Funding Each Child: A Preschool Voucher Proposal

Mr Speaker, since serving as a Member of Parliament, I have seen first-hand the impact of national policies on small, independent preschools in my division.

As a parent of young children, I feel these issues acutely. Their voices warn of a serious problem: the quiet extinction of diversity in our preschools. Many young parents may have read in CNA of a spate of preschool closures over the last few years – at least six reported in the past two years alone. And there are many that go unreported. I will explain why.

Mr Speaker, let us first understand the landscape. In 2013, the Early Childhood Development Agency (ECDA) was formed under the Ministry of Social and Family Development (MSF) to raise preschool standards. Under it, two major schemes now dominate the sector. First, the Anchor Operator scheme (AOP). Five large, Government-supported operators: PCF Sparkletots, NTUC My First Skool, E-Bridge, Skool4Kidz, and M.Y World. They receive significant grant funding and priority HDB site allocation, in exchange for capping fees and meeting quality requirements.

Second, the Partner Operator scheme (POP). These are mid-sized players with slightly higher fee caps but similar obligations.

Together, these two schemes have grown at a staggering rate. Today, over 53% of all preschools in Singapore are either an AOP or POP. PCF and NTUC My First Skool alone account for at least 30% of all preschools. The Government has stated that over 65% of preschoolers are in Government-supported preschools, with a target of around 80% by 2025.

There is another angle of competition, coming directly from the Ministry of Education (MOE). MOE Kindergartens (MKs) were launched in 2014 and are co-located within primary schools. A major draw for parents is priority under Phase 2A of Primary 1 registration for the primary school which creates a "through-train" for Primary 1 admission. There are now 56 MKs. You may know some of these primary schools: Temasek, Princess Elizabeth, Gongshang. This has pulled students away from independent preschools.

Independent operators face a pincer movement. From MSF and ECDA: anchor and partner operators who receive significant fiscal funding and preferential allocation to Housing and Development Board (HDB) sites with much lower rent. From MOE: kindergartens operating with the full backing of the national Budget, no binding constraint of rental costs, and a compelling competitive advantage – an implicit pathway into the affiliated primary school.

In this environment, even church kindergartens, who have been operating for decades, paying zero rent to use church premises, are also shutting down, halving from over 200 centres 10 years ago to over 100 today. As one operator told me: "Even zero rent also cannot survive."

The direction of travel is clear: the "middle tier" of independent preschools is shrinking.

Mr Speaker, I support making preschools affordable and raising educators’ wages. But the method of direct operator subsidies used to achieve them has inadvertently created a deeply distorted market. The unfairness comes from the way subsidies are given. There are two types of subsidies. The first is the parent-level subsidy, which many parents will know.

The Basic Childcare Subsidy provides a transparent and fair offset of $150 to $300 per month for any citizen child in an ECDA-licensed centre.

But the second far more opaque category of operator-level subsidy is largely implemented through direct fiscal transfers. On the MSF side, this is only available to AOPs and POPs. On the MK side, this comes directly from the MOE national Budget. This is a direct transfer to these chosen Government-supported operators, and no one else.

The Government's method has thus not created a level playing field; it has created a trap. For independent operators, this trap has three walls. First, they cannot remain. They face dwindling enrollment due to the breakneck expansion of AOPs and MKs, which use unequal fiscal grants to offer lower fees. Simultaneously, these state-backed centres create a net talent drain by offering higher salaries, leaving independents to struggle with rising rental costs and a fight for survival.

Second, they cannot consolidate. Some say, "Join the Partner Operator scheme", as this is the intended way for private operators to enter the Government-supported umbrella. For many, this is a difficult choice: (a) the consortium requirement means they must expose their books to one another. One lead holds the purse strings and counterparty risk is high; (b) the selection criteria is opaque – if rejected, ECDA provides no reason and no feedback; (c) there is commercial lock-in: once fees are capped under the POP scheme, exiting is near-impossible as parents will likely not accept a reversion to significantly higher fees.

Third, many cannot sell. For many operators in HDB sites, the inability to sell their businesses is a frustrating obstacle. Transfer of lease requires HDB and ECDA approval, but rejections are given without reasons. One operator's sale was blocked with the vague, one-sentence justification that the new owner could not "ensure the continuity of care and education," leaving them with no path of appeal.

Cannot remain. Cannot consolidate. Cannot sell. The only path left is to shut down. And that is what many do. So, this quiet extinction continues.

Mr Speaker, this is not right. Many private operators started with good intentions to provide a way of education for their kids, pouring their life savings and their passion into creating nurturing spaces. But today, many feel trapped.

Speaker, let me state plainly what many operators believe. They suspect the Government wants to nationalise the sector. They ask three questions and they deserve straight answers.

Question one: does the Government want standardised, cookie-cutter early education? Many feel the push for AOPs and MKs penalises operators who offer unique models – small teacher-child ratios, project-based learning, Montessori, Reggio Emilia, faith-based schools – that do not fit the standard mold.

Question two: does the Government wish to nationalise this sector? Because if the intention is not nationalisation, why are these features present: AOP share increasing, MK count increasing, share of children served by AOPs, POPs and MKs targeted to be 80% by 2025, and no articulated vision for the independent sector beyond its “managed-decline”.

Question three: is the Government's ideal outcome a kindergarten market dominated by MKs, with the pre-kindergarten market dominated by major AOPs?

Mr Speaker, let me give a further example of why operators perceive a deep lack of fairness in the system and raises questions about whether ECDA’s actions serve the entire sector equitably.

On 29 October 2022, MSF Minister Masagos announced significant pay rises for educators in AOPs. However, long-standing ECDA rules require that fee increases for the following year must be notified by 1 September of the previous year. So, fee notifications for 2023 had to be submitted by 1 September 2022. This timing trapped private operators: they were locked out of adjusting fees to match the new wage benchmarks, yet were immediately exposed to talent poaching by AOPs offering the pay rises. I ask the Ministry to clarify if any transitional provisions were made for private operators caught by this announcement.

Mr Speaker, the human cost of this system starts with our children and radiates outwards to their teachers, their parents and finally, all of us as taxpayers. At the centre are the children. While I have great admiration for those who work in AOPs and MKs, which have good programs on science, technology, engineering and mathematics (STEM) and public speaking, we must acknowledge these systems’ flaws. High teacher-child ratios mean less individual attention. Furthermore, MSF’s top-down directives to include neurodiverse children create chaotic environments.

The typical AOP setting, with its bright white lights, cluttered displays and high noise levels, is often unsuited for the neurodiverse, and in turn, diverts resources from neurotypical children who must learn in a more disrupted environment.

The educational philosophy itself is also narrowing. MKs increasingly run a standardised programme as their principals focus on Primary 1 readiness and “school-ify” our young children. I do not blame them, if their key performance indicators are more for Primary 1 results over preschool creativity, the push for Primary 1 readiness will almost always win.

But we should have the space to “let children be children”. The accelerated roll-out of MKs with priority Primary 1 admission, feeds parental anxiety and creates focus on academic readiness over holistic development.

Mr Speaker, we should be preparing children not for Primary 1, but for life.

There is an immense cost placed upon our teachers, who are on the frontlines of a system breeding burnout. They navigate an unstable market, with centres shutting down left and right, and are increasingly pushed into "cookie-cutter" state-led models that kill their passion for teaching. They manage large kindergarten 2 classes of 25 children and find it hard to give individualised attention. They spend precious time dealing with paperwork and writing incident reports instead of teaching. And they operate in a “kiasi” culture, driven by conservative interpretations of ECDA circulars. This is a culture where pencils must be stored lying flat for safety, where operators are afraid to let children taste prata during cultural lessons.

This high-stress, low-trust model is unsustainable. I am told by both teachers and operators that it is causing many teachers to burnout and leave the AOP system, often after bonuses are paid. While I do not have official data, the anecdotal attrition estimates shared with me are concerningly high.

This brings us to the cost for parents: a severe diminution of choice. As independent operators close, parents lose access to the diversity that could offer a refuge from these systemic flaws.

Finally, there is a cost to all of us as taxpayers. The current funding model is entirely opaque. Without transparency on operator-level subsidies, it is impossible to assess the true cost and efficiency of these schemes. Worse, we may be funding wasteful competition. In some estates like Punggol and Jurong West, multiple AOPs are clustered together in a small area, all "fighting for numbers", displaying what they in China call "involution" or "内卷": a zero-sum game of wasteful competition.

Mr Speaker, the fundamental problem is that MSF and MOE are relying on operators – AOPs, POPs, MKs – to uplift the sector instead of genuinely implementing sector-wide reforms. Their three policy goals – affordability, increasing educator salaries, and quality assurance – are rolled out via chosen operators. I will lay out a sector-wide reform without biasing towards particular operators.

First, we must fund the child, not the school. Let subsidies follow the child. Instead of funnelling opaque grants to select operators, we can create a portable preschool voucher that bundles all public support into a transparent, per-child amount. Parents can use it at any licensed centre. This empowers parents to choose a preschool that best fits their child's needs – be it PCF, Montessori, faith-based organisations, or play-based centres. It forces all schools, including state-backed giants, to compete fairly on quality, philosophy, service; without pre-determining the winner's business model.

In fact, this is not a radical leap, because ECDA itself moved from funding AOPs based on centre capacity to a per-child funding model earlier this year. This principle should be expanded to all operators, not just AOPs. On fee control: the Government may fear subsidy capture – that operators will absorb the voucher without lowering fees. Let me offer a different view. The surest way to keep fees in check is to keep the market open and contestable. A January 2024 study on childcare in Minnesota found that when you fund parents directly, the market finds a way to create more supply. They found that increased voucher funding led to more providers entering the market, an expansion of available slots, and only modest price increases.

This is what a healthy responsive market looks like. It is diversity – and the capacity of all to scale – that gives a market supply-elasticity. A system where operators "cannot remain, cannot consolidate and cannot sell" would create inelasticity and potential future subsidy capture.

This is not a leap into the unknown. Australia runs a portable, per-child subsidy, the Child Care Subsidy, that follows the child to any approved service. It is paid to providers to reduce the bill and is governed by a published rate cap that limits the total subsidised amount. Portable funding across operators, transparent reference prices and quality assurance can coexist.

By contrast, the current system is highly susceptible to subsidy capture – with chosen operators capturing massive unequal subsidies that may not reach parents as choice or quality improvements. With vouchers, parents can control where the money goes. This will fix the school-level market where subsidies distort operator competition.

Second, embed policy goals in the voucher. Speaker, the Government’s instinct is to solve every preschool problem – from teacher pay to special needs – by leaning on its chosen operators. This creates a two-tier system by design. Every preschool policy target begins to look for an operator-led solution.

There is a better way. We can use voucher supplements to achieve these policy targets while preserving a contestable market.

For teacher wages: instead of selective grants, we can offer a "wage supplement" to the voucher for any centre that pays its teachers above certain benchmarks. The higher the pay, the larger the supplement. We can enforce this transparently using Central Provident Fund data to verify wages and National Institute of Early Childhood Development standards to ensure teacher quality. It turns every operator into a potential partner in raising standards.

For special needs, the same principle applies. Instead of forcing top-down integration, we give every child with assessed needs a portable, ring-fenced voucher supplement, based on their assessed needs, such as specialised teachers, lower ratios, or sensory-friendly environments. This funding follows the child, empowering parents of neurodiverse children to choose centres with resources to provide proper support. It will also allow the emergence of specialised centres.

Some may point to Hong Kong, which once had a pure flat-rate voucher system, but moved away from it in 2017. Among the reasons given for moving away were ineffectiveness for raising teacher pay, addressing special needs and helping low-income families. In my assessment, the Hong Kong system’s flaw lay more with the flat rate, than the voucher system itself. We can learn from this by using targeted funding supplements for these policy targets: lower-income families, special needs, teacher wages.

Three, contestable sites for public benefit. Mr Speaker, Singapore has unique policy levers that many other systems, including Hong Kong’s, do not – such as our stock of preferential allocation sites at HDB estates and primary schools. I believe we must make access to these locations fair and contestable. The principle should be simple: public sites for public benefit. We can open up tenders for new preschool sites in HDB estates and kindergarten spaces within our primary schools, making it a core contractual requirement that any winning bidder must adhere to a strict fee cap. This ensures the public subsidy on rent is passed on directly to parents as affordability."

I propose two pilots. First, MSF and the Ministry of National Development to run a sector-wide, open tender for the next batch of preschool sites in new HDB estates. Second, MOE to pilot this same open-tender model in a small number of primary schools, say, five initially, inviting all qualified operators to compete.

Mr Speaker, in closing, I ask this Government for the following.

First, to answer the three questions. Does the Government want standardised, cookie-cutter early education? Does the Government want to nationalise this sector? Is the Government's ideal outcome an AOP to MK nationalised model?

Second, fairness. To clarify ECDA's actions in October 2022 regarding the wage announcement timing and to commit to level-playing field policies going forward. This means dismantling the walls of the trap that operators find themselves in. Allow them to consolidate by providing detailed POP selection criteria and right of appeal. Allow them to sell their preschools.

Third, to implement the three-pillar reform. A portable voucher system to fund the child, not the school; a tiered voucher supplement system that embeds policy goals like better teacher pay and special needs support; and a fair and contestable process for allocating preferential sites, with fee caps as a firm condition.

Mr Speaker, this Government mentions how the world is becoming more uncertain. At this juncture, enforcing an educational monoculture is exactly the wrong philosophy toward an uncertain world. We need more diversity, not less. I appeal to the Government's sense of fairness and to parents' lived experience: let us not allow this quiet extinction to continue. If we have five more years of this, I think there will be nothing left to save. Let us shift our focus from creating national champions to nurturing a vibrant and resilient preschool ecosystem for all our children. Let us be pro-child, pro-teacher, pro-market, pro-diversity. Thank you.

Mr Speaker, I thank Mr Kenneth Tiong for moving this Motion.

This Government is focused on outcomes. We are committed to providing every child with a good start in life. Preschools play an important part in supporting our children's development, while meeting parents' caregiving needs. Over the past decade, preschool enrolment in Singapore has steadily increased. Today, around nine in 10 Singaporean children, aged three to six, are enrolled in preschool. We have enough full-day preschool places to accommodate every resident child aged three and above.

The Government has no plans to nationalise preschool education. We value a diverse preschool sector where private preschools offer niche programmes that meet different preferences and needs of parents. We intend to keep the market open so that parents can continue to have choices. Our foremost objective, as rightly mentioned by Mr Tiong, has been to ensure accessibility, affordability as well as quality of our preschools for our parents' children. And we do this today through a mix of measures.

First, on the supply side, we provide operator grants and impose fee caps for Government-supported preschools and 80% of preschoolers can have a place in Government-supported preschools by the end of this year. Second, on the demand end, we provide a suite of subsidies. And third, to uplift overall sectorial standards which will not happen organically, we work with the sector to provide broad based support.

On the supply side, we fund private operators on the AOP or POP schemes to ensure they keep within fee caps while investing in quality improvements. In January this year, we reduced full day childcare monthly fee caps for AOP and POP by $40 and will further reduce it by $30 dollars next year.

To ensure that our AOPs and POPs maintain high standards of quality, operators go through a rigorous selection process, not one that is opaque as the Member suggested. Criteria consider factors such as the applicants' track record in providing quality childcare services, financial sustainability and accessibility of centres and local preschool demand. Applicants must also demonstrate commitment and ability to meet the AOP and POP scheme requirements, which includes the ability to provide affordable and quality preschool services and enhance, professional development and career prospects for early childhood professionals.

Mr Tiong suggested removing direct operator grants and replacing them with a per child subsidy via preschool vouchers for families. Implementing a vouchers scheme alone may result in unintended consequences such as increases in preschool fees without corresponding improvements in accessibility or quality, as experiences in some countries have shown. In Hong Kong, where the preschool voucher scheme was implemented in 2007, but eventually discontinued, it worsened in equity as affluent families utilised vouchers for extra educational programmes. Similarly, in the United Kingdom, a nursery voucher programme implemented in 1996 was also discontinued shortly, because rather than improving quality and choice, it created unfair competition, reduced provider diversity and potentially harmed educational outcomes for young children.

On the demand end, we adopt a comprehensive approach to preschool affordability by keeping fees for Government-supported preschools low, and providing both universal and means tested childcare subsidies to parents. The Government provides all Singaporean children with basic subsidies of up to $300 each for full day childcare as well as means tested additional subsidies for eligible families. As a result of both fee caps, as well as subsidies, we have been able to effectively reduce out-of-pocket expenses, while ensuring access and choice of quality preschools for families.

Full day childcare expenses before means tested subsidies will be similar to what households pay for primary school and after school care fees combined in 2026. From January 2026, a dual income family with a monthly income of $10,000 will pay $235 per month for full day childcare in an AOP preschool after subsidies, half of what they would have paid in 2019.

Mr Tiong has implied that the preschool voucher system would give parents more autonomy to choose a preschool that suits their children's needs best and allowing for a market mechanism to work. This incentive is already built into the nature of childcare subsidies which preschools receive based on the number of children enrolled. Parents today are discerning when choosing preschools that best meet their child's needs and preferences, and this has promoted healthy competition among preschool operators and consequent improvements in quality.

A third plank in our strategy is to work with the sector to provide broad based support to uplift sectorial standards. Mr Tiong suggested using targeted voucher supplements to advance national objectives such as raising teacher wages. Salary increases must correspond with higher professional skills and contributions. A proposal to provide vouchers to preschools may not necessarily raise educators' salaries. Without due consideration for skills development and safeguards, such a move may run the risk of fee escalation without corresponding increase in quality of teaching.

In contrast, the Government has continued to make significant sector-wide moves over the past decade to invest heavily in professional development, enhance career progression and improve working conditions of early childhood educators. And one such example is the setting up of the National Institute of Early Childhood Development in 2019.

As a result of these concrete efforts to uplift sector quality, salaries of early childhood educators and leaders in AOP and POP centres have increased by at least 19% on average from 2022 to 2024, reflecting the deepest skills and contributions of our early childhood professionals.

I now address some other suggestions made. Mr Tiong suggested using vouchers to advance support for children with special needs. The Government has been enhancing support for children with developmental needs. We have enhanced subsidies for early intervention services and accelerated the increase in the number of Government funded places for children requiring moderate to high levels of early intervention support by almost 80% since 2020. ECDA is piloting a new Inclusive Support Programme (INSP) and we will expand the pilot by another 600 places from 2026.

On tenders for HDB and primary school sites, HDB sites are allocated to Government-supported preschools to avail affordable preschool services to residents soon after they move in. Nevertheless, I want to assure him that there are HDB sites open to all operators to bid competitively for, even as ECDA works with HDB to ensure that there are sufficient sites allocated for affordable preschool places today.

Mr Tiong asks about preschool salary enhancements in 2022. To give better context, ECDA has been working with AOPs and POPs to raise salaries and deepen professionalisation since 2016. In 2022, we signalled salary increases, paced over two years to maintain competitiveness relative to the broader labour market. Before the 2022 announcement, salaries for early childhood educators in Government supported preschools had already increased by 20% on average since 2018.

Sir, preschools play a key role in meeting families caregiving needs and complement parents in supporting our children's development. I can say so because I think about this every day when I send my five-year-old son to preschool in the mornings. The average Government expenditure per preschool age child has increased from $7,900 in 2020 to $13,000 last year, with a higher amount spent per child in both AOP and POP preschools and on children from lower-income families.

In 2019, we made a decisive move to expand Government supported preschool places to cater to 80% of preschoolers, so more Singaporean families can benefit from good access to affordable and quality preschools by the end of this year. We are getting there, but our work is not done. We will continue to evolve our policies to improve access to affordable and quality preschools across the sector – so that every child can have a good start in life.

*Question put, and agreed to.*

*Resolved, "That Parliament do now adjourn."*