The Commerce Commission has filed charges in the Auckland District Court against Kowhai Montessori Pre-School Limited and its former director and manager Rebecca Brindle, following an investigation into allegations they misrepresented to parents the subsidy the pre-school received under the Government’s Early Childhood Education (ECE) scheme.

Kowhai and Brindle each face 14 charges under the Fair Trading Act relating to five invoices and two letters sent to parents between October 2013 and October 2014.

The Commission alleges that in October 2013 Kowhai, which operated in the suburb of Orakei, began misrepresenting the subsidy it received under the Government’s 20 hours free ECE scheme to parents of children aged three to five.

Kowhai advised parents that the ECE subsidy contributed $4.70 toward its set hourly rate of $11.70, with the $7 balance to be met by the parental contribution. This representation was also repeated in a letter sent to parents in May 2014 that advised the hourly rate was increasing to $13.70, making the parental contribution $9 an hour.

The Commission alleges that the actual subsidy Kowhai received from the Ministry of Education at this time was $11.33 per hour under the 20 hours free ECE scheme, and that it also received additional funding under the Plus 10 hours ECE scheme.

In September 2014 Kowhai wrote to parents informing them their contribution would be reduced to $8 an hour in light of extra funding announced in the Budget increasing the ECE subsidy to $5.70 an hour. The Commission alleges that at that time the subsidy received was $11.43 an hour. 

Kowhai and Brindle have both entered not guilty pleas and are scheduled to next appear in court on 27 September. Name suppression has not been sought.

Kowhai Montessori Pre-School was sold last year and now operates under a new name under new management.

As this case is before the courts the Commission cannot comment any further.

Background

Under the Government’s ECE scheme, all children from three to five years of age are eligible to receive funding for their care at an approved ECE service provider or kōhanga reo. The ECE scheme is administered by the Ministry of Education and comprises two parts:

  • The 20 hours ECE scheme: under which the Ministry of Education pays a prescribed hourly rate to the ECE provider for each hour of ECE a child attends, up to 20 hours per week (and no more than 6 hours per day).
  • The Plus 10 hours ECE scheme: this operates in addition to the 20 hours ECE scheme. Under this scheme the Ministry pays a lower prescribed hourly rate to the ECE provider to subsidise 10 hours of ECE beyond the hours provided for under the first scheme.

No compulsory fees can be charged by the ECE provider in respect of the hours provided for under the 20 hour scheme. Compulsory fees may be charged by a provider for the hours exceeding the 20 hour weekly funding period, including for hours a child attends over the 6 hour daily limit, but these fees must incorporate any subsidy the provider has received under the Plus 10 hours ECE scheme (where applicable).

Funding under the ECE scheme is primarily designed to reduce the cost of ECE services for parents, which in turn encourages greater participation of children in education from an early age. The structure of the funding also incentivises providers to employ fully qualified staff. The highest funding bracket is available only to those providers who have at least 80 per cent of staff who are fully qualified teachers.

More information on ECE funding can be found here.