Canada’s federal budget for 2021 included a $27 billion commitment to establish a $10-a-day childcare program within five years. Combined with additional funding, a total of $30 billion was committed in years one through five, with a projected annual cost of at least $9.2 billion in year five and later. The federal government then entered into negotiations with each province and territory (negotiating a unique asymmetrical agreement with Quebec, which had a program already) to jointly determine the funding and goals. These negotiations resulted in a “Canada-Wide Early Learning and Child Care Agreement” with each province and territory (which we refer to as “the Agreement” in this brief).

Cardus conducted its own costing estimate in 2021 prior to the release of the Agreements, concluding that the federal government had underestimated the cost and complexity of implementing a national childcare program. 1 1 A. Mrozek, P. J. Mitchell, and B. Dijkema, “Look Before You Leap: The Real Costs and Complexities of National Daycare” (Cardus, 2021), https://www.cardus.ca/research/family/reports/look-before-you-leap. Cardus is now studying the funds spent and goals achieved in each province and territory annually. We will issue provincial and territorial reports covering each year of the agreements as data become available.

The Agreement with Nova Scotia was signed on July 21, 2021. 2 2 Government of Canada, “Canada–Nova Scotia Canada-Wide Early Learning and Child Care Agreement—2021 to 2026,”  July 2021, https://www.canada.ca/en/early-learning-child-care-agreement/agreements-provinces-territories/nova-scotia-canada-wide-2021.html.

This brief presents the results for years one and two for Nova Scotia (fiscal years 2021–22, and 2022–23, which is April 1, 2021 to March 31, 2022, and April 1, 2022 to March 31, 2023).

The centrepiece of the Agreement with Nova Scotia was the intention to overhaul the childcare sector within the first year. At the time that the Agreement was signed, almost 60 percent of providers in the province were private, for-profit businesses. The action plan called for the swift transition to a not-for-profit system, in which providers would fall under the mandate and management of a yet-to-be created central organization. Under the plan, for-profit private providers would be encouraged to convert their businesses to non-profits and become employees of the central organization. By the end of year one, the province paused the creation of this central organization, imposed a licensing freeze on for-profit providers, and delayed other action-plan objectives. The Agreement was amended so that the province could carry over 74 percent of year-one funds into year two, and then amended further to increase the year-two carryover from 30 percent to 63 percent.

The province successfully reduced parent fees by 25 percent of the 2019 average by April 2022. The reduction was made retroactive to January 1, 2022. A further fee-reduction of 50 percent of the 2019 average was achieved by the end of 2022. A project to determine the true cost of care, in preparation for the creation of the central organization, was less successful. The project encountered data gaps and other challenges, missing the year-one completion deadline.

The province took several steps toward working with operators to create new spaces in the not-for-profit sector, yet it fell well short of the stated goal of 4,000 new spaces by the end of year two. The province reported creating just 1,691 new spaces by the end of year two, but with attrition of existing spaces the total net number was 845 new spaces. The number of childcare centres in the province decreased from 334 at the beginning of year one to 312 at the end of year two.

In an effort to enhance quality within the sector, the province offered a one-time retention grant to childcare workers. A project to develop standard measures of quality, based on the Quality Matters program, was put on hold when the partnering institution was unable to find a suitable consultant. The province also offered a grant to for-profit providers to explore transitioning to non-profit status, but it did not report on the uptake of the grant nor on how many providers converted their operations. The province successfully introduced a wage grid for Early Childhood Educators in the fall of 2022.

Other quality targets and inclusivity activities were funded under a separate bilateral agreement with the federal government and are not reviewed here.

Term: April 1, 2021 to March 31, 2026.

Table 1 displays the projected federal share of financial provisions for each year of the Agreement.

• Reduce parental fees by 50 percent of the average 2019 fee by the end of 2022, and to an average of $10 a day by the end of year five (2025–26).
• Create over 9,500 new spaces for children under age six, by 2025.
• Develop a new, centralized organization to manage all regulated childcare by April 1, 2022.

• Provincial childcare budget of approximately $80 million in fiscal year 2020–21. 3 3 Government of Canada, “Canada–Nova Scotia Canada-Wide Early Learning and Child Care Agreement—2021 to 2026.”
• Average centre-based parent fees were $36.27 per day for toddlers and $42.66 per day for infants, as of April 2021. 4 4 Government of Canada, “Canada–Nova Scotia Canada-Wide Early Learning and Child Care Agreement—2021 to 2026.”
• 18,180 spaces for children aged 0–6 in 2019– 5 5 Government of Canada, “Canada–Nova Scotia Canada-Wide Early Learning and Child Care Agreement—2021 to 2026.”

The Canada-wide Agreements share a similar structure, focusing on four priorities: affordability for parents, increasing access through space creation, making childcare more inclusive, and improving the quality of care.

Nova Scotia provided a two-year action plan within the Agreement (2021–22 to 2022–23). The tables shown here summarize the commitments made, the year in which targets are to be achieved, and the federal funding allocated to the targets.

The tables also summarize the progress made toward the target and the funding spent on these efforts in years one and two. Unless otherwise noted, the results and spending shown are taken from the “Canada-wide Early Learning and Child Care (ELCC) Agreement Annual Report Guide for Fiscal Year 2021–2026,” and the “Canada-Nova Scotia Canada-wide Early Learning and Child Care Agreement 2022–2023 Annual Report.” Cardus obtained these documents through Freedom of Information and Protection of Privacy requests.

Nova Scotia introduced a 25 percent fee-reduction in April 2022, retroactive to January 1, 2022. Parents could receive either a reimbursement or a credit on future care, with both options administered through eligible providers. The province reported that $6.9 million of the $7.2 million allocation was spent on the fee reduction. The funding allocation was listed in the action plan as $8.8 million; the province reported, however, that the figures “reflect accrual at year end cut off and not actual expenditures.” 6 6 Government of Nova Scotia, “Canada-Wide Early Learning and Child Care (ELCC) Agreement Annual Report Guide for Fiscal Year 2021–2022,” 2023, 2. Unspent year-one funding was to be spent in year two.

The province continued to support the 25 percent fee-reduction through bi-weekly payments to providers until December 2022, when parent fees were reduced an additional 25 percent. The province spent the allocated $38.5 million in year two.

In year two, all licensed centres received the Quality Investment Grant, though the province did not provide a specific funding amount in the year-two report.

The province hired Halifax-based marketing agency Trampoline Creative to develop a campaign promoting the fee reductions to parents. The campaign ran from February to April 2022, at a cost of $100,000.

To assist with affordability, the province expanded eligibility for the Child Care Subsidy Program, aimed at increasing subsidy utilization. The two-year plan included forming a team with financial consultants to redesign the program to expand eligibility requirements, based on a sliding income scale. The province targeted the completion of a first draft by the end of 2023 (year three). The province allocated $1.8 million in year one (2021–22) but did not provide an update in its year-one report. The year-two report also does not provide an update on the program redesign but states that much of the work on the program is supported under a separate bilateral agreement. The province did report that 4,194 families received the subsidy, with about 3,000 families paying no daily fee under the program.

In anticipation of moving toward a centralized system, Nova Scotia sought to determine the true cost to deliver care. The information was to be used to develop a funding model based on per-space costs. According to the action plan, the province was to begin work during late summer and fall of 2021, delivering a recommendation to be enacted by April 1, 2022. The process would involve hiring consultants and a financial services company to review operators’ annual reports and audited statements.

The province spent the $150,000 allocated, including hiring consultants, but the true cost of care project ran into “material data gaps,” among other issues. The project was incomplete as of April 2022, and the province reported that it developed an internal “dashboard model” instead, with work ongoing into year two (2022–23). The project was an important step toward the creation of a central organization, which the province placed on hold in year one.

The province allocated $7 million in year one (2021–22) and $18.9 million in year two (2022–23) for several initiatives with completion dates falling within the 2023 calendar year. The province reports spending the full funding allocations for both years.

The action plan targeted a net increase of 4,000 new full-time-equivalent spaces by the end of year two (2022–23). The province reported creating just 1,691 spaces. With some providers opening or expanding and others closing operations, there was a net total of 845 additional spaces by the end of year two (2022–23). During the first two years of the Agreement, the number of licensed childcare centres declined, from 334 in year one to 312 in year two.

The province targeted one hundred new licensed homecare spaces by December of 2022 (year two), and it reported that it exceeded the goal, by adding 546 homecare spaces between July 2021 and March 2023.

By the end of year two (March 2023), there was a total licensed capacity of 18,928 spaces. 7 7 Government of Nova Scotia, “Canada–Nova Scotia Canada-Wide Early Learning and Child Care Agreement 2022–2023 Annual Report,” September 29, 2023, 18.

The province entered into agreements with twelve existing not-for-profit providers and one family homecare agency to support space expansion. During the fall of 2021, an expression-of-interest campaign was launched to recruit existing providers to increase spaces. By the end of year two, this effort resulted in approximately fifty centre-based providers signing on, with the potential to create 1,200 spaces.

The province also selected operators to provide additional school-based wrap-around care, also known as the Before and After Program, resulting in approximately 800 additional BAP spaces by the end of year two, for a total of 1,608 BAP spaces.

Nova Scotia intended to expand free care for three-year-olds, targeting 2,000 children by 2023. The program focused on delivering care for “equity seeking” families but was paused after year one, as only eight children participated in the program.

It should be noted that according to the action plan, the province intended to increase “space utilization” as a significant step within its accessibility strategy. Like many provinces, use of licensed childcare declined during the pandemic. When the Agreement was signed, about 79 percent of spaces were in use. Use increased to 81 percent by the end of year one and to 89 percent by the end of year two. 8 8 Government of Nova Scotia, “Canada–Nova Scotia Canada-Wide Early Learning and Child Care Agreement 2022–2023 Annual Report,” 18.

The province’s focus on inclusion in years one and two was primarily funded under a separate bilateral agreement, and not reported here. Under the Agreement, Nova Scotia initiated a collaborative process with Indigenous partners, which is ongoing.

The province provides specialized services, called Early Childhood Development Intervention Services, for children with developmental delays. The Agreement states that the province would seek to increase the portion of children in ECDIS who attend childcare to 50 percent by March 31, 2023. The year-two report states that the portion of ECDIS cases in childcare increased to 43 percent. However, the Agreement lists the starting baseline as 42 percent, whereas the provincial document indicates that the starting baseline was 35 percent. The province reports spending $2.6 million, with funds coming from the Agreement and a separate bilateral agreement.

Nova Scotia uses Quality Matters, a childcare-quality assessment program, to measure and improve the quality of care in the province. Under the Agreement, the province plans to expand the program to homecare, wrap-around care, and school-based care by year five (2025–26). While funding was originally allocated under the Agreement for Quality Matters targets, the reports for years one and two indicate that federal funding was provided under a separate bilateral agreement that is not reported here.

The province stated that 97 percent of centres participated in Quality Matters in year one, but that the portion declined to 80 percent in year two. The province attributed the decline to “centre closures, the pandemic, and staffing shortages.”

In year one, the province allocated $200,000 to develop standards to measure quality, through a partnership with Mount Saint Vincent University. The university was unable to hire a consultant, and the project was placed on hold, while more funds were to be invested in 2023.

In an effort to retain current childcare workers, the province offered a one-time grant of $500 to 1,817 workers on September 30, 2021. Approximately $1 million was allocated to the grant, though this target was not listed in the action plan.

Nova Scotia announced a wage grid in October 2022 and provided retroactive wage increases back to July 2022. The province reports that wages increased in the range of 14 percent to 43 percent. By the end of year two, the province was planning to offer health and retirement benefits. The province also increased the portion of staff with level-two qualifications, from less than 40 percent to 66 percent.

With the intention to move to a centralized organization, the Agreement states that the federal government would fund 2,500 not-for-profit spaces in year one. This would free up $10 million in provincial funds for one-time transitional support aimed at helping for-profit providers convert to not-for-profit organizations. Nova Scotia reported offering for-profit providers a Quality Investment Grant to seek professional advice for transitioning to a non-profit model. The province allocated $1.8 million to offer grants of $15,000 each. The year-one report does not disclose how many providers accepted the money, how much was spent, or how many for-profits converted to not-for-profit. In the year-two report, the province stated that all licensed centres received the Quality Investment Grant for the purpose of reducing parent fees. As the purpose of this grant shifted in year two, we have recorded the year-two results in the Affordability section of this report.

The province identified a number of other quality targets, including Quality Matters program targets, as part of a separate bilateral agreement that is not reported here.

Nova Scotia allocated $1.7 million in year one toward administrative costs, including “professional services to support an initial analysis of operation costs, a review of the Quality Matters program, central organization planning and marketing campaign.” 9 9 Government of Nova Scotia, “Canada-Wide Early Learning and Child Care (ELCC) Agreement Annual Report Guide for Fiscal Year 2021–2022,” 19. These targets had specific funding allocations separate from administrative costs. The province did not report how much of the year-one administrative allocation was spent. The year-two report states that $1.7 million was allocated for this purpose.

The Agreement allowed the province to carry over 52 percent of year-one funding into year two. A June 2022 amendment increased this carryover amount to 74 percent. Further, the Agreement authorized the province to carry over 30 percent of unspent funding from year two into year three. The Agreement was amended in October 2023 to increase this carryover percentage to 63 percent.

Perhaps the most important aspect of the program’s first year was the plan to transition the childcare sector toward a publicly operated system, under a yet-to-be-created central organization. The plan had significant implications for all providers, particularly for the nearly 60 percent of the sector operating as businesses.

In the fall of 2021, the province introduced a six-month licensing freeze on for-profit providers in anticipation of this transition to the centralized system. Several operators reported that they had invested time and money into developing spaces to accommodate younger children, on the advice of licensing agents, only to have their licensing applications denied. 10 10 A. Draus, “Families Struggle to Find Child Care as Nova Scotia Licensing Freeze Prevents Spaces Opening,” Global News, November 10, 2021, https://globalnews.ca/news/8364545/child-care-struggle-n-s-licensing-freeze/; A. Draus, “Fall River Families Left in Lurch after Province Delays Licensing for Child Care Centre,” Global News, November 8, 2021, https://globalnews.ca/news/8358650/fall-river-families-licensing-delays-childcare-centre/. The denials were followed by the announcement of the licensing freeze, leaving waiting parents without the care.

In January of 2022, the province offered operators several options to facilitate the transition to the centrally run system. For-profit providers could remain for-profit under strict guidelines determined by the province, essentially working under the control of the central organization. Alternatively, for-profit providers could accept a buy-out from the province and either work for the central organization as a non-profit or transition the spaces to another non-profit. Finally, for-profits could operate outside the new system, but would be ineligible for any further funding. Operators were given about three months to decide the future of their centres.

Following an information meeting that the province hosted in January 2022, Joe Kinsman, co-owner of Becky’s Daycare in Waverley, told a journalist, “Throughout the meeting, anytime anyone asked a question the general answer was, ‘we’re still drafting, we’re still preparing, we’re still writing.’” 11 11 D. Montague, “Confusion and Anger: Explaining the Ultimatum Given to N.S. Daycare Owners,” The Huddle, January 19, 2022, https://huddle.today/2022/01/19/confusion-and-anger-explaining-the-ultimatum-given-to-n-s-daycare-owners/. He continued, “They’re essentially telling us we have three options but they’re also telling us none of the three options have any of the policy or anything attached to them yet.” 12 12 Montague, “Confusion and Anger.”

An accountant with several childcare operators as clients told CBC News that providers simply did not have enough information to make informed decisions. 13 13 P. Mulligan, “Female Entrepreneurs in N.S. Vow Not to ‘Cave’ in Child-Care Showdown,” CBC News, January 19, 2022, https://www.cbc.ca/news/canada/nova-scotia/daycare-owners-guidance-government-demands-nova-scotia-1.6319440. Longtime operator Marcia Nickerson reported feeling devastated and “backed into a corner” by the province. 14 14 Mulligan, “Female Entrepreneurs.”

Uncertain about what costs the program would cover, operators worried that joining the program would leave them unable to meet their financial obligations. Furthermore, as multi-site operator Donna Buckland told C2C Journal later in 2022, operating as a for-profit under the new program would mean “the government would be setting your price, the wages you pay and all your policies and programming. That’s not a business anymore.” 15 15 P. S. Taylor, “Canada’s National Private-Sector Childcare Destruction Program,” C2C Journal, June 22, 2022, https://c2cjournal.ca/2022/06/canadas-national-private-sector-childcare-destruction-program/.

For many operators, taking a buy-out was simply not an option. Kinsman reported that his childcare operation would receive just 60 percent of the 2021–22 funding in return for giving up his for-profit status. 16 16 Montague, “Confusion and Anger.” It was clear that the province was not prepared to offer fair-market value. Buckland stated that the buy-out was not a feasible option, as she was offered $100,000 and yet had $4 million in mortgages on her centres. 17 17 Taylor, “Canada’s National Private-Sector Childcare Destruction Program.”

Operating outside the system would result in being ineligible for any funding, including funding operators had come to rely on prior to the Agreement. Providers would no longer be eligible to receive children on subsidies. In Buckland’s opinion, “They want us gone. But they want our spaces too.” 18 18 Taylor, “Canada’s National Private-Sector Childcare Destruction Program.”

The province relented, affirming the desire to work with all licensed providers. Having allocated $620,000 in year one to evaluate the feasibility of establishing a central organization, the province paused the initiative. 19 19 Government of Nova Scotia, “Canada-Wide Early Learning and Child Care (ELCC) Agreement Annual Report Guide for Fiscal Year 2021–2022,” 20. Nova Scotia eventually offered providers the same funding as in the previous year. 20 20 Taylor, “Canada’s National Private-Sector Childcare Destruction Program.”

As operator funding agreements were set to renew in the fall of 2022, private and non-profit providers warned that many daycares would not be sustainable. The province issued new funding agreements, but some providers argued that there was not enough time to consult with financial professionals to determine if the agreements were feasible. 21 21 J. Laroche, “Private Daycare Operators Predict Disaster in Nova Scotia under Government Plan,” CBC News, October 28, 2022, https://www.cbc.ca/news/canada/nova-scotia/daycare-operators-houston-government-early-childhood-educators-1.6632874.