Auckland childcare centres offer steep discounts to keep afloat

Source: Radio New Zealand

Some early childhood education centres in Auckland are offering steep discounts – in some cases up to 12 months of childcare free of charge – in a bid to lift enrolments.

Operators say the incentives reflect a deepening affordability crisis in early childhood education. For some centres, it’s one of the few options they have to stay afloat.

However, others warn that offering aggressive discounts is unsustainable, risks intensifying financial pressure across the sector and may force more centres to close.

Enrolment discounts

Go Bananas Childcare in the Auckland suburb of Beachlands is offering 12 months of free early childhood education for new enrolments, including meals, for children of all ages.

Manager Nadine Cilliers said that, as a newly opened centre in the area, the discount was an effective way to build relationships in the community while making childcare more affordable.

“Offering incentives and discounts has become more noticeable in recent times because of our economic climate,” she said.

“We know some families are struggling to pay daycare fees because it is very expensive,” she said.

“Some promotions have always existed, and centres are looking for ways to remain accessible to families while trying to maintain enrolments.”

Early childhood education in New Zealand is funded through a mix of government subsidies and parent fees.

The government covers part of the cost, including 20 hours of free early childhood education for children aged 3 to 5, while parent fees help cover the remaining operating expenses.

Cilliers said that, because her centre did not charge newly enrolled families any fees in the first 12 months, most of its operating costs were now covered by government funding and support from the franchise.

She said other childcare centres in the area were also offering discounts, such as three months free or 50 percent off fees.

However, Cilliers said many centres were concerned that families might leave once the discounts ended.

“It is a worry that parents find better promotions elsewhere, that they move to other areas that offer better promotions than yours,” she said.

“But we do hope that after the 12 months, children are settled, they’re happy, our families are connected and they’ve formed strong bonds with our centre,” she added.

“We hope they won’t want to leave.”

Cilliers said discounting could add pressure to early childhood education centres, particularly smaller, independent providers that may not have the same level of financial backing from a franchise.

However, she said it also reflected a broader community need for more affordable childcare.

“It does put pressure on us to maintain a higher standard, because we want to keep our families with us even after the 12 months,” she said.

RNZ has reported that early childhood education costs rose by 2.5 percent between the March and December 2025 quarters.

Some parents returning to work are facing childcare bills of $15,000 to $20,000 a year, while the sector has warned that fees could rise further.

Rising costs

Little Dinosaurs, a family-owned early childhood education centre in Epsom, is offering free childcare over autumn for newly enrolled families, helping them save up to $3800 per child in childcare costs.

The centre’s owners, Sean and Margarita Sampayo, said the promotion was a response to the childcare affordability crisis and a decline in the centre’s roll.

Sean Sampayo said the centre was licensed for 27 children and currently had 21 on its roll. But enrolments fell last year to about 12 or 13 children, which worried the couple.

“We were really keen to get our numbers up and to a more suitable sort of rate again,” Sampayo said.

“Our parents are facing an affordability crisis at the moment. People are very price sensitive. We want to meet families where they are, and we want to make it affordable for them to send their children to childcare.”

Sampayo said the discounts were also a response to added pressure and competition from nearby kindergartens and childcare centres offering similar programmes.

“When one centre runs a programme like this, it almost forces the hand of other nearby centres to run similar programmes as well,” Sampayo said.

Sampayo said 70 percent of the families enrolled at the centre were currently on discounted rates.

He said discounts could help families pay for childcare during an affordability crisis, but they could also put significant pressure on smaller providers.

“When you’ve got centers that are privately owned by individuals like ours, we can make a loss in a year or two,” he said.

“But over time, those losses start to stack up, and it just makes it impossible.”

Sampayo said family-run centres had tough decisions to make at that point.

“Do we continue to run the centre in a way that’s just enough to keep it up and running, barely profitable and unable to [reach] the service level that you’d expect?” he said.

“Or do you decide to shut down the centre and move on?”

Sampayo said the government could do more, through both policy and funding, to ease the pressures driving widespread discounting and provide greater oversight of drastic discounts.

Funding shortfall

Reach for the Stars on Auckland’s North Shore is another early childhood education centre advertising enrolment discounts, offering three months free for new enrolments, including meals and nappies, if families stay with the centre for at least a year.

Manager Carole Liang said the discount strategy began after Covid, when the centre found more families were struggling to pay for childcare.

Liang said enrolment discounts had become increasingly common across Auckland after Covid, and that her centre was feeling pressure from aggressive discounting by other providers.

“There are many centres [opening] in the same area. Some people just think childcare is a good business to make money,” she said.

“They think that as long as they have children, they would get funding and, with that funding, they can make money,” she said.

“Childcare is education. It is about caring for children and their future,” she said.

“We are nurturing children and providing them with a good environment to grow and learn. It is not just a business.”

Liang said many early childhood education centres were trying to keep their services affordable for families, but that it was increasingly difficult to maintain quality under current government funding levels.

She said Budget 2025 included a 0.5 percent funding increase for the early childhood education sector, but that it was clearly not keeping pace with the real costs of running a centre.

“Everything has increased by 5-10 percent,” she said. “But we can’t increase parents’ fees because they can’t afford it.”

Liang said large promotions could widen the financial gap between what centres needed to operate sustainably and what they received in funding.

She said early childhood education should prioritise quality, rather than affordability alone.

“That’s not healthy competition,” she said. “We should emphasise quality and what children and families can get from [early childhood education].

“If you just focus on affordable childcare, but neglect the other factors which are more important, then I don’t see the hope in our childcare education in the future.”

Discounting raises closure fears

Simon Laube, chief executive of the Early Childhood Council, which represents early childhood education operators, said steep enrolment discounts were becoming more common in the sector but were unsustainable, especially when centres asked for no contribution from parents and government funding became the only source of income towards operating costs.

According to the Early Childhood Council, 443 early childhood services nationwide closed between March 2022 and July 2025.

More than half of those closures were education and care services, with Auckland the hardest-hit region, accounting for 44 percent of education and care closures.

Laube said centre closures appeared to be rising again this year, with 20 centres closing in the latest quarter, according to Ministry of Education data from March 2026. That followed a high rate of closures in 2023, when an average of nine centres closed each month.

“That’s the hard end of discounting,” he said. “You don’t want to become one of those statistics.”

Laube said the Early Childhood Council was extremely concerned about aggressive discounting, saying it showed the level of desperation among providers.

“The fact that you’re seeing discounting happening across lots of centres just shows that there are lots of centres [operating] below the occupancy level they need to be financially viable,” he said.

Laube said that if centres were unsuccessful with their discounting and revenue did not increase as occupancy rose, they could be forced to cut staff and other costs.

He said centres that chose not to compromise on quality could be forced to close.

He said the Early Childhood Council had been advocating for a higher cost adjustment for providers in this year’s Budget.

“We do need things like a Budget uplift just to keep the sector going,” he said. “Otherwise, there will be quite a few centre closures that occur if things stay the way they are.”

Funding system under review

Rebecca Barnes-Clarke, acting general manager of System, Connections and Early Learning Policy at the Ministry of Education, said discounts offered by early childhood education and care service providers might make early childhood education more affordable for parents and caregivers, as well as increase children’s participation in the short term.

“However, education and care service providers would need to consider and decide whether they can sustain such discounts,” she said.

Barnes-Clarke said early childhood education services could determine the level of fees they charged families beyond the hours covered by government subsidy.

She said the ministry recognised the early childhood education funding system was no longer fit for purpose, with concerns about affordability, access, the need to support children who stood to benefit most from early childhood education, and the complexity of the current settings for parents and services.

The government established a ministerial advisory group in June to review funding for early learning.

Barnes-Clarke said the group had completed a discovery phase, hearing people’s experiences and views on the challenges and opportunities in the early childhood education funding system.

She said the group intended to consult on indicative options in the middle of this year before finalising its advice and recommendations to the minister, which were due by the end of the year.

“The government will then make decisions on this advice,” she said.

“Any changes to funding provided to the sector will be subject to future government and Budget decisions.”

– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand