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Introducing a preschool voucher scheme alone may increase fees without improving accessibility or quality: MSF

LaksaNews

Myth
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SINGAPORE: Implementing a voucher scheme alone in the preschool sector may result in fees increasing without improving accessibility or quality, Senior Parliamentary Secretary for Social and Family Development Eric Chua said on Tuesday (Oct 14)

He was responding to an adjournment motion by the Workers' Party's (WP) Kenneth Tiong, where the Aljunied Member of Parliament proposed ways to achieve fairer and more diverse preschool education.

One of these was per-child subsidies in the form of preschool vouchers that parents can use at licensed preschool centres, in place of direct operator grants.

The WP had, in its party manifesto ahead of the 2025 General Election, proposed that vouchers be given to parents to be applied to childcare or preschool fees, as an alternative to subsidies.

On Tuesday, Mr Tiong noted media reports of preschool closures over the past few years, including the Red SchoolHouse @ Toh Tuck which allegedly did not pay its employees after it shuttered in May.

Mr Tiong said independent operators were being squeezed by those under schemes by the Early Childhood Development Agency (ECDA) - which received significant funding and preferential allocation to Housing and Development Board sites - and Ministry of Education kindergartens which had the "full backing of the national budget".

"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'," Mr Tiong said.

He added that the method of direct operator subsidies has inadvertently created a "deeply distorted market" where independent operators are "trapped".

Operator-level subsidies are largely implemented through direct fiscal transfers. On the Ministry of Social and Family Development end, these are only available to operators under ECDA schemes, he noted.

"On the MOE Kindergarten side, this comes directly from the MOE national budget. This is a direct transfer to these chosen government-supported operators, and no one else," he said.

As a result of subsidies, independent operators face dwindling enrolment and increased competition for talent.

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Due to the challenges they face in remaining, consolidating, or selling their business, these operators shut down, Mr Tiong said.

As part of suggested sector-wide reform, he mooted the idea of preschool vouchers.

"This empowers parents to choose a preschool that best fits their child's needs — be it PCF, Montessori, faith-based organisation, or play-based centres. It forces all schools, including state-backed giants, to compete fairly on quality, philosophy, service; without predetermining the winner's business model," said Mr Tiong in his speech.

However, Mr Chua said that having a voucher scheme alone may result in unintended consequences, such as increase in preschool fees without improvements in accessibility or quality.

He referred to examples in other countries, such as Hong Kong, where a preschool voucher scheme implemented in 2007 was discontinued as it worsened inequity. Affluent families used the vouchers for extra-educational programmes, noted Mr Chua.

Mr Tiong had in his speech referred to the same example, but said in his assessment that the Hong Kong system's flaw lay more with how it used a flat rate rather than the voucher system itself. "We can learn from this by using targeted funding supplements for these policy targets: lower-income families, special needs, and teacher wages," he said.

Mr Chua also said that in the United Kingdom, a nursery voucher programme implemented in 1996 was discontinued shortly after because it created unfair competition, reduced provider diversity, and potentially harmed educational outcomes for young children.

He said Singapore adopted 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.

All Singaporean children are provided with basic subsidies of up to S$300 (US$231) 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," Mr Chua said, adding that 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.

"Mr Tiong has implied that a 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. This has promoted healthy competition amongst preschool operators, and consequent improvements in quality," he added.

Preschool enrolment in Singapore has increased over the past decade.

Currently, around nine in 10 Singaporean children aged three to six are enrolled in preschool.

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