The best childcare solution is to fund families directly
Posted by Peter Jon Mitchell | Mar 22, 2022
We've all seen the headlines about Ontario being the only province not to sign on to the federal childcare plan. The Liberal Party of Ontario drew attention to this again recently, announcing that if it formed a government in June after the next provincial election, the province would send families a retroactive payment of $2,750 per child to help cover childcare fees they say would have been reduced under a federal agreement.
The Liberals may have stumbled onto something very useful: funding families directly. If a major Ontario party were willing to adopt this policy, it would help far more Ontario families than the federal childcare agreement.
Just as we've seen in other provinces, the federal childcare plan's fee reductions apply only to the families using licensed care. In Ontario, less than a third of children under age six use that kind of care. Two-thirds of kids would get zero benefit.
Ontario parents use diverse forms of care to meet their specific needs. They consider many factors when selecting a provider, including location, the characteristics of the provider, hours of operation and affordability. For example, take families that require care outside the typical 9-to-5 workday. Data show a considerable lack of options in the province, but unregulated home care providers are more likely to offer this kind of care than the licensed sector. Yet these providers don't qualify for federal funding.
Some observers point to the promise of additional childcare spaces under the federal plan. The expansion targets in many of the agreements are too small to meet the anticipated demand for affordable care. For example, Manitoba aims to almost double its capacity by 2026, but even if the province meets the target, it would still only cover half the kids under age six.
Meanwhile, the federal government insists that for-profit centres be denied federal funds for space expansion. Data from British Columbia shows that for-profit providers who received space creation funding vastly outpaced other providers in providing new spaces. Despite this success, B.C. has moved toward denying expansion funding to for-profits, mirroring the federal policy. Federal restrictions on space creation funding may further harm the ability of provinces to meet inflated demand for affordable care.
In Ontario, this would mean 25 per cent of centres would be unable to access federal funds to expand spaces, hurting their ability to expand or even maintain their business. In some regions, such as Ontario's north, for-profit centres are the only choice for parents who prefer centre-based care.
A government of any political stripe with a fresh mandate in June could make care more affordable for all by funding families directly. At the very least, parents should get support regardless of the type of paid care they use, including nannies or the neighbour down the street. A better approach would recognize the financial cost of childcare irrespective of who provides the care, including parents who forego income to care for their child. Enhancing and expanding eligibility for the Ontario Child Benefit would reach far more families than the federal childcare plan.
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To be fair, the Progressive Conservatives implemented the Childcare Access and Relief from Expenses tax credit that can be applied to a wide variety of paid care. The Ontario Liberals have promised to expand the credit by 50 per cent to an estimated average of $2,000 annually. But under a federal agreement, some families will receive the credit on top of heavily subsidized care, not to mention the federal childcare deduction, simply because they use the type of care the federal government prefers. This is unfair.
Promises for retroactive payments may be moot in the end. Prince Edward Island has offered retroactive payments back to Jan. 1, and it's reasonable to think that Ontario could do the same under a federal agreement. The catch is that parents have to use the type of provider the federal government demands.
It's time to stop playing favourites. Fund parents directly so they can all afford the kind of care that best meets their needs.
Peter Jon Mitchell is family program director at Cardus. Cardus is a non-partisan think-tank dedicated to clarifying and strengthening, through research and dialogue, how society's institutions can work together for the common good.
Peter is a Troy Media Thought Leader. For interview requests, click here.
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