As Justin Trudeau fades from the spotlight, so too do his signature social programs. These days, his government’s national child-care program gets little media coverage.
But a new report makes clear that the program still needs our attention.
The report by the C.D. Howe Institute is a comprehensive analysis of the Canada-wide Early Learning and Child Care program’s first three years of implementation.
As the report details, the program has achieved one important goal: it has meaningfully reduced parents’ child-care fees in most parts of Canada.
In eight provinces and territories, average fees are now at or below the government’s target of $10 a day. In the remaining (largest) provinces, fees have been reduced by at least half.
As for failures, the researchers list several.
Governments have failed to create enough new licensed spaces or to improve wages for childhood educators. With reduced parental fees increasing demand for insufficient spaces, there are now long waitlists to get into licensed care. In 2023, the number of parents reporting difficulties finding care was 32 per cent higher than in 2020, the year before the program launched.
Worse, the families who could most benefit from subsidized support are often the least likely to qualify. Nearly 40 per cent of preschool-aged children are in households where at least one parent works non-standard hours such as evenings, nights or rotating shifts.
“Many of these families include single parents, parents working multiple jobs, low-income households, immigrants, and members of racialized communities who already face structural disadvantages,” the report says.
For many of these families, the subsidized child-care program cannot help them. Fewer than two per cent of licensed child-care centres offer evening, weekend or overnight care. Unlicensed, home-based providers, by contrast, were substantially more likely to provide this care.
The program has thus led to a deeply inequitable outcome. Some families pay as little as $2,500 a year for subsidized care, while others pay more than $35,000 to non-subsidized providers — while also contributing to the subsidized system through their taxes.
The inequities in the current system should be a national scandal.
Just imagine if the same dynamic existed in health care: if some families had to pay modest co-pays to access health care, while others — particularly low-income families — had to pay full cost. Canadians would be outraged.
There is a simple solution to this problem: support families outside the subsidized system as well.
Specifically, the report recommends creating a progressive, income-tested refundable tax credit for children not enrolled in subsidized care. Quebec, which has had its own subsidized child-care program for decades, already offers such a credit.
“This [credit] would target families who were unable to secure a subsidized space due to capacity constraints and avoid providing duplicate subsidies,” the report says.
Such a credit would not only be fair; it would also preserve parental choice and afford flexibility to families’ whose work schedules do not fit the rigid schedules of most subsidized providers.
However, one quibble we have with the report’s recommendation is making the credit means-tested.
We currently do not means-test public health or K-12 education. The fact that all families rich and poor can and do access the system means that the public at large, and the wealthy and politically connected, have a vested interest in the system.
Also, as C.D. Howe Institute’s own earlier research has noted, the proliferation of means-tested benefits has resulted in shockingly high marginal tax rates for moderate-income families.
For example, a single parent in Newfoundland making just over $50,000 a year could face a marginal tax rate of over 90 per cent when benefit clawbacks are considered. Layering on an additional benefit subject to clawbacks increases complexity for families and decreases their incentive to work.
When the Trudeau government introduced subsidized child care, it said one of its key goals was enabling women to work. Currently, the program has failed to meaningfully boost women’s labour market participation, which means the program is also failing to pay for itself, the researchers found.
Importantly, the C.D. Howe Institute — which often advocates for market-based solutions to social problems — does not advocate for the subsidized child-care program to be scrapped. To the contrary, it calls for sustained and stable funding and policy coherence to address its current shortcomings.
But it recognizes that a one-size-fits-all model creates its own inequities that must be rectified. We couldn’t agree more.
