This is from a larger publication, Alternative federal budget 2026-27: Bridge to independence
Introduction
Canada’s 2021 federal budget committed to a new social program to ensure “that all families have access to high-quality, affordable and flexible early learning and child care no matter where they live.” Canada’s first federal child care legislation became law on March 19, 2024.
April 1, 2026, marked the beginning of the second five-year phase of building the Canada-Wide Early Learning and Child Care (CWELCC) program, now commonly known as the $10-a-day program. The program’s first five years were foundational, with initiatives and challenges in all parts of Canada. This second five-year phase will be pivotal for the program’s expansion. A critical infusion of $5.4 billion over two years was announced in June 2026 which expands transfers to the provinces and territories by a third. However this funding is time-limited.
Since 2021, the infusion of federal funds has led to measurable progress. For the first time in Canada’s history, licensed child care provision is primarily publicly funded, with low (albeit varied), country-wide parent fees. There has also been considerable expansion of licensed child care spaces and improved compensation for educators.
The progress made towards meeting the goal of affordable, accessible, high-quality and inclusive child care for all varies across provinces and territories. Despite the failure to use consistent, evidence-based policies to shape this emerging social program, substantial economic returns have already been generated for both levels of government.
Overview
Economist Jim Stanford’s 2024 analysis shows that,1Jim Stanford, Powering Growth: Economic benefits from Canada’s $10-per-day Early Learning and Child Care Program, Centre for Future Work, November 2024, https://centreforfuturework.ca/wp-content/uploads/2024/11/Child-Care-Economic-Benefits-Nov2024-FINAL.pdf. even in its infancy, the Canada-Wide Early Learning and Child Care program has supported significant growth in employment. Since 2019, 40,000 new positions have been created in the early learning and child care sector. Overall, women’s labour force participation has grown by 1.4 percentage points, narrowing the longstanding participation gap between men and women. Stanford estimates that the program generated $32 billion in additional GDP in 2024 compared with 2019.
Economists Gruber, Baker and Milligan’s 2026 paper calculates the “enduring positive impact on employment long after children have aged out of the preschool years.”2Michael Baker, Jonathan Gruber and Kevin Milligan, “Investing in mothers? The long-run impact of a universal child care program on maternal work and income,” March 2026, https://sites.google.com/view/kevin-milligan/home/research/bgm-childcare3. Their research shows that “tax remittances grow over the lifecycle, and social assistance and employment insurance receipts fall.” They estimate that “the net present value of the flow of fiscal benefits may recapture between 75 and 117 per cent of the upfront costs of the program.”
These numbers lead one to speculate about how much greater the economic impact of this program could be if its implementation was consistently aligned with effective, evidence-based public policy. Notably, for example, if:
- Child care workforce issues were addressed.
- Operational funding was better aligned with the actual costs associated with high-quality, inclusive programs.
- The pervasive barriers to not-for-profit expansion were removed.
- Capital funding supported the equitable and rapid expansion of high-quality, publicly owned facilities.
It is abundantly evident that transformational system building requires long-term commitment from all levels of government. The successes, to date, have highlighted the significant demand for high-quality, affordable child care, reflected in frustrated families on long wait lists. Yet expansion has largely been piecemeal rather than coherent, and market-driven rather than publicly planned based on community need. And although educator compensation has increased, it has not reached the level needed to consistently support the recruitment and retention of qualified educators required to maintain existing programs and allow new programs to open.
Despite the obvious need for additional public funding to continue building a child care system that will meet the stated goals, other than the time-limited $5.4 billion over two years (2026-27 and 2027-28) the federal government has committed no new operational funding for 2026-27 and only an inflationary increase of three per cent per year starting in 2027-28. Regarding capital funds, the Early Learning and Child Care Infrastructure Fund will be sunsetted at the end of 2026-27, and the billion dollar capital loan program announced in the 2024 federal budget has not yet launched (and may have been abandoned by the federal government).3An additional $10 million in federal funding for early childhood education training was also announced but it has not yet materialized.
Both federal and provincial/territorial governments are using the current context of economic uncertainty and government deficits to justify de-prioritizing the annual increases in public funding needed to enable ongoing child care system-building. Yet the spring economic update showed that the federal government is prioritizing funds to invest in major projects requiring skilled trades workers. The update identified the need for significant labour force growth—up to 1.4 million skilled trades workers before 2033—to support infrastructure, resource development and defence, including $6 billion in funds to recruit and train as many as 100,000 new skilled workers over the next five years.
Meanwhile, Statistics Canada research notes that “women—especially mothers of young children—remain underrepresented in full-time, stable employment relative to men”.4Statistics Canada, Employment Rate of Mothers and Fathers, 2023, October 15, 2024, https://www150.statcan.gc.ca/n1/pub/14-28-0001/2024001/article/00006-eng.htm. Research shows women to be very underrepresented in the building trades: in a 2022 Ontario Building and Construction Tradeswomen’s (OBCT) survey of Ontario women in the building trades, 76% reported that construction work’s hours are a problem when managing child care, while 52% reported turning down work as a result of child care needs.5Kayla Bailey, Child Care Worker Early Childhood Educator Appreciation Day, October 18, 2022, https://www.obctradeswomen.com/post/october-18th-child-care-worker-and-early-childhood-educator-appreciation-day.
As Child Care Now noted in its response to the spring economic update,6Child Care Now, “No new investment in child care leaves women out of Canada’s economic plan,” April 29, 2026, https://childcarenow.ca/2026/04/29/carney-government-leaves-women-out-of-canadas-economic-plan/. the federal government “does not recognize that a properly funded universal child care system is an essential pillar for every other economic initiative in its plan.”
Actions
The actions outlined in this section are aimed to:
- Address the exclusion of women from Canada’s current fiscal plan.
- Further advance universal child care as an essential pillar of a robust, workable economic strategy to support Canada Strong.
- Highlight the irrefutable fact that affordable, accessible child care is also key to addressing the affordability crisis for young families.
The AFB will provide significant annual increases in operational and capital funding to support provinces and territories to continue to expand the Canada-wide Early Learning and Child Care program. To ensure that these funds are used most effectively to advance the goal of affordable, accessible, high-quality and inclusive child care for all, the provinces and territories will develop, implement and be publicly accountable for achieving plans to:
- Increase and equitably distribute the supply of not-for-profit, public and Indigenous child care programs.
- Cap all parent fees at $10/day, instead of the present federal goal of “an average of $10 a day.”
- Provide additional financial mechanisms as required to ensure that child care is affordable for lower-income families, with no fees for families living below the poverty line.
- Expand the size of the qualified child care workforce by increasing recruitment and retention rates, and by increasing the proportion of staff who have early childhood education post-secondary diplomas and degrees.
- Ensure that all those who work in licensed child care are compensated for all hours they work, including program preparation time, with regularly improved wage scales commensurate with their responsibilities, qualifications and work experience.
- Develop benefit and pension plans for the child care workforce equivalent to those in place in publicly funded sectors such as public education, health care and municipal services.
Furthermore, provinces and territories will ensure that federal funds—whether operational or capital—will not fund new or expanded for-profit child care.
In each of the next five years, it is essential that federal operational funding increase substantially above the previously announced annual federal transfer to provinces and territories, including the three per cent inflationary adjustment in each year. The AFB will increase the 2027-28 federal operating funding from the $8 billion projected in the spring economic update to $9.7 billion, rising annually by 11 per cent in the following years.
Each province and territory will receive a share of these funds based on the ongoing per capita formula contingent upon preparation of a detailed five-year operational plan that includes the above elements.
In addition, the AFB will provide capital funding for expansion through a renewed Early Learning and Child Care Infrastructure Fund. This will allow each province and territory to apply to receive federal capital funds on a cost-shared 75/25 per cent basis to finance the capital costs of public and non-profit expansion, contingent on submission of comprehensive, publicly led expansion plans. As part of expansion plans, public and non-profit child care will be co-located in non-market housing projects, schools, post-secondary education facilities, public health care facilities, other public buildings, and on public lands and other locations. Capital funding will fund only public and non-profit child care facilities, with a goal of public retention of publicly funded capital assets.
The AFB will ensure adequate operational and capital support for the full implementation of the Indigenous Early Learning and Child Care Framework co-developed by First Nations, Métis and Inuit partners and the Government of Canada.
The AFB will convene and support the development of a comprehensive strategy to build a public before- and after-school child care system covering children outside regular school hours from the age of four years to 12. This will include extensive consultations with the child care community, including service providers, parents, researchers and other early childhood experts, public school authorities, and municipalities.
The AFB will require each provincial and territorial government to issue a comprehensive public report each year on the implementation of its operational and capital expansion plans and its workforce strategy, including specific and consistent performance indicators for expansion, operational and workforce targets.
The AFB will develop, fund and operationalize a comprehensive Canada-wide early learning and child care data strategy to monitor and report publicly on progress, track and account for public spending, and support policy development.
The AFB will fund an early learning and child care research program to answer key research questions and evaluate the effects of policy and program change.
The AFB will commit the federal government to producing an annual public report on the overall progress of all elements of the Canada-Wide Early Learning and Child Care program, including consistent and comparable key indicators for each province and territory.
