Budget 2023: Twenty hours' free early childhood education extended to 2yos

Parents with 2-year-olds are getting a helping hand from the Government as part of its cost of living package in Budget 2023.

It's coughing up $1.2 billion over four years to extend 20 hours of free early childhood education (ECE) to parents with 2-year-olds. Previously, only parents with children aged between 3 and 5 were eligible for the subsidy.

The subsidy could save parents up to $133 per week, the Government has said.

Prime Minister Chris Hipkins acknowledged the current cost of living pressures were providing tough times for families.

"This will be a major saving for families and will reduce barriers for working parents to take on more hours if they can," he said.

The Government said the subsidy would come into force in March next year.

In addition, the Government said it was allocating another $322 million to ECE services to lift teachers' pay toward parity with kindergarten educators.

"In some circumstances, this could amount to increases of $14,762 or 18.6 percent," Education Minister Jan Tinetti said in a statement.

"This is not just an issue of fairness. The sector has told us that inequitable pay between comparable roles causes a range of issues for education and care services, such as teacher shortages and staff retention."

Funding for the ECE services that opt-in would be able to access the extra funding from November, the Government said.

Meanwhile, free lunches for children in schools who experience "the greatest socioeconomic barriers" would continue until at least the end of next year.

The programme feeds about 220,000 children across nearly 1000 schools.