Question Period Note: PARLIAMENTARY BUDGET OFFICER REPORT ON EARLY LEARNING AND CHILD CARE COSTING

Why is the Parliamentary Budget Officer showing that the real cost of the Government’s child care plan is a billion dollars more than expected?

• The Government of Canada remains committed to increasing access to affordable, high-quality, flexible and inclusive child care for families across the country, no matter where they live.

• The Department is reviewing closely the findings included in the Parliamentary Budget Officer’s report. We are pleased to see that the report validates and puts a price tag on the economic and fiscal benefits of child care, adding to the consensus on this topic.

• In Budget 2021, the Government of Canada committed to new investments of over $27 billion over five years to build a Canada-wide early learning and child care system with provinces and territories.

• This is in addition to federal funding committed in Budgets 2016 and 2017 totalling $7.5 billion over 11 years, which the 2020 Fall Economic Statement made permanent and ongoing starting in fiscal year 2027-2028.

• These investments result in transfers to the provinces and territories totalling nearly $30 billion over five years, with $8.4 billion ongoing as of 2026-2027. This does not include funding for Indigenous Early Learning and Child Care.

• We understand the Parliamentary Budget Officer limited their examination to funding provided in Budget 2021. The Department will continue to work with the Parliamentary Budget Officer to ensure a comprehensive understanding of the funding being made available to the provinces and territories and the scope of the existing bilateral agreements.

If pressed on interaction between the Canada Child Benefit and the Canada-wide Early Learning and Child Care system
• The Canada Child Benefit has been increasing the incomes of families with children since its inception in 2016. The Government began indexing the Benefit, starting in July 2018, to keep pace with the cost of living. This will ensure that the Canada Child Benefit will continue to help Canadian families over the long term.

• Interactions between changes in income and the amount of Canada Child Benefit received are consistent with the intent of the Canada Child Benefit to target support to those who need it most. For example, any family with net income below $32,028 in 2020 will receive the maximum CCB entitlements for the 2021-22 benefit year.

BACKGROUND

Early Learning and Child Care
Budgets 2016 and 2017 provided federal investments in early learning and child care totalling $7.5 billion over 11 years to support and create more high-quality, affordable child care across the country, and to strengthen Indigenous early learning and child care.

The 2020 Fall Economic Statement announced key early investments to lay the groundwork for a Canada-wide child care system, in partnership with provinces, territories and Indigenous peoples, including making the early learning and child care funding announced in Budget 2017 permanent at 2027-2028 levels.

This results in transfers to the provinces and territories totalling nearly $30 billion over five years, with $8.4 billion ongoing as of 2026-2027. Note that this does not include funding for Indigenous Early Learning and Child Care.
The goal is to bring fees for regulated child care down to $10 per day on average within the next five years. By the end of 2022, the Government is aiming to reduce average fees for regulated early learning and child care by 50 per cent to make it more affordable for families. These targets would apply everywhere outside of Quebec, where prices are already affordable through its well-established system.

The Government of Canada is committed to building 250,000 new child care spaces and hiring 40,000 more early childhood educators by the end of fiscal year 2025-2026.

Transfers to provinces and territories,
2021-2022 to 2025-2026,
5-year total and ongoing P/T Transfers* ($ Billions)
2021/22 2022/23 2023/24 2024/25 2025/26 5-year total
(2021/22 to 2025/26) Ongoing
Budget 2017 0.40 0.53 0.57 0.57 0.57 2.63 0.64
Early Childhood Workforce Allocation 0.42 - - - - 0.42
Canada-Wide Agreements under Budget 2021 2.95 4.50 5.54 6.50 7.72 27.21 7.72
Total 3.77 5.03 6.11 7.07 8.29 30.26 8.36
*Excludes IELCC funding.
Canada Child Benefit

In July 2016, the Canada Child Benefit (CCB) replaced three different previous benefits—the Canada Child Tax Benefit including the National Child Benefit Supplement, and the Universal Child Care Benefit—with one simplified, fair and tax-free monthly child benefit. The Government began indexing the CCB, starting in July 2018, to keep pace with the cost of living.

The CCB is income tested (based on family net income from the previous tax year), so as family incomes rise, the amount of the CCB payment is reduced once income is above $32,028. Any reductions in CCB as a result of an increase in family net income are aligned with the intent of the CCB, which targets support to those families that need it most.

The Parliamentary Budget Officer’s report notes that savings may be achieved to Government if the Canada-wide system on early learning and child care increases family net incomes by reducing Child Care Expense Deduction claims. Given that the Canada Child Benefit reduces gradually as a percentage of income, decreases in child care costs may result in modest changes to payments in cases where parents report a reduction in their Child Care Expense Deduction claim.

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