Canada’s child care program has slashed daycare fees in half on average, report says

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Canada’s national child care program has been a major achievement in reducing daycare fees by an average of 50 per cent, according to a new report, though concerns remain about the lack of capacity to accept new children in many cities.

The Canadian Centre for Policy Alternatives study, released Thursday, recommends that provinces and territories adopt a set fee model and prioritize public and non-profit spaces over for-profit providers, as the program enters its next phase.

“We regard the fee reduction as a big success. Parents who have a space, their fees have really dropped,” said Martha Friendly, a co-author of the report.

The goal of the Canada-Wide Early Learning and Child Care (CWELCC) agreement, first announced in 2021, was to reduce fees by 50 per cent by the end of 2022, on the way to ultimately dropping fees to an average of $10 a day by 2025.

The CCPA report found that half of the 32 cities surveyed have reduced fees by at least 50 per cent, while another quarter of the cities have reduced fees by at least 40 per cent. Of the remaining quarter, some cities have only cut fees by 20 per cent. The report also highlights concerns over expansion of the program, with half of the cities surveyed saying they have no room to accept new children.

“As we benchmark the halfway mark here on the way to $10 a day in a couple more years, we’re making good progress toward that final end goal,” said David Macdonald, a senior economist with the CCPA and co-author of the report.

Based on the survey data, the report suggests that all jurisdictions should adopt a set fee model rather than allow market-based fees to be determined by centres. Currently, seven of 13 jurisdictions have set fees: Quebec, P.E.I., Newfoundland and Labrador, New Brunswick, Manitoba, Saskatchewan and Nunavut.

Fees are higher in jurisdictions with market-based fee systems, the report notes. Richmond, B.C., is the most expensive city in Canada for toddler care, with median fees of $905 a month. Calgary is the second most expensive, at $838 a month and Toronto is third, at $725 a month.

As these figures are medians, there can be large variation in how much parents pay in these cities and others with fees set by the market, Ms. Friendly said. A set fee system would not only be more fair and predictable for parents, it would also be more simple for government administration and monitoring, she added.

“It’s clear that a set fee is a better way to do it,” Ms. Friendly said.

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The overall success of the program in reducing fees now brings the issue of expanding the number of available child care spaces – CWELCC’s next phase – to the fore, Mr. Macdonald said.

“The challenge now is that you’ve created a lot of additional demand. That’s exactly what the program was for. Now we have to meet that demand for new spaces,” he said.

Half of the cities in the CCPA survey reported little to no room for an extra preschool aged child. For infants and toddlers, 22 of the 30 cities with available data said they had little to no extra capacity.

These figures are concerning considering CWELCC’s expansion goals. For example, in Ontario alone, the province is expected to create 86,000 new child care spaces by the end of 2026.

Expanding the program should prioritize public, not-for-profit care over for-profit care because the latter tends to charge higher fees, and the report found the gap in fees between the two is widening, Ms. Friendly said.