The government has warned the early childhood sector it could step in to limit the detrimental effects of competition and it wants to turn the tide away from privatised education.
The comments were made in documents related to development of an Early Learning Strategic Plan, which said the government wanted to invest in the public education system.
"This involves turning the tide away from a privatised, profit-focused education system. In the context of early learning, this includes working to ensure that community-based early childhood education services have well-maintained facilities and are able to expand to meet growing demand," the plan's terms of reference said.
In a related Cabinet paper, the Education Minister, Chris Hipkins, said the private sector had grown from owning 28 percent of all early childhood services in 2002 to 46 percent in 2016.
"I therefore consider it timely to assess whether current policy settings remain fit-for-purpose. The Early Learning Strategic Plan will explore whether the government should play a more active role in the early learning market to match the supply and demand of early learning provision, and limit any potentially detrimental effects of competition," he said.
RNZ understands some in the sector regarded the government's comments as divisive and hostile to privately-owned early childhood centres.
However, teachers have told RNZ that profit-making undermined quality in the early childhood sector, and some business owners said government funding was so low that it was no longer possible to make a profit and provide quality education and care.
In his Cabinet paper, Mr Hipkins, said the strategic plan was a key priority.
"I am not confident all children are receiving quality early learning. Evidence suggests the quality of provision is variable," he said.
Mr Hipkins said a strategic plan would create a stepped approach to developing and strengthening early childhood education.
The union for several thousand early childhood teachers, the Educational Institute, said the plan was long overdue.
New Zealand Kindergartens also welcomed the terms of reference, saying it was time to get early childhood education "back on track."