Commencement Date: 1 February 2023

Introduction

1. A high-quality network of licensed early childhood services is key to achieving an early learning system that enables every child to achieve their full potential and that supports their identity, language and culture, and is valued by parents and whānau.

2. Network management of licensed early childhood services is a regulatory function that supports this goal by helping to ensure that all children have access to quality early learning settings and prevent the unintended consequences of oversupply in specific areas.

Purpose

3. Any person intending to operate a new licensed education service (which is not an excluded service) must apply for approval from the Minister of Education under section 17 of the Education and Training Act 2020 before applying for a license.

4. This Statement provides potential applicants for approval with information about the network of licensed early childhood services including:

1. the Government’s strategic priorities for the establishment of licensed early childhood services;
2. information about the supply, forecast growth, demand, and need for licensed early childhood services; and
3. other information relevant to applications for approval, including about the approach the Minister intends to take to assessing that information in accordance with the statutory criteria.

Relevant Considerations

5. As described in section 17(2)(a-g) of the Education and Training Act 2020 the Minister in assessing applications for network approval must take into account:

1. a high-level assessment of the relevant attributes of the area to be served, including (without limitation):
1. the demography of the area;
2. the needs of the communities in the area;
3. the needs of the children in the area; and
4. the availability of licensed early childhood services in the area with different offerings (for example, the provision of te reo Māori); and
2. this Statement and any relevant Regional Statement;
3. the suitability of the applicant and of every individual involved in the governance of the proposed service (which at a minimum requires the Minister to consider and determine whether each individual is a fit and proper person);
4. the applicant’s financial position;
5. the licensing history of the applicant and individuals involved in the governance of the proposed service;
6. the applicant’s capability to effectively establish and provide the service to which the application relates; and
7. any other matter that the Minister considers is relevant to the application.

Process

6. Key process information is outlined in the Education (Early Childhood Services Network Approval) Regulations 2022.

7. The Ministry of Education has made further information on the application process, including how to apply, available at https://www.education.govt.nz/early-childhood/running-a-service/starting-a-service/network-management.

Strategic Priorities for the Establishment of Licensed Early Childhood Services

8. These strategic priorities describe the types of service offerings that the Government considers to be a priority for ensuring availability within the network of licensed early childhood services.

9. Meeting a priority is not a prerequisite for receiving network approval. However, as set out below, the extent to which a proposed service will meet a priority will be considered when the Minister takes into account whether the service will meet a need in the area to be served, as well as other relevant information about supply, demand and need. If a proposed service will meet a priority, it will be considered more favourably in these assessments. For example if two similar services apply for network approval in the same area, the one that meets a priority to the greater extent is more likely to be approved.

Assessment of the Relevant Attributes of the Area to be Served

Identifying the Area to be Served

10. Applicants are expected to identify and consider the area that the proposed service will serve, and the relevant attributes of that area.

11. For most types of early childhood education and care services, the area to be served will predominantly be the nearby geographic area (including the people living and working in that area). To enable demographic and other statistical information to be considered about the area, the starting point is that the nearby geographic area is the Statistical Area Unit 2 (SA2) in which the proposed service would be located and the adjoining SA2s.

12. For hospital-based services, the community to be served are the children under the age of 6 years who are receiving hospital care in the relevant hospital.

13. For home-based education and care services, the area to be served will not necessarily be the nearby geographic area but should be identified by the applicant.

14. Despite these starting points, the Minister may consider that a service is likely to serve a broader or more specific area, including an identifiable community within an area or areas, if there is information available that provides reasonable grounds to support that assessment.

High-level Assessment of Relevant Attributes

15. The Minister will take into account a high-level assessment of the relevant attributes of the area to be served, including the demography of the area, the needs of the communities in the area, the needs of the children in the area, and the availability of licensed early childhood services in the area with different offerings (for example, the provision of te reo Māori).

16. This assessment may take into account relevant information relating to supply, forecast growth, demand, and need for licensed early childhood services in the area to be served, as set out below.

17. The Minister may also take into account other information, including information supplied by the applicant, about the relevant attributes of the area.

Information About the Supply, Forecast Growth, Demand, and need for Licensed Early Childhood Services

Approach to Assessing Supply, Forecast Growth, Demand, and Need

18. Information about the supply, forecast growth, demand and need for licensed early childhood services is relevant to the Minister’s assessment under section 17(2)(a), (b) and (g) of the Act.

19. In assessing applications for approval, the Minister will consider the best available relevant information about the supply, forecast growth, demand, and need for services in the area to be served, as described below.

20. Based on that relevant information, the Minister will assess:

1. whether the applicant has established that the proposed service will meet a need in the area to be served; and
2. whether there are reasonable grounds to believe that granting approval:
1. could lead to an oversupply of licensed early childhood services in the area to be served;
2. could help address an undersupply of licensed early childhood services in the area to be served; or
3. neither i. nor ii. apply.

21. The assessment of need referred to at 20(a) is distinct from the assessment of broader supply and demand factors referred to at 20(b), although there may be significant overlap between them. The assessment of need relates to whether the proposed service will meet an identified unmet need in the area to be served, whereas the broader assessment of supply and demand relates to the impact of the proposed service on the overall network of licensed early childhood services in that area.

22. More information is provided below about how these assessments will be undertaken and the information that will be taken into account. The intention is that this approach will be developed over time as more evidence becomes available, including insights generated from the network management function.

23. This assessment may affect the Minister’s decision in the following ways:

1. An application is likely to be declined if the applicant has not established the service will meet a need and/or there are reasonable grounds to believe that granting approval could lead to oversupply in an area to be served.
2. An application is more likely to be granted if the applicant has established that the proposed service will meet a need in the area to be served (particularly if the need reflects a strategic priority) and/or there are reasonable grounds to believe that granting approval could help address an undersupply of services in an area to be served.
3. If the Minister does not consider there are reasonable grounds to believe that granting approval would either lead to oversupply or help address undersupply in an area, then that part of the assessment will not be determinative either way.

Relevant Information About Supply, Forecast Growth, Demand, and Need

24. Applicants are expected to identify the need the proposed service will meet and how the proposed service will meet that need, as well as assess the relevant available information about supply and demand in relation to the area to be served.

25. The following sections describe the national-level and regional-level information that will be relevant to the supply, forecast growth, demand, and need for licensed early childhood services.

26. The Ministry will maintain on its website a list of sources of relevant information that can be obtained specifically in relation to an area to be served. Information on new approvals relevant to an area to be served can be found at https://www.education.govt.nz/early-childhood/running-a-service/starting-a-service/network-management/approvals-and-revocations. Additional information on the network of licensed early childhood services can be found at https://www.education.govt.nz/early-childhood/running-a-service/starting-a-service/network-management.

27. The intention is that more information will be made available to assist potential applicants as the approach to network management is developed and more information becomes available (including as a result of verifying the applicability of current datasets and from insights generated from the network management function).

28. Initially, it is likely that more reliance will be placed on relevant information submitted by the applicant about local factors affecting need and demand than on the statistics set out below.

Standard Area-specific Information About Supply, Forecast Growth, Demand, and Need

29. In all cases the Minister is likely to consider the following information, accessible from the Ministry’s website.

1. Standard information about supply and forecast supply of licensed services within the relevant area:
1. Current licensed services in the area: including location, number of licensed places (2 and over, under 2 and total), enrolments, licensed opening hours, and service type;¹ and
2. Forecast licensed services in the area (being services that have received network approval and any proposed excluded services recognised by the Ministry as having reached an equivalent stage where that information is available ²): including location, forecast licensed places (2 and over, under 2 and total), forecast opening hours, and service type.
3. This information will not initially include home-based education and care services, for which there is currently no area-specific information.
2. Standard information about potential demand or need for services within the relevant area:
1. Under 5 population projection for the area: including projected population under 5 resident in the relevant area and (where relevant) the population under 5 resident in the relevant area by ethnicity. The Statistics New Zealand mid-range projections for 2033 should be used.
2. Number of people travelling to work in the area: where relevant, the number of people travelling to work to that area based on the most recent Census data published by Statistics New Zealand.
3. Underlying zoning for the area: that is whether the area is predominantly residential, commercial, rural, or mixed in the relevant district plan.
3. Standard comparison of information about supply and demand: which may include considering the following basic ratios for the relevant area:
1. ratio between the projected population under 5 and the total combined number of current and forecast licensed places in the area;
2. ratio between the projected population under 5 and the combined number of current and forecast licensed places in the area of the relevant service type; and
3. ratio between licensed attendance and licenced places.

Other Area-specific Information That May be Relevant to Supply, Demand and Need

30. In a particular case, the Minister may also consider other information relevant to supply, demand and need for a service if such information is objective, verifiable based on evidence, provides a reasonable basis for comparison with other services, and provides a reasonable basis on which to assess the supply, demand or need for a service.

31. This information may be already held by the Ministry, supplied by the applicant, or gathered by the Minister during the application process.

32. The Minister will not necessarily take into account other information and may decide to disregard other information if there is already sufficient information on which to make a decision or the other information is not considered sufficiently reliable or relevant.

Additional Information and Assumptions About Demand and Need for Early Childhood Education Services

33. In assessing applications in respect of a particular area, the Minister may also take note of the following additional information and assumptions relating to demand or need:

1. A proposed service that reflects a priority is likely to be considered to meet a need in the area to be served.
2. The projected population of children under 5 resident in a nearby geographic area will likely impact the demand or need for services in that area. This is likely to be more relevant in predominately residential areas.
3. The number of people travelling to work in a nearby geographic area will likely impact the demand or need for services in an area and may provide an indication about areas where demand is greater than what would be suggested by the resident under 5 population. This is likely to be more relevant in predominately non-residential areas.
4. Service type is relevant to demand and need, which means the existence of services (licensed or forecast) that are the same service type as the proposed service will be given more weight in the assessment of supply, demand and need. For example, if an applicant proposes to establish a parent-led early childhood education and care centre, the existence of services nearby of that same type will be more relevant to the expected demand for the proposed service than those of a different type (such as teacher-led early childhood education and care centres).
5. The following other factors may be relevant to demand, need and parent choice in a particular case:
1. opening hours, flexibility and convenience;
2. fees and affordability;
3. particular service offerings (such as culturally appropriate services or services with a special character or philosophy).

High-level National-Level and Regional Level Information

34. High level national-level and regional-level information about the supply, forecast growth, demand, and need for licensed early childhood services is provided in Appendix B.

Limitations of Information and Assessment of Supply, Demand and Need

35. The information referred to in this Statement relating to supply, demand and need is the best available information that has been identified at the time and is set out above to assist potential applicants to consider the necessary factors in making an application. No warranty is given as to its accuracy at any particular time.

36. Further the purpose of network management is not to protect the commercial interests of any person or to protect licensed service providers from any competition. Granting network approval, including a favourable assessment of demand and need, does not provide any guarantee or assurance that there will be demand for the service. Further the Minister is not required to decline network approval for an applicant merely because the proposed new service will impact an existing licensed or forecast service.

37. If the Minister intends to rely on potentially unfavourable information that was not available to the applicant at the time of the application (eg because the relevant information has since changed or because it is information held by the Ministry), the Minister may provide the applicant with an opportunity to respond to the potentially unfavourable information.

Information Relevant to Other Parts of the Network Management Assessment

38. This section sets out other information relevant to applications for approval, including describing the other information that will likely be relevant to assessing other parts of the statutory criteria and the Minister's approach to those criteria.

39. Where this Statement refers to information that will likely be relevant, this is provided to assist applicants to understand what should be addressed in the application. The Minister may in any particular case consider other relevant information.

Suitability of the Applicant and of Every Individual Involved in the Governance of the Proposed Service

40. The Minister will take into account whether the applicant and every individual involved in the governance of the proposed service are suitable. At a minimum this requires the Minister to consider and determine whether each individual is a fit and proper person, including by considering the Secretary’s assessment provided under section 18(4) of the Act.

41. The information relevant to the Minister’s determination relating to fit and proper persons will be the Secretary’s assessments and any information relevant to those assessments (which is information about the matters listed in section 18 of the Act and in the Regulations).

42. An application for approval will be declined if the Minister determines that the applicant or any individual involved in its governance is not a fit and proper person to operate a licensed early childhood service.

Applicant’s Financial Position

43. The Minister will take into account the applicant’s financial position, including by considering the Secretary’s assessment provided under section 18A(3) of the Act.

44. The information relevant to these assessments will be the Secretary’s assessment, as well as the information that may be considered by the Secretary. This includes whether the applicant has access to, or has a credible plan to obtain access to, sufficient resources to effectively establish and provide the service. It is expected that the Secretary will apply this assessment flexibly so that smaller and less commercial applicants are able to receive a favourable assessment.

45. An application for approval will almost certainly be declined if the Minister determines that the proposed service is not financially viable (eg, because the applicant does not have access to, or does not have a credible plan to obtain access to, sufficient resources to effectively establish and provide the service).

Licensing History of the Applicant and Individuals Involved in the Governance of the Proposed Service

46. The Minister will take into account the licensing history of the applicant and the individuals involved in the governance of the proposed serviced.

47. This may include considering the following information if it is considered relevant:

1. licenses held by the applicant and any licensed early childhood services of which the relevant individuals have been involved in the governance;
2. the number of years those licensed early childhood services have operated;
3. any adverse regulatory decisions, including provisional licenses, suspension, cancellations, or directions.

48. This assessment of this criterion will not have significant weight to the overall decision of whether to grant or decline approval. However, the information above may be relevant and material to other parts of the assessment in particular, to both the fit and proper assessment, and to the capability assessment.

Applicant’s Capability to Effectively Establish and Provide the Service to Which the Application Relates

49. The Minister will take into account the applicant’s capability to effectively establish and provide the service to which the application relates.

50. The information relevant to this assessment is likely to be information about the governance and management of the applicant and proposed service, including the experience, qualifications and skills of the relevant individuals and organisations involved. Relevant qualifications, experience and skills may relate to:

1. The establishment of the proposed service, including managing the proposed development.
2. The provision of the proposed service, which may include experience in skills in education (especially early childhood education), cultural competence and business / organisational management. If the proposed service is of a particular type or offering, then the governance and management will need to reflect the skills and experience required to provide that service type or offering. For example, if the applicant proposes to establish a service that will reflect a priority, it will be expected to show that it has the capability to meet that priority effectively.

51. Applicants will be expected to provide credible and reliable information, including in relation to current governance arrangements, rather than only point to future plans to acquire necessary skills.

52. This part of the assessment is particularly important and will receive significant weight in the overall decision of whether to grant or decline approval.

Limitations of Network Approval Decisions

53. A network approval decision and a subsequent decision about whether to grant a licence are independent of each other. If network approval is granted, the fact that a matter was considered as part of that decision should not be taken as an indication about how that matter will be addressed at the licensing stage. When applying for a licence, applicants must demonstrate that all requirements set by the Education (Early Childhood Services) Regulations 2008 and relevant licensing criteria are met or complied with, including premises and facilities and health and safety standards, and overall suitability for use as an education and care centre (if applicable).

Appendix A: Service Type Categories

The following Service Type Categories will be used in assessing the supply, demand and need for licensed early childhood services, as described in the Statement.

Appendix B: High-level National-level and Regional Level Information

Table One: Number of Licensed Early Childhood Services by Type (as at 7 Oct 2022)

Table Two: Number of Licensed Early Childhood Education Places by Type (as at 7 Oct 2022)

Table Three: Population and Projected Population Growth

Table Four: Population and Projected Population Growth by Ethnicity

Dated this 24th day of November 2022.

Hon CHRIS HIPKINS, Minister of Education.

Notes

¹ Service type categories are defined in Appendix A.

²The Ministry may develop a process for determining whether a proposed excluded service is recognised as having reached a stage equivalent to network approval.