Upcoming Increase in Subsidies for Pre-school Education

Mr Desmond Choo asked the Minister for Social and Family Development in view of the upcoming increase in subsidies for pre-school education, how will the Ministry guard against undue fee increases from operators that will negate the effectiveness of such subsidy support to parents.

Mr Liang Eng Hwa asked the Minister for Social and Family Development what measures will the Ministry put in place to prevent pre-school operators from taking advantage of the recently announced higher subsidies to parents by raising their pre-school fees.

Today, MOE Kindergartens1, Anchor Operators and Partner Operators provide slightly over half of all pre-school places. Anchor Operators and Partner Operators are subject to fee caps stipulated by the Early Childhood Development Agency (ECDA), and are required to ensure that any fee increase is moderate and their fees do not exceed the caps. In fact, the fee caps for Anchor Operators and Partner Operators have been maintained at their current levels since 2014 and 2016 respectively. Each year, some Anchor Operator or Partner Operator centres that charge below the fee caps may make some moderate fee adjustments to maintain sustainability. However, the fee caps help to moderate any increase in fees for a significant proportion of the pre-school sector.

The remaining half of pre-schools are provided by private and not-for-profit operators. Like childcare centres that are under the Anchor Operator and Partner Operator schemes, families whose children attend these private and not-for-profit childcare centres also receive the Basic Subsidy and means-tested Additional Subsidy.

But these operators are not subject to fee caps and have flexibility in setting their fees. We recognise that fees may be adjusted from time to time in response to market conditions and operational costs. By and large, most pre-schools seek to ensure that their fee increases are not excessive, in order to remain competitive and attractive to parents.

All preschools are required to inform parents and ECDA of any increase in fees by 1 September of the preceding year, so that parents can make an informed choice about their child's pre-school.

Over the next few years, parents will increasingly have more affordable and quality pre-school options to choose from, as we increase the number of Anchor Operator and Partner Operator preschools and add a few more MOE kindergartens. By around 2025, the share of Anchor Operator, Partner Operator and MOE pre-school places will rise to 8 in 10.

In the medium term, as Government-supported pre-schools grow, we will lower their fee caps so that parents will pay around the equivalent of primary school fees plus after-school student care fees for full-day pre-school, before means-tested subsidies.

Already, Government-supported operators have helped to stabilise pre-school fees in the sector. Median full-day childcare fees fell for the first time in 2016 when the Partner Operator scheme was introduced, and have been maintained since. We expect median fees to be brought down further when we expand the Partner Operator scheme to bring in more pre-schools in 2021, along with a lowering of their fee cap from the current $800 (before GST) per month for full-day childcare.

Increasingly, parents will enjoy more access to affordable and quality pre-schools for their children. This ensures a good start for every child and strong support for parents in raising their families.