Equity Funding was introduced in March 2002 with a budget of $8.5 million. The objectives are to:

  1. reduce educational disparities between different groups in New Zealand
  2. reduce barriers to participation faced by under-represented groups in early childhood services
  3. support services to raise levels of educational achievement for these children.

Equity Funding is ‘tagged’ and identifiable as an amount additional to a service’s ECE Funding Subsidy and 20 Hours ECE. It must be spent with the equity objectives for participation and quality in mind. Early childhood services, who receive Equity Funding, are required to report to parents and the local community about how they have spent such funds.

Equity Funding consists of four components. Services may be eligible for funding against one or more (or all) components.


Eligibility confirmed by...

Component A: Low Socio-Economic Communities

Equity Index Value

Component B: Special Needs, and Non English Speaking Backgrounds

Equity Index Value

Component C: Language and Culture other than English (including Sign-Language)

EC15 Attestation Form

Component D: Isolation

Isolation Index Value

Eligibility for Component A is based on the Equity Index (EQI) which measures the extent to which a service draws children from low socio-economic communities. Licensed ECE services with an EQI of 1 - 4 are eligible to receive Component A.

Eligibility for Component B is also determined by a service’s EQI. Services receive Component B if they meet eligibility for Component A. Eligibility is not based on individual children.

Licensed ECE services are eligible for Component C if they provide ECE in a language and culture other than English (including sign language) during more than half of the formal education and care programme.

Eligibility for Component D is based on the Isolation Index. This rates a service’s ‘relative isolation’ and is worked out by measuring the service’s distance from towns/cities of three different population sizes (5,000, 20,000, and 100,000).

Licensed ECE services with an Isolation Index of 1.65 or greater qualify to receive Component D.

In 2002, only licensed community-based services who met the criteria were eligible to receive Equity Funding. An evaluation of Equity Funding in 2006[4] provided information on the changes in quality and participation that were related to Equity Funding, as well as conditions that supported positive impacts.

From 1 July 2011, Equity Funding became available to all licensed early childhood services who met the eligibility criteria. The Government announced a corresponding increase in budget to $21.5 million over 4 years. In 2012, an additional increase of $47.9 million over 4 years was announced in place of the annual cost adjustment. In 2013, an additional increase of $41.3 million over 4 years was allocated to compensate low income families for fee increases.

In the 2012 financial year, 38 percent of early childhood services (1771) received at least one component of Equity Funding.