Parents delaying second child because of daycare costs

Author
Newstalk ZB / NZ Herald,
Publish Date
Sun, 28 Jun 2020, 10:40AM

Parents delaying second child because of daycare costs

Author
Newstalk ZB / NZ Herald,
Publish Date
Sun, 28 Jun 2020, 10:40AM

New Zealand parents are having children further apart or even deciding against a second baby because they can't afford to have two kids in daycare at once.

For many couples, stay-at-home parenting is not a long-term option because of mortgage or rent costs.

But some find they are are barely better off with both parents working because of the relatively high cost of having more than one child in early childhood education (ECE).

Two-income households are also likely to lose some government childcare support because they are earning too much.

This "second-child trap" is one of the findings in a new Herald series called Choosing Childcare, an in-depth look at the proliferation of ECE centres in New Zealand, the costs of childcare, and its pros and cons.

Mother-of-two Tori McKinley, from Oakura near New Plymouth, said she placed her first child Emilia in daycare at 11 months.

"I probably should have returned to work after the 18 weeks [of paid parental leave] was up," she said. "But I wasn't ready to hand my baby over at three months."

McKinley, whose household income was between $80,000 and $85,000, said that if she had not worked the family would have struggled to cover its costs. But after paying for daycare, which cost more than their mortgage, the family was only $100 better off a week.

She is now home with a second baby, Nina, and is fretting over whether she can put her in ECE.

Another mother, Jo, said she faced a bill of $450 a week for full-time care for her two children under 3 years old, even after discounts had been applied.

That cost was virtually the same as the mortgage payments on her Auckland house and, after paying for all the other costs of running a home, the family would be left struggling just to get by.

Yet once she went back to work, she and her partner would be earning too much together to get any childcare subsidies.

It is a situation which forces many New Zealand parents to delay their second child until their first child can get the 20 hours' free ECE - which begins at age 3.

Dr Pushpa Wood, director of Massey University's financial education and research centre, said these pressures on families were partly the result of changing social structures which meant families - especially Pākehā ones - were less likely to get support from grandparents.

It is also a consequence of rising costs of living in New Zealand, which require both parents to be working at once.

These factors were leading to what Wood called "pedantic planners".

"Nowadays the younger generation is thinking more carefully than ever before about when to have children, how many children they have, and how far apart they have them."

She said that when parents sent a second child to daycare, their expenses doubled but their incomes did not necessarily increase by that much.

"It is a huge difference. Unless you are prepared within your income, it can really put a lot of strain - both financial and mental."

The relatively high cost of ECE in New Zealand is partly because it covers both care and education. Most of kids' fees went into paying the salaries of qualified teachers, which many in the sector argue is better for children than unqualified staff.

"It is not a baby-sitting service," said Peter Reynolds, chief executive of the Early Childhood Council.

A report by the OECD based on 2018 data found that Kiwi couples on an average wage, using full-time, centre-based care for two children aged 2 and 3, spent 37.6 per cent of their household income on child care. The global average is 14.5 per cent.

- Text by Isaac Davison. Additional reporting Tamsyn Parker