CCPA report confirms BC’s new investments in child care affordability are urgently needed

Last year, the BC government made a landmark investment to begin addressing the affordability crisis in child care. A new report released by CCPA this week shows just how urgently needed those measures were (and continue to be).

The report, Developmental Milestones: Child care fees in Canada’s big cities 2018, shares results from the CCPA’s annual survey of child care fees across the country. The survey—which was conducted in the spring and summer of 2018—found that Metro Vancouver municipalities were among Canada’s most expensive places for child care last year (alongside Toronto and its suburbs), especially for children younger than three years old.

The 2018 survey was conducted too early to capture the effects of BC’s new child care fee reduction, but it provides valuable baseline data to measure the success of the government’s child care affordability measures going forward (more on the details of those measures below).

Canada-wide trends in child care fees

The Developmental Milestones report provides a snapshot of median child care fees in Canada’s largest cities based on the CCPA’s annual survey of providers (the median fee is at the mid-point in the cost range of child care fees being charged). The results reveal three key Canada-wide trends:

1. There are staggering disparities in child care fees across the country;
2. Child care fees in most cities continue to increase faster than inflation; and
3. Public policy matters for affordability: child care fees are much higher in provinces that leave child care to market forces than in provinces that have made public investments to limit fees.

The lowest parent fees in 2018 were found in cities in Quebec, where public investment keeps out-of-pocket fees low and the typical family paid just under $200/month. That’s seven times less than what Vancouver families with infants or toddlers had to shell out, and nearly five times less than what Vancouver families with preschool aged children were charged.

Fees in Surrey, Burnaby and Richmond—the other BC cities included in the report—were only slightly lower than those in Vancouver.

In addition to Quebec, Manitoba and PEI have also prioritized affordability for families and provide significant operational funding for child care facilities in exchange for setting maximum fees. This is why child care fees in Winnipeg and Charlottetown were considerably cheaper than in BC cities.

The good news for Canadian families is that more provincial governments are taking significant measures to reduce child care costs, with BC, Alberta and Newfoundland and Labrador introducing new programs to improve affordability. Although not all of the new affordability measures were fully implemented in time for the CCPA survey, the initial results are encouraging. For the first time since the survey was initially conducted five years ago, child care fees are going down in some cities—and we can expect to see further reductions next year.

BC’s new child care affordability measures

Fee reduction program

While other provinces concerned about high child care fees have generally tended to set maximum fees for publicly funded spaces (for example, in Quebec, Manitoba and PEI), BC took a different approach. Instead of setting caps on fees, BC’s fee reduction initiative reduces fees by set amounts (from whatever the fees were previously). All licensed child care providers that receive provincial operating funding are eligible to apply for additional public funds to support fee reductions for parents. Despite some initial hiccups around the program launch in the spring, the vast majority of licensed child care providers in BC have now opted in (full list here).

The fee reduction program enables child care providers to lower fees by $350/month for infants and toddlers and $100/month for children aged 3–5 in full-time centre-based care (family-based providers and part-time child care received slightly smaller monthly reductions).

The savings for parents are enormous. A fee reduction of $350/month for infants and toddlers translates into an extra $4,200/year available for parents to spend on other necessities or put into savings. In BC’s four biggest cities, this represents a 25% to 30% reduction of the median child care bill.

Families using licensed home-based child care providers are also seeing significant savings—$200/month for infant and toddler care, which translates to a 15% to 20% drop in the median child care bill in Vancouver, Burnaby, Surrey and Richmond.

Child care for children aged 3–5 is considerably less expensive than for infants and toddlers, which is why the fee reduction saving is lower.

Even with the much needed fee reduction program, BC parents face out-of-pocket child care fees that are five times higher than those in Quebec cities for infants and toddlers, and four times higher for preschool aged children. The good news is that the BC government is exploring the possibility of truly low-cost child care with a pilot project at 53 sites, which covers 2,500 spaces where parents only pay $200/month (about $10/day) and families with incomes below $51,000 receive free child care.

Affordable Child Care Benefit

In addition to the fee reduction program, the BC government is assisting lower- and modest-income parents with the new income-tested Affordable Child Care Benefit, which replaced the long-frozen provincial child care subsidy last September.

The new benefit offers up to $1,250/month for infant care for families with incomes below $111,000 (the maximum benefit amount is available to those with incomes below $45,000). The benefit amounts are considerably lower for older children (similar to the previous subsidy maximums) but the 2018 Provincial Budget promised to increase them in 2019. In addition, because the income threshold to receive the benefit increased to $111,000, many families who were previously considered too well-off for subsidies will now qualify.

The new benefit will not be captured in child care fee surveys like the CCPA’s, but it will help many parents struggling to afford child care.

What the new measures mean for out-of-pocket child care costs in BC

While we have to wait until next year’s CCPA survey to capture the full impact of the program on fees in BC’s largest cities, we anticipate significant declines.

In the meantime, we can estimate the combined impact of the subsidy and fee reduction on the net out-of-pocket cost of child care for different types of families.

BC’s new affordability measures have virtually eliminated out-of-pocket costs for lower-income families with infants and toddlers in licensed child care, and generated significant savings for middle-income parents, as shown in the table below. Savings have been smaller for parents with preschool aged children (three to five years old) but they are much needed after years of child care fees rising faster than inflation.

A survey of Vancouver child care centre fees done by the Westcoast Child Care Resource Centre in late 2018 confirms that the high BC child care fees documented in the CCPA’s report show what parents were facing before the fee reduction program was implemented. The Westcoast survey finds that after accounting for the fee reduction the median monthly bill for centre-based child care in Vancouver was $1,057 for infants, $1,054 for toddlers and $914 for children 3–5.

Both the CCPA and the Westcoast Child Care Resource Centre reports reveal many child care providers increased their fees early in 2018, before the fee reduction came into effect. Which means that for many parents, the fee reduction was partially or wholly offset by annual cost increases. This is an important reminder that BC’s decision to fund a fee reduction—rather than setting across-the-board maximum fees—risks allowing runaway price increases to erode the savings for parents, despite significant public investment.

Similarly, providing generous child care subsidies without keeping a lid on fee increases risks turning the subsidy program into an expensive transfer of public funds to providers without any accountability levers. The $10aDay Campaign outlines the risks of BC’s current approach to affordability in a recent policy brief.

Laying the foundation of a universal, public, affordable child care system in BC

BC’s new investments in child care extend beyond improving affordability. The province is making capital grants available to create 22,000 new licensed child care spaces by 2020/21, with additional funds budgeted to maintain and upgrade existing spaces. BC has a new child care recruitment and retention strategy that includes investments in training and generous bursaries, combined with funds for wage increases to support early learning professionals. And there are additional investments to improve inclusion for children with disabilities and to support culturally based Indigenous early education and care.

Some of these investments are supported by the federal multilateral early learning and child care framework, but notably, the BC government has invested 6.5 times more than the federal funds ($1 billion vs $153 million over the same three years).

Importantly, these investments represent the first steps in transforming the existing patchwork of child care services in BC into a universal, affordable, high quality child care and early learning system—and that’s something to celebrate. I’m hopeful that BC Budget 2019 will maintain the momentum on building this system for children and families across BC.

Topics: Children & youth, Provincial budget & finance