage, each playing an instrument” all except Amy, who clearly was not being included. Now the girls attend a non-profit centre of 25 students in total and after six months Penny has noticed a marked improvement in Amy’s speaking and behaviour.

Penny and Bob also found out at the new centre they were entitled to 40 free hours for both Amy and Grace because of the disability. “But at the last place we had to pay $48 a week each.” They were also charged $25 per child for a trip to the zoo whereas their new place charged $8.50 for a similar trip. “That was about the only trip they did there” but here they go out every week for swimming and gymnastics and dance and bush walks. They had a mini- triathlon. Amy came home with a certificate that had a little red ribbon and a mini submarine on it. Apparently she goes under the water and stays there for ages. I heard she’s doing dog paddle” I would never have thought of Amy doing anything like that.”