Rahim Mohamed: Checking in on the status of national "$10-a-day" child care

The good, the bad and the mystery of one of Trudeau's signature policy initiatives.

By: Rahim Mohamed

It’s hard to think of a bigger political winner for the Liberals than $10-a-day child-care — at least until recently.

Endorsed by the Trudeau government at the height of a COVID-fuelled “she-session” that pushed women’s labour force participation to its lowest level in decades, $10-a-day child care promised to kick-start the “she-covery” while simultaneously keeping all-important millennial and Gen-X parents in the Liberal voting column.

It didn’t take too long for the prime minister to cobble together 13 bilateral child-care agreements with each of the provinces and territories — not even committed Trudeau foes like Doug Ford and ex-Alberta premier Jason Kenney could say no to boatloads of federal cash for cheap child care, especially with provincial elections near at hand. By mid-2023, the tide had turned so decisively in favour of $10-a-day child care that, when legislation enshrining the federal program was introduced in the House of Commons, not a single vote was cast against it.

Yet, an initiative that, not too long ago, looked to be a slam dunk for the Trudeau government now finds itself on shaky footing. In recent months, a growing number of child-care operators across the country have raised concerns about the economics of the program, with many saying that the new multilateral funding model has left them operating at a deficit and, in some cases, on the verge of shuttering their doors. Three hundred child-care centres in Alberta, for example, launched a campaign of rolling closures in late January to call attention to their untenable financial circumstances.

The present impasse provides a good opportunity to take stock of how the program was supposed to work, where things went off-course and whether the $10-a-day child-care agreements can be salvaged.

How was the program supposed to work?

Under the Canada-Wide Early Learning and Child Care (ELCC) Agreements, licensed child-care operators in each province/territory were to receive jointly funded operating grants to offset the financial hit of incremental parental fee reductions — the Trudeau government set out to reduce fees by an average of 50 per cent by 2022 and, subsequently, down to an average of $10 a day by the end of the current round of agreements in 2026. 

The proportion of these grants financed by the federal government varies by province/territory, per each jurisdiction’s bilateral agreement with Ottawa. In 2023/24, the roughly 5,000 Ontario-based operators enrolled in the program received a combined $1.65 billion toward reducing fees, translating to about $330,000 per operator. The actual size of each grant varied based on, among other factors, the number of spaces maintained and ages of children cared for.

How has the rollout gone so far?

The rollout of Canada-wide $10-a-day child care has, thus far, been something of a mixed bag. By the end of 2022, parental fees had fallen by 50 per cent or more in just over half of Canada’s major population centres, according to a survey conducted by the Canadian Centre for Policy Alternatives. The survey found that a further 20 per cent of jurisdictions reduced fees by at least 40 per cent, concluding that the country as a whole has made “solid progress in offering more affordable child care.”

This is all great news for parents who can find a space, but finding a space to begin with increasingly looks to be the rub. While an estimated 97,000 subsidized spaces have thus far been created under the program (as of March), nearly half of parents say they’re having difficulty finding child care, a double-digit increase since before the initiative began. Child-care centres across the country have likewise reported that they have little to no excess capacity to take in new children. The Canadian Centre for Policy Alternatives found in 2023 that there were virtually no vacancies in 22 of the 30 child-care markets it monitored.

Troublingly, the equity issues that have long plagued Quebec’s almost 30-year-old subsidized child-care program are starting to crop up in other provinces, as low- and moderate-income parents struggle to compete in a cutthroat market for subsidized spaces. Researchers in British Columbia, for example, found just 17 low-income single mothers across the entire province last year who had children enrolled in $10-a-day child-care programs — a shockingly low number that accounted for just a tenth of a percent of all users. 

It's also worth noting that the national child-care rollout has, puzzlingly, been met with declining enrollment. According to Statistics Canada, the number of children aged five and under enrolled in child-care declined by 8.5 per cent between 2019 and 2023; Statistics Canada’s population figures for the applicable population are only current to 2021, but the number of children in the target age group had been steady for a decade. The decline could reflect external factors like the COVID-driven shift to hybrid and remote work for parents but nevertheless warrants further investigation.

Finally, it should be noted that the program’s rollout has coincided with an uptick in the labour force participation rate among working age women across Canada, which now sits at a record high. This stated, women’s employment had already bounced back to pre-pandemic levels by early 2021, before the program started in earnest.

What’s gone wrong?

The obvious culprit is, of course, inflation. Providers are predictably struggling to maintain low parental fees at a time when the costs of virtually all their inputs — rent, supplies and the like — are going up, even with the new operating grants they receive. The current agreements are not indexed to inflation and Ottawa has told the provinces not to expect an infusion of federal dollars before they expire in two years’ time. 

Another challenge has been for provinces to recruit and train enough early childhood educators to keep pace with the anticipated growth in child-care spaces. Ontario’s Ministry of Education, for example, has said that the province could face a shortage of 8,500 educators by the end of the current round of agreements in 2026. The training and retention of qualified early childhood educators is an issue that long precedes the inflation crisis, notably in Quebec.

Are conservative provincial governments “sabotaging” the Canada-wide child-care agreements?

It has been suggested, including by the prime minister himself, that conservative-led provincial governments are deliberately underfunding child-care in their jurisdictions in an effort to sabotage Canada-wide child care from within. For instance, the Ford government spent $146 million less than it originally budgeted for child care in the first quarter of 2024, according to the Financial Accountability Office of Ontario.

Notwithstanding any political gamesmanship taking place on the margins, the rollout of Canada-wide child care has run into problems in every part of the country, irrespective of which party is in charge at the provincial level. Liberal and NDP-led provinces and territories like Yukon, Manitoba and Newfoundland are having many of the same issues on the child-care file as their conservative-led counterparts.

Conservative premiers would also risk damaging their own respective brands by actively trying to “86” the incipient Canada-wide child-care program. Alberta Premier Danielle Smith, for example, spoke frequently of “bringing in $10-a-day child care” during last spring’s provincial election campaign, placing child care above even some of her signature policies like the Alberta Sovereignty Act and Alberta Pension Plan. 

So what’s next?

Acknowledging that subsidized child-care spaces are not being created at a fast enough pace, Justin Trudeau revealed last month that the 2024 Budget would include a new $1 billion Child Care Expansion Loan Program. The program, administered by the Canada Housing and Mortgage Corporation, will make roughly $72 million in low-interest loans and capital grants available over the next two years to public and not-for-profit providers seeking to open new spaces or renovate existing ones.

However, even with this infusion of credit, the Trudeau government will be hard-pressed to meet its target of creating 250,000 new child-care spaces by the end of March 2026 — that’s if it is even still in government after the next federal election, expected to take place the preceding fall. 

Interestingly, one of the first big decisions Pierre Poilievre could make as prime minister might be whether to negotiate a new round of bilateral agreement with the provinces or scrap the agreements altogether. If he chooses to go the latter route, he will be under tremendous pressure to replace the cancelled agreement with a viable child-care policy of his own. 

One thing Canadians can be reasonably certain about is that child care will, once again, be one of the most hotly debated policy issues of the next federal election campaign. 

Rahim Mohamed is a master’s student at the University of Calgary’s School of Public Policy. His writing has appeared in The Hub, and the National Post, and CBC News Calgary.

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