Why Privatization Is Bad

Privatization: What is it and why is it dangerous for Manitoba’s early learning and childcare sector?

First, let’s look at what it means to “privatize” something. Privatizing means
“transferring ownership, property, or business from the government to the private sector.”

Generally speaking, it means the government has zero financial responsibility to fund childcare, and instead has childcare operated as a for-profit business, owned by both individuals and corporations.

Is that concerning? We think so, for a number of reasons, backed by numerous studies. This includes financial impacts to families and quality of early learning and education for children. Families in Manitoba need access to quality, affordable childcare, in order to participate fully in our economy. This is especially true for women. In 2016 there were 499,870 women participating in the Manitoba workforce. Lack of access to affordable, quality childcare continues to be a barrier for women to enter the workforce after having children.

There are currently over 16,000 families on the provincial wait list for childcare spaces. For families who do have childcare spaces, they report the childcare costs are a challenge for their family’s finances. And that is with Manitoba ranking 3rd least expensive across Canada for daily childcare costs. The Province sets the maximum daily childcare fee for all licensed non-profit infant, preschool, school-age, nursery and enhanced nursery childcare centres.

The current Daily Fees are:

  • $30.00/day for Infant
  • $20.80/day for Preschool
  • $20.80/day for Full Day School-Age or
  • $8.60/day for Two Periods School-Age or
  • $6.15/day for One Period School-Age

The way our current licensed non-profit system is designed, the daily parent fees only cover
a portion of the needed Operating Revenue for childcare centres.

The three revenue streams come from:

  1. Daily Parent Fees
  2. Annual Operating Grant from the Province of Manitoba
  3. Fundraising and Donations

The Operating Grants are the key to understanding the dangers of privatizing the childcare
sector. Let’s explain.

We will look at two different models: an infant childcare centre and a preschool childcare
centre, so families can truly see the outcome they would face if childcare was privatized.

Scenario #1: An Infant Centre

An infant centre (ages 0-2) that has 20 spaces would get a monthly operating grant of
$18,958.33.

That is because they get:
$11,375/space x 20 spaces = $227,500/year

Divide that over 12 Months, and you get $18,958.33 a month in Operating Grant Revenue.

Your parent fees are currently $30.00/day. In a month, you pay your centre $600. All 20
families combined would be a total revenue of $12,000/month a month in Parent Fees Revenue. This means the Parent Fees make up six thousand dollars LESS than their Operating Grant of your centre’s Monthly Operating Revenue. And this is without adding in Fundraising and Donations.

Now, if we privatize the childcare sector, we lose that Provincial Operating Grant of $18,958.33/month. And that missing revenue needs to come from somewhere.

Where would that missing revenue come from?

From your Parent Daily Fees.

Those 20 families would need to pay $1,547.92/month, or $77.40/day.

That means the Infant Parent Fee would jump from $30/day to $77/day.

Can your family afford to pay $77 each day for your infant childcare? Because that’s the
MINIMUM of what will happen if childcare becomes privatized. That cost could and would
go higher. We will explain, but first let’s take a look at how a Preschool space’s fees would
change.

Scenario #2: A Preschool Centre

A Preschool Centre (ages 2-5) that has 20 spaces would get a Monthly Operating Grant of
$6,966,67.

That is because they get:
$4,180/space x 20 spaces = $83,600/year
Divide that over 12 Months, and you get $6,966.67 a month in Operating Grant Revenue

Your parent fees are currently $20.80/day. In a month, you pay your centre $416.00. All 20
families combined would be a total revenue of $8,320/month a month in Parent Fees Revenue.

This means the Operating Grant provides almost half of your centre’s Monthly Operating Revenue.

And again, this is without adding in Fundraising and Donations.

Now, if we privatize the childcare sector, we lose that Provincial Operating Grant of
$6,966.67/month. And that missing revenue needs to come from somewhere.

Where would that missing revenue come from? Again, from your Parent Daily Fees. Those
20 families would need to pay $764.33/month. That means the Preschool Parent Fee would jump from $20.80/day to $38/day.

Can your family afford to pay $38 each day for your preschool childcare? Again, that’s the
MINIMUM of what will happen if childcare becomes privatized. That cost could and would
go higher. Let’s explain.

We haven’t even mentioned the “extra fees” that for-profit childcare centres can add in, such
as:

  • early start fees
  • late pick up fees
  • admin fees
  • enrichment fees
  • supply fees

Basically, at a privatized childcare centre, anything they want to add in as additional costs can be charged as “extra fees.”

Ultimately, the reason your childcare fees would continue to go up in a privatized system is that childcare centres would be for-profit businesses. Unlike our non-profit system which aims to “zero out” or break even each fiscal year end, private childcare doesn't bill parents just to break even. They are a business that wants to turn a profit.

Here are some actual “additional fees” currently billed to families each month at a Winnipeg for-profit childcare centre:

  • Preschool Fee: $40.00/day
  • Early Drop Off (7:30-8): $14.50/day
  • Late Pick Up Fee (4:30-5:30): $14.50/day
  • $200 Annual Registration Fee: $16.67/month
  • $200 Annual Supply Fee: $16.67/month
  • Total Monthly Invoice: $1,413.34

Compare this to a non-profit licensed preschool monthly invoice of $416.00

Which would you rather pay? Which could you afford to pay? A difference of almost $1000/month, for one child! What if you have two, three or more children?

Another danger that arises from privatizing the childcare sector is the loss of both the
Manitoba Subsidy Program, and the Inclusion Support Staffing Grant. Both would have
devastating negative impacts to children and families, and both affect the most vulnerable of
our childcare sector’s families. Let’s look at what losing the Manitoba Subsidy Program
would mean for families.

The Manitoba Subsidy Program is a government-funded system that ensures families who
fall below set household income levels can still access quality childcare services. Families
who are approved have either part or all of their Monthly Parent Fees paid by the Manitoba
Government directly to the childcare centre. Without this Subsidy Program, our most
vulnerable low-income families would not be able to access quality childcare. And if families
cannot access childcare services because of costs, they cannot work towards bettering their
lives through school and work. Single parents, newcomer families, and First Nations
families are statistically the most at-risk for this outcome, which leads to the continuation of
cycles of poverty.

If Manitoba childcare is privatized, there will be NO Subsidy Programs for anyone to
access.

The same fate will fall upon the Inclusion Support Staffing Grant program that currently
exists in the licensed non-profit childcare sector. Children who require additional supports
have access to a Staffing Grant, paid to childcare centres by the provincial government, that provides funds to hire an additional educator. This educator reduces the educator-to-child ratio to ensure the child’s full physical, cognitive, social, emotional and safety needs are met. Inclusion practices — meaning EVERY child has equal access to early learning and childcare — are the cornerstone of quality childcare.

But Canadian studies have shown that for-profit childcare centres are less likely to enroll children with additional support needs because this costs more money. Remember: they are businesses. And what is the main purpose of a business? To make as much money as
possible. Families of children with additional support needs would face insurmountable
barriers to access any quality early learning and childcare services.

When researching this topic, we examined over a dozen different Canadian studies and
research that documented the very real fact that in general, for-profit childcare offers
drastically lower indicators of high quality care and education than the non-profit sector (find a full list of references at the end of this post).

We can also look to countries like Australia to examine real-life examples of the dangers of
privatizing the early learning and childcare sector. The collapse of ABC Learning, an Australia early learning chain, left hundreds of for-profit centres closed and tens of thousands of children at risk of losing early learning and childcare programs.

When corporations take over childcare sectors, it is no different than any other business which could close its doors at any time. That leaves families without childcare, with little to no notice. Imagine if your own childcare provider wassuddenly closed, and the immediate and long term impacts that would have for your family. Is this a risk Manitoba families want to take?

The dangers of corporations running our childcare sector means the risk of losing the
backbone of our economy. If there’s no childcare, people cannot work, as man have learned first-hand during the COVID-19 pandemic. Without predictable, stable funding structures as seen in the non-profit funding model, for-profit childcare businesses would be as risky as any other business. A 2004 study by Kershaw, Forer and Goelman showed that one third of all for-profit centres closed in a four-year period, and that the non-profit centres are 97 times more likely to operate over the study’s four year period.

There is one more dangerous aspect of privatizing our childcare sector, and we want all Manitoba families to really understand what it would mean for their children. When families are choosing a childcare centre, they need to feel comfortable and confident that they are leaving their children with well educated, dedicated, caring and invested early childhood educators. Here is a quote from the book Childcare by Susan Prentice and Martha Friendly:

“In the past two decades, research has documented significant differences in the for-profit and non-profit sectors in quality, with the advantage falling decisively to the not-for-profits. The pattern holds whether quality is measured using observational measures that systematically assess adult-child interactions and other features of ECEC programs or structural indicators such as staff training, wages, working conditions, professional development opportunities, staff morale, continuity for children, compliance with regulations, staff to child ratios, and how funds are being used.

A logical explanation lies behind these findings: to ensure profit, commercial operations tend to skimp on supplies, equipment, and even food, and shortchange staff. They hire lower-trained educators, pay lower wages and benefits, and create working conditions that lead to higher rates of turnover and lower morale - all culminating in lower quality of care for children.”

What about educators?

Employees of childcare centres would feel the effects of privatization acutely. Parents have told us that they are appalled by early childhood educators' (ECEs) low wages, and they want better compensation and conditions for workers.

Upfront, we want to dispel a popular myth: parent fees DO NOT need to increase to ensure
workers are better compensated. Wages are low because government funding has been frozen for four years, and was too low for many years prior.

In 2019, Oxfam Canada published Who Cares? Why Canada Needs a Public Childcare
System. That report showed that wages are approximately 25% higher in non-profit centres
than for-profit childcare centres — even though for-profit centres are often more expensive for
parents!

Oxfam also reported that a significant portion of unregulated child caregivers in Canada are
migrant workers. Employers of migrant child caregivers often do not comply with labour
regulations or clauses in their employment contracts regarding hours of work, wages and
time off. However, migrant caregivers often will not challenge their employers because they
fear losing their job and not being able to get another job without employer references.

Worker well-being is much more assured in licensed, non-profit centres.

But doesn’t this all seem really expensive?

Governments of all stripes have shied away from properly funding childcare. Unfortunately,
this neglect of children, families and workers doesn’t make economic sense. The Early Years Study and many others show the economic benefits to families, communities and society at large that come from properly investing public money into childcare. They have calculated that every one dollar invested in early childhood education yields six dollars in economic benefits over the lifetime of a child, and also does the following:

  1. Improves educational outcomes such as higher graduation rates and less need for
    special education
  2. Prepares children for the 21st century workplace by promoting language and thinking
    skills, as well as physical, social, and emotional well-being
  3. Stimulates the economy and address workforce shortages
  4. Reduces gender and income inequality for women
  5. Increases social equity for marginalized children
  6. Boosts maternal labour force participation
  7. Promotes diversity

The authors also note that the tax revenue from more parents working would not only help fund the additional costs, but would also raise many families out of poverty, reducing health and other social costs.

With this perspective, we think it is clear that refusing to invest in childcare is the wrong
decision for the economy, for society at large and for all of our families.

We also believe that any parent seeing these facts will agree with us: that the privatization
and corporatization that the Manitoba provincial government has begun in the childcare sector
is a danger for our children.

And what’s more distressing is that this is being attempted during a global pandemic, at a time when our current childcare sector needs our provincial government to support our existing system. We need their financial assistance to stabilize our sector.

What can we do to help prevent privatization?

We can stand together and tell our provincial government that privatizing our childcare
sector will not be accepted. Centres, ECEs, boards, families and the community can unite
and make our voices heard.

Here are some steps you can take:

  1. Write to your local MLA, the Minister of Families, and the Premier. Them know you stand
    with Childcare is Essential, and you are against the dismantling of our non-profit childcare
    system.
  2. Sign our petition, check out the upcoming advocacy campaigns we have planned, and if you are able, sign up to volunteer.

Join us in fighting for all of Manitoba’s children and families. It’s time to protect our
non-profit early learning and childcare sector. We know it’s an essential service. Let’s make sure it’s treated like one.

 

Click here to read a list of references for this article