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Federal Government Underestimates Cost of National Daycare


May 6, 2021

OTTAWA, ON – The federal government dramatically underestimated the cost of creating a national daycare system in Budget 2021. Crunching the numbers in a new report, Look Before You Leap, think tank Cardus estimates a national daycare system would realistically cost an estimated $36.3 billion per year. This factors in the desires of public advocates for a Quebec-style system.

The federal government assumes a 50-50 cost share with the provinces, but these deals have not yet been signed. Since the federal funding is set for the next five years and the real costs of a national daycare plan are significantly higher than what the federal government is proposing, the provinces would end up covering the lion’s share of the cost, forking out as much as $23.3 billion annually. In Ontario alone, the real cost of implementing a system would be $9.5 billion annually.

“It’s not just about the high and growing costs of a system—it’s about a high level of complexity in a country as diverse as Canada,” says Andrea Mrozek, a Cardus senior fellow and co-author of Look Before You Leap. “Frankly, provincial governments will dodge a bullet if they reject the federal proposal and demand flexible funding that responds to all parents’ needs instead of the federal plan.”

To put the numbers in context, the federal government’s $9.2 billion Budget 2021 annual commitment works out to almost $3,900 per child under age six. The real cost of a national system at $36.3 billion per year estimate comes to almost $13,700 per child under age six.

“The federal government needs to provide more detail on its proposal. In doing the calculations we’ve done, they’d have to conclude this kind of system is not the way to go,” says Mrozek. “There are other tested, proven, and modern tools for helping families afford child care, like an enhanced Canada Child Benefit, more generous, progressive and more frequently paid refundable childcare tax credits, and enhancing targeted support in areas of highest need. These would ensure that those who need help most will get it immediately. The federal government is promising $10-a-day daycare five years hence to everyone – even high-income earners – and sticking the provinces with most of the bill.”

Look Before You Leap is freely available online.


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