Better childcare key to growth: C.D. Howe

By James Langton | March 30, 2021 | Last updated on March 30, 2021
2 min read
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Given the importance of improved access to childcare in cementing the economic recovery, a new report from the C.D. Howe Institute argues for reforming existing programs, rather than trying to craft a whole new regime.

A report from the Toronto-based think tank said that improved access to affordable childcare will be critical in determining the extent to which parents — particularly mothers, who’ve been harder hit by the disruption inflicted by the Covid-19 pandemic — can return to their pre-pandemic levels of employment and wages.

“That matters because growth in family income during the ’80s and ’90s came largely from rising female labour force participation rates and, since then, largely from rising average female wages,” the report said.

While some have advocated for “big bang” national reforms to childcare, the C.D. Howe report was skeptical of that approach.

“We aren’t convinced that giving a new and expanded role to the federal government will be the panacea some hope for,” the report said. “A resilient and inclusive network of childcare infrastructure across Canada must respect jurisdictional roles in a decentralized federation like Canada.”

Instead of shifting the responsibility of affordable care onto the feds, the report said that an enhanced role for the federal government should focus on “where it can do the most good, rather than try to do too much, and do it badly.”

The report recommended enhancing access to childcare with a series of measures designed to increase the supply of affordable spaces, along with a more supportive tax incentive structure.

Specifically, the report called for replacing the existing tax deduction for child care — which it called a “regressive tax deduction that reinforces patriarchal gender roles for parents” — with a refundable tax credit that is “more generous” and progressive.

The report also recommended that the provinces increase grants to licensed childcare providers to boost the availability of affordable spaces, and that all federal spending on childcare “be consolidated into a single, dedicated and permanent transfer to provinces.”

“This incremental approach — building on what exists — should not mask the importance or challenge of getting childcare right,” the report said.

Access to childcare will “play an oversized role” in the post-pandemic recovery, the report said.

“We do not have the luxury of time to reinvent early learning and care from the ground up or to waste months, if not years, renegotiating the division of responsibilities in Canadian federalism,” the report argued. “We need immediate attention and incremental but aggressive reforms to get this right, for women, for families and for Canada as we emerge from the pandemic.”

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James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.