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the Doug Ford government that will save about $400 million per year when it’s current child care tax credit program is superseded.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 1/7th 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. 

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?

  1. 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.
  2. 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. 
  3. 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. 
  4. Fee reductions should be phased-in so that demand for services expands at about the same rate as capacity grows.
  5. 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). 
  6. Increased operating grants for these publicly-managed services should support increased compensation of ECEs as well as lower fees for parents. 
  7. 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.
  8. 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.

FAQ: WHAT’S WRONG WITH FOR-PROFIT CHILD CARE?

What’s the position of the federal government on for-profit child care?
The fall economic statement and the federal budget made things pretty clear.  The Quebec model based on not-for-profit Early Childhood Centres (CPEs) is the model to follow. 

The 2021 Budget provides $30 Billion over 5 years for the building of a “Canada-wide, community-based system of quality child care.” (p. 101).  A community-based system means publicly-planned and publicly-regulated not-for-profit and public services. 

The budget compares this to public health care and the public school system: “Just as public school provides children with quality education in their neighbourhoods, the government’s goal is to ensure that all families have access to high-quality, affordable and flexible early learning and child care no matter where they live.” (p. 101).

In case those statements were not clear enough, the budget states that over the next five years, the federal government will work with provinces and territories “to support primarily not-for-profit sector child care providers to grow quality spaces across the country while ensuring that families in all licensed spaces benefit from more affordable child care.” (p. 103)

The position is not ideological; it is practical.  Child care systems dominated by not-for-profit and public providers operate differently than those dominated by commercial providers.  Just compare co-ordinated child care systems in Norway, Sweden, Finland, Denmark and New Zealand to wild-west markets for child care in England, Australia and the United States.  Or look at the recent experience during COVID in for-profit long-term care homes in Ontario.  In child care systems dominated by not-for-profit and public provision, low-income families are better served, the quality of services is higher and more reliable and the costs are lower.

Notice that the federal position does not say that for-profit child care will be abolished.  Only that it will not be supported to grow.  Many families have their children in for-profit services that will continue to get government funding.  However, going forward, the federal government insists that the growth will be not-for-profit or public and that new federal money will not support the expansion of private, for-profit centre-based services.  For-profit operators, and especially multinational corporate chains of child care services, will be vocal in their desire and willingness to build new services quickly.  If the Government is mesmerized by this siren song and relies on for-profit child care operators for expansion, it will largely lose control over the evolution of and quality of the early learning and child care system.

What is needed are producers of child care whose primary objective is the provision of quality experiences for children, producers who are willing to make constant quality improvement their watchword. These producers need to be financially transparent and open (because government will need to monitor costs and account for expenditures). These producers need to pay staff well according to established salary grids to ensure stability and quality of services.  Working conditions should include planning time and professional development.  These producers need to have as a key objective making early learning and child care into a public service at good quality and affordable for all.

If existing for-profit providers are willing to accept these types of conditions on their operation, they should be welcomed to continue operation, with operational funding.  However, new for-profit and corporate child care cannot be part of a new community-based system.  THE KEY PROVISION THAT ALL BILATERAL AGREEMENTS MUST HAVE IS THAT NO OPERATIONAL FUNDING SHOULD BE AVAILABLE TO NEW OR EXPANDED FOR-PROFIT PROVIDERS.

Remember, there will be substantial downward pressures on quality as the child care sector expands rapidly, even if it is dominated by not-for-profit and public providers. There will be many new staff with little experience, there will be shortages of trained staff, and there will be inadequate numbers of experienced educators to properly mentor new staff. In this circumstance, to rely on providers whose fundamental objectives do not align well with quality promotion would be a serious mistake.

  • What’s wrong with for-profit child care?

    In some other industries, the profit motive is a beautiful thing, IMHO.  Most of the goods and services we consume day-to-day are sold to us by private businesses, competing with each other to attract consumer dollars, each business striving to succeed in producing the most attractive useful product at the best price.  Some of these businesses may get out of hand with false advertising or delivery of shoddy goods, but government regulation may be able to control these negative behaviours and leave us with mostly positive results.
  • However, early learning and child care is a service where minor regulation of private profit-seeking businesses is not enough to deliver good results.   Early learning and child care is a sector that has much in common with education.  In general, education is much better when providers are public or not-for-profit.  Primary and secondary education are delivered in public schools for free.  Tertiary education is delivered by not-for-profit community colleges and universities for fees that are subsidized with public dollars.  
  • We think that a primary and secondary education system that is delivered by public institutions (schools) behaves differently than it would if it were dominated by private profit-seeking businesses competing for the consumer dollar.  We think that tertiary education delivered by profit-seeking businesses would be different and worse than when delivered by not-for-profit community colleges and universities.  There are issues of quality, there are issues of trust in the behaviour of the provider, there are issues of equity of delivery and access.  All of these make us prefer not-for-profit and public delivery of educational services.
  • The fundamental objective of for-profit institutions is to make profit for owners and shareholders. In child care, high profits come from hiring less qualified staff, paying low staff compensation, and raising fees.  In economic theory, markets are supposed to control this behaviour.  The “control” mechanism is supposed to be competition for consumers’ dollars, enforced by the willingness of parents to leave a low-quality high-fee child care facility and move their child to another one with better quality and lower fees.  But it is difficult for parents to accurately perceive and measure the quality that their children receive, so it is difficult for consumers to hold producers to account using market mechanisms. And most parents are hesitant to move their children away from known friends and caregivers into a new arrangement, unless things are really bad. 
  • Further, fees will soon be more or less the same everywhere at $10 a day, so the cost to parents will not be a big factor in parental decisions. There is overwhelming evidence from many countries that market mechanisms are completely inadequate to foster and promote good quality early learning and child care services.
  • Isn’t the preference for not-for-profit child care just ideological?

No, not really.  In fact, it is more true that the preference for for-profit child care is ideological.  What do I mean?  Well, the argument for for-profit child care is based on what we all learned in Economics 101; that the profit motive leads businesses to serve the public interest because they have to compete for consumer dollars.  But it is a fiction that consumers voting with their dollars will be controlling the price, quality and accessibility of child care going forward.  When parent fees drop to an average of $10 a day by 2025-26, over 80% of the funds for children of these ages will come from government.  Parents will be paying less than 20% of the full costs of providing care. 

No matter how you deliver the government assistance, that means that the parent is no longer the main consumer, controlling child care providers by voting with their dollars for better quality, more services or lower fees.  The main consumer, the main driver of what happens in the child care “market” will be the government, as it is in all levels of education.  So, it is, more or less, a purely ideological statement to say that competitive markets will make for-profit providers be more efficient, that they will serve parent needs better, that they will provide better quality care, that they will be more responsive to what parents and children need and want.

  • Doesn’t for-profit child care provide more “choice” for parents?
  • Not really.  The “choice” that parents want and need is choice of services that are more convenient for parents in terms of location and hours and better for children in terms of availability of special needs programming, variety in programming (such as outdoor-oriented programs), support for particular cultural and language learning etc.   Most of these programs are more expensive to offer than standard child care.  For-profit operators are less, rather than more, likely to offer them when fees are controlled.

It is a charade to suggest that “for-profit” is a type of choice that parents need.  Parents have diverse needs.  As we develop the early learning and child care system going forward, we all need to plan for the provision of a variety of services that serves the tapestry of parent and child needs.  The federal government has made clear its willingness to fund “flexible” and inclusive forms of child care.  This should be specified in the bilateral agreements that provinces/territories sign.

  • Is there any evidence that the quality of for-profit child care is worse?

Sure.  There is good academic evidence that for-profit provision tends to be of lower quality.  And noted Canadian economist Professor Pierre Fortin has summarized the quality results from two Quebec studies very nicely in this chart.

            This evidence is based on lengthy and detailed on-site quality evaluations using    accepted scales for the measurement of the factors important to children’s           development.  As the chart shows us, children in not-for-profit CPEs in Quebec have

            been receiving good or excellent quality child care.  Many children in for-profit full-fee    child care centres have been receiving child care of inadequate quality.  

  • But isn’t it true that public and not-for-profit enterprises are inefficient and for-profit providers can produce services at lower costs?

So far, there is little evidence of this.   The Canadian Centre for Policy Alternatives recently made over 9,000 phone calls to child care facilities across Canada, inquiring about the fees they charge to parents.  Their conclusion: “We found that for-profit centres generally charge more for preschool spaces than not-for-profit centres do. In 19 of the 25 cities for which we had data (76%) for-profit centres charged at least 10% more than not-for-profit centres. In the more extreme cases (Calgary, Richmond, Richmond Hill and Edmonton), for-profit centres’ preschool-age fees were 50% to 60% higher than their not-for-profit counterparts.” (pp. 20-21).  The chart below from that publication shows that, in 15 of the 25 cities, for-profits charge on average over 20% higher parent fees. 

It is worth noting that in Australia, with child care provision dominated by for-profit operators, the average cost of full-time care is over $27,000 a year for all ages of children.

  • But isn’t it true that for-profits can build spaces faster?  We do need lots more spaces.
    When it comes to growth, for-profit child care providers have structural advantages over not-for-profits.  Not-for-profits are frequently unwilling to go into debt, so unless there is a program of capital grants to pay for the costs of building new facilities or repurposing existing buildings, it is hard for not-for-profits to expand. And the mission of not-for-profits is to provide good quality care that children and families need, rather than to expand. 

    The mission of for-profit businesses is to make a profit, so expansion is a natural fit, particularly when the government is paying over 80% of the operating costs and providing a guaranteed demand for services.  Shareholders or banks are always willing to ante up when the government is willing to provide guaranteed funding for profit-making businesses.

But there are ways around these structural barriers faced by not-for-profits.  Not-for-profits need two main things if they are to build new capacity quickly.  First, is access to capital.  Some of this should come in the form of capital grants to not-for-profits or municipalities or school boards who are willing to move quickly.  Some of this can be in the form of low-interest loans.  Not-for-profits are allowed to borrow money, but most banks are unwilling to lend because of perceived high risk of default.  But governments can guarantee the loans, and, in general, there will be ample operating funding for child care centres to pay back the loans over time.

The second thing that not-for-profits need is a development champion – a development agency that specializes in handling all the details involved in building new capacity or renovating existing capacity.  This is familiar territory for co-operative housing or not-for-profit housing developments.  There are specialized agencies that handle the housing development and then turn the housing over to co-ops or not-for-profit housing agencies to manage and operate.

Neither of these barriers is particularly insurmountable, but they do require governments to facilitate surmounting them.  In many cases, public agencies such as municipalities, school boards, and community colleges can help a great deal in supporting not-for-profit and public developments.  And the federal government should be open to expansions of kindergarten integrated with before-and-after school care.  This is particularly true in Manitoba, Saskatchewan and Alberta that currently have only half-day kindergarten for 5-year-olds.

Ontario shows that rapid expansion of not-for-profit child care services is very possible.  The information is available in the annual Ontario statistical report on early learning and child care.  Over the last 10 years to 2019-20, centre spaces increased in Ontario by 198,600.  Fully 85% of the increase (168,900 spaces) was in not-for-profit child care.  There are now 462,800 centre spaces in Ontario.

  • On balance, what should we conclude about for-profit child care?

Some for-profit child care providers are good, some are bad.  This is not really a discussion about individual operators.  Particularly when small for-profit operations are run by persons knowledgeable about early childhood education, they can sometimes do quite a good job providing child care services. 

The real issue is “Should the early learning and child care systems that we are building in Canada be dominated by for-profit corporate child care operators?”   We know that if government policy is agnostic between for-profit and not-for-profit, and generous operating funding for over 80% of costs is made available to both, we will quickly have for-profits dominate new provision of services.  You can bet that for-profits will move fast when generous profit opportunities appear.  The federal and provincial/territorial governments when they are negotiating the bilateral funding agreements (which they are doing right now) have to explicitly decide to favour new not-for-profit and public providers for support.  That means that new or expanded for-profit operations should not be eligible for operating funding going forward.  The time to decide the future of the early learning and child care sector is now!

Gordon Cleveland
June 21, 2021

An Open Letter to Ken Boessenkool about the Child Care Expense Deduction (and other things)

I participated recently in the webinar at which you spoke, sponsored by the Toronto Star, First Policy Response, the Lawson Foundation and others.  The topic was “Delivering on the Commitment: A Canada-Wide Childcare Plan”.   

I often disagree with your policy positions in relation to child care, but I think it is important in any debate that we can agree on facts before opinion takes over.  So, if you will permit me, let me correct a couple of things that you said at that webinar. 

First, the Government of Ontario did not get rid of the Child Care Expense Deduction in Ontario.  It still exists.  They layered the child care expenses tax credit (sometimes called CARE) on top of the Child Care Expense Deduction.  These measures have the same base and the same limits, to make it easy for families, but they are distinct. I explain below that these measures actually have different purposes.

Second, the federal government’s new child care financing proposals announced in the 2021 Budget are not 50/50.  The term 50/50 was used once in the budget documents to suggest that by 2025-26 the federal government’s financial contribution to early learning and child care would have risen to equal the current expenditures of provinces and territories (including kindergarten expenditures in the provincial-territorial total).  However, there is no requirement for 50/50 cost-sharing of any of the $30 Billion over 5 years or $8.3 Billion going forward from 2025-26 onwards.  The design is, of course, deliberate.  The federal government wants to make it difficult for provinces to refuse to sign bilateral agreements and realizes that child care is in provincial jurisdiction.  So, it is offering money if provinces are willing to agree to commit to the affordability goals it has stated.  I will not be surprised if the federal government encourages provinces to also make investments when it is in bilateral discussions.  That would make things easier.  But there is no requirement for provincial/territorial contributions beyond maintaining their current levels of expenditure. 

Third, you treat the Child Care Expense Deduction as if it were designed to help families with child care costs.  If it was intended as financial support for child care costs, I would agree with you that it is very poorly designed – bigger tax breaks for the rich than the poor, based on the income of the lower earner, any type of paid child care is eligible, etc etc.  

But the Child Care Expense Deduction is a measure to create horizontal equity in the tax system; it is a tax measure, not a measure to reduce child care costs.  The Child Care Expense Deduction looks superficially similar to a refundable tax credit for child care expenses, but it is fundamentally different and should be treated differently.  Ever since 1972, the Child Care Expense Deduction has been a way of defining what income should be taxable and what income should not.  The Child Care Expense Deduction was a response to the analysis in the 1970 Royal Commission on the Status of Women which wrote: “… expenses for the care of children or other dependants are denied to a working mother as a legitimate deduction from her gross salary or wages. Under the present system, the wife who works outside and has one or more dependants who require care pays a tax on earnings out of which she has to pay for child-care. Since the couple must pay for child-care services out of net income, after payment of income tax, a working mother has to earn a substantial salary if her working outside is to be financially more profitable than the value of her services in the home.” (p. 292).   Two years after this report the Government of Canada established the Child Care Expense Deduction. The Child Care Expense Deduction affects the after-tax income of the family – it is an element of fair taxation of working parents.  And getting rid of it would mean potentially punitive taxation of mothers entering the work force. 

Do this thought experiment.  If child care for your young child costs $8,000 a year and you (as the lower earner in your family) are in a tax bracket with a marginal tax rate of 25%, how much are your child care costs?  You are going to say $6,000 a year ($8,000 – (.25 x $8,000)).  But the correct answer is $8,000.  All the Child Care Expense Deduction does is ensure that you pay your child care expenses (up to $8,000 per young child) in pre-tax dollars rather than after-tax dollars.  If you had to pay these child care expenses in after-tax dollars, you would have to earn about $10,667 dollars, pay 25% of this in income taxes, in order to have $8,000 to pay child care expenses.  The CCED treats child care (any kind of paid child care) as a necessary work expense, which is therefore deductible from income before levying tax rates on the income. 

Cheers,
Gordon

How Big Will the Expansion of Child Care Services Need to be in Ontario?

The federal budget puts forward very substantial amounts of money for early learning and child care – $30 Billion over 5 years, or more importantly $8.3 Billion of new federal money in perpetuity from 2025-26 onwards.  The federal template calls for a cut of 50% in parent fees by the end of 2022, and an average fee of $10 a day for children 0-5 years of age across Canada (outside Quebec) by 2025-26. 

How much more child care capacity will Ontario need?  It’s an important question.  Ontario will need to plan a very rapid expansion of capacity, but do it wisely so that the new child care capacity offers good quality services and is created where it is most needed.

The bottom-line conclusion from the rough calculation below is that when we lower parent fees dramatically in Ontario, we will have a very substantial number of children wanting to use licensed child care.  We are likely to need about 150,000 new spaces if parent fees are cut by 50% and we will need about 250,000 spaces if parent fees are reduced to $10 a day (similar to Quebec). 

TABLE 1
Children, Spaces, and Need for Child Care Capacity in Ontario

 # of children in ONCurrent # of spaces in centres and home child care ( 2019 -20 est.)Total # of licensed spaces needed to match Quebec take-up ratesEst. # of licensed spaces needed if fee cut by 50%Children in ON with mothers in labour force
Infant
(0-18
months)
201,90014,80070,30024,400 
Toddler
(18-30
months)
135,60051,00089,30084,200 
Preschool
(30 – 48
months)
278,900120,000203,500198,200 
Kindergarten
(48–72
months)
286,500111,900236,900184,800 
Total
for
0-5 years
902,900297,600600,000491,600 545,000*
Notes: Numbers are rounded to nearest 100.  Numbers for preschoolers have been corrected.
* Number of children 1-5 years with mothers in labour force is 466,100.  The number of children 0-5 years of age currently using any form of non-parental child care is about 475,000.

Table 1 gives the numbers.  It tells us how many children in each of the traditional age groupings (infant, toddler, preschool and kindergarten) there are in Ontario.  It tells us the estimated number of centre-based plus home child care spaces currently available[1]. It tells us how many spaces would be needed in each of these age groupings in Ontario if our child care take-up rates were the same as those in Quebec.  In the next column, we show a rough calculation of how many licensed spaces would be needed if parent fees are cut by 50% (this is supposed to happen by the end of 2022).  The final column shows us, for reference, how many children in Ontario currently have mothers in the labour force (and might therefore switch into licensed child care from some other arrangement).


We are likely to need about 200,000 new spaces if parent fees are cut by 50% and we will need about 300,000 spaces if parent fees are reduced to $10 a day.  This calculation ignores any increase in the use of school aged child care for children in Grade 1 and above (which we should expect).  It also ignores any decisions by parents to use infant care in order to get around waiting lists for services for older children.

If we take the rough estimates of demand when parent fees are cut by 50%, these imply that we will need nearly 10,000 more infant spaces, 33,000 more toddler spaces, 78,200 more preschool spaces and 73,000 additional kindergarten spaces by the end of 2022 to avoid facing shortages of child care supply.

The shortage of trained ECEs will be a very significant constraint on expansion as well.  Already there are substantial shortages of Registered Early Childhood Educators.  For a very rough calculation, we might assume (based on calculations in Appendix B of Affordable for All: Making Licensed Child Care Affordable in Ontario) that one new staff member will be needed for every four children in 0-5 year old licensed child care and, varying across ages, about half of these will need to be RECEs.  If this were true, Ontario would need about 18,750 new ECEs by the end of 2022 and a total of about 31,250 new ECEs by 2025-26.  And this does not account for additional centre supervisors needed.

These calculations have lots of potential policy implications.  One is that capital expansion has to proceed very quickly.  A second is that the expansion of the trained workforce cannot wait.  A third is that there will be excess demand at certain times, so we need to consider how waiting lists and other ways of managing this demand will work.  I will explore these and other implications soon.


[1] Currently available means 2019-20 which is before the pandemic.  Hopefully, most of these spaces will reopen after the pandemic, but this is uncertain.