By: Asvini Uthayakumaran
Organizations representing the interests of for-profit child care operators, including the Association of Childcare Entrepreneurs (ACE), have recently been calling on the Canadian government to implement a direct funding model or a voucher system for child care. With this approach, the federal government would continue providing funds to provinces, and provincial governments would then issue monthly payments, vouchers or tax credits to families to use with licensed childcare providers. For example, ACE argues that this model would “reduce the need for costly claims systems, complex audit procedures, and federal oversight structures—while still maintaining quality standards and equity goals”. Notably, there would no longer be any restrictions on the power of operators to raise fees and profits. Instead, this system would rely on the market to deliver quality, accessibility, affordability, and inclusivity. Since the market has not delivered quality, accessibility, affordability and inclusivity before, it requires a big leap of faith to believe that this would happen once government controls are removed. The research and experience have been clear: universal, publicly funded child care systems—like the Canada-Wide Early Learning and Child Care (CWELCC) plan—consistently deliver better outcomes for families, educators, and children.
This blog post will focus on highlighting just a few of the reasons why a direct funding model like the one proposed by ACE will leave us with fragmented child care that is unaffordable, inaccessible, and unsustainable.
1. Vouchers don’t lower the costs of child care
Child care vouchers have been used extensively in the United States. American research on how the implementation of voucher systems has impacted quality, price and supply of child care revealed that “…at best, vouchers had no effect on the price, supply, and quality of day care, and at worst, they worked in the opposite direction”. Rather than investing in a publicly funded child care system where fees are regulated, organizations like ACE advocate for a system that will deregulate child care. Under a voucher system, operators are free to charge market rates, and families will have to top up whatever the voucher doesn’t cover.
In fact, we can observe the inefficacy of the direct funding model by looking at the Ontario Child Care Tax Credit. This initiative, which was announced in 2019, allows eligible families to claim up to 75% of their child care expenses up to a maximum of $6,000 per child under the age of seven. The standard benchmark allocation provided by the Ministry of Education currently amounts to $20,500 per child annually in a child care centre with 63 toddler and preschooler spaces. With the tax credit alone, parents would be expected to pay $14,500 per child out of pocket every year. This calculation does not include a number of variables that would increase the cost for parents. For example, if the centre was new, the cost of child care would be higher, or if family income was higher than $20,000, coverage would be less than $6,000 per child under the age of seven.
By contrast, CWELCC addresses the root problem—price regulation. By directly funding licensed providers and capping fees, the system guarantees affordability. Under the CWELCC agreement, child care fees in Ontario have been capped at $22/day, resulting in significant financial relief for thousands of families. Currently, parents are paying $5,742 annually per child, a figure that will be reduced by more than half once the CWELCC promise of $10/day child care is implemented.
2. The market will not guarantee accessibility
Proponents of the voucher system claim that vouchers would be a mechanism that empowers parental choice. The assumption here is that direct funding will allow parents to shop around and compare options, choosing the child care that best suits their needs. However, the market does not guarantee accessibility. Families in rural, remote, or underserved areas with limited child care options may have no real choice, even with a voucher in hand. Further, research indicates that with unregulated child care markets, parents can easily assess the quality of care incorrectly. Providers offering lower-quality care at lower rates enter the market and thrive in contrast to their higher-quality counterparts. The CWELCC agreement prioritizes quality, acknowledging the real issue of child care deserts, and the program focuses on child care expansion in the communities that need it the most. We just need more of it to meet the needs of all Canadian children and families!
3. Vouchers do not support the child care workforce.
Advocates for a direct funding system argue that this will result in savings without sacrificing quality, but it is important to remember that quality in child care requires investments in the child care workforce. Early childhood educators continue to be devalued despite their critical work; a market-based approach to child care will only further exacerbate this issue. Staff shortages have proven to be a significant challenge for Ontario’s child care sector. Inadequate wages and poor working conditions have resulted in low retention and recruitment rates of ECEs. A key goal outlined in the Canada-Ontario CWELCC agreement is to enhance quality by investing in the early child care workforce. There is no evidence that recruitment and retention of qualified program staff, RECEs in particular, would be improved under a voucher system.
Child Care Is a Public Good
The tax credit/voucher proposal may be marketed as a cost-saving fix, but in practice, it undermines everything Canada has worked toward under CWELCC: real affordability, public accountability, workforce stability, and equitable access.
CWELCC is supported by millions of families across the country, educators, and child care operators. ACE claims to represent non-profit operators that support the market-based child care; however, it is important to remember that in Ontario, 92% of licensed operators have enrolled in CWELCC as of September 2024. The majority of these operators are non-profit. Additionally, B2C2 frequently works with a number of non-profit licensed child care operators facross the province who have long supported CWELCC.
If we want a child care system that truly works for Canadian families, we need to invest in public infrastructure. The application of CWELCC has not been flawless, as highlighted by the Canadian Centre for Policy Alternatives in their annual child care survey. However, with the transformation of a formerly fragmented child care system into one that is publicly funded and universal, hurdles are to be expected. Overhauling CWELCC and implementing a voucher system as proposed by ACE will have devastating consequences for families and child care workers. Vouchers offer a band-aid solution to a systems-level problem. CWELCC is building a national system—one that integrates public and non-profit providers, supports workforce development, and ensures every child, in every province and territory, can access quality care.