The destruction of private child-care businesses is a national phenomenon.
Canada has a national crisis of child care.
B eware whenever the government says it will intervene in some area of the economy to increase affordability or ensure quality. It means the government is about to destroy a market. Health care, rent control, labor relations, or anything else — the story is always the same. Canadians are now suffering the destruction of yet another market through the federal government’s takeover of child-care services. In 2021, the federal Liberal government committed $30 billion over five years, then $9.2 billion annually after that, to establish national $10-per-day child care. Researchers with the think tank Cardus estimate provincial governments will need to kick in at least another $4.2 billion (and possibly much more than that on top) to help achieve the Liberals’ child-care ambitions. Two years in, it’s already shaping up to be a massive disaster.
The Liberals have said their multi-billion-dollar program will improve affordability, but that is absurd. Affordability is about reducing costs. The government can shift costs between people, try to hide costs, and appear to reduce costs by reducing the quality of a good or service (or, as is done to an extraordinary degree in Canada’s “universal” health-care system, denying service altogether), but none of these efforts actually reduce costs. In order to properly reduce costs, the government must deliver efficiency improvements.
I am reminded of John Cochrane’s assessment of so-called Obamacare. Let us look, he suggested, at the historical record of government control, new regulation, price controls, and top-down planning leading to improved efficiency, dramatic cost reductions, improvements in quality, and rapid technical innovation. Listing examples of this, Cochrane noted, is an exercise that amounts to a moment of silence. “When has this ever worked?” he asked. “The post office? Amtrak? The Department of Motor Vehicles? Road construction? Military procurement? The TSA? Regulated utilities? European state-run industries? The last 20 or so medical ‘cost control’ ideas? The best example and worst performer of all. . . wait for it. . . public schools?” In fact, government control has worked nowhere. “It simply has not happened,” Cochrane concluded. “Government-imposed efficiency is, to put it charitably, a hope without historical precedent.”
Canada’s government takeover of child care is no exception; it has imposed not efficiency but disaster. On this there is widespread consensus, and no region of the country is exempt. As Statistics Canada reports, “a higher proportion of parents report difficulty finding child care in 2023” versus before the federal program was implemented. In Toronto, there is said to be a “child care space crisis,” as the city is on track to fall well short of its targets and is already facing shortages of workers for the child-care spots that do exist. In Vancouver, a senior city planner says that, with respect to child care, “it’s a desert everywhere,” and already the shortage is nearly 15,000 spaces. In Kamloops, another city in British Columbia, a local media outlet declares there is a “provincial child care crisis.” The words that come up often in news reports on child care across the country are “shortage” and “crisis.” Even the Canadian Union of Public Employees, which is gobbling up additional taxpayers’ funds as a result of the program, says there is a “nationwide child care crisis.”
The federal government has individual agreements with each province, but since the shortages and crises are taking place in every province, a reasonable person might conclude the national program, not local implementation, is the problem. A particularly nefarious aspect of the federal program is that it does not simply view government as one of the players in the child-care space, which would be bad enough, but that it looks to impose an effective government monopoly by destroying private for-profit centers.
For example, in announcing the federal deal with Nova Scotia two years ago, a news release from the prime minister’s office said the agreement “will expand not-for-profit and public delivery of early learning and child care with the goal of moving to a fully not-for-profit and publicly managed system. The system will be supported by a new provincial organization that will manage all regulated child care in the province.”
What have been the results? Paige MacPherson and Alex Whalen with the free-market Fraser Institute summarize the crisis, writing that, “two years in, daycare providers say waitlists are longer than ever” and “the government’s plan is failing.” The program has raised the cost of living by making government more expensive, and by directing government funding toward government-regulated operators, it has created waitlists “while simultaneously strangling independent daycare operators who are now part of the $10 per-day program, forbidding them from opening new spaces because they are for-profit.” The view from the other side of the spectrum is no more encouraging: The socialist Canadian Centre for Policy Alternatives reports 47 percent of pre-kindergarten children in Nova Scotia live in a “child care desert.”
The destruction of private child-care businesses is a national phenomenon, not limited to Nova Scotia. In Alberta, about 70 percent of the market is served by for-profit operators, but the head of the Association of Alberta Childcare Entrepreneurs tells the Canadian Senate that, with the government’s funding model which discriminates against the for-profit centers, “you are limiting choice, you are limiting options, and you are bankrupting businesses like my own.” That is, the government is wiping out the investments of child-care entrepreneurs, the vast majority of whom are female and many of whom are mothers. How ironic for a Liberal government that tirelessly brands itself as feminist and considers its national child-care program a cornerstone of its feminist agenda.
The Alberta operator’s statement fell on deaf ears; her concerns of diminishing parental choice were waved away by a Liberal-appointed senator as “red herrings.” Of course parental choice is of no concern: The central planners cannot imagine that anyone might possibly prefer something other than what the central planners choose for them. Even when that choice is less flexibility, less efficiency, and billions of dollars in excess costs, and leads to the destruction of a sector vital for many families with young children.