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Early Reflections on the Canada-Alberta Child Care Agreement

November 18, 2021

Peter Jon Mitchell


Policy Brief

Child Care Parents & Children

A Cardus Family Policy Brief

Alberta signed on to the Canada-wide Early Learning and Child Care agreement on November 15 after months of negotiation. While the Edmonton Journal editorial board called the agreement a win for all Albertans, there are a lot of details yet to be released in a province where a minority of children under six are in licensed care – the only type of care supported by the agreement. What do we know so far, and what questions are left outstanding?

In general, the federal plan aims to spend about $30 billion over five years to reduce the parent-paid portion of child care to an average of $10-a-day across Canada. It also promises funding for new spaces but specifically excludes for-profit child care providers.

The basics of the Alberta agreement include a transfer of $3.8 billion in federal funds over five years for licensed child care for children below kindergarten age. In return, Alberta will reduce parent fees on average by half starting in early 2022 and to an average of $10-a-day by the end of 2026.

Of the total funding, $2.865 billion is intended for fee reductions achieved through a combination of operation grants and parental subsidies, both paid directly to providers. The exact details have yet to be released. The Ministry of Children’s Services says the price parents pay will be geared to income and provides the following example based on household income:

  • $10 per day for households earning up to $119,999 annually
  • $11 to $17 per day for households earning between $120,000 and $179,999 annually
  • $22.19 per day for households earning $180,000 and above annually

These reductions apply only to licensed centres and approved day homes.

The agreement allocates $204.64 million to create 42,500 spaces over five years in not-for-profit and public care. The majority of licensed spaces in Alberta are provided by for-profit providers, but the province acquiesced to the federal government’s desire to favour public and not-for-profit providers.

Additionally, $306.16 million will go to supporting early childhood educators, and $202.6 million to programs serving diverse communities and children with special needs.

Finally, the federal government has indicated a Canada-Alberta Implementation Committee will be struck to develop a ‘cost-control framework.’

Many details of the agreement are yet to be released but the new agreement raises a number of questions.

First, the creation of a committee to develop a cost-control framework is an acknowledgment that the agreement alters the relationship between providers and the province. The Ministry of Children’s Services will need to be much more involved in understanding and managing the cost of care. If the province is going to control the cost to parents, it will need to efficiently manage operating grants and subsidies, ensuring funding meets the diverse range of costs across the province and is responsive to the growing cost of providing care. Provinces like Manitoba that have implemented fee caps have chronically underfunded providers as costs increased. At the same time, fee caps have left providers with little recourse for addressing shortfalls between the actual costs of providing care and what they are allowed to charge. Unlike Manitoba, Alberta relies heavily on for-profit care providers who may have a lower tolerance for cumbersome provincial management and funding shortfalls.

Second, dramatically lowering the cost of licensed care in the next several weeks will increase demand. Is Alberta positioned to meet new demand?  The province has committed to rolling out 42,500 new spaces over the next five years but curiously agreed to do so only in the not-for-profit and public sectors. What limitations does this place on space creation? Will there be enough spaces to meet new demand and how quickly can new spaces be rolled out? What impact will this have on providers outside the licensed system, many of whom are female entrepreneurs?

Third, while for-profit providers are eligible for the operation funds and subsidies, excluding these providers from federal space creation funding sends a confusing message about the future vision for child care in Alberta. What role will for-profit providers have in the child care sector moving forward?

Fourth, Alberta’s child care policy has historically relied on a suite of subsidies to offset costs for low-income families. The agreement alters the use of subsidies, resulting in families earning $119,000 annually paying the same low fee as families earning less than half that amount. High-income families in the highest deciles who were previously ineligible for subsidies will see a dramatic reduction in their child care fees and perhaps have the most to gain under this agreement. Is this the kind of system Albertans desire?

Finally, some parents will benefit from the immediate reduction in fees, but according to Statistics Canada data collected before the pandemic, only about 27 percent of children under age six were in centre-based or preschool care. An additional 11 percent were in home group care but an unknown portion of these would be with providers outside the regulated system. In short, a minority of children under age 6 are in care arrangements that qualify for the fee reduction. Over the last few years, the province eliminated the kin care subsidy and has focused resources on the licensed care sector. What help does the $3.8 billion in federal funding provide for families who choose relatives, in-home nannies, or forego earned income to care for their children?

All these questions point to the idea that, despite the Edmonton Journal’s declaration that everyone wins, many Alberta families will see no benefit under the agreement. This highlights our longstanding concern that when the government preferentially funds only one form of care, it does indeed pick winners and losers.