Parisa Mahboubi is an associate director of research at the C.D. Howe Institute, where Tingting Zhang serves as a policy analyst

Many parents are signing their children up for daycare wait-lists before they are born. Even that is not always early enough. Some daycare centres now warn pregnant mothers that by the time they call, they are already too late, as they have filled all available spots and wait-lists continue to grow.

The federal government has spent billions of dollars subsidizing and creating thousands of child care spaces, reducing fees and improving worker wages. As a result, child care costs have dropped. Yet for many families, finding regulated child care is a struggle. That’s the central paradox of Canada’s $10-a-day child care plan: It has made care more affordable, but less accessible.

Rather than relying solely on a single overloaded model of care, Ottawa should adopt a dual-track child care system similar to Quebec’s: subsidized, regulated child care spaces for families most in need, combined with a refundable, income-tested tax credit for those using private or non-standard care. Effective policy requires moving beyond a one-size-fits-all fee reduction and recognizing that different families have different child care needs.

The Canada-Wide Early Learning and Child Care system, announced in 2021, has delivered on affordability. Eight provinces and territories now offer a significant proportion of regulated child care for $10 a day or less for children under the age of six, while the remaining provinces – British Columbia, Alberta, Ontario, New Brunswick and Nova Scotia – have reduced fees by about half. Families who secure a space are saving thousands of dollars annually.

But lower fees have driven demand far faster than supply can expand. As fees dropped, more families sought licensed care, including many who previously relied on informal arrangements. The system has not kept up, and too many families simply cannot get in as the number of new, licensed spaces remains well below the federal target of 250,000 by March of this year. At the same time, staffing shortages have limited centres’ capacity to expand, even when funding is available. Job vacancies for early childhood educators remain well above prepandemic levels. Low wages and limited benefits have led to high turnover across the sector.