While the federal government has spent billions subsidizing child care and creating thousands of spaces, many families are still struggling to find a regulated child care space.
A recent op-ed by Parisa Mahboubi and Tingting Zhang from the C.D. Howe Institute, published in the Globe and Mail, which was based on a more comprehensive report by the authors, argues that the solution to insufficient child care supply is to move away from a single, overloaded model of care.
Instead, the authors recommend the federal government adopt a dual-track child care system similar to Quebec’s. Under this approach, households could access income-tested subsidized spaces or receive a refundable, income-tested tax credit to access private child care existing outside the subsidized system.
But a dual-track child care model, which was described as Quebec’s biggest policy mistake in 25 years by former Family Minister Mathieu Lacombe, would also be a mistake for the rest of Canada.
A dual-tier model risks degrading quality of care
Quebec moved towards a dual-tier child care model in 2003, when Jean Charest’s conservative-minded provincial Liberal government introduced a more generous tax credit for families who did not use Quebec’s low-fee subsidized child care. Around the same time, Charest’s government also lifted a moratorium on the expansion of for-profit child care to boost child care supply.
These policy moves attracted for-profit operators seeking to provide child care outside of the province’s low-fee subsidized system, which is subject to greater quality regulation and performance monitoring. This effectively undermined the objective of previous Parti Québécois governments to make Centres de la petite enfance (CPEs), which are community-based and parent-controlled, the foundation of the new subsidized system.
The expansion of for-profit providers matters because there is substantial evidence that for-profit child care operators provide lower-quality care than their public and non-profit counterparts. As of 2024, 59 percent of unsubsidized centres, many of whom are for-profit, failed the educational quality evaluation conducted by Quebec’s Ministry of Families, compared to 21 percent of CPEs.
According to the Auditor General, Guylaine Leclerc, the high failure rates among non-CPE centres were partly attributable to the absence of qualified educators. This likely reflects such centres being unable or unwilling to pay the wages necessary to attract and retain qualified staff.
Providing parents with a tax credit that can be used at non-subsidized centres may boost supply quickly, but it also risks encouraging the proliferation of lower-quality for-profit operators who may seek to minimize operating costs to pocket a larger profit at the expense of quality of care.
Expansion through tax credits could result in less, not more, inclusive care
Another issue raised in Mahboubi and Zhang’s op-ed is the severe shortage of spaces for families who work outside standard office hours.
Fewer than 2 percent of licensed centres offer evening or weekend care. This is also an equity issue considering that low-income, single parent, racialized and Indigenous households are more likely to work non-standard hours.
A tax credit for use towards unsubsidized child care, however, would do little to address this particular problem.
The for-profit operators that would come to dominate non-subsidized expansion would have little financial incentive to provide care during evenings, overnight, or weekends because doing so is more expensive. Staff must be paid higher wages for non-standard hours, increasing operating costs that would result in higher fees many families could not afford to pay.
While Mahboubi and Zhang do call for a number of necessary measures that would better enable subsidized operators to provide non-standard hour care (including improving educator wages) in their full report, they do not mention such measures in their op-ed.
Furthermore, increased funding towards subsidized care requires increased political will, which is at risk of diminishing over time if governments establish a dual-tier income-tested child care model.
A dual-tier income-tested model risks slowly degrading public support for subsidized child care
The deeper problem with an income-tested two-tier system is that it risks eroding widespread public support for a national child care system.
If only low-income Canadians can access subsidized child care for a low fee, public support for maintaining and expanding the subsidized system could gradually erode as middle- and higher-income families desert the program for unsubsidized care, including private and unlicensed care.
Such a program may then become politically vulnerable as politicians and government seek to deprioritize funding from a system that only low-income Canadians have a strong interest in maintaining.
As public investment declines, both the quality and accessibility of subsidized care could suffer.
Conversely, a national child care program that maintains a low set fee for all families irrespective of income is more likely to generate broad-based support across income groups.
How to support inclusive space expansion
While a dual-tier child care model is not the answer to solving the child care supply shortage, that does not mean the status quo is sufficient.
Federal, provincial, and territorial governments need to allocate more funding to the system, particularly given that provinces, such as Ontario, are overly relying on federal investments to support subsidized child care expansion.
This additional funding should be used to ensure that funding reflects centres’ actual operating costs, including improving educator wages to attract and retain qualified staff. A stable, adequately compensated workforce is the lynchpin to sustaining and expanding access to child care across the country.
Governments should also consider temporarily holding fees at their current level to direct more funding towards prioritizing expansion, particularly in lower-income neighborhoods.
During this expansion period, governments would continue to provide subsidies for low-income households to ensure affordability does not become a barrier for this group.
Given that fees have already been substantially reduced, temporarily pausing further fee reductions while governments prioritize expansion could help address the significant gap between child care supply and demand.
Finally, to ensure new child care reflects families’ needs, including the need for evening, overnight, and weekend care, municipalities across the country should be empowered to play a bigger role in planning and directly operating centers based on local demand.
We cannot sacrifice accessibility for quality
Quebec’s experience utilizing a dual-tier child care model offers an important lesson for the rest of Canada: how we transition to a universal child care system matters enormously.
While federal and provincial governments need to address the very real shortage of child care spaces, expanding child care supply through a parallel, market-based system risks reproducing the inequalities and quality issues that a universal child care system is supposed to address.
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