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). 

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
(30 – 48
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.

Why Andrew Coyne is Wrong About Child Care Funding

Andrew Coyne knows very little about child care, but feels free to pontificate about it.  It’s a shame, because some people still listen to him and believe he has done his homework.  He hasn’t.  And so, he concludes that the federal government should help parents, especially low-income ones, by giving them a direct subsidy – money.  There are more than a few problems with his opinion piece in the Globe and Mail

Apparently, Andrew doesn’t realize that we already have a direct payment to parents, similar to the one he is calling for and geared to income, called the Canada Child Benefit.   If your family earns less than about $32,000 annually, you will receive $563.75 per month for each of your children under six years and $475.66 for each child 6-17 years of age.  The Canada Child Benefit is a partial solution to poverty, but it is not a child care policy.

Of course, the funding announced in the recent federal budget is designed for a different purpose – to dramatically improve the affordability and accessibility of early learning and child care services.  The plan is explicitly feminist; it is designed to remove barriers to the full participation of mothers in the economy and society.  That’s why it is designed to follow Quebec’s CPE example of low-fee licensed child care.  Andrew Coyne apparently doesn’t get this; he apparently doesn’t see gender as a relevant policy issue. 

Andrew Coyne applies a very old-fashioned economist lens to his thinking about child care. Those economists rely on what they learned in the first-year course, that it is always better to give someone money rather giving them a service.  But, giving money directly to families (as with Stephen Harper’s Universal Child Care Benefit), will tend to discourage mothers’ employment and reinforce current gender roles in families and in the workplace.  So, handing out money is not a good place to start.

On top of this, Andrew doesn’t know much about Quebec’s child care situation (or else he is simply cherry-picking his facts to fit his preconceptions). 

Andrew Coyne says that only 1/3rd of Quebec’s child care is subsidized.  

I encourage him to check the website of the Quebec Ministry of the Family; it has a lot of data available to correct his misperceptions.   In December 2019, nearly 80% of the child care spots for children 0-4 years of age were directly subsidized, at $8.35 per day (some in CPEs, some in family child care, some in subsidized for-profit child care).  About 55,000 children were in “unsubsidized” child care, but even here a provincial child care expenses tax credit covers a substantial portion of a family’s child care costs. 

Andrew Coyne says that Quebec’s child care system is far from universal.
Nearly 75% of Quebec’s children who are between one and four years of age are in early learning and child care services substantially paid for by the Quebec government, over 80% for 4-year-olds.  Andrew Coyne likes to say that Quebec’s child care system is not universal; this evidence suggests it is very close to universal. 

Andrew Coyne says there are huge waiting lists for child care
As economist Pierre Fortin reckons there is no longer a problem of excess demand for child care spots in Quebec.  There is no “shortage of spaces in aggregate”.  In fact, there are empty child care spaces amongst the for-profit full-fee child care centres whose parents will receive a tax credit.  Where there is excess demand is for spaces in the relatively high-quality CPE network.  So, there is a problem, but not the problem that Andrew Coyne identifies.  Parents are on long waiting lists for non-profit CPE spaces, because the quality there is so much better than in the wild-west for-profit centres that have been more recently established.  The federal government has learned the right lessons from this and will strongly favour funding going only to non-profit enterprises and family homes.

Andrew Coyne says that Quebec’s child care funding “disproportionately benefits the well-to-do”.
Coyne is not wrong here, but neither is he fair in his judgement.  We can compare the situation of low-income children in Quebec to those from high-income families – the bottom 20% to the top 20% of children.  When we do that, using Statistics Canada data from 2019, we find that 68% of children from low-income families in Quebec use licensed child care compared to nearly 78% of children from the highest-income quintile in Quebec.  I agree, this disproportionately benefits the well-to-do and we should structure the new bilateral agreements with provinces and territories to bend the stick the other way.  It’s important.

However, Andrew Coyne is cherry-picking here.  What he doesn’t examine is this same problem of “disproportionate benefit” in other provinces.  Take Ontario.  Despite the existence of child care subsidies targeted at low-income families, only 27% of children from the low-income quintile are using licensed child care.  But just about 50% of children in the top-income quintile use licensed child care.  So, this problem of disproportionate benefit for the well-to-do is bigger outside Quebec than in it.  “Universal” child care contributes to solving the problem of disproportionate benefit rather than making it worse.

Andrew Coyne says that Quebec child care appears to have negative effects on children and families
I agree with Andrew that the impact of child care on children’s development is an important one, but his assessment is not balanced.  Professor Pierre Fortin reads the literature differently.  As he says, “all published studies in the fields of psychology, psychiatry and medicine have given high marks to the CPE network, which is attended by 35 per cent of children in care. Their unanimous finding is that CPEs deliver positive cognitive, health and behavioural results on average, and are effective in reducing the vulnerability of children of all income classes.”  According to Fortin, the big problem is quality in the for-profit child care centres, and to some extent in family child care services.  This is where the negative effects are concentrated. 

The new bilateral agreements should therefore work on fostering high-quality child care in not-for-profit centres, or in publicly-operated facilities.

Andrew has his knickers in a twist about the money Quebec will receive from the federal government.  He is busy developing a conspiracy theory that the only reason that the federal government likes the Quebec CPE model of child care is so that it can funnel free money to Quebec!  This ridiculous claim is beneath him.  Andrew should talk to any person knowledgeable about child care policy before making this outlandish claim.  Admittedly, this federal funding will be beneficial for Quebec, and will, no doubt, help them improve quality in their existing child care system.  But anyone will tell you that the Quebec model, although it is not perfect, has many fans amongst those who know a lot about child care.

Gordon Cleveland
May 2nd, 2021

Another Poorly Conceived Child Care Proposal from C.D. Howe

I believe we need a child care system across Canada that is as dependable, beneficial for children and accessible as the public school system and nearly as affordable.  I think that is what the Finance Minister promised in the Fall Economic Statement when she said that “Quebec can show us the way on child care.”

Ken Boessenkool and Jennifer Robson offer a different perspective on how to build a child care system in a C.D. Howe Commentary entitled “Aggressive Incrementalism: Strengthening the Foundations of Canada’s Approach to Childcare”. They argue for an incremental approach – “building on what exists”.   This contrasts with what they call the “big bang approach” of universal childcare services at low or no cost to parents, fuelled by substantial federal financial contributions and leadership. 

What they offer is a strange mixture of refundable tax credits, increased operating and capital grants to licensed providers, and a permanent federal transfer of funds to the provinces and territories.   They don’t like principles-based child care funding agreements with provinces, but they, perplexingly, want this new permanent federal funding to be conditional on provincial efforts to expand licensed child care.

Unfortunately, in my opinion, this is a poorly thought-out, poorly informed set of recommendations for addressing the current child care crisis that families face. 

First of all, their proposals do not really build on what exists.  They want to dramatically transform the Child Care Expense Deduction into a refundable tax credit, which breaks with what has existed since the early 1970s.  And they want to break with bilateral agreements, which was the federal funding approach under Paul Martin and now under the Trudeau government.  

A “big bang” approach would, instead, keep the bilateral approach for funneling child care assistance to provinces and territories.  Those agreements would probably direct increased funds towards operating and wage enhancement grants that already exist (perhaps with new conditions).  And quite possibly, the existing Child Care Expense Deduction would be maintained.  So, Boessenkool and Robson’s proposals break from existing funding arrangements more than building on what exists, and possibly more than the “big bang” approach would do.

The biggest problem with the Boessenkool and Robson piece is that they scarcely seem to recognize the centrality of the affordability problem.  As they write, “Our focus here is … on incremental and structural reforms to increase the quantity and quality of childcare in Canada.” (p. 3).  They emphasize over and over the need for more spaces, but affordability gets a very light touch.  The problem is that without very dramatic moves to improve child care affordability, the majority of new spaces will stay empty.  Affordability and availability of child care are not separate problems; they have to be solved together. 

Boessenkool and Robson’s main instrument to improve affordability is a refundable tax credit for child care expenses.  This would replace the existing Child Care Expense Deduction.  They believe the Child Care Expense Deduction is regressive and patriarchal and should be replaced with this tax credit.  The truth is that they do not understand the Child Care Expense Deduction (CCED) at all.  It is not a child care funding mechanism; never was, never will be.  The CCED is part of the definition of income in the tax system.  For our tax system to be fair (horizontally equitable), we allow the lower earner in the family to deduct his or her (but mostly her) necessary costs of employment from the income she earns, before we apply tax rates to determine how much tax she should pay.  If we don’t do this, this lower earner in the family will face punitive tax treatment when she seeks employment.  Getting rid of the Child Care Expense Deduction would do more to reinforce the patriarchy than to smash it.

Boessenkool and Robson think that the tax credit will solve the affordability problem.  How much money will the refundable tax credit give you?   Well, to judge from Doug Ford’s child care tax credit in Ontario, it won’t give you much. 

Conservative politicians selling tax credits in the 2018 Ontario election announced that tax credits would cover up to 75% of a family’s child care costs.   In the cold light of day after the election, the Financial Accountability Office of Ontario (FAO) studied what the likely impact of the tax credit would be in Ontario.  The FAO estimated that only 300 families across Ontario, or one-tenth of one percent of all families claiming the tax credit, would be eligible for the maximum benefit – the 75% assistance promised.  And, although there was much talk during the election of $6,000 or $7,000 of financial assistance to Ontario families, the FAO estimated that the average family receiving a tax credit would get $1,300 worth of help.  So much for the wonder of tax credits to deal with the child care affordability problem, let alone issues of accessibility, quality, special needs, etc.   Of course, Quebec has experienced the other negative effects of using tax credits: dramatic expansion of for-profit child care of considerably lower average quality.

If you do the math, you will find that most Canadian families would be only a few hundred dollars per year better off with this tax credit, and many mothers would face higher tax rates.  What Boessenkool and Robson don’t get is that it will take a “big bang” to dramatically improve child care affordability.  And improving child care affordability is the key to solving the child care crisis that families face.

I am pleased that Boessenkool and Robson recognize the importance of providing direct operating grants and capital grants to child care providers.  However, they don’t seem to realize that operating grants are already a major funding mechanism in provinces and territories.  And, they seem to believe that, having solved the affordability problem with their tax credit, the purpose of these more generous grants to providers is to expand the number of child care spaces.  In fact, operating grants have two primary effects: first, to lower parent fees, and second, to increase staff compensation.  And therefore, these grants primarily impact affordability and quality of services.  The grants do not directly fund the expansion of spaces, although increased affordability means that the economics of space expansion will work out better.

Having misunderstood the purpose of these operating grants, Boessenkool and Robson then develop odd suggestions for the distribution of these grants – they should be based on the birthrate in a neighbourhood, or based on the existence of child care deserts, or they should be allocated by parents to their favoured child care provider.   Some of Boessenkool and Robson’s suggestions could be interpreted as a belief that there should be more planning in the child care system – that facilities should be grown most in the neighbourhoods that need them most.  Others, like the suggestion that these grants should take the form of a child care voucher, head in the opposite direction.  It is a confusing mish-mash.

Boessenkool and Robson suggest that the federal government should transfer child care funding to the provinces and territories in the form of a permanent block grant rather than through bilateral agreements with conditions for the expenditure of funds.  This seems unrealistic and undesirable at this stage.  It is unrealistic because solving affordability, accessibility and quality issues in child care will take Billions of dollars of annual funding.  The federal government will need reasonable assurance that this money is being spent to deliver affordability, accessibility and quality, rather than, for instance, to enrich private corporate interests in different jurisdictions.  Once a good and effective child care system is established across different jurisdictions, block grants could be a viable funding mechanism.

To state it succinctly, I think the primary federal government objective is that there comes to be, in each jurisdiction, a planned, coherent and diverse system of community-based high-quality early learning and child care services that are affordable and accessible to families.  The federal government needs to be respectful of provincial/territorial jurisdiction (which has important benefits).  But the federal government also needs to ensure that funding goes towards achieving this multi-faceted objective.

Gordon Cleveland

March 31, 2021

The new Angus Reid poll on child care

Great News for Supporters of a National Child Care System

Cardus must really be kicking themselves.  Cardus is a Christian research and advocacy organization that spent a lot of money on that recent Angus Reid poll on attitudes to a national child care program.  I’m sure they expected to hear a lot of support for their view that governments should just give money to parents with children.  Cardus opposes building a child care system that is universally available to families.  And they believe that Canadian families support their point of view.

Imagine their surprise then when Angus Reid found that support for major new investments in child care and for a national child care system is overwhelming amongst families with young children.  The survey found that 84% of families with a child under 6 agreed with the statement that “we need a much bigger public investment in affordable quality child care options.”   That included over 80% of families with a parent at home, as well as those currently using child care.

Of families with a child under 6, a total of 83% of families with a child under 6 supported “the idea of moving towards a national child care system in Canada”.  Only 16% of these families moderately or strongly opposed this statement.

  • 88% of all these families agreed that “finding quality child care is a way bigger hassle than in should be for parents today”
  • 82% agreed that “child care workers are underpaid for the important work they do”
  • 96% agreed that “mothers have every right to work hard and pursue a fulfilling career”.

Of course, families with a child under 6 are split on the best financing and delivery mechanisms for a new national child care system.  In this survey, 85% supported “publicly subsidiz[ing] eligible child care centres and regulated home day cares as in Quebec where parents pay roughly $10 per child per day and the government funds the rest of the costs.”

But 85% also supported the “creat[ion] of a refundable federal tax credit that allows lower income families to claim as much as 75% of their child care expenses.”

And 84% supported “increase[ing] the Canada Child Benefit payment up to an additional $125 a month per child.  And 84% supported “creat[ing] a guaranteed paid family leave program that provides income during the first year of a child’s life for those who don’t qualify for parental leave under Employment Insurance.”

But only 64% supported “creat[ing] a $300 a month per child subsidy for non-parental, in-home care (such as a nanny or paid relative).

These families with a child younger than six years were also asked “of the various proposed child care policies we just looked at…which…would you choose as the top priorities to proceed with?”   The largest proportion by far (52%) answered “subsidized child care facilities where parents pay $10 a day.”   A tax credit for child care expenses was chosen by 23%.  An increase in the Canada Child Benefit was chosen by 39%.  Paid family leave outside EI was chosen by 22%.  (Obviously families were allowed to choose more than one top priority, because these numbers add up to more than 100%).

It is probably worth noting that the Canada Child Benefit has already recently been increased.  This means that for the 2020–21 benefit year, the maximum benefit will be $6,765 per child under age 6 and $5,708 per child age 6 through 17.  The Canada Child Benefit is of particular benefit to families in which a parent is at home and to lone parent families, because incomes in these families tend to be lower.

The Liberal party promised at the last election to look closely at maternity/parental benefits for families not currently eligible for benefits through EI.  This remains to be done.

The overall conclusion from the Angus Reid/Cardus poll seems to be that there is very substantial public support by parents for major investments in child care, and particularly for    direct subsidization of child care facilities to make child care widely accessible and affordable.

Cardus must have gotten some joy out of the answer to one of their more speculative questions – if you could afford to, would you rather stay home full-time with your children until they go to grade school?  Two-thirds of respondents said yes to this highly hypothetical question. 

Of course, nearly all families COULD NOT actually afford to have a parent stay at home full-time.  And society couldn’t afford it either.  When society makes low-fee child care available for families, this supports activities that increase employment, production, incomes, tax revenues and well-being of many people in society.  That’s not what would happen if society gave parents with children enough money to allow them to stay at home for years while their children grow up. 

However, nearly all the reponses to this very extensive survey should make Cardus change its tune on child care.  Consider these results from the part of the survey that went to a general sample of the Canadian population (not exclusively to families with young children).

  • 72% of all Canadians, and a majority in EVERY PROVINCE (including 59% in Alberta) favour moving towards a national child care system
  • 89% of women 18-34 years of age support moving towards a national child care system (and over 60% of women and men in every age category also support this).
  • 90% of Canadians who voted NDP in the last election support moving towards a national child care system
  • 85% of Canadians who voted for the Liberals in the last election support moving towards a national child care system
  • Amazingly, even 49% of Canadians who voted for the Conservative Party in the last election support moving towards a national child care system

Not good news for Cardus, but good news for the rest of us.  The large majority of Canadians, and overwhelming numbers of families with young children are on board with moving towards a national child care system with a very substantial federal investment of dollars.  And there is very strong support for direct funding of child care services to provide affordable and accessible child care for $10 a day.

What Lessons can the Rest of Canada Learn from Quebec Child Care?

children's artwork
Article Link

What is “the Quebec model” of early learning and child care?

There are several different lessons to learn about the Quebec model.  Generally, the decisions to rely on direct funding, on building good quality not for profit child care, on building a system that includes enhanced maternity parental benefits/leaves as well as schoolaged child care have been very positive.  But, we also need to learn from the problems Quebec has had.  They only had sufficient supply for 15% of the child population (0-4) at the time that they announced low-cost universal child care, and they’ve been behind the curve ever since.  That really is what has forced them into too much expansion of family child care and of for-profit child care.  And, it is now clear that both of those are of substantially lower quality than non-profit centre care.  And, so also they have ended up with many lower-income families in lower-quality care, and they have ended up with very long waiting lists for the good quality services (although there is now enough total supply of all kinds to meet total demand).

In short, there are a lot of useful lessons to be drawn by us in the rest of Canada.  We need to figure out how to expand affordability quickly enough to make a big difference for families and yet slowly enough that we don’t suffer all of these problems.  It won’t be easy, particularly since the federal government is more a funder than a manager of child care’s development.