Federal child-care cash linked to daycare fee drop in some cities, study says

OTTAWA — A new report says federal spending on child care has eased costs in a handful of cities countrywide when the cash was used to reduce fees.

The annual report on child-care fees from the Canadian Centre for Policy Alternatives noted steeper-than-expected declines in a few cities since federal money began to flow in 2017.

St. John’s, N.L., saw the sharpest drop for the cost of preschool spaces in the country over the past three years, thanks to what the report says is a combination of provincial and federal efforts to reduce costs for parents.

On the other hand, Toronto and Ottawa saw little change in fees over the same period because they did not implement fee-reduction programs, the report says.

David Macdonald, one of the authors of the report, says the findings suggest that government funding to providers along with fee caps can reduce the price parents pay for daycare.

“Where fees are going down has nothing to do with markets, it has everything to do with government interventions in some form,” said Macdonald, the centre’s senior economist.

The upcoming federal budget is supposed to include details on a Liberal campaign promise to create 250,000 before- and after-school care spaces and cut fees by 10 per cent.

The Liberals estimated the measures would cost $535 million a year, which is supposed to be on top of planned spending under the child-care agreements.

The government hoped that some of the $7.5 billion in planned spending over a 10-year period would go to addressing affordability concerns, along with improving accessibility and quality.

The first tranche of funding was tied up in three-year agreements Ottawa signed with provinces. Those agreements are to expire this year, requiring a new round of talks that will include the extra spending for before- and after-school spaces.

Macdonald said the uncertainty around the renegotiation of the funding agreements is putting a number of fee-subsidy programs in jeopardy because of their reliance on federal money.

“Some of the experiments (to reduce fees) have been more successful than others,” he said.

“We can learn directly from those successful experiments what governments should be doing if they really want long-term, sustainable reductions in fees for parents.”

The report says median monthly costs for infant spaces — set aside for those under 18 months — ranged last year from $1,774 in Toronto to $179 in five cities in Quebec, which has provincially regulated and subsidized daycare.

Moving up to toddlers who are under age three, the report shows again Toronto at the top at $1,457 per month and the Quebec cities at the bottom at $179.

Gatineau, Laval, Montreal, Longueuil and Quebec City remained at the bottom of the monthly cost chart for preschool fees, but Iqaluit was found to have the highest fees for this age group at $1,213 — a few dollars more expensive per month than Toronto.

This report by The Canadian Press was first published March 10, 2020.

Jordan Press, The Canadian Press