Last week for-profit child care operators in Alberta and Ontario participated in a week of rolling closures to protest the Canada-Wide Early Learning and Child Care (CWELCC) agreement, otherwise known as $10-per-day child care.
For-profit operators claim that CWELCC undermines quality child care programming and undermines families’ right to choose their preferred childcare provider. The truth is that operators are concerned about their ability to generate a profit using taxpayer dollars.
The for-profit lobby is pushing a series of myths in order to sabotage $10-per-day child care.
Does CWELCC undermine families’ ability to choose?
The short answer is no. CWELCC simply limits the expansion of lower-quality and higher-cost for-profit operators.
One of the key demands of the Alberta Association of Childcare Entrepreneurs (AACE), an advocacy group for for-profit operators that is claiming to spearhead a national campaign, is to shift childcare away from the federal government and ‘federal ideology’. The AACE takes issue with the federal government’s funding condition that requires that no more than 30 percent of CWELCC child care providers can be for-profit. This condition effectively stems the expansion of for-profit operators across most of the country.
The AACE claims that this limits families’ right to choose their preferred provider based on who is allowed to participate in CWELCC. Instead of limiting for-profit expansion, the AACE states that the government should be giving money directly to parents through subsidies or vouchers and let parents decide how to use that money.
While supporting parents’ choice sounds like a noble goal, there is good evidence that the federal government was wise to limit for-profit expansion. Research from multiple studies demonstrates that for-profit child care operators provide lower-quality care than non-profit and public child care centres, on average. This is because the primary objective of any for-profit enterprise is to make profit for its owners and shareholders. In childcare, high profits come from hiring less qualified staff and paying lower wages, resulting in lower-quality and less safe care.
Quebec provides an illuminating example of what happens to quality when private for-profit operators are allowed to expand to try and meet demand. Together, subsidized and non-subsidized private daycare operators were the subject of 77 percent of all complaints, despite making up just 40 percent of the childcare network. Private daycares were also significantly more likely to fail an educational quality evaluation based on the absence of qualified educators, the presence of expired medications, improperly stored toxic cleaning products, and “problems” concerning conducting staff background checks.
Simultaneously, for-profit centres will often raise fees to generate a higher profit, providing more expensive care than non-profit and public providers. A study conducted by the Canadian Centre for Policy Alternatives demonstrates that for-profit centres charged from 10 to 60 percent more than non-profit operators in 19 of the 25 cities across Canada they had data for.
This is one reason why replacing a public system with vouchers is a bad idea because there is nothing preventing for-profit operators from raising their fees in response to the rollout of a voucher program. Knowing families are receiving a cheque every month for childcare, for-profit operators can easily raise their prices to try and capture a larger profit if there are no enforceable caps on childcare fees.
Does a cost-based funding model undermine program viability and quality?
The reality is a cost-based funding model is needed to fund the real costs of child care and ensure the responsible use of public money.
In Ontario, as many as fifty childcare centres in the GTA closed last Tuesday to protest recent changes to Ontario’s funding model. According to Jacky Sheppard, the spokesperson for Private Operators Group, which represents some for-profit childcare operators in Ontario, the new funding model puts for-profit operators at risk of closure and undermines operators’ ability to provide quality programming.
For context, the province announced that it would be switching to a cost-based funding model, moving away from a revenue replacement model, for operators signed onto CWELCC beginning January 1, 2025. While the new funding model is still imperfect, namely because funds have not been allocated to improve the wages and overall compensation of staff, it is an improvement from the former model. This is because it reimburses childcare centres based on their operational costs as this may vary by region and the age ranges of children in care, rather than based on a portion of the fee centres would otherwise be collecting from families. As a result, this funding model is intended to provide operators with the funds needed to meet the real costs of running a childcare centre, all while giving operators an approximately 8 percent surplus that can be reinvested back into the centre or taken as a profit.
For-profit operators are protesting this, claiming that a cost-based funding model undermines the quality of care their centres can provide. Some claim that the expenses that make their programs unique, including nature-based programming and higher staff to children ratios, are not eligible based on the requirements set out in the cost-based funding formula. For-profit operators are also complaining about having to seek permission from the municipality to be reimbursed for necessary expenses, such as replacing a broken fridge.
“We’re now being controlled completely on what we spend and how we spend it,” noted Sheppard.
Although this claim may initially sound legitimate, we know it to be misleading because we already know for-profit operators are not reinvesting their revenue to support program quality, especially as this relates to investing in qualified staff.
Registered Early Childhood Educators (RECEs) employed in a for-profit center are paid $2.54-per-hour less than RECEs working in non-profit centers and $7.38-per-hour less than RECEs working in a municipally-run center. These workers are also less than half as likely to have some form of retirement benefit compared to workers employed in a non-profit centre. Staff employed by for-profit childcare centres are more dissatisfied with their work compared to staff employed by non-profit and public operators, which points to issues in their work environment that could reflect the quality of care children are receiving.
What for-profit operators are not admitting is that a cost-based funding model with a controlled rate of profit of 8 percent prevents operators from siphoning off a larger share of public money and diverting it towards profits. This was easier under the former funding model when for-profit operators were not subject to profit caps and experienced less oversight from municipalities in Ontario.
Genevieve Lemaire, press secretary for the federal Minister of Families, Jenna Sudds, clarifies this, stating that protesting for-profit operators are demanding 20 percent profit margins. “These for-profit operators are closing their doors on families because they want 1 out of every 5 dollars that’s supposed to go towards better care for kids, better wages for educators, and more spaces for parents, to end up in their pockets as private profits.”
We can’t trust for-profit operators to invest in staff and children
As for-profit operators try to cast themselves as conscientious entrepreneurs whose business interests align with their objective of providing high-quality care for children in the media, we know that the evidence tells a different story.
Rather than acquiesce to their demands, the government needs to continue to restrict for-profit expansion in the early learning sector to limit the expansion of lower-quality providers. Governments also need to more generously fund a cost-based model that allows non-profit and public centres to compensate their staff properly to support retention in the sector, which is needed for childcare expansion.
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