Will parents benefit from new childcare framework?

If your client is the parent of young children, he might have more disposable income once childcare funding becomes available.

This is important because, as a new study by the Canadian Centre for Policy Alternatives suggests, childcare fees in some of Canada’s biggest cities has skyrocketed over the last three years, rising an average of more than twice the rate of inflation over the same time period.

The study adds the average monthly cost for full-time childcare has gone up by more than 8% across the country over the last three years. Much of that is the result of Quebec’s decision to introduce a sliding scale for fees based on income in 2015, which saw average prices jump by 18%, but they still remain the lowest in the country.

Taking Quebec out of the equation, costs across the country have increased by more than 6%, more than double the average rate of inflation of 2.5% over that time, the study shows. What accounts for the increase in fees outpacing the cost of living has baffled researchers who have looked at the issue for years.

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Martha Friendly, executive director of the Childcare Resource and Research Unit, says bringing down the cost of childcare in the rest of Canada would mean either cutting costs and staff, or increasing government funding. “There’s no other way to reduce the cost of child care,” said Friendly, who co-authored the study.

“One of the things that’s absolutely clear from everything we know is that there has to be more government money because market costs for childcare do not work for families. They can’t afford them.”

Plans for childcare support

The 2016 federal budget earmarked $400 million next year for a childcare framework–a carrot the Liberals dangled to convince provinces and territories to sign on to the plan.

In a recent interview, Social Development Minister Jean-Yves Duclos told The Canadian Press that the Liberals have a plan to make a long-term funding commitment in the 2017 budget to help provinces expand their childcare systems. But the exact dollar amount, and how the money will be used by provinces, is expected to be announced in that budget.

The study says families can end up paying more than $12,000 a year in some cities for a single child in daycare. In Toronto, monthly median childcare fees are $1,649; in Vancouver, $1,321.

Fee subsidies for low-income families offset some but not all of the cost. The study found out-of-pocket fees can range from $90 in Ontario up to almost $500 in Saskatoon and Calgary.

The study says the three provinces that set fees and directly fund services — Quebec, Manitoba and Prince Edward Island — have the lowest costs in the country, compared to provinces that let the market dictate fees.

“The best way to get low fees that are predictable is to set them and [then] make up the difference through direct transfers to providers” said study co-author David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.

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