Analysis: Daycare fees on the rise across Canada
Nick Kirmse, CTVNews.ca
Published Thursday, May 24, 2018 6:15AM EDT
When Jamie Towers gave birth to her daughter Marley a year-and-a-half ago, daycare was never part of the plan for the new family.
“It’s just ridiculously expensive here,” Towers, a Vancouver resident, said. “Some places you’re paying more for child care than you are for rent. “
Towers, an eyelash technician, went back to work only eight months after she gave birth, while her husband, Neil, gave up his full-time job with a moving company to become a stay-at-home dad.
It’s become an all-too familiar story – young Canadian families often find the costs of putting their child in full-time care more of a burden than living off a single income.
A typical dual-income family with young children in Canada spends about one-third of their net income on childcare fees – and that’s if they can even get their child into a child care program.
A 2017 study by the Canadian Centre for Policy Alternatives explored the problem, surveying licensed full-time child care facilities in 28 cities across the country to find median child care costs in Canada.
They found that the median price of licensed child care for an infant in Toronto is more than ten times what you would pay for a similar service in Montreal. At $1,758 a month, a year of child care can end up costing Toronto families almost as much as four years of university tuition.
In the lead-up to the Ontario election, where child care may be a ballot-box issue for many parents as it was in the Vancouver provincial election, CTVNews.ca presents a breakdown of the report, exploring the costs and scale of the child-care problem in Canada.
Breaking down child care terminology
In the study, child care is divided into three categories – infant, toddler, and preschooler. The researchers define these categories as birth to two years for infants, 18 months to three years for toddlers, and two-and-a-half years to kindergarten age for preschoolers, which is age four or five, depending on the province.
These categories often see wildly different prices for full-time care, as a result of the smaller number of facilities available for infants, as well as the higher ratio of caregivers to children required by law. This means that while preschool age child care tends to be a lower figure overall, it gives the best idea of what the average family pays, since half of children in child care centres in Canada fall into this category.
The costs of child care across Canada
The most recent Statistics Canada figures from 2011 found that 54 per cent of parents reported using child care services for their children under four years. David Macdonald, senior economist at the Canadian Centre for Policy Alternatives and co-author of the Time Out study, say that this number reflects the fact that generally, Canadian parents work, and need to find some sort of child care.
With a national average cost of approximately $10,000 a year, child care can often cost as much as a year of university tuition. And these figures assume a family only has one child that needs to be enrolled in child care.
Looking across the country, the study found that Ontario has the top three cities with the highest child care costs, localized in the Greater Toronto Area.
Toronto is the most expensive city for child care, with the median cost of infant care in the city being $1,758 a month, or $21,096 annually. Toronto is followed closely by Mississauga at $1,451 monthly and Vaughan at $1,360. The next highest cost, and the first outside of Ontario, is Vancouver, with a median cost of $1,360.
Toddler- and preschooler-aged care costs are lower, but still expensive, at $1,354 and $1,212 in Toronto, respectively.
On the opposite end of the spectrum, Montreal has the lowest costs for child care, with a median cost of $168 per month. That number is followed closely by Gatineau, Laval, Longeueil, and Quebec City – all with a median cost of $183. These cities don’t necessarily charge more, however – the differences are a result of the way their fees are calculated.
In Quebec, child care costs are set by the government, implementing a sliding scale based on family income. For families with incomes under $52,060, child care costs $7.75 a day, while the maximum amount is $21.20 for families with income in excess of $162,490.
Quebec isn’t the only province to regulate fees, however – Manitoba and P.E.I. also have government-set rates in some facilities. Quebec’s system remains unique though, as the fees for child care don’t change based on the age of the child. This more affordable infant care allows parents to get back to work quicker after the birth of their child.
Fees on the rise across Canada
The costs of child care are growing across the country, with 20 of the 28 cities involved in the study seeing an increase in fees since 2016 that outpaced the rate of inflation. Most cities saw an increase in the range of two per cent to three-and-a-half per cent – almost twice the rate of inflation.
And researchers aren’t quite sure why that’s the case.
Macdonald says that while some fee increases, such as those in Quebec, can be explained by set yearly increases, most can’t. “In most of the market systems, they’re also increasing, and can be increasing at a fairly quick rate.” Macdonald said. “And it’s not clear exactly why they’re increasing so rapidly.”
Richmond, B.C. saw the most drastic changes, with a 12 per cent jump in fees over the past year, which can be attributed to individual care providers raising fees, as well as new facilities with higher prices opening.
St. John’s, Burnaby, and Calgary are also outliers, with a drop in fees of up to 2.4 per cent, while Kitchener, Vancouver, Charlottetown, and Winnipeg had fees remain the same.
Winnipeg and Charlottetown are notable cases, as both provinces that support child care operationally, and have set fees that haven’t changed since 2014.
Canada versus the world
But how do the fees Canadians pay stack up to the rest of the world?
A 2016 study from the Organization for Economic Co-operation and Development found that Canadian families spend almost one-quarter of their income on child care – one of the highest amounts worldwide.
This is in part because most of Canada’s child care providers operate under a market system. “The market system, where you leave most of the pricing up to the market, is pretty unusual in the developed world.” Macdonald said. “There’s often much more involvement of governments.”
The study by the OECD, which focused on the economic status of young people, found that the average dual-income families in wealthy nations spend approximately 15 per cent of their net income on childcare. In Canada, this figure is as high as 22 per cent on average, with the United Kingdom having the highest figure with 33.8 per cent.
And the situation is worse for single parent families in Canada, which spend up to 33 per cent of their income of child care on average. In this aspect, Canada is behind only the United States and Ireland, at 52.7 per cent and 41.6 per cent, respectively.
These high costs often affect Canadian’s decisions not to work, as having to pay for child care is cost prohibitive. Women are often affected by this most, with the decision to become a stay-at-home mom to avoid the costs of child care directly contributing to the gender wage gap that exists in Canada.
That’s not only bad for families, but has major implications for the economy, as these families have less taxable income.
The waitlist problem
But costs can be only half the battle for families when it comes to child care. The demand for child care greatly surpasses availability in most cases. “One of the common features is the prevalence of waitlists across the country, almost irrespective of where you are,” Macdonald said. “Eighty to ninety per cent of centres will be maintaining a waitlist.”
Researchers found that in almost three-quarters of the cities covered in the study, centres maintained lengthy waitlists of children waiting to enter care programs. Bigger cities see 80 to 90 per cent of centres maintaining a waitlist, while even smaller cities like St. John’s are in the 40 per cent range.
Wait lists are one of the major hurdles keeping parents from accessing quality child care, with families having to start the process early if they want to get their child enrolled. “You have to apply basically while you’re pregnant,” Jamie Towers said.
In many places, these waitlists also require parents to pay a fee to have their child placed on the waitlist. These fees can range anywhere from $10 to $200, and since most child care facilities have their own lists, parents may have to pay multiple wait list fees while waiting for a spot to become available.
The prevalence of wait fees has dropped dramatically from recent years, since the government of Ontario prohibited charging waitlist fees in 2016. Despite the ban, wait fees still exist in some Ontario cities, though they’re much less common as a result. A drop was also seen in British Columbia, despite no such legislation existing there.
Fixing the problem
Recognizing the problem that child care presents for almost 75 per cent of Canadian families, efforts are being made on both the federal and provincial level to make child care more accessible.
In last year’s federal budget, the Trudeau Liberals pledged funding for childcare through 2028, spending $7 billion to help lighten the weight of child care costs. The plan would see $540 million spent in the 2018-2019 period, creating 40,000 new subsidized daycare spaces across the nation.
On the provincial level, British Columbia’s NDP government has announced the $1-billion beginning of a 10-year plan to introduce “universal” child care in the province. The plan will introduce subsidies paid directly to child-care centres, lowering costs by up to $350 per child, depending on their age and family financial situation. The move will make B.C. one of the few provinces to have publically funded child care.
Liberal Leader Kathleen Wynne’s campaign promises are a sign Ontario is also trying to tackle the child-care problem. The plan promises access to free licensed child care for preschool aged children with a $2.2 billion-dollar plan set to come into place in 2020. This investment will create spaces for additional 125,000 kids at licensed child-care centres across the province.
The announcement has made child care one of the hot button issues of the election, prompting both the NDP and Progressive Conservative parties to offer up child-care solutions of their own.
The NDP platform includes the even-grander promise of free child care for children of all ages for families earning less than $40,000 a year and $12 a day for everyone else, while the PCs plan to offer a tax credit for up to 75 per cent of child care costs for children under 15 for low income families.
But making child care free for preschool aged children may introduce new problems for Ontario child care, rather than solving the old ones. Macdonald said that making child care free will substantially increase demand and put more pressure on a system, which already has a significant wait time issue. To avoid creating even longer wait lists, the government also needs to invest in creating the infrastructure to support a larger child-care system.
Above all else, Macdonald believes the best solution requires a change in how most of Canada approaches child care entirely, changing to the government set-fees model that Quebec, and much of the rest of the developed world, utilizes.
“I think it’s clear that if you want more affordable child care, the solution in the Canadian situation is to set fees and make up the difference to providers,” Macdonald said. “That’s consistently produced the lowest fees, as opposed to any other approach to fees – particularly to middle-class families.”