Ottawa should leave daycare policy to the provinces

A recent federal announcement marks an evolution in daycare policy in Canada. Historically, daycare policy has been the domain of the provinces, but the Trudeau government is looking to interfere—likely to the detriment of good policy.

Ottawa will pull on the purse strings with a new $7.5 billion transfer to the provinces over 11 years for daycare. Crucially, the transfer comes with new requirements (except in Quebec) and opens the door to federal interference in provincial policymaking related to daycare.

In principle, the Canadian Constitution assigns separate roles for the federal and provincial governments. For example, Ottawa handles foreign and defence policy while provincial governments provide health care and education programs. In reality, however, the federal government interferes by creating rules that limit the policy options or distort decision-making by provincial governments.

Take health care, for example. Ottawa has established stringent rules (through the Canada Health Act) on how provinces run their health-care programs. These federal rules forbid many types of policy experimentation and are largely responsible for policy inertia, underperformance and inefficiency (including historically long wait times). Failure to abide by these rules results in a reduction in federal transfers.

In other areas of provincial policymaking, however, the federal government has taken a more hands-off approach—generally with better results. Consider K-12 education policy, where federal influence and funding is limited to aboriginal education. Tellingly, there’s no federal ministry of education in Canada and therefore no cabinet position dedicated to education.

The lack of federal rules and oversight allows provinces to innovate and experiment with education funding and delivery models that suit their residents, which partly explains why several Canadian provinces (B.C., for example) have high-performing education systems by international standards.

Contrast the Canadian approach with education in the United States. Prior to 1979, there was very little federal involvement in K-12 education until President Jimmy Carter created a federal cabinet post for education and started spending federal dollars to achieve his objectives and monitor performance from Washington. Since then, public spending on education has soared while student performance has declined.

Which takes us back to the Trudeau government’s daycare funding announcement. It looks like Canada may be turning away from the successful decentralized approach in education towards a centralized approach characterized by tight rules and oversight from Ottawa.

The new federal funding for provincial daycare programs requires provinces to demonstrate progress towards particular goals including a requisite number of daycare spaces, daycare workers and programs designed to serve particular populations such as minorities and refugees.

Of course, governments should set measurable goals, but goals imposed by Ottawa rob provincial governments of the flexibility to unilaterally change goals or adjust policy approaches.

More broadly, there’s a risk of mission creep, where the federal government could add additional conditions as time goes by. By allowing federal interference in exchange for cash, the provinces will likely find it more difficult to prevent further interference in provincial daycare policy as they become dependent on federal transfers.

Experience in health-care policy and elsewhere has taught us that federal interference in provincial matters generally leads to worse outcomes. The federal government would do well to stay out of provincial areas such as daycare policy.