Canada’s Child-Care Plan Faces Equity Challenges Five Years In

Canada’s ambitious child-care initiative, the Canada-Wide Early Learning and Child Care (CWELCC) program, intended to provide affordable care for families, is now facing significant equity challenges. Five years into the plan aimed at establishing $10-a-day child care, the affordability improvements have primarily benefited those fortunate enough to secure spaces. Families that need care the most are increasingly being excluded, highlighting the urgent need for government intervention.

Both the Auditor General of Canada and the Auditor General of Ontario have raised alarms about the CWELCC program, noting that while it has successfully reduced fees, it is failing to meet commitments related to inclusion, quality, and equitable access. The program was envisioned as a nation-building project that would provide every child, irrespective of their background, with an equal opportunity for a strong start in life. Yet, as the current situation demonstrates, affordability without equity is a hollow victory.

The decline in subsidy usage among low-income families is particularly concerning. Traditionally, these families have qualified for government subsidies, which can cover the entire cost of care. However, reports indicate a sharp decrease in the number of children receiving subsidies, with Ontario’s auditor general noting a 31 percent decline. In Toronto alone, subsidy usage has dropped below 80 percent. As fees decrease, demand for low-cost care increases, but the number of available spaces has not kept pace. This creates intense competition, with more affluent families, who often have better networks and resources, becoming prioritized for available spots.

This phenomenon aligns with the well-documented Matthew effect, where those with advantages gain even more. Compounding the issue, CWELCC-funded programs are not required to enroll families receiving subsidies. By mid-2025, 30 percent of Toronto’s CWELCC programs had no contract with the city to serve subsidized children. Meanwhile, over 16,500 children in Toronto are waitlisted for spaces, and nearly one in three publicly funded programs deny them access.

Funding structures further entrench these inequities. The fee subsidies come from provincial budgets, while CWELCC affordability funding is federally sourced. When families stop using subsidies due to a lack of available spaces or restrictive eligibility requirements, provinces save money while still benefiting politically from federal investments that enhance the appearance of affordability. Some jurisdictions, including Saskatchewan, Alberta, and the Northwest Territories, have even eliminated subsidy programs altogether.

On November 10, 2023, Ontario announced a one-year extension of its federal child-care deal, maintaining current funding terms while a more comprehensive agreement is negotiated. While this extension preserves the current fee of approximately $22 a day, it fails to address the underlying inequities embedded within the system. The CWELCC framework is based on five pillars: affordability, access, quality, inclusion, and data accountability. So far, only affordability has seen significant progress.

Even if new funding becomes available, simply injecting money into the system will not resolve the issues at hand. Federal and provincial governments control funding, but regional policymakers in Ontario already possess the authority and responsibility to act. They can allocate subsidies, set local priorities, and conduct annual program reviews. With effective leadership, they could mandate that all CWELCC-funded programs—both for-profit and non-profit—accept subsidized children as a condition for continued funding.

Equity cannot be achieved by allowing for-profit operators unregulated growth. In several provinces, for-profit expansion has surpassed the limits established in child-care agreements. These operators typically expand into wealthier communities where profits are greatest, leading to rapid growth in affluent areas while stagnating in regions that need affordable, high-quality care. Ontario’s auditor general has identified this trend, finding that nearly half of all new licensed spaces were created in for-profit centres, despite commitments to prioritize non-profit and public expansion.

The current funding extension provides Ontario with an opportunity to reassess its approach. By maintaining the fee at $22 daily instead of reducing it to the promised $12, approximately $100 million in Toronto could be freed up. These funds could be redirected to expand care in low-income neighborhoods, enhance program quality, stabilize the educator workforce, and curb for-profit expansion.

Contrary to political fears, such adjustments would not impose undue hardship on middle-income families. After applying existing federal and provincial tax benefits, the median Ontario family with two children in care pays around $15 per child per day, a figure close to the proposed $12 target. The greater challenge lies with families who are still unable to find any available spaces.

Expanding subsidies alone will not rectify structural inequalities. Under current regulations, parents must demonstrate employment, educational engagement, or meet specific “activity” requirements to qualify for subsidies. Such conditions exclude children whose parents are not actively participating in the labor market—those who could benefit the most from early education. To create a more equitable system, these rules should be eliminated.

Looking ahead, Canada should aim for a universal, income-based model for child care, akin to the Canada Child Benefit, where all children qualify for early learning and fees are scaled according to family income. This approach would replace the existing complex patchwork of subsidies and flat fees with a simpler and fairer system.

The next phase of Canada’s early learning and child-care initiative must prioritize equity as a core measure of success. While Canada has made strides in making child care affordable, the focus must now shift towards ensuring that this affordability is equitable for all families.