File image. Photo: RNZ / Marika Khabazi
Early childhood education (ECE) providers will no longer be required to offer 20-hours-only enrolments.
The government's Budget this year included extending the 20 hours of free ECE to also cover two-year-olds from March next year.
However, some providers complained the policy was unworkable after reading the fine print and discovering they would no longer be have the option of requiring children to be enrolled for more than 20 hours per week.
They had said it meant they would be required to run at a loss.
Prime Minister Chris Hipkins on Monday confirmed the government would be abandoning that requirement.
"The intention of the 20-hours-free early childhood education initiative was to lower the cost for parents, not to have an impact on services' financial position," he said.
"We've agreed - and the ministers have written to sector leaders today to confirm - that we've removed the specific funding condition that would require services to take enrolments for 20 hours only, when they were requested by parents to do so.
"That update fulfils our promise of extending 20-hours-free ECE to two-year-olds, and increasing 20-hours ECE funding rates by 4.6 percent, but it also removes a complication that was going to make it too difficult for services to do that in a financially viable way."
Other conditions would remain, including that service providers make clear to parents any additional fees they would be receiving.
"We've been moving quickly to remove any uncertainty that the sector might face," Hipkins said.
Some centres had been charging a daily fee rather than an hourly fee, he said - so it was not clear to parents exactly how much they were paying for what - but the proposed change would have meant some centres no longer being financially viable.
"What a number of centres have said - and particularly the case for smaller centres - they've said that would impact their financial viability because the extra hour or two they might be also charging parents for was the difference between them being viable and not viable.
"So we've heard that feedback. They'll still need to charge by the hour but they will still be able to bundle the 20 hours with paid hours."
He said bigger centres had more options, but smaller centres were often focused on providing an all-day-model of care.
"The 20 hours free is capped at six hours a day. If one child takes the six hours free, often it would be very difficult for the centre to find another child to take up the remaining hours in the day."
He said he thought the sector was back on board with the policy.
"They're not wild about the idea of transparency but I think they can live with that. This was the stumbling block for them."
Associate Minister of Education Jo Luxton provided more detail in a statement.
"On hearing their subsequent concerns, I met with ECE representatives. They specifically flagged the proposed condition requiring services to offer enrolments for 20 hours only, if requested," she said.
"On the basis of their constructive feedback and with further advice from officials, Minister Tinetti and I have agreed to remove the condition."
The government had been unable to consult with the sector before the policy was announced because of the confidential nature of Budget processes, she said.
Other conditions attached to the funding would remain.
"We all support more affordable childcare and an easing of pressures on household budgets and I am pleased to announce this update."