Family policy

Why the Private Sector is Essential to Ottawa’s National Childcare Plan

Peter Shawn Taylor
May 20, 2021
The Trudeau government's $30 billion plan to transform childcare nationwide is focused on more than just families. It also wanders into an ideological battlefield by declaring the non-profit sector preferable to private operators. Ottawa is thus ignoring the vital role played by childcare owners in expanding supply and meeting the diverse needs of working parents. In a deep dive into Canada’s complex childcare system, Peter Shawn Taylor talks to several remarkable female entrepreneurs and other key figures to reveal the reality and necessity of for-profit childcare. 
Family policy

Why the Private Sector is Essential to Ottawa’s National Childcare Plan

Peter Shawn Taylor
May 20, 2021
The Trudeau government's $30 billion plan to transform childcare nationwide is focused on more than just families. It also wanders into an ideological battlefield by declaring the non-profit sector preferable to private operators. Ottawa is thus ignoring the vital role played by childcare owners in expanding supply and meeting the diverse needs of working parents. In a deep dive into Canada’s complex childcare system, Peter Shawn Taylor talks to several remarkable female entrepreneurs and other key figures to reveal the reality and necessity of for-profit childcare. 
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For Melanie Ross, necessity is the mother of entrepreneurship as well as invention. After working in the childcare sector in Toronto for several years, she moved back home to northern Ontario to begin a family in 2006. “When I started having kids, I looked around at the local childcare options and realized there was nothing that could satisfy my needs,” she recalls.

Ross had a specific vision of her ideal childcare facility. “I wanted there to be room to run around,” she says in an interview from North Bay, about 350 km north of Toronto. “And I am a big advocate of clean eating and having low-sugar, gluten-free and meatless meal options.” She also wanted a flexible, part-time schedule that would allow her own parents to care for her kids one or two days a week. “Everything I looked at had this very narrow definition of childcare. It had to be full-time, five-days-a-week or nothing. And that didn’t seem proper to me.”

Ignored by Ottawa: Melanie Ross provides 300 childcare spaces across northern Ontario, but her for-profit status means she may be cut out of the federal government’s $30 billion national childcare plan.

Ross’ solution? Dissatisfied with the options on offer, she decided create her own. When her youngest son was just four months old, she opened Friends Forever Childcare in North Bay. Four years later she bought an existing childcare centre in Timmins, a remote mining town 400 km farther north. She also operates a home agency that coordinates a network of 27 daycare providers in the region who work from their own houses.

In chronically underserviced northern Ontario, Ross is providing over 300 licensed, much-needed childcare spaces. She has a clear vision of the services she wants to deliver, and her clients seem to appreciate her commitment to flexible schedules, robust outdoor play and meal plan diversity. Outside the pandemic, Ross’ centres are habitually full and profitable.

So why does the Trudeau government – a feminist government, we are so often reminded – want to exclude this successful female entrepreneur from its recently announced $30 billion, five-year national childcare plan? Precisely because she is profitable.

“Primarily” Fixated on Ownership

The biggest item in the $101 billion of new spending announced in federal Finance Minister Chrystia Freeland’s 2021 Budget was the much-heralded Canada-wide Early Learning and Child Care System. By 2025-26, Ottawa will spend $27.2 billion on regulated childcare spaces across the country, plus another $2.5 billion for Indigenous daycare. The plan aims to cut average fees paid by parents by 50 percent by the end of next year, leading to a nationwide $10-a-day system in five years. Quebec, where parents currently pay $8.35-a-day, is presented as the “pioneer” and model. In addition to chopping fees, the federal government is also promising to increase the supply of childcare spaces. But there’s a catch. According to the budget, money set aside for expansion will go “to support primarily not-for-profit sector child care providers.” In other words, Ottawa doesn’t want business owner Ross and her Forever Friends Childcares in North Bay and Timmins to be full participants in its national childcare plan.

For decades it has been commonplace for advocacy groups, academics and unions to argue that for-profit operators cannot be trusted to deliver reliable, high-quality childcare. “To make a profit in childcare…you have to cut corners,” claims Carolyn Ferns, spokesperson for the Ontario Coalition for Better Child Care. Ferns’ organization relentlessly promotes non-profit delivery and warns of the risk posed by “Big Box” corporate childcare, even though such a thing does not exist in Canada.

“My position is that childcare should be non-profit,” advises Christa Japel, a professor in the Education and Psychology departments of the Université du Québec à Montréal (UQAM) in an interview, citing her own research on the disappointing quality of privately-provided childcare. Asked for her opinion on the new federal commitment to “primarily” fund non-profit operations, she says: “I hope they will insert a clause that says there will be no funding for for-profits.”

“Childcare should be non-profit”: Université du Québec à Montréal professor Christa Japel is among the many critics of private sector childcare.

Seeing the federal budget explicitly align itself with vociferous critics of the for-profit sector “makes me really nervous,” says Ross. More than just Ross and her fellow childcare entrepreneurs should be nervous.

Canada’s existing provincial childcare systems are extremely diverse and complex. And while the Liberals’ plan to exclude or sideline the private sector may offer a windfall to non-profit operators and related unions, it threatens great harm to everyone else. If Ottawa uses its new childcare plan to indulge critics of for-profit centres, it will inevitably hamper its own goals of increasing capacity and lowering fees across the country. It will also make the entire sector less innovative, to the detriment of every family who relies on childcare. And it can only undermine the Trudeau government’s self-professed commitment to improving female entrepreneurship. Finally, trying to get rid of for-profit childcare is likely to prove impossible given Canada’s constitutional arrangements. So why even bother?

Rather than being a problem, the profit motive deserves recognition as being indispensable to Canada’s childcare system. Parents and kids depend on it.

The Space Race

According to national statistics compiled by the Childcare Resource and Research Unit (CRRU), a Toronto-based organization vehemently opposed to for-profit childcare, the private sector currently provides 28 percent of Canada’s childcare spaces. While substantial, this figure obscures its enormous importance in many parts of the country. In Newfoundland and Labrador, the private sector provides 70 percent of all spaces. In Nova Scotia, it’s 65 percent. It also comprises a clear majority in Alberta and British Columbia. In all these provinces, government support is typically provided on an equal basis to both for-profit and non-profit operators.

Some provinces, however, explicitly advantage non-profit delivery, as Ottawa apparently intends. This inevitably reduces the supply of childcare spaces. In Saskatchewan, for example, government policies have long denied subsidies and grants to private operators. As a result, the for-profit childcare sector has been virtually wiped out. The province also has the worst access to childcare in the entire country – offering spaces for just 17 percent of children aged 0-12. The national average is 27 percent.

With Quebec being presented as an exemplar for Ottawa’s new plans, the experience of the private sector in that province demands a close look. CRRU data claims only 20 percent of Quebec’s lauded system is privately operated. But the other 80 percent includes enormous after-school programs for older children operated by publicly-funded schools. Of the current 307,490 licensed childcare spaces in Quebec outside the school system, official provincial figures show that only 98,014 – or less than one third of total capacity – are operated on a non-profit basis by Centres de la petite enfances (CPEs), the heavily-subsidized model the federal government finds so attractive. The other 209,476 spaces are delivered by the private sector. These take a variety of forms, including privately-owned centres that also receive direct government subsidies, subsidized home daycares run by individuals for profit, and licensed private sector operators who operate outside the subsidy system but whose clients are eligible for tax credits largely equivalent to what the other categories receive.

A heavy reliance on the private sector: Despite being hailed as the model for Ottawa’s national childcare plan, Quebec’s non-profit Centres de la petite enfances (CPEs) comprise only a third of the province’s childcare system; the remainder is delivered by for-profit operators. (Pictured: CPE Biscuit, Montreal, Quebec. Source: Jeangagnon, Travail personnel; licensed under CC BY-SA 4.0)

To be clear: two-thirds of Quebec’s conventional childcare spaces are run on a money-making basis. And almost all the growth in supply over the past ten years has come from the private sector. The reason for this situation is instructive. When Quebec first launched its $5-a-day childcare program in 1997, it relied almost entirely on non-profits for purely ideological reasons. A moratorium was even declared on the licensing of any new for-profit operations. But unionized, strike-prone CPEs quickly proved incapable of meeting parental demand and waiting lists grew to be vast and contentious. Research showed a disproportionate share of the coveted, highly-subsidized CPE spots were filled by high-income families, a clearly perverse outcome.

Successive provincial governments eventually realized the private sector was essential to meeting parental demand. In 2003, Quebec lifted the moratorium on new for-profit centres. And in 2009 existing tax credits for parental childcare expenses were raised to be roughly comparable to government subsidies for CPEs. The response was dramatic. Between 2009 and 2019 the tax credit-fueled private-sector component of Quebec’s childcare system grew from 7,000 spaces to over 70,000. Nowhere has the non-profit sector proven itself capable of such rapid growth.

Even strident critics of for-profit childcare, including UQAM’s Japel, grudgingly acknowledge the private sector’s highly-tuned and efficient response mechanism. “For-profits have grown significantly over the past ten years,” she observes. “It is cheaper to create space in for-profit [centres].” This phenomenon has benefited tens of thousands of low-income families who would otherwise be shut-out of the government-funded system. Yet Japel terms the result to be “unfortunate.” According to her: “Education should not be in the hands of the private sector. It should be not-for-profit from birth to university.”

The facts, however, speak for themselves. If Quebec is to be the federal government’s template for a national $10-a-day childcare system, then the province’s entire experience must be heeded. And a key lesson is that it is impossible to create new subsidized spaces in a timely manner while “primarily” relying on the non-profit sector. You can either expand the system or you can restrict participation by the private sector for political reasons. You can’t do both.

Price and Quality

Like Saskatchewan, Ontario operates a childcare system that discriminates by ownership type. Provincial childcare funding in Canada’s most populous province is disbursed though municipal governments, and for political reasons several major cities, including Toronto and Ottawa, deny for-profit childcare centres access to provincial grants or subsidies. This creates a two-tiered system in which non-profit centres are better funded than their commercial peers. Such unequal funding is commonly cited as the reason private childcares shut down in these cities, depressing overall supply. It is also a key factor in complaints that such facilities provide lower-quality services.

“All hands on deck”: Don Giesbrecht, CEO of the Canadian Child Care Federation, argues it will be impractical to exclude for-profit operators from the first stage of Ottawa’s national childcare plan; the longer-term prospects remain uncertain.

Most academic efforts at measuring childcare quality rely on inputs such as wages paid and staff qualifications to determine rankings. Policies that deny for-profit centres access to wage and other subsidies, programs that would allow them to pay higher salaries and hire more qualified staff, inevitably lower their observed quality measures. These policies are essentially self-fulfilling prophecies. Studies in jurisdictions that fund both models equally typically show no difference in quality. This suggests a government interested in ensuring consistent quality across the entire childcare sector should be funding non-profit and for-profit operators equally.

Don Giesbrecht, CEO of the Canadian Child Care Federation, which represents a variety of childcare groups across the country, doubts the for-profit sector can feasibly be excluded from federal fee-reduction plans, at least in the early years. “This is an all-hands-on-deck situation,” he says in an interview. Achieving a $10-a-day system nationwide “will require for-profit, not-for-profit and home childcares. No matter how you operate, government is going to support your operations.” Asked to account for the budget’s explicit preference for the non-profit sector, Giesbrecht adopts a hopeful, if perhaps naïve, perspective. “Right now, there is zero discrimination,” he says. “The budget does say expansion will be ‘primarily’ in the not-for-profit sector, but that’s a goal for somewhere down the road.” Giesbrecht says it will be up to the provinces and Ottawa to hammer out those details. For now, he’s focused on wrangling that $30 billion bonanza.

The mathematics of childcare suggest Giesbrecht may be right. Using CRRU data and excluding Quebec, the for-profit sector accounts for about one third of childcare spaces across Canada. Achieving the budget’s promise of a 50 percent cut in average fees by the end of 2022 without including the for-profit sector would require that fees in all non-profit operations drop by 75 percent. In provinces where the majority of childcare centres are for-profit, such as Alberta, British Columbia and Atlantic Canada, such an outcome appears mathematically impossible: prices at non-profit centres would need to fall to zero or below to achieve a combined 50 percent cut. It thus seems likely the private sector will be allowed to participate in Ottawa’s fee reduction scheme. Its role in future plans to expand capacity, however, remains unclear.

Innovation by the Creche-Load

Beyond the issues of capacity, price and quality, the private sector’s most significant contribution to the care of children is in the innovation it delivers to an industry notoriously resistant to change. Like Ross, Karen Eilersen also decided to open her own childcare centre after becoming a new mother and finding herself dissatisfied with what was available in her hometown of Barrie, Ontario, about an hour’s drive north of Toronto. “There were very few childcare centres in Barrie in 1998. And the ones that weren’t full, I didn’t want to put my children in,” she recalls. All the centres that failed to meet her standards, she points out, were non-profit operations.

Connecting kids with nature: When Karen Eilersen (centre) couldn’t find appropriate childcare for her own children in Barrie, Ont., she decided to open her own; today Discovery Child Care is an accredited “Forest School.”

Determined not to leave her kids stuck indoors all day, Eilersen opened Discovery Child Care on a 2-acre property in Barrie. Today it is licensed for 101 children and boasts a “Forest School” accreditation, which means most of its programming takes place outside. “Our whole philosophy is on connecting kids with nature,” she says, “We are quite different from most childcares.” Her passion for bringing innovation to her chosen field is readily apparent. “I have a vision of what I want to offer my children and their families, and as the owner I am in complete control of that,” Eilersen says. “This is my life’s work and I have pride in what I do.”

Amanda Munday experienced a similar frustration. An ambitious tech industry administrator prior to having children, she found it difficult to get her career back on track after two maternity leaves. What Munday needed was an affordable way to work part-time in an office environment in downtown Toronto. When she couldn’t find that, she realized it was up to her to create it. Her solution was The Workaround, a unique, parent-friendly co-working space.

Located in a former bank on Toronto’s busy Danforth Ave., The Workaround offers working mothers and fathers dedicated office space that can be rented by the day, week or month – with professional childcare included on-site. Rates start at $85 per day. “There is an incredibly large, unmet need from parents who don’t want 9-to-5, five-days-a-week childcare,” says Munday. “As soon as I opened, I realized I had found a market that existing non-profit daycares were not able to service.”

A mom-friendly co-working space: The Workaround, founded in 2018 by Amanda Munday (pictured, centre) offers working parents in Toronto flexible access to office space with professional childcare onsite.

Within a year, Munday was expanding to keep up with demand. “January and February 2020 were my two best months,” she recalls. Then the pandemic hit, shutting her – and her clients – down. “The government told us we weren’t an essential business,” she says, her voice rising with emotion. “But many of my clients have since told me they’re no longer taking contracts or have quit their jobs because they can’t afford to work and look after their kids now. We were certainly essential to them.”

Ross, Eilersen and Munday offer stirring and convincing evidence of the role entrepreneurs play in solving problems ignored by the “primarily not-for-profit” childcare sector. None of them got into the childcare business because they wanted to make themselves rich. Instead, each found themselves creating a service they themselves needed and couldn’t find in the existing marketplace. Across Canada, childcare entrepreneurs like these women are crucial to ensuring their industry is responsive to parental needs, while at the same time boosting overall supply.

This vital contribution is not lost on Rebecca Schulz, Alberta’s Minister of Children’s Services. In a recent interview, Schulz explained how her department recently put out a call to childcare centres to participate in a provincial pilot program offering overnight service for parents who work shifts. “This is a huge change-maker for anyone who works in industry, nursing or are first responders,” Schulz says of the round-the-clock service, which began in February. Unsurprisingly, all 13 participants in the pilot project are for-profit operators. “This is exactly the sort of innovative childcare we need to meet the needs of parents,” crows Schulz. “I’m really grateful to the centres who have stepped up.” 

Political Obstacles

The Trudeau government’s plan to discriminate by ownership type faces a significant constitutional obstacle. Childcare is an area of exclusive provincial responsibility, and creating a national program will require that Ottawa sign agreements with all provinces to disburse its $30 billion promise. Yet not all provinces agree with the budget’s stated preference for the non-profit sector.

“Not interested in one-size-fits-all”: Rebecca Schulz, Alberta’s Minister of Children’s Services, says any childcare deal with Ottawa must respect provincial jurisdiction and recognize the major role played by the private sector in her province.

“We are not interested in a one-size-fits-all approach,” Schulz states firmly. A partisan preoccupation with how childcare centres are owned is unlikely to earn her signature on a deal with Ottawa. “We are looking for flexibility in this area of provincial jurisdiction,” Schulz says. “Over 60 percent of childcares, after-schools and pre-schools in our province are run by private operators. Many of them are female entrepreneurs. And they care a lot about delivering high-quality, accessible childcare.” Echoing Quebec’s historical experience with wealthy families filling up subsidized spaces, Schulz adds: “If we start picking and choosing what type of childcares can be part of this new system we will be creating have and have-not parents.”

Schulz also addresses academic claims that quality and standards vary across ownership models. “We don’t see a differentiation between types,” she notes. “We see quality in all different settings. There are excellent quality programs right across Alberta that are privately owned.” Plus, she finds the issue irrelevant to the people whose opinions really matter. “In my discussions with parents, ownership is not something that comes up very often,” she says. Parents are typically far more concerned about location, hours and staffing than with who owns the childcare centre they patronize, she notes. In many cases, having an owner on site improves parental satisfaction because it means issues can be dealt with immediately.

New Brunswick seems similarly supportive of its commercial childcare sector, which currently comprises 68 percent of all spaces. “Our partnerships with the private sector are one of our greatest assets and they have strengthened our childcare service model,” reports Flavio Nienow, spokesman for Dominic Cardy, the provincial minister for Education and Early Childhood Development in an email. Nienow notes that 86 percent of New Brunswick’s childcare centres meet its recently-developed quality-enhancement designation.

With six of ten provinces relying on the private sector to provide the majority of their childcare spaces, Ottawa seems unlikely to achieve a national consensus on restricting or denying funding to for-profit operators.

A Feminist Government Opposed to Female Entrepreneurs

Discriminating against female entrepreneurs: Childcare centre owner Eilersen points out the Trudeau government’s plan to favour non-profit childcares is at odds with its own Women Entrepreneurship Strategy.

In addition to providing $30 billion to build a “primarily” non-profit system, the federal budget also – and without irony – allocates $147 million to its Women Entrepreneurship Strategy. “Canadian women entrepreneurs are important to Canada’s economic success, but women face unique and systemic barriers to starting and growing a business,” the budget states.

Given its childcare policy, the Workaround’s Munday calls the budget’s claims to be helping female entrepreneurs “a joke.” And not the funny kind. “If I was considering opening a new childcare centre, I would be worried,” she says, noting that Ottawa “is putting a whole bunch of money into creating a system that could potentially push a lot of women out of entrepreneurship. I know I am unlikely to receive any funding from this $30 billion announcement.”

“Look how many privately-owned childcare centres are single-site, female-run operations,” argues Eilersen, a director of the Association of Day Care Operators of Ontario. She bristles at allegations that these women entrepreneurs are somehow enriching themselves at the expense of their children, or doing a poor job. “What they’ve done is create a job for themselves. I certainly don’t drive a Lamborghini. I pay myself a salary, and when I do make a profit, it gets put back into the operations.” If Ottawa succeeds in boosting the not-for-profit system at the expense of the private sector, she notes, it will have diminished the presence of female entrepreneurs right across the country. How’s that for creating systemic barriers?

The Necessity of the Private Sector

The most charitable view of the federal budget’s promise to “primarily” fund the not-for-profit childcare sector is that the phrase was included by the Trudeau government simply to pander to left-wing advocacy groups and academics who habitually fret about the private sector. If so, it’s a cheap shot that does a disservice to many hardworking female business owners. If, however, Ottawa intends to do more than just signal virtuously, then such a policy is not just rude, but deeply problematic.

Shutting out private sector childcare spaces will make it next to impossible for Ottawa to reach its stated goal of a 50 percent price reduction in fees by next year in provinces where for-profit operators constitute the sector’s majority. In other provinces, discrimination based on ownership type creates deliberate inequities that shortchange any parents who choose for-profit centres. Not only is this unfair, but it may exacerbate existing concerns over childcare quality and supply.

Watch for hazards: Any attempt to sideline the private sector in Ottawa’s childcare plan will leave parents and children worse off by denying them the innovation and growth that entrepreneurs provide.

As for the federal government’s plans to grow capacity nationwide, Quebec’s experience clearly demonstrates the difficulties of expanding a low-fee, high-demand childcare system without a dominant presence by the private sector. If Ottawa aims to follow the lessons of Quebec – rather than its mistakes – it should abandon its stated preference for non-profit delivery and encourage as many entrepreneurs as possible to enter the market.

Finally, and perhaps most importantly, any policy that discourages private-sector involvement in childcare will make the entire sector less innovative and flexible for parents who might want something other than unalterable, standardized, 9-to-5, five-day-a-week care for their children. As the careers of Ross, Eilersen and Munday make plain, the essential urge to improve childcare comes from entrepreneurial talent and drive. This is what creates greater diversity at meal time, more flexible hours, unique outdoor education opportunities and innovative co-working facilities that include professional childcare. Recall further that not one academically-sanctified, “high-quality,” non-profit childcare centre in Alberta cared enough about shift-working parents to participate in the province’s overnight pilot project. Identifying and responding to new opportunities and needs is what the private sector does best.

We should be celebrating our childcare entrepreneurs, not treating them like dirty diapers.

Peter Shawn Taylor is senior features editor at C2C Journal. He lives in Waterloo, Ontario.

Source of the main image: Shutterstock/ Maria Symchych

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