June 04, 2024

Budget 2024 prioritises education - what is the money funding?

Two thirds of new funding for budget 2024 is going to education, health, and law and order.

Budget 2024 makes it clear that education is a priority for this government – certainly in comparison to other portfolios.

This Budget puts forward a series of new investments, savings, and re-prioritisations across early childhood education (ECE), primary and secondary schools, and tertiary education.

The Government is investing $2.9b of new expenditure over the next four years for new classrooms, more teachers, additional teacher support, and early childhood education (ECE). For Budget 2024, the total net operating expenditure for education (including tertiary education) is $4b across four years, and total net capital expenditure is $679m. Of the $1.8b new net operating spending after savings, $780m (43 percent) is just an expense associated with depreciation – it doesn’t actually buy anything. In comparison, Budget 2023 announced $3.6b total operating and $1.3b total capital in education initiatives. Alongside this, the Summary of Initiatives (page 35) lists savings and revenue of $440 million operating costs and $0.5m total capital savings.

Source: The Treasury

For the year ending June 2025, this budget forecasts total core crown education expenses of $20.5b, an increase of six percent from the previous budget’s forecast spend of $20.14b. Core crown funding for the sector, for the June 2025 period, is forecast to increase 1.88 percent from 2024.

Education expenses in 2025 comprise funding for primary and secondary schools (49 percent), tertiary education (25 percent), ECE (14 percent), departmental expenses (11 percent), COVID-19 apprenticeship support (0.2 percent), and other (0.9 percent).

Tertiary education has been cut by $951m in operating expenses, and $220m in capital expenses, over the next four years

Cuts have also been made to the Apprenticeship Boost scheme, which provides subsidies to employers of eligible apprentices working toward a qualification. The scheme is set to continue until December 2024, and the monthly rate of $500 will remain. Therefore, this represents a cut to monthly payments in real terms. From 1 January 2025 this programme will be cut in half and targeted to first-year apprentices only. This means that funding for second year apprentices will stop after 31 December 2024. This funding comes from Vote Social Development – and does not have a significant impact on overall Vote Education funding.

Funding is allocated for healthy school lunches to the end of the 2026 school year, including $8 million to introduce a targeted early childhood food programme

The main initiatives being funded in education include additional new funding in property, operating allowances, staffing costs for ECE providers, teaching materials, and school lunches. After much talk about cutting the lunches in schools programme, the government has cut $107m in funding for the programme in comparison to the level of funding that would have been provided.

The Fees Free scheme for tertiary students will change from the first year to the final year of study, beginning in 2025, providing $879m in savings over the forecast period. Eligibility for fees free includes provider-based and work-based learners studying at Level 3 NZQA or above. Tertiary fees for students are also likely to increase, as the Government is enabling providers to increase tuition and training fees by up to six percent in 2025, something providers have been unable to do previously.

No new funding has been provided to increase the number of teachers in schools

$53m is also budgeted for new and existing teachers, with the Minister for Education saying the Government aims to grow the workforce by 1,500 new teachers over the next four years. $4.09m total operating expenses have been cut from the Partnering to Strengthen Māori Education programme.

As was previously announced in the mini budget, the Government has saved money by cutting the previously planned, but not yet implemented, expansion of 20 hours free ECE to two-year-olds. Over the forecast period, this generates savings of $1.2b, which in turn has been used to finance the ‘Family Boost’ payment for ECE costs.

While the additional funding in education (including tertiary education) will increase by 1.88% for the year ending June 2025, inflation is forecast to be 2.2% for this same period. It is an artefact of the allowance system that funding looks like it will be falling in the future (see table below). In reality, however, it is likely that this will be topped up with new funding from the operating allowances ($2.4b per annum) in future years.

The Treasury

Budget 2024 also allocates funding for the creation of 15 new charter schools, and the conversion of 35 state schools to charter schools. $153m has been set aside as a contingency for this initiative, but this has yet to be fully agreed by the Government. Forecast funding for professional development has increased 25 percent from the June 2024 year. This appears to mainly comprise funding to support the new Structured Approaches to Literacy Resources initiative.

*2024 to 2028 are forecasts