Canada Makes Progress Towards Making Child Care Affordable for All

Imagine being a new parent and paying only about $7 per day for the child care necessary for you to return to work. While that might seem like a dream to many American parents, it’s gradually becoming a reality for a growing number of Canadian parents. Canada’s commitment to making a substantial investment in early education over the next few years offers lessons about both the positive impact that a federal commitment to young children can have as well as a reminder that such an investment is no panacea for the issues that plague the child care industry.

In 2021, Prime Minister Justin Trudeau’s government introduced a national child care plan that it hailed as “a transformative project on a scale with the work of previous generations of Canadians, who built a public school system and public health care.” The goal of the plan is to work with the country’s provinces to spend up to $30 billion Canadian dollars (CAD) (about $22.7 billion USD) over the next five years to create 250,000 new low-cost child care spots.

With the help of government financing, providers will gradually reduce their fees to meet a threshold of $10 CAD (about $7.30 USD) per day by 2026, enabling more parents to afford the cost of child care while they work. Currently, child care can cost closer to $60 CAD per day in urban areas such as Vancouver and Toronto. The plan also emphasizes the importance of meeting the needs of Indigenous families through culturally appropriate child care and investing in training and development opportunities for the child care workforce.

Canada’s plan was informed by lessons learned from a similar initiative in Quebec that began 25 years ago. In 1997, the province invested in creating a universal child care system that offered a spot for every child who needed one for $5 CAD per day. Today, parents pay about $9 CAD per day for subsidized child care.

According to the Canadian government, Quebec’s initiative helped raise the province’s GDP by 1.7 percent and led to the highest labor participation rate among women of any province. (For a deep dive on Quebec’s plan, check out this event we hosted in 2021 as well as this document that applies lessons from Quebec to the U.S. context).

While it has only been two years since Canada made its public commitment to investing in child care, the plan is already having a positive impact in many parts of the country. Earlier this year, Prime Minister Trudeau joined the Premier of Newfoundland and Labrador to announce that families in that province are already benefiting from $10 CAD per day child care, three years prior to the national target. The government estimates that families are now saving about $6,300 CAD per year for each child in care.

Overall, five of the country’s 13 provinces and territories have already met the $10 CAD per day threshold, while the other provinces are making progress and have reduced their fees by half. Across the country, about 52,000 reduced-cost spots have been created as a part of the national program. And in Nova Scotia, most early educators are seeing a bump in pay of about 30 percent with the federal government paying $35 million CAD per year to help fund the pay increase as part of its five-year plan to transform the child care sector.

While Canada’s investment in child care has the potential to be transformative, no investment can solve all of the sector’s woes overnight. The federal government has now reached deals with every province and territory, but the reduction in child care fees has led to a surge in demand for care. The high demand is exceeding the supply of child care spaces, particularly in Ontario. Parents are joining waitlists in record numbers due to a shortage of spaces, and the low wages and lack of pensions and paid vacations that are still the reality for many of the country’s early educators make recruitment and retention difficult. There’s reason for hope here: each province’s deal with the federal government requires them to set minimum wages for educators and explain how those wages will increase over time.

Are there lessons for the United States to learn from Canada’s substantial investment in child care? Of course, there are a lot of differences between the two countries, starting with a population of about 333 million (U.S) compared to 40 million (Canada). Any similar sort of substantial federal investment in America would cost a lot more than $22.7 billion (keep in mind that the projected cost of the child care and pre-K portions of President Biden’s Build Back Better plan was $390 billion). And a huge issue that will need to be addressed is ensuring that the care provided to young children is not only affordable, but also high quality (Canada’s plans to spend funds on training for early educators is an acknowledgment of this). But two years into Canada’s five-year plan illustrates an important point: a long-term federal commitment to investing in early education can be an effective tool towards reducing the overall cost for parents and setting plans in motion to increase early educator pay, even if issues of inadequate supply persist.

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