Gordon Cleveland

October 26, 2022

Accessibility and Quality of Child Care Services in Quebec

These (link below in next paragraph) are slides from a recent webinar presentation I made along with colleagues from Équipe de recherche Qualité des contextes éducatifs de la petite enfance at UQAM. You can listen to the French version of my talk https://youtu.be/R-JIAjvfQew or the whole webinar https://qualitepetiteenfance.uqam.ca/evenement/leducation-a-la-petite-enfance-sinvite-dans-la-campagne-electorale-27-septembre-2022/

But, I have also reproduced most of that talk in English here:

Click to access English-Version-of-the-Quebec-Presentation.pdf

Christa Japel has also done similar work here https://childcarecanada.org/blog/learning-experience-access-and-quality-qu%C3%A9bec%E2%80%99s-profit-child-care

October 25, 2022

Give Them an Inch and They’ll Take a Mile: The Story of For-Profit Child Care in Ontario

The Ministry of Education in Ontario is beginning to understand that they really can’t satisfy for-profit child care providers with anything less than the full cake and eat it too. The Ontario government has bent over backwards to accommodate the for-profit child care operators; they want them to opt into the Canada-wide Early Learning and Child Care (CWELCC) system. What has the Ministry done so far for the for-profit operators?

It changed the regulations so that municipalities (mandated to be Service System Managers) no longer have the discretion to sign purchase-of-service agreements only with not-for-profit providers (16 of the 47 had this type of provision);
It changed regulations so that measurement of quality in a centre could not be used as a criterion for eligiblity for CWELCC sign-up;
It completely gutted the new Management and Funding Guidelines for 2022 which the Ministry itself had established back in April. The April version of the guidelines affirmed that municipalities should judge whether the funds given to operators in 2022 were based on actual costs. In other words, the municipalities should judge whether operators had ineligible expenditures or excesssive profit claims. The August Guidelines eliminated these provisions.
It ordered municipalities to collect very little financial data from operators. The April version of the Guidelines said that “CMSMs/DSSABs are required to collect sufficient and detailed financial information from Licensees…. CMSMs/DSSABs will review all financial components including cost and expense line items for reasonability and eligibility, while ensuring CWELCC System objectives will be achieved….” The August version of the Guidelines said “Information collected from Licensees to support implementation should be kept to the minimum amount necessary to meet the reporting requirements outlined in the CWELCC Guidelines….”

As of October 18^th, the Ministry of Education has announced that the August 2022 Guidelines will continue for 2023; there will be few controls over how child care operators spend the revenues they receive from the CWELCC program. Information collection will be kept to a minimum. All of this despite the fact that, with a 50% cut in fees at the end of 2022, more than twice as much government money will be going to operators.

Ontario’s Action Plan (part of the CWELCC Agreement with the federal government) said there would be a revised allocation methodology in 2023. That didn’t happen. Now, the new costs-based funding system will be in place for 2024.

But that’s not enough concessions as far as the for-profit operators are concerned. They want more. Sharon Siriboe, the director of the Ontario Association of Independent Childcare Centres wants guaranteed funding rules before for-profit operators will join the system. “How can any small business remain viable and be asked to make such significant changes with only 14 months of clarity?”

What is the problem here?

Ontario signed an agreement with the federal government back in late March of 2022 – the Ontario-Canada Canada-wide Early Learning and Child Care Agreement. In it, Ontario committed itself to the vision of building a largely not-for-profit system of accessible, affordable, inclusive child care services of high quality with federal money – $10 Billion of it over 4 years.

In Section 4.1 of that agreement, it states that “Ontario intends to maintain and build upon its existing robust accountability framework by introducing a further control mechanism. Ontario proposes to implement a cost control framework following the signing of the agreement that will be in place for all providers that opt into the Canada-wide ELCC system. The Parties are interested in approaches to ensure the sound and reasonable use of public funds, ensuring that costs and earnings of child care licensees that opt-in to the Canada-wide ELCC system are reasonable and that surplus earnings beyond reasonable earnings are directed towards improving child care services.”

I don’t really like calling it a “cost control framework”. It would be better to call it a “wise spending of public dollars” framework. The objective is not to have costs that are as low as possible; the objective is to spend public dollars sensibly to achieve the objectives of affordability, accessibility and quality. Ontario has agreed with the federal government that there will be a mechanism that ensures that all providers spend public funds wisely and that both the costs claimed by these providers and the earnings (profit) claimed by these providers are reasonable in achieving the objectives of this new child care system.

What is this new cost control/wise spending of public dollars framework? Ontario tries to claim they have one already, but they don’t. They have what we could call a fee control framework. In other words, base fees for every operator are frozen at whatever their value was on March 27, 2022. Each operator will get revenue from government equal to 25% of this base fee if they join CWELCC in 2022. The operator will use these funds to backdate a 25% fee reduction to parents. There will be another cut to fees at the end of December. This will take fees down by 50% compared to the level they had in 2020. And, in 2023, operators will get revenues from government to cover these fee reductions for parents. These rules control the fees charged by operators, but they in no way validate the costs and earnings that are covered by the new government revenues. There is effectively no reporting on what these costs and earnings are. There is no way to calculate the amount of surplus taken by operators, or to see how it is used.

That’s the way the for-profit operators like it. No requirement for reporting on how the public funds they receive are spent until well into 2024. Even then, only a requirement for an annual audit. No need to justify the salaries paid to management. No need to justify the profits they claim each year, which are built into the fees they charge. We know from the CCPA fees survey that for-profit operators in cities across Ontario charge higher fees than not-for-profits. Their median fees are between 8% and 40% higher than the not-for-profits, depending on the municipality. Why? Are these fee (and revenue) differentials justified? The for-profit sector would prefer not to tell. They don’t want detailed accountability for the public funds they receive.

I have recently argued that the Ministry of Education should be requiring all operators in 2023 to submit detailed budgets of planned expenditures. These would be reconciled against actual spending (and profit) at the end of the year. This, along with related operating data, could provide the detailed costs and spending information the Ministry of Education would need to design a new costs-based funding system. But the Ministry doesn’t want to do that. Instead they are giving the for-profit child care operators a free pass for another year. The Ministry plans to develop a new costs-based funding system for 2024 with virtually no costs data upon which to build it. And, the for-profit operators are even objecting to this. They apparently want the free pass to continue for ever.

Why, you might wonder? From an economic point of view, the position of the for-profit operators is quite rational. They have a licence to provide child care services in Ontario and many of them make good money providing these services. From now on, having a licence to provide child care services to children 0-5 in Ontario is going to mean receiving hundreds of thousands of dollars a year in guaranteed government funding; by September 2025, government-provided revenues will cover over 80% of the per-child costs of most centres. Access to this kind of government funding is scarce; not everyone can get a licence In a similar situation in Quebec, some fixed-fee centres have been able to sell their licences to new operators for over a million dollars. That’s not selling equipment or real estate; that’s just the price of buying the licence. In Ontario, the fewer the reporting requirements, the fewer the controls over how operators spend their money, the fewer the controls on profit, the higher will be the price when you come to sell your licence. Large big-box for-profit child care chains may be willing to pay top dollar for existing licences of small for-profit operators if there are very few controls on the reasonableness of costs and earnings. So, the demands of the for-profit operators are rational; they’re just not very good for Ontario children, families and for the building of a financially accountable child care system.

October 19, 2022

FOUR URGENT STEPS TO BETTER CHILD CARE HEALTH

The second theme in today’s publication by IRPP (see earlier blog post for the first) is what needs to happen now to make sure that $10 a day child care works out for families and children. There’s a tsunami of additional demand for child care on the horizon as child care fees plummet and we’re not ready for it. Many provinces have not placed much emphasis on expansion of not-for-profit child care spaces and haven’t provided the funding or tools necessary to make it happen.

In today’s publication, which is available here…

IN ENGLISH: https://irpp.org/research-studies/early-learning-and-child-care-in-canada/

IN FRENCH: https://irpp.org/fr/research-studies/apprentissage-et-garde-des-jeunes-enfants-au-canada/

… I make the following recommendations to federal and provincial governments:

Rapidly expand not-for-profit and public child care facilities. Provincial and territorial governments should provide substantial capital grants or loan guarantees to not-for-profit operators to accelerate a planned and coordinated expansion. Large jurisdictions should enable specialized development agencies to design, plan and build not-for-profit centres, and should encourage the delivery of more child care services by municipalities, colleges and school boards.

Increase the wages of early childhood educators. With little improvement in pay for child care educators in over 30 years, wages have to rise substantially to recruit and retain enough qualified early childhood educators to meet demand and maintain or improve staff-child ratios.

Be prepared to inject more funding. No one has yet addressed whether $9 Billion a year is enough money to provide universal $10 a day child care in all jurisdictions, especially those where child care fees have been particularly high for years (e.g., B.C., Alberta, and Ontario). It probably isn’t. A cost-shared federal-provincial supplementary financing program in high-fee jurisdictions would make good fiscal and social sense, as governments get a substantial revenue boost from the increased labour force participation of mothers.

Close gaps in maternity and parental benefits. There is a stark difference in the coverage and generosity of maternity and parental benefits between Quebec, which has its own program, and the rest of Canada, which relies on federal Employment Insurance. The federal government should address these gaps as part of planned Employment Insurance reforms. It should follow through on the Liberals’ 2019 election platform promise to ensure that parent who do not qualify for paid leave through EI receive income benefits during the first year of their child’s life.

October 19, 2022October 19, 2022

Comparing Then and Now: Child Care and Child and Family Benefits

Here’s a quick summary of some key conclusions from my new study published by IRPP today – Early Learning and Child Care in Canada: Where Have We Come From, Where Are We Going?

IN ENGLISH: https://irpp.org/research-studies/early-learning-and-child-care-in-canada/

IN FRENCH: https://irpp.org/fr/research-studies/apprentissage-et-garde-des-jeunes-enfants-au-canada/

Factor	Progress	Description
Child care spaces	Positive	There were a lot more licensed child care spaces in 2019 than there were in 1986 — 7 times as many — serving a fairly stable number of children.
Children in centre care	Positive	The popularity and acceptance of licensed centre-based child care has increased dramatically. Back in the early 1980s, only about 10% of preschool children of employed mothers used centre care, 40% were in informal paid care and about 50% were cared for by family members. In 2019, about half of preschool children of employed parents were in centre care, 20% in paid family child care and 30% cared for by family members.
Full-day kindergarten	Positive	Kindergarten in public schools has moved from mostly half-days during the school year for 5-year-olds to being widely available for full schooldays to 4- and 5-year-olds.
Mothers in the workforce	Positive	Labour force participation of mothers has increased substantially since 1986. For instance, in 1986 the labour force participation rate for mothers with the youngest child 3 to 5 years of age was 62%. Now, it is 78%. This is still below rates in Quebec or for mothers with older children.
Child care fees	Negative	Child care fees have risen substantially over the period from the mid-1980s. In fact, using preschool fees as the marker and adjusting for inflation, typical child care centre fees are over $3,000 more expensive in Ontario, Alberta and Nova Scotia, and more than $2,000 more expensive in British Columbia and New Brunswick. Quebec and Manitoba have been notable exceptions.
Staff-child ratios	Mixed	In most provinces and territories, legislated staff-child ratios for centre care have not changed very much since 1986. Quebec’s staff-child ratios for children younger than 3 years are the worst across jurisdictions. The only province or territory to have gotten pretty consistently worse in staff-child ratios from 1986 to 2019 is Alberta.
Funding for low-income families	Mixed	Funding of child care services across Canada has changed dramatically over the years. Back in 1986, the main federal funding instrument was the Canada Assistance Plan, which funded child care subsidies. All provinces and territories had child care subsidy payment systems targeting lower-income families and children. More than half of all child care funding came in the form of subsidies — often much more than half. Nowadays, Quebec no longer has a child care subsidy program of this type. In other provinces and territories, child care subsidies now comprise about 40% of total funding. However, there were approximately twice as many children receiving low-income child care subsidies in 2019 as in 1986 (176,738 compared to approximately 82,000)
Funding for operators	Positive	Direct operational funding to licensed/regulated child care services — to lower fees, to raise wages, to improve quality — was in 2019 a very substantial proportion of all funding. It was nearly 100% of Quebec’s funding, and 50% on average in other provinces and territories.
Child care expenses deduction	Positive	The Child Care Expenses Deduction allows earners to deduct work-related child care expenses from income before taxes are assessed. In 1986, the claimable limit was $2,000 per child. Now, limits are $8,000 annually for children 0 to 6 and $5,000 annually for children 7 to 15 years.
Maternity and parental benefits	Positive	Parental benefits have changed very dramatically since 1986. There were no legislated parental benefits at that time, only 15 weeks of maternity benefits under Unemployment Insurance. Now, Quebec and the rest of Canada have different maternity and parental benefit schemes, offering different levels of income replacement and different amounts of benefits reserved for the non-birthing parent. The total length of benefits — maternity, parental, paternity — can exceed a year, and can now include self-employed parents.
Child care educator wages	Mixed	Child care staff were poorly paid in 1986 and they are still poorly paid. Data on child care workers’ compensation are sketchy, but the evidence suggests that child care wages have improved and that wage enhancement grants in various provinces and territories have had some effect. But the picture is uneven. In some of Canada’s largest provinces, where the bulk of child care educators are located, and compared with the average hourly earnings of other workers, the movement in wages over time has been small.
Federal child benefits	Positive	Federal child benefits are, without doubt, larger than they were in 1986. These benefits provide between $5,000 and $7,000 per child (depending on age) to families with low incomes and some amount of child benefits to nearly all families. These benefits have had an impact on child poverty and are a very significant boost to income for families with very low incomes.

March 27, 2022

What Should We Look for in Ontario’s Child Care Agreement?

How should we judge whether the new Ontario child care agreement with the federal government is a good one? There are many things to look for; I’ve written about this before. Yet, if I boil it down, the key concern is how quickly Ontario is able and willing to expand services – moving towards a quality universal system of child care for preschool children.

There are two issues here. First, does Ontario have an ambitious plan to expand not-for-profit licensed capacity? We know that Ontario will eventually need between 200,000 and 300,000 additional child care spaces. We also know that even with no additional funding from the Ontario government, there is enough federal money to expand by at least 100,000 spaces in the new four-year agreement. Without dramatic expansion NOW there will be shortages and long waiting lists. Without substantial expansion, lower income families will be pushed to the back of the line and employment barriers for mothers will still be high. Ontario’s target should be at least 150,000 spaces over the term of the agreement. Anything less will be a big problem.

The second issue is really the first issue (in priority). Expansion cannot happen without more trained early childhood educators. An early childhood educator must have a two-year college diploma and related practicum experience. All jurisdictions across Canada are short of fully qualified educators already and we will need a minimum of 20,000 more in Ontario for capacity to expand. It will not be possible to expand the supply of trained educators and maintain quality services without improving salaries and benefits substantially. Does the new Ontario agreement have substantial up-front money flowing to increase staff compensation? If not, you know the government is not really serious about moving towards universal affordable high-quality care.

There are two things we know will be in the Ontario agreement, because they form the federal government’s bottom line. There will be a cut in licensed child care fees to 50% by the end of December 2022. And Ontario will agree that fees will be down to an average of $10 a day by the end of 2025-26. But is there a plan to deal with the very large increase in demand this will create? Is there capital money in grants and loans? Is there up-front money to help municipalities and non-profit providers jump into the development process now? Ontario’s Action Plan should answer this. If it doesn’t, Ontario has been wasting the year they waited to sign the agreement.

It’s about time that Ontario signed up and started working on affordability, availability, quality, and inclusivity. Better late than never. But I am concerned that Ontario is only worried about pinching pennies and has not done the work to plan for transforming Ontario’s child care system to meet parents’ needs.

February 15, 2022February 15, 2022

My Recent Presentation on Child Care Affordability

The Institute for Gender and the Economy recently sponsored a workshop on Care Work in the Recovery Economy. I did a short presentation with slides looking at Alberta’s new child care policies – following on the funding agreement with the federal government. Do the new policies get us to $10 a day? Are low-income families still disadvantaged with the burden of child care costs? I thought you might like to see the slides and draw conclusions.

Child-Care-Affordability_CARE-ECONOMY-presentation Download

And how about this neat graphic provided to me after the workshop by the workshop organizers!! It summarizes some of my main themes.

January 30, 2022January 30, 2022

ARMINE IS WRONG ABOUT DOUG FORD

I like Armine Yalnizyan. Usually, I agree with her. But I don’t appreciate her recent sympathy for Doug Ford (https://www.thestar.com/business/opinion/2022/01/25/doug-ford-is-the-only-premier-who-has-yet-to-sign-ottawas-10-a-day-child-care-deal-hes-right-to-push-back.html ). She sympathizes with Doug Ford’s reluctance to sign an agreement with the federal government to get billions of dollars per year to make licensed child care more affordable and more accessible for Ontario families. She agrees with Doug Ford that there is not enough money in the pot to lower fees on existing child care spaces AND expand child care capacity.

But she’s wrong. There is enough money on the table to take giant steps towards making child care both affordable and accessible in the next five years. After all, right now Ontario only spends about $2 billion per year on licensed child care. By 2025-26, the federal government will be providing over $3 billion of additional funds for Ontario to spend on child care. That more than doubles Ontario’s child care spending. Come on, Ontario! Sharpen your pencils! Can’t you figure an intelligent way to spend an extra $3 billion per year making child care more accessible and affordable for Ontario families?

Yes, it will be tough. Child care is expensive in Ontario, so cutting fees in half and then getting them down to $10 a day will be expensive. I estimate that it will cost just over $1 billion per year to cut current fees by half for existing child care spaces. And I estimate that the net cost of lowering fees on existing spaces to $10 a day will be just over $1.5 Billion. I’ve shared these calculations with Armine. That’s a lot of money, but over the next five years, offering existing child care spaces at $10 a day will eat up only about one-half of the cumulative total of $10.2 Billion that Ontario will get from the federal government over that time. That leaves half of the federal money to devote to expansion and to lowering the fees on new spaces down to $10 a day. And to increasing staff compensation so that new qualified staff can be recruited and existing staff will stay in the sector. And to all of the other aspects of building an affordable, accessible, high-quality system of child care in Ontario.

I calculate that the operating funding to lower fees to $10 a day for 100,000 new child care spaces would be about $1.2 Billion annually. That would bring Ontario’s coverage rate up to 47% – there would be capacity for 47% of all Ontario children 0-5. That’s not the 59% coverage that some other provinces – but not all – have promised. But 47% in Ontario means a lot more children have access to early childhood education than 47% would mean in other jurisdictions. Fortunately, we have very good full-day kindergarten for 4- and 5-year-olds. This was the same full-day kindergarten that Doug Ford wanted to dramatically downgrade back in 2019-2020. (https://members.etfo.ca/AboutETFO/Publications/PositionPapers/PositionPapersDocuments/Dr%20Gordon%20Cleveland%20Kindergarten%20Research%20Report%20Executive%20Summary.pdf ).

In fact, Doug Ford has a pretty poor record when it comes to supporting good-quality affordable early learning and child care. When he came into office back in 2018, he immediately cancelled Kathleen Wynne’s decision to proceed with providing free child care to preschool-age children. That would have cost about $1.6 Billion of provincial money. In its place, he devised the Ontario Child Care Tax Credit to provide a sprinkling of expenditure relief for the use of any type of child care. That provided very little support for families and did nothing to build a child care system. And then Ford and his ministers made plans to weaken full-day kindergarten but backed off at the last minute when they read the polls about how popular full-day kindergarten is. So, I don’t trust Doug Ford’s motives in delaying signing a child care agreement – he is not my child care knight in shining armour.

The federal government is offering provincial/territorial and Indigenous governments enough money to go a long way towards building an affordable, accessible Canada-wide child care system. Families need it; children need it – it’s time for Doug Ford to stop playing games and sign up for child care.

December 8, 2021

$10 a Day Child Care Will Dramatically Reduce Employment Barriers for Parents

A major new study (https://childcarepolicy.net/wp-content/uploads/2021/12/Ten_a_day-paper-web.pdf ) addresses the question of whether the $10 a day program will truly improve child care affordability and reduce barriers to employment for families. It was written by economists Gordon Cleveland and Michael Krashinsky from the Department of Management at University of Toronto Scarborough.

Their study focuses on the situation facing couple families with one infant child and one preschooler in each of the three provinces at different possible levels of income. The authors’ main conclusion is that the $10 a day program can and should dramatically change child care affordability and make employment a worthwhile option for many caregiving parents. However, even if provinces and territories adopt a flat fee of $10 a day, they will need to have some kind of sliding scale to ensure that low-income families are not disadvantaged.

On the basis of this work, Dr. Gordon Cleveland says

“Ontario should sign a funding deal soon with the federal government; if they don’t reach an agreement by early next year, Ontario will lose about $1 Billion in child care funding.”
“Our work shows that child care costs are a very large barrier to employment for many two-parent families, and that $10 a day child care will dramatically reduce those barriers.”
“To reach an agreement, Ontario needs to develop a child care Action Plan. That plan needs to include support for dramatic expansion of non-profit child care – at least 150,000 spaces over 5 years. It needs a plan to phase-in more affordable child care, so that supply and demand increase together. And it needs plans to pay early childhood educators more so we can recruit more trained staff now.”

Finance Minister Chrystia Freeland’s April Budget is spending $30 Billion over 5 years to make child care affordable enough to eliminate this major barrier to the employment of mothers of young children across Canada. As of December 2021, nine provinces and territories have signed on to the $10 a day early learning and child care program, with Ontario being a notable holdout. This timely study seeks to determine whether the $10 a day policy gamble is likely to work, and what kind of funding reforms will make the effects more equitable.

Specific conclusions of the study include:

Under current policies, if a couple family with two children cannot access subsidies in Ontario (and most cannot) licensed child care at any income level is remarkably unaffordable.

If Ontario offered licensed child care at a flat fee of $10 a day per child along with the existing tax credit, a couple family with two children would pay less than 15% of the caregiving parent’s income contribution in child care fees, no matter what their income level. The child care cost barrier to employment would be dramatically reduced.

Alberta’s new funding policies agreed to with the federal government will improve affordability, particularly for families at higher levels of income. Alberta plans to offer substantial operating grants to child care centres and homes to allow them to lower parent fees. And Alberta is extending its subsidy system to cover families with partial subsidies out to $180,000 of family income.

The combination of grants and subsidies will still leave Calgary couple families with two children giving up more than 30% of net extra employment income if the caregiving parent earns less than $44,000 (family income of $110,000). In other words, child care will be unaffordable for these families even when Alberta’s new child care policies are fully implemented.

Edmonton families will be better off than Calgary families because median fees start off at a lower level before the new funding programs. Only families where the caregiving parent earns less than about $18,000 (family income of $45,000) will find child care unaffordable (30% or more of the net income contribution of the second earner).

Manitoba pioneered flat fees for child care, and operational funding to lower fees. However, its positive reputation is not supported by measures of current child care affordability.

A flat fee of $10 a day per child (with no subsidy system) would improve affordability for nearly all couple families with two children in Manitoba except when the caregiving parent’s income is $14,000 or below. However, a flat fee will mean that affordability is always worse for families the lower their income.

August 17, 2021

Lies, Damned Lies, and Conservative Politicians

What a lot of whoppers! If Erin O’Toole were Pinocchio, his nose would be 10 feet long by now. Erin O’Toole, leader of the Conservative Party of Canada, has now come out with a full platform of policies, including policies on early learning and child care. In it, he promises (1) “to provide increased support for working families by providing increased funding for child care” (2) that “nobody should be prevented from getting back to work because they can’t afford child care” (3) that the Conservative policy will be “covering up to 75% of the cost of child care for lower income families” and (4) that “this will massively increase the support that lower income families receive and provide more assistance to almost all families”. All of these promises are on page 47 of “Canada’s Recovery Plan” published by the Conservative Party of Canada.

I live in Ontario, so I am going to look at this from an Ontario perspective. Ontario ALREADY HAS a refundable tax credit for child care. It already pays some money back to you in compensation for child care expenditures that are related to parental work or study. The O’Toole policy is a bit more generous, especially for higher-income families, but has the same eligibility rules. Since you can’t get paid twice for the same expenditures, the best the federal program can do is to REPLACE THE ALREADY EXISTING PROVINCIAL TAX CREDIT. At the same time, O’Toole is going to get rid of the federal Child Care Expense Deduction.

What does this mean for families in Ontario? If you currently earn $30,000, your new tax credit will give you $640 more than the old one, but you will lose up to $1,200 of Child Care Expense Deduction. You will be worse off.

If you currently earn $120,000, your new tax credit will give you $3,360 more than the old one, but you will lose up to $2,080 of Child Care Expense Deduction. You will be better off to the tune of $1,280 per child per year. Many other families’ situations will lie between these two examples.

Conclusions?

In Ontario, low income families will be worse off with the O’Toole plan. Higher income families will be better off, but only by a couple of thousand dollars. The chief beneficiary will be the Doug Ford government that will save about $400 million per year when it’s current child care tax credit program is superseded.

Should we be surprised? The median cost of licensed child care in Ontario in 2020 was just over $17,000 for infants, just over $14,000 for toddlers, and just over $12,000 for preschoolers (2½ – 5 years). For most families that can’t afford these fees now, a tax credit that gives you a couple of thousand dollars at best and limits the maximum subsidizable fee to $8,000 probably won’t change things much.

Should we be surprised? Since we already have a refundable child care tax credit in Ontario and we have had it since 2019, we know whether this program will solve the child care affordability problem. It doesn’t.

Should we be surprised? The Financial Accountability Office of Ontario analyzed what the effects of the Doug Ford tax credit would be back in 2019. They concluded that: “Families that receive the CARE tax credit will receive an average benefit of approximately $1,300.” Not $6,000 or $4,000, but $1,300. They knew this program would not do much. And the Financial Accountability Office also knew that low-income families were NOT going to benefit much. As they concluded: “fewer than 300 families, or 0.1 per cent of all CARE tax credit recipients, will receive the maximum benefit entitlement per child” (p.3). In other words, fewer than 300 families across Ontario would receive back 75% of their child care expenses.

Should we be surprised? We know the approximate cost of the Erin O’Toole tax credit. A very similar proposal was analyzed in 2017 by the C.D. Howe Institute. The net cost was $1.2 Billion per year. The ongoing amount of federal spending announced in the recent federal budget was $9.2 Billion per year. Does Erin O’Toole really think that a program that is less than 1/7^th the size of the proposed federal program will have a bigger impact on child care affordability? I don’t think so.

Should we be surprised? Reducing the child care affordability barrier to women’s full participation in employment is a big problem, not a small problem. In a 2018 report to the Government of Ontario, I calculated that in 45% of Ontario families, the cost of licensed child care would eat up over 60% of the mother’s earnings contribution to household income. For another 33% of families, the costs would eat up between 30% and 60% of the mother’s earnings contribution. The Ford tax credit for child care expenses has not changed this situation by much, and neither would the O’Toole tax credit. It will cost a lot of money to change this major employment barrier and O’Toole is not willing to spend it.

August 14, 2021

WHAT SHOULD THE ONTARIO CHILD CARE PLAN INCLUDE?

In order to access the child care money announced in the 2021 Federal Budget, Ontario has to devise a credible, implementable 5-year plan to make licensed child care affordable, accessible and of high-quality. It’s a lot of money. I estimate that Ontario could receive about $1.16 Billion of new federal child care money in 2021-22. And more money on top for Indigenous child care. That would mean an increase of 50% in the amount of spending by the Ontario Government on early years and child care (which is now about $2.3 Billion).

The federal child care money for Ontario would rise to $1.74 Billion, $2.12 Billion and $2.51 Billion over the next three fiscal years. In 2025-26 and thereafter, Ontario should be receiving $2.97 Billion per year.

I believe the fundamental objective of the federal government is the creation in each province and territory of a system of community-based child care services that is affordable for parents, serves a wide range of child and parent needs, is accessible to families, inclusive of children with additional needs, and is of high-quality (i.e., with a high proportion of trained early childhood educators, with substantial continuing professional development). Community-based services are predominantly not-for-profit or public services such that the needs of communities, parents and children are the basis of all decisions rather than the commercial interests of the owners and shareholders of child care businesses. This is the direction mandated by the eight provincial and territorial agreements signed so far.

If Ontario comes up with a 5-year plan consistent with these objectives, the federal government will sign on the dotted line and we will get the child care funding. And this funding is permanent.

Good news? Yes. But Doug Ford is apparently unwilling to come up with an Ontario Action Plan that meets the federal requirements.

Of course, it won’t be easy. Ontario has the most expensive child care in the country. Real estate is more expensive here, labour is more expensive here, and child-staff ratios and regulations are better here than in some other provinces. Chrystia Freeland has called for a cut of 50% in parent fees by the end of 2022, but I don’t think the Ontario plan can be as simple as that. It would cost over $1 Billion just to reduce fees by 50% on existing Ontario spaces, without dealing with expansion or raising wages. We need a plan that simultaneously builds capacity, lowers fees, improves equity in access to services, increases compensation of ECEs and avoids long waiting lists for not-yet-existing services.

The trick is to design policies so that the transition towards affordable child care is equitable and well-managed. We need to work together on the five-year plan. The City of Toronto has already proposed that municipalities should be at the Ontario table because they will have major responsibility for delivering and managing the expansion of services. This is a good idea.

What principles and policies should be in Ontario’s 5-year child care plan?

Low-, middle- and high-income families should all benefit from the reduction in child care fees. This may imply adoption of a sliding scale of parent fees along with gradual reduction of fixed maximum fees for child care.
Rapid capacity expansion of not-for-profit and public services should be a top priority. Municipalities and school boards will be key to planning and implementation.
There must be a 5-year and a 10-year plan for capital expansion and for the expansion of home child care. New capacity developments should be planned to produce an equitable geographic and income distribution of services. New capacity should take account of services for children needing additional supports, for families needing non-standard hours care, for special rural needs, and other needs for diverse services. There needs to be money for planning, development and capital.
Fee reductions should be phased-in so that demand for services expands at about the same rate as capacity grows.
All existing for-profit, not-for-profit and public services should be invited to provide lower-fee services for Ontario families. These fee reductions will be funded by substantially increased operating grants. In return for this substantial public funding, services will need to accept that they are providing what is essentially a public service with required financial transparency, controlled fees, increased compensation moving towards wage standards, enhanced reporting requirements, quality-improvement initiatives, increased professional development, and so on. Services that do not wish to accept these conditions can continue to operate with existing supports and regulations (e.g., current rather than increased levels of operating grants).
Increased operating grants for these publicly-managed services should support increased compensation of ECEs as well as lower fees for parents.
Research and widespread consultations should be conducted to lead towards agreement on the future structure and level of wages necessary to ensure continuing recruitment of adequate numbers of trained ECEs and to incentivize making early childhood education a viable career choice. A province-wide compensation grid with variations by region and by qualifications should be negotiated and operators should be expected to meet or exceed these levels.
The Ontario government should sponsor collaborative research, in which municipalities will be involved, on the costs, quality, fees and demand for licensed child care. An important output of this research will be the identification of key factors affecting child care costs (and/or quality) that should be legitimately subsidized through operating funding.

These ideas are intended to begin an important conversation about the best growth strategy for licensed, community-based, publicly-managed child care services in Ontario. Federal initiatives have opened up immense possibilities; we need to determine the best path forward and pressure the provincial government to take it.