Canada is one step closer to a national child-care system after the federal government signed a deal with Ontario on Monday, ending months of protracted negotiations.

Ontario was the last jurisdiction to sign on.

The province has long said it wanted the arrangement to include both for-profit and non-profit daycares, whereas Ottawa favoured the latter. Ontario Premier Doug Ford also said he wanted assurances that the deal wouldn’t lapse when the initial five-year funding runs out.

“I appreciate the federal government allowing us the flexibility and the sustainability,” Ford said Monday. “We have the sustainability. We have the flexibility, and we’re good to go.”

Ottawa started negotiating with provinces and territories in April 2021 after Finance Minister Chrystia Freeland included the $27-billion plan in her first budget. British Columbia was the first province to sign in July 2021.

Ontario gets $10.2 billion from the federal government until 2025-26, and $2.9 billion more in Year 6, according to a document provided by the province.

Because it signed late, Ontario can spend the $10.2 billion over the next four years, as opposed to five, as other provinces must do.

The 2021 federal budget committed at least $9.2 billion in annual funding after 2025-26. Ontario would be entitled to about $3.4 billion of the ongoing money, based on the fact that 38 per cent of Canadian children under 12 live in Ontario.

However, some of the $9.2 billion in ongoing funds won’t be directly transferred to provinces and territories. Instead, some will be used for Indigenous child care.

“The additional money that the Ontario government is referring to beyond the $10.2 billion would be Ontario’s share of the $9.2 billion that the 2021 federal budget committed to on an ongoing basis,” said Morna Ballantyne, executive director of Child Care Now, a national advocacy group.

Said Armine Yalnizyan, an economist with the Atkinson Foundation: “It’s not one penny more than what they were going to get if they’d signed eight months ago.”

The deal means Ontario families will soon be getting money back. Starting in May, the fees paid by families in the province with children under 5 will be cut by 25 per cent, retroactive to April 1. Fees will be cut a further 25 per cent at the end of the year.

Rebates to parents in Nova Scotia are retroactive to the start of 2021.

A third fee reduction will come in September 2024, and the “$10-a-day” promise will be fulfilled by September 2025.

Ontario is also keeping its child-care tax credit, whereby parents can claim up to 75 per cent of eligible child-care costs.

The province will now get to work enrolling 5,000 licensed daycare providers in the program by September. It estimates the deal will create 71,000 spaces for kids 5 and under, on top of 15,000 created since 2019.

New spaces will include a mix of for-profit and non-profit options, the province said.

The province will also “improve compensation” of all early-childhood educators working with children age 12 and under.

The province hasn’t made a wage grid public, as other provinces have, but Ford mentioned it to reporters on Monday.

“Nothing’s carved in stone,” he said. “We’re going to work collaboratively with the stakeholders. … People have to be treated fairly.”

The union representing early-childhood workers has been demanding a starting wage of $25/hour. Kate Bezanson, a professor of social work at Brock University, said she was “heartened” to see Ford recognize the importance of the child-care workforce, and hopes it’s a sign of good things to come.

The deal also has a three-year review clause to help “reconcile the actual costs of the new national child-care plan with funding,” according to a document provided by the province.

Other provinces have a similar requirement after the second year. Ontario’s applies after the third year because it signed the deal late.

The review mechanisms are important, because they allow the federal government to measure how much a province has expanded its child-care program, Ballantyne said.

“Part of the review process involves the province or territory submitting a new action plan for the rest of the term of the agreement,” she said.

Ontario families pay some of the most expensive child-care fees in the country, said David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives.

According to a report he wrote in 2021, seven cities in the Greater Toronto Area were in the Top 10 most expensive places for daycare in Canada. The median cost of an infant’s full-day care in Toronto is $17,000 to $19,000.

The $27 billion dedicated to the national program might not be enough, however, according to a recent report by the parliamentary budget officer (PBO), which says: The money would only cover the first two years; the cost to fully implement the plan might be closer to $28.3 billion; and, while Canada will need nearly 679,000 daycare spaces in 2026, current funds would cover just 497,000.

Ontario makes deal with Ottawa for subsidized child care

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