The rising cost of living is doing a number on family budgets. In response, the federal government recently released its “affordability plan” that includes the previously announced child-care fee reductions under its Canada-wide $10-a-day plan.
In May, some Ontario families had expected to see reduced child-care fees and a partial refund backdated to Apr. 1. That didn’t happen. Frankly, these Ontario families won’t be seeing the money any time soon.
The fastest and most equitable way to lower the cost of child care is to put the money directly in the pockets of all parents, who can choose the care that best works for them.
Instead, the federal-provincial agreement for so-called $10-a-day care will only benefit about a third of children under the age of six in Ontario. That assumes, of course, that every qualifying care provider can and will sign onto the program. Yet some qualifying Ontario child-care operators have already indicated they may be unable to afford to join the program.
The federal-provincial agreement is the least efficient, most expensive, and complex way to tackle child-care fee affordability.
The first problem is that the refunds don’t go directly to parents. Instead, the money trickles down from the federal government through the province, through municipal managers, through providers and then to parents.
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In Ontario, the province has issued additional guidelines, downloading the implementation of the reduced fee plan to municipal managers. So 47 regions will need to convert the provincial directives into a functioning application process and funding program while leaving providers enough time to review and indicate their intentions by the Sept. 1 deadline. It also means the particulars of the plan will differ from region to region.
The municipalities then have until Dec. 31 to process applications. The Ontario Ministry of Education guidance to municipalities states that regional managers should work with providers “to ensure that refunds are provided back to parents in a timely manner and where possible prior to Dec. 31, 2022.” In other words, parents might see refunds before Christmas. Then again, they might not.
The second problem is that many child-care providers are concerned they won’t be able to pay their bills under the new program. The province of Ontario has left it to the municipalities to determine what qualifies as a legitimate level of expense. Federal funds can’t be used to cover property taxes, mortgage repayment or a handful of other costs.
Municipalities also have the right to cap how much money the providers can have in reserve. As the plan caps parent fees, there are no options to cover financial shortfalls. Several news reports indicate many owner-operators remain uncertain if they will join the program.
Assuming providers sign onto the program and offer fee reductions and refunds, there’s a third problem that could delay fee refunds. There’s little clarity concerning the coverage of costs to providers in issuing refunds, such as extra time, administrative costs and bank fees. These costs could run into thousands of dollars, especially for larger providers.
Watching the province stumble out of the gate on $10-a-day care highlights the plan’s fourth and most significant problem. The federal and Ontario governments have promised parents $ 10 a daycare without knowing the true cost.
This is, of course, not unique to Ontario. In Nova Scotia, the federal-provincial agreement states that the province would use some of the federal funds to hire a consultant to determine how much it costs to run a daycare. Hats off to that province for its honesty. At least Nova Scotia’s government was willing to admit it skipped critical information before signing on.
The federal-provincial agreements commit to far more obligations than just reducing fees and funding new spaces, all with guestimates on cost. The Parliamentary Budget Office and our earlier cost assessment at Cardus show that the federal government has badly underestimated the actual cost of the program. Both these assessments pre-date skyrocketing inflation.
There are much more equitable and efficient ways to address child-care affordability. Early indications reveal just how complex and expensive implementing the $10-a-day program will be.
The minority of families who could benefit from the new program will just have to be patient as the bureaucratic gears slowly grind out refunds. Eventually.
In the meantime, inflation rages on, and family life just gets more expensive.
Peter Jon Mitchell is the family program director at the think-tank Cardus.
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