Federal government steps up to provide $1billion loan program for capital expansion

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The federal government’s recent commitment as part of the 2024 budget will launch a new $1 billion Child Care Expansion Loan Program offering low-cost loans available to public and not-for profit child care organizations to build new spaces and renovate existing child care centres.  The expansion of non-profit child care programs has been a non-starter so far primarily because of lack of access to capital.  This initiative represents a very positive breakthrough for the much-needed expansion.  The program will be delivered through the Canada Mortgage and Housing Corporation (CMHC) which has many years of experience in administering social housing loans.  

However, at first glance, the government of Canada recognizes that not all parents are able to access the much lauded $10 dollar per day child care due to limited spaces.  Expansion is at a standstill in the non-profit and public sector since they are generally unable to access loans through traditional avenues.  Banks tend to be risk-averse and very reluctant to loan significant funds to the non-profit sector.  

This new federal program will help to support the public and non-profit child care programs achieve their expansion goals.  Of course, the devil is in the details and it will need to be rolled out quickly in order to allow the centres to initiate building projects, get approvals, develop designs and start building.  

At the same time, the government and child care organizations across Canada are keen to expand to provide better access to quality child care, improve workforce standards for educators and build a long-term sustainable system. 

We learned from Quebec’s experience when it first introduced $5.00 a day child care in 1997.  There was a surge in interest from parents who were keen to enrol their children.  Rather than support expansion of the higher quality centres de petite enfance (CPEs), (the non-profit programs), the government introduced a scheme of tax credits that promoted the expansion of for-profit child care.  The result was poorer quality programs and dissatisfaction by parents who preferred the higher-quality non-profit fixed fee centres.  

The federal government’s plan to set up the loans program through the CMHC has cast a breath of fresh air in the path of non-profit and public programs.  It will create a level playing field for the public and not-for-profit sector and a way to right-size the expansion of child care across Canada.  Accessing loan funding to expand child care creates opportunities for a cost-effective way to build on existing services.  The payments for the loans program can be built into cost recovery through operating funding that has been guaranteed in the CWELCC program.  

CHMC was set up as a Crown corporation and functions as Canada’s national housing agency.  It will now oversee a loans program to support the expansion of child care in the public and non-profit sectors.  This is an effective way to ensure access to and provide accountability for the use of public funding.

We can only hope that provinces and territories will also be inspired to take new and bold initiatives to realize the promise of the new Canada-wide Early Learning and Child Care system that parents want and need, and that will help grow their economies as more and more women join the workforce.

This article was written by Dr. Zeenat Janmohamed, Executive Director: Atkinson Centre and Susan Colley, Chair: Building Blocks for Child Care