Make higher-income families pay more for child-care spaces, Manitoba government told in review

Manitoba should rely on higher-income families to pay more for child care so the provincial government can further subsidize the costs for families of lesser means, an independent report recommends.

Since 2019, the child-care sector has been bracing for KPMG's long-awaited report, released on Monday, which recommends a dramatic overhaul to a funding system in which parent fees have been frozen since 2013.

The new model proposes a drastic reduction in the operating grants for licensed child-care centres. A greater proportion of provincial funding would instead cover the fees of lower-income families, while higher-income families pay more out of their own pocket.

It suggests the new system would make child-care spaces affordable for more families by gearing the market to their needs. It proposes the creation of more for-profit and more evening and weekend spaces.

"Our government is committed to modernizing and improving the early learning and child-care system so it protects Manitoba families by going further to meet their diverse needs and offering more choices and flexibility for parents," Families Minister Rochelle Squires said in a late Monday news release.

The release states the firm's report "is only one piece of information that will be used to develop a better [child-care] system for Manitoba."

Parent fees stagnant for 3 more years

A spokesperson for the PC government didn't state how many of the report's recommendations would be followed. The province pledged last month to freeze parent fees for three years to ease the financial burden of the pandemic.

A longtime child-care advocate said KPMG's report falls short. The external firm recommends a reshuffling of existing money, but doesn't advocate for an influx in new cash for a sector which advocates say have grappled with underfunding. Provincial operating grants have been frozen since 2016.

"It's about trying to take the same small pie and cut it up and in fact, open it up implicitly," said Susan Prentice, a University of Manitoba sociology professor. 

"It's going to open up the same small-size funding pie to for-profit businesses."

The daily parent fee for most pre-school aged children at licensed child-care centres is currently $20.80 per day (different rates apply for infants and school-aged children, and the rates can vary depending how how many hours per day kids are in care).

Under the new model, Manitoba would tie parent fees to income, the report proposes. For example, families with a gross income between $51,641 to $70,610 would be expected to pay no more than 2.5 per cent of their total gross income on child-care, if the ceiling for parent fees was $30 per day. Families making more than $105,916 annually would be expected to devote 10 per cent of their gross income to child-care. 

Using the $30 per day cap, Manitoba would devote 78 per cent of total provincial funding toward subsidies ($116.9 million), rather than the existing 15 per cent ($22.6 million), the report suggests.

The authors wrote "substantially more families would be eligible for assistance, ensuring that low and middle-income families have fewer disincentives to work and will be better off than they are now when they choose to do so." 

The proposal is described as a "more parent-oriented funding approach" that encourages "providers to work with families and make sure their needs are met."

Prentice said Manitoba cannot build up its public services with the new funding formula.

"Over 150 years ago, we figured out if we wanted public education for all children, government had to take an active role in steering, planning, developing and providing. And a half a century ago, we figured something equivalent for health care.

"This report misses the opportunity to propose the real transformation that's required for Manitoba."

'Failure of imagination,' advocate says

She's also bothered by the report's push to turn the provincial government into a "market steward" of the child-care system, which pulls the province from detailed day-to-day involvement into more of a strategic overseer.

"I'm really disappointed at this failure of imagination because, basically, we have a free market of child care right now, and it's the reason why we have so little child care, so few parents have access, why it's still so unaffordable for so many families, and why early childhood educators still are so poorly paid," she said.

The authors state that the new funding model would push providers to create more diverse child-care choices and give them the means to consider ways to improve the quality of services they offer, including wages that help attract and retain qualified staff.

The province introduced legislation last month that will inform the planned overhaul to the child-care system. The government plans to make more child-care programs eligible to become licensed facilities and expand which providers can receive grants.

NDP Leader Wab Kinew said he's worried the government is setting the stage for a child-care system that's run like a business. 

"We should have a government that's pushing for universal, accessible and affordable child care, but I don't see this report pointing the way toward that."

The report suggests a potential benefit of the new model is bringing 1,000 families into new private child-care spaces, which would free up that same number of spaces at non-profit providers for low and middle-income families.