A Comprehensive Look at Canada’s New Childcare Program

(Prime Minister Justin Trudeau in Surrey, British Columbia)

Canada’s Childcare Movement

The story of national childcare starts all the way back when the Liberals were elected with their majority mandate back in 2015. As part of the Liberal party’s platform, investing in “social infrastructure”, including childcare care, was a big push for the Liberal Party. At first, the government had no plan to impose stringent cost control mechanisms to keep the program affordable. But Canada found itself at crossroads with international data from the OECD citing the country’s daycare fees being among the most expensive in the world. Couple daycare unaffordability with the covid-19 pandemic disproportionately increasing unemployment for women and political pressure from childcare associations; the stage was set to implement a policy that the “half-century of struggle” feminist movements since the 1970s dreamed of when the Royal Commission on the Status of Women called for a national daycare program.

In Budget 2016, a $500 million framework for developing a national early learning and childcare strategy was created to study what a program would look like, this framework committee worked from 2016-2018. Governments of all levels including Indigenous nations were included in the discussions on creating such a program. This framework led to the initial early learning and childcare agreements with the provinces and territories in 2017. These investments were mild and only increased affordable access to childcare by a few 10,000 spaces. 

It wasn’t until 2020 that a “down payment” was made to the provinces and territories as an initial promise of building a national childcare system was announced. In Budget 2021, Canada got the entire investment of nearly $30 billion in building a Canada-wide Early Learning and childcare program inspired in part by Quebec’s existing program. Tabled by Deputy Prime Minister Chrystia Freeland, Canada’s long-awaited national childcare program came to fruition. 

Policy Goals of National Daycare

The program has 4 primary goals: 

- Reducing daycare fees by at least 50% across the country by the end of 2022.

- Reduce daycare fees to $10 a day by 2025-2026.

- Increase childcare spaces by 250,000 primarily in the non-profit sector to meet increasing demand.

- Focus on improving factors of quality, affordability, inclusivity, flexibility, and accessibility in childcare across the country.

The provinces of Quebec, Yukon, and Newfoundland have already achieved the $10-a-day childcare goal. With other provinces of Manitoba and Saskatchewan quickly following suit this year. Among the largest provinces in the country, Ontario and British Columbia, are set to achieve the target by 2025-2026. 

In the short term, all 10 provinces and 3 territories have achieved at least a 50% reduction in childcare fees as of December 2022. Cost savings from reduced fees vary from province to province, parents in the Atlantic provinces are poised to save thousands each year compared to parents in Ontario who will see savings of over $9000 per year. This difference is primarily due to the standard cost of childcare care in provinces being vastly different from one another due to population inconsistencies and the demand for childcare care.

For example, discluding savings from the CWELCC program, Toronto parents would pay a median of over $1500 in childcare fees per year compared to Fredericton’s modest $715 per year. When including the CWELCC program savings, parents from both cities would see costs lowered to $150-$300 per year (based on preliminary data). As a result, the average Toronto in Ontario parent would save more in total than a parent from Fredericton in New Brunswick. In both cases, the average family would save 10s of thousands of dollars over several years. 

Parents Demand More Daycare

Due to decreased fees, the Canadian government expects demand for daycare to increase as childcare care becomes more affordable. As a response, the government is looking to create more than 250,000 childcare spaces to meet the increased demand. However, the creation of such spaces will be administered by the provinces; the federal government is merely putting conditions in the CWELCC program’s funding requirements for provinces to primarily build spaces in the not-for-profit childcare sector. Some provinces with a high portion of private childcare space (such as Alberta) have signed cost-control frameworks with the federal government to make sure profits from childcare spaces are invested back to support the facilities themselves (focusing on wages, operations, quality, fee reduction) rather than shareholders or owners.

Although the funding model is split 50/50 between federal and provincial governments, the provinces hold jurisdictional power over the implementation of the program. If the provinces fail to comply with the provisions of the CWELCC program, then the federal government is free to claw back funding or renegotiate provisions at the end of the 5-year 2021-2026 term. On the other hand, if the federal government determines the initial goals settled in 2021 are met by 2026, then a continuation of the CWELCC funding program will naturally follow. For the provinces, such a program is very difficult to implement without federal funds; as such, the federal government will have significant leverage in the direction of childcare across all provinces. 

Politically, all provinces have touted to achieve the goals set by the federal government by 2026 or sooner. Many of them have used the federally initiated program for their political gain, citing affordable and quality childcare care to be a pillar of the said provincial government’s progress on social programs, feminism, and economic growth. For the provinces, achieving affordable and quality childcare care will be a big political talking point for provincial governments looking to get reelected. Thus, provinces will be severely hesitant in clawing back such a program; and any future federal government will be discouraged from making significant changes to the program due to provincial backlash. Notwithstanding public backlash from parents who previously would’ve enjoyed cheap childcare care if the program is repealed.

Investments from Provinces

As evidence of such commitments from the provinces, the provinces of Manitoba, Saskatchewan, and Ontario have provided 100s of millions of dollars for childcare centres to cover operating expenses and increase wages. 

In other avenues, the province of British Columbia has made significant progress in reducing fees to $10 a day in many rural cities and towns. The province has also made significant progress in providing higher payments to families by increasing the amount for the province’s Affordable childcare Care Benefit. 

Provinces such as Alberta are providing an income-based childcare subsidy on top of the CWELCC program’s $10 a day goal to make childcare even more affordable for parents.  

The Workforce Crisis 

Canada has a workforce crisis, and key industries all across the economy are facing record labour shortages. Similarly, the childcare sector is also facing such a crisis, low wages and mass exodus from the workforce are stretching the labour resources of childcare facilities thin. And in a time when federal and provincial governments are building more spaces, having sufficient labour is key to realizing the true potential of the childcare sector. Stories of daycare centres temporarily closing, operating at half capacity, or shutting down outright are a direct result of the daycare labour shortage, CBC news reports. 

Carolyn Ferns, policy coordinator at the Ontario Coalition for Better childcare Care says "It's the worst workforce crisis childcare care has ever faced." Ferns states that the workforce crisis has only worsened after the pandemic. According to childcare advocates, the cause of the crisis is poor wages and benefits, thus giving workers little incentive to stay in the sector. 

The YMCA of Greater Toronto is the largest non-profit provider of childcare care in the city. The chief strategist, Jamison Steeve states that the workforce crisis “threatens the vision of making affordable, high-quality daycare accessible to all parents.” But stops short of stating that it’ll jeopardize the national program itself. 

"We will be able to provide $10-a-day childcare care, but not to the numbers that the plan currently calls for", Steeve says.

Many advocates call for a wage grid. A wage grid would allow for ECEs to have a consistent expectation as to when and how their pay increases based on time and experience. The more experience and time they’ve spent in the sector, the higher their pay. Union and childcare associations across the country are calling on governments to implement such measures to effectively retain the workforce and lure new workers. 

Provinces such as Manitoba and Alberta simply have guidelines for what ECEs should be paid. Others like Ontario and British Columbia are only offering wage enhancements for ECEs. Others provinces like Nova Scotia and New Brunswick already have wage grids in place. 

The Numbers

According to sources provided by CBC News, the workforce crisis is present all across the country in numerous ways:

- “The Ontario government forecasts that nearly 15,000 additional early childhood educators are needed to staff the 86,000 new childcare-care spaces planned for the province by 2026, according to official documents obtained by The Canadian Press.”

- “In British Columbia, a recent report from the Early childhood Educators of B.C. found nearly half of all childcare-care employers to be losing more staff than they could hire.”

- “The group childcare Care Now Alberta says thousands of qualified early childhood educators left the sector during the COVID-19 pandemic and says the government has not adequately addressed the workforce crisis.”

- The Association of Early childhood Educators of Alberta states the province will have to “ will need to recruit and retain between 7,000 and 20,000 early childhood educators to meet the requirements of the province’s deal with the federal government.” 

- “Nova Scotia created just 400 of 1,500 new childcare-care spots it promised by the end of 2022, and the government said a labour shortage was partly to blame.” 

- In Ontario, jurisdictions such as the Waterloo region are seeing shortages to the point of temporarily closing childcare centres. 

- “The Manitoba childcare Care Association estimates the province will need an additional 3,000 early childhood educators to fulfill the expected demand for the $10 per day program.”

- According to the Globe and Mail, “the [Quebec] government estimates it will have to recruit nearly 18,000 educators to meet its goal of creating 37,000 subsidized spaces by March 2025.”

Martha Friendly, executive director of the childcare Resource and Research Unit, a policy think-tank in Toronto, says both federal and provincial governments need to get involved to address the challenge. Having a supply of qualified early childhood educators is key to getting a Canada-wide childcare-care system off the ground", says Friendly.

Economic Benefits 

According to Canada’s Department of Finance, the economic benefits of the CWELCC program are vast. The department finds that children who “participate in early childhood education programs have higher graduation rates, make better decisions, improve work habits and grades, make gains in reading and math, are excited about learning, and develop strong social skills”.

In the province of Quebec, which already has had a subsidized daycare program since 1997, has raised Quebec’s GDP by 1.7%. Moreover, women’s participation in the workforce is 8% higher than prior to the implementation of the program and 4% higher compared to the rest of Canada. A landmark study from TD Economics indicates that for every dollar spent on early childhood education, “the broader economy receives between $1.50 and $2.80 in return.”

Moreover, women with children under 3 in Quebec showcase “some of the highest employment rates in the world", according to Canada's Finance Department. Much of this is attributable to Quebec’s success in implementing an affordable and quality daycare program for women looking to work and have kids at the same time. Economists predict that expanding this program to the rest of Canada will allow the country to become more economically productive and retain higher employment.

Regulating the For-Profit Sector

Some provinces like Alberta have a significant mix of for-profit daycare centres as part of their childcare system. As a result, the Alberta government has pushed the federal government to include for-profit daycare eligibility in reducing fees and creating more space (as is the case for not-for-profit daycare). However, the federal government has made it clear that any funding support for for-profit centres must be met with a cost-control framework.

According to the cost-control framework agreement, the federal government seeks:

"to ensure the sound and reasonable use of public funds, ensuring that costs and earnings of childcare care businesses are reasonable and that surplus earnings beyond reasonable earnings are directed towards improving childcare care services

Essentially, the federal government wants public funds to be used to improve the operations and quality of childcare spaces rather than using the funds for shareholder, ownership, asset, or investor gain.

Similarly, the Ontario government is looking to implement such a framework as well. In Ontario, for-profit daycare centres account for 30% of childcare providers. As such, a focus on providing adequate but responsible support for the for-profit sector is key to providing the best childcare for parents from both sectors. 

Some advocates point out that the Ontario government’s lack of movement in implementing such cost-control measures will have a significant impact on achieving affordable childcare. Some advocates claim that the Ontario government has no interest in putting a cap on profitability for centres in order to bolster the for-profit sector instead.

The Risk of Private Equity Firms in Public childcare 

These cost-control mechanisms are key to ensuring that the for-profit sector doesn’t become beholden to rent-seeking behaviour using public funding. childcare advocates thus argue that cost control is the only way to ensure that for-profit daycares do not use public money to increase profits and instead invest that money back into the daycare itself. 

In the US, childcare advocates warn that an increase in private equity firms controlling the childcare chain will lead to less accessibility, affordability, and quality. Research indicates that non-profit childcare centres have higher quality than for-profit centres. These US advocates warn that such a private transformation has been slowly creeping in in the past few decades.

Similarly in Canada, childcare advocates warn that significant leeway with for-profit centres regarding the usage of public funds will lead to higher fees and lower-quality childcare. Thus, the key to keeping for-profit centres consistent with quality and affordability is using adequate government oversight.

Institutionalization

Canada’s Minister of Families, children, and Social Development - Karina Gould - has tabled new legislation (Bill C-35) to enshrine early learning and childcare care as a federal responsibility. It is part of the federal government’s commitment to ensuring childcare is institutionalized in Canada and is less prone to future governments rescinding the program. 

Indeed, combining funding from all levels of government, passing a federal law to guarantee federal responsibility, and ensuring fee reductions for parents will make it difficult for any government in future to significantly alter the program. 

According to Employment and Social Development Canada, Bill C-35 will enshrine the following 4 provisions: 

- “If passed, the bill would enshrine the principles of a Canada-wide early learning and childcare care system into federal law”

- “Commitment to maintaining long-term federal funding for provinces, territories and Indigenous peoples to support the provision of early learning and childcare care under a Canada-wide system.”

- “Would require the federal government to report to the public on federal investments and progress being made on the Canada-wide system."

- “It would also enshrine in law the National Advisory Council on Early Learning and childcare Care. The role of this recently announced council is to provide third-party expert advice to the Government of Canada and serve as a forum for engagement on issues and challenges facing the early learning and childcare sector.”

Bill C-35 is currently in consideration by the committee in the House of Commons and is likely poised to pass. This bill establishes a significant step toward institutionalizing childcare in Canada just as the Canada Health Act institutionalized healthcare in 1984.

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