An Auckland kindy has been ordered to pay a total of $265,500 after pleading guilty to charges that it misled parents about the amount of funding it was receiving under the Government’s early childhood education (ECE) scheme.

In addition to a fine of $254,099, Kowhai Montessori Pre-School Ltd was also ordered to pay $11,400 in reparation to four parents who complained to the Commerce Commission.

Kowhai told parents it was receiving significantly lower funding than it actually received, and parents were asked to make up the supposed shortfall between the pre-school’s hourly charge and the subsidy received.

Between October 2013 and October 2014, Kowhai sent parents invoices and letters which misrepresented the subsidy being paid to the kindy under the government’s ECE funding.

The invoices initially represented that Kowhai was receiving a subsidy of $4.70 per child per hour. The correct figure under the Government’s 20 hours’ free ECE funding scheme was $10.32 per child per hour, for eligible children attending Kowhai.

In September 2014, Kowhai advised parents that the hourly ECE subsidy was increasing to $5.70. In fact, Kowhai was by then receiving an hourly ECE subsidy of $11.43 for eligible children.

Kowhai did not inform parents about a further ‘plus 10 ECE’ subsidy which was payable for eligible children, at $5.73 per child per hour, later increasing to $6.70.

Grossly wrong representations 

In sentencing in the Auckland District Court, Judge Jelas said the offending involved representations which were “grossly wrong” and required parents to pay significant additional amounts in childcare costs.

She said “one obvious motivation was to maximise an unlawful financial gain” and Kowhai “undermined the purpose of the ECE programme by making its services appear more expensive than they ought to have been”.

“The case is a reminder that it is critical that service providers who are Government subsidised, as well as part-charging the public, accurately reflect the subsidies they are receiving and do not mislead the public about the existence or amount of public funding for their services,” says Commissioner Anna Rawlings.

“Over the period covered by the charges, in our best estimate Kowhai received $221,632 in ECE funding which was not disclosed to parents.”

Former manager and director Rebecca Jayne Brindle has signed a personal court enforceable undertaking to pay any part of the fine that Kowhai fails to pay.

Kowhai Montessori Pre-School was sold in 2015 and now operates under a new name and under new management.

The Ministry of Education’s Deputy Secretary of Sector Enablement and Support, Katrina Casey says it’s unacceptable that parents were misled by an early learning service.

“Parents should be able to get accurate information from their early learning service about how fees are calculated and about funding they’ve received from us. We are very disappointed that this didn’t happen at Kowhai Montessori. While we believe this is an isolated case, we will be reminding all early learning services that they need to provide accurate information to parents on how fees are calculated.”