Public Accounts Committee on Nov. 27th, 2025

[The Chair, Conservative, John Williamson]

Good morning, everyone.

I call this meeting to order.

Welcome to meeting number 17 of the House of Commons Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders. Members are attending in person in the room. I don't believe anyone is joining us remotely.

Pursuant to Standing Order 108(3)(g), the committee is commencing its study of the report on the Canada-wide early learning and child care system, taken from the 2025 fall reports of the Auditor General of Canada and referred to the committee on Tuesday, October 21, 2025.

I would like to now welcome our witnesses.

From the Office of the Auditor General, we have Karen Hogan, the Auditor General of Canada; Gabriel Lombardi, principal; and Ewa Jarzyna, director.

It's nice to see you all.

From the Department of Employment and Social Development, we have Paul Thompson, deputy minister, along with his colleague Catherine Adam, senior assistant deputy minister, income security and social development.

Thank you for coming in today.

You'll each approximately five minutes for an opening statement.

Ms. Hogan, you have the floor to kick us off, please.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Good morning, Mr. Chair.

Thank you for the opportunity to appear before the committee to discuss our report on the Canada-wide early learning and child care system, which was tabled on October 21.

I would like to begin by acknowledging that we are standing on the unceded traditional territory of the Algonquin Anishinabe people.

As part of our audit, we examined whether Employment and Social Development Canada had fulfilled its responsibilities to support early learning and child care in Canada.

The federal government has committed $35 billion over five years to provinces, territories and indigenous partners to support the creation of high-quality, affordable, inclusive and flexible early learning and child care spaces.

In the first three years of the funding agreements, provincial and territorial governments spent $12 billion of the $15 billion in federal funding for early learning and child care initiatives.

The audit found that as of March 2024, parents' out-of-pocket fees for federally funded spaces had been reduced to an average of $16.50 a day. The target is to reach an average of $10 per day by March 2026.

Federal funding also supported the creation of approximately 112,000 new child care spaces as of March 2024. However, with time running out, there is a risk that the goal of creating 250,000 new spaces by 2026 will not be met.

The audit found that the department lacked information to track whether federal funding had met the objectives of supporting diverse and vulnerable children and families and supporting indigenous early learning and child care initiatives. For example, the department could not report about progress achieved on initiatives for indigenous early learning and child care, such as facility renovations or repairs.

While child care costs to parents have been reduced, Employment and Social Development Canada’s monitoring is not sufficient enough to know whether families' needs are being met. The department needs to collect consistent and comparable data across the country to track the program's overall performance, inform future decisions and support families across Canada. Monitoring is also essential to assess the financial sustainability of the Canada-wide system going forward.

This concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

Now, Mr. Thompson, if you have an opening statement, you have approximately five minutes or whatever you need.

[Paul Thompson, Deputy Minister, Department of Employment and Social Development]

Very good.

Thank you, Mr. Chair.

I would like to thank the committee for inviting me to appear today.

I'd like to start by commending the Auditor General and her team for a thorough and thoughtful analysis of the early learning and child care program in Canada.

The report appropriately captures some of the progress achieved through the early learning child care system. It accurately reflects a number of the challenges we've had in rolling the program out, and in so doing, it makes some very important recommendations.

I want to assure the committee that my department is already working to address and implement the recommendations in the report.

The goal of establishing a Canada-wide early learning and child care system is to ensure that all families have access to high-quality, affordable, flexible and inclusive early learning and child care services, no matter where they live.

In its report, the Office of the Auditor General agreed that families are finding that their financial capacity is improving. It found that all provincial and territorial governments had reduced the average fees associated with regulated spaces under the Canada-wide program by 50%, as of December 2022.

As of March 2024, five provinces and three territories reported achieving an average fee of $10 per day. This brought the average fees paid throughout Canada for full-time child care to approximately $16.50.

However, the report also found that the target to create 250,000 new early learning and child care spaces by March 2026 was at risk. The deadline for the space creation target is next year, as stated, and we continue to work with our provincial and territorial partners to achieve it.

When the Government of Canada announced its intention to create an early learning and child care system in 2021, it was clear that there were two issues at the forefront: affordability and access.

As the Auditor General's report points out, our collaboration with the provinces and territories has already resulted in significant savings for families across the country. However, the increase in capacity through the creation of new spaces is progressing at a slower pace.

What I think is important to note is that unlike fee reductions, which are a question of providing funding, the creation of spaces takes greater time. It involves complex multi-year projects and the development and support of the workforce.

That is why in many cases, provincial and territorial action plans reflect a more gradual ramping up of the space creation goals, having first addressed some issues of affordability. Their space creation goals are more heavily weighted in the last two years of the agreements.

The Auditor General also identified that ESDC's reporting has not been timely, in part due to the necessity to both receive and review the information from our partners. Openness, transparency and accountability are guiding principles, and as deputy minister, I agree with the AG that proper data collection and reporting on the system are vital to ensuring that the program remains responsive to evolving needs.

There's no question that more work is needed to improve our reporting practices, which is why we are in constant dialogue with our partners to strengthen and better communicate progress. As an example, we have been co-developing results frameworks with first nations, Inuit and Métis partners to improve how we measure collective outcomes for indigenous early learning and child care.

Furthermore, in March 2024, the Canada Early Learning Child Care Act received royal assent. This legislation includes a requirement that the minister deliver annual reports to Parliament on federal investments and the progress being made under a Canada-wide system.

With that, I would again like to thank the Auditor General and her office for the report and the recommendations, which are helping us guide the work forward on improving Canada-wide early learning and child care.

[The Chair, Conservative, John Williamson]

Thank you both very much.

We'll now begin our first round, which will consist of three members for six minutes each.

Ms. Goodridge, it's nice to see you here today. You will kick us off, please, for six minutes.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Thank you.

[The Chair, Conservative, John Williamson]

Ms. Goodridge, I'll let you know as a guest that when your time expires, if the witnesses are still answering the question, I let them finish. You can't interrupt them once your time has expired, but you will have your full six minutes and a few extra if you time them wisely.

It's over to you.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

That's fantastic. Thank you, Mr. Chair.

I want to thank our witnesses for being here today. This is a very important topic. I think it's something that a lot of families have benefited from.

In your report, Ms. Hogan, you highlighted that there was a risk of not getting the space creation. Are you confident, based on the information you were able to assess, that all of the spaces that were created were net new spaces?

[Karen Hogan]

That was a challenge and why we talk about a risk that the target of 250,000 new spaces won't be met.

The federal government has the information that's provided to it by provinces and territories, and there aren't clear parameters on exactly what to report back. There could be some that are not net new. There could be some that are created but are not used or taken up because there isn't staff for those spaces to be created. I think this speaks to one of our key recommendations: better gathering of data to be able to compare across the country apples to apples. That is definitely needed.

When we look at how many spaces were created in year three, while I recognize it's likely going to be back-end loaded, there's a lot of work left to be done.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

In my province of Alberta, there were day homes and a lot of them were unregulated. Basically, we created regulated spaces. An unregulated day home can have five kids; a regulated day home can have six. That's a creation of one space, but I believe in this agreement....

Perhaps Mr. Thompson could give us some information on this. Did it count as six spaces or one space in a situation like that?

[Catherine Adam, Senior Assistant Deputy Minister, Income Security and Social Development, Department of Employment and Social Development]

If a private home care provider moved into the Canada-wide early learning and child care system and added a new space, I believe that would be counted as six new spaces created because they're coming into the Canada-wide system. By doing that, they're abiding by the guidelines the province has agreed to around affordability.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Ms. Hogan, I guess it opens up a big question, if that's the case. There were already five spaces. By moving them from one system into another system, now they count as six new spaces, but technically there were five spaces.

Is that not really funky math?

[Karen Hogan]

I think it's important to step back. Child care is regulated by the provinces, and there are unregulated spaces and regulated spaces. All the federal government can gain access to is information on regulated spaces. There are certain rules, and you're going to have certain rigour and improve quality. The goal of this program was to increase affordable, quality, flexible spaces.

Yes, it would be bringing in new spaces. I agree that if I was a parent, I would say that there aren't six new spaces there.

I think that's one of the biggest challenges of being able to show whether or not this funding is really meeting the net objective of creating 250,000 new spaces.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

In your report, you talked about the fact that there were provinces using school-aged kids. Can you elaborate on which province or provinces were using school-aged children as part of their counts?

[Karen Hogan]

We mentioned that about one province. I believe it was the province of Saskatchewan. I think in this case, what they were told was the space is occupied by someone over the age of six, but eventually when that person is no longer in that space, they'll redirect it.

This is why you need to set out the parameters with provinces and territories at the outset. What are we going to count? What are we all going to agree is a new space under this program so that we're reporting accurate and comparable information nationally?

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

I think that's critically important.

I'm a parent of two young kids. I have a four-year-old and a two-and-a-half-year-old, and we rely on child care. I think a lot of parents feel completely gaslit because they have access to wait-lists, but they don't actually have access to child care in so many provinces across this country. The federal government says that this is such a huge success; they've done such an amazing job and created all these spaces. Parents are sitting there going, “No, this day home I used to go to is just now regulated, so there's one more space.” That's not six new spaces; that's one new space.

When we hear things like some provinces are saying that because the information from the federal government wasn't clear, well, perhaps this was a case where the federal government should have left provincial jurisdiction alone and worked with provinces to create a program rather than imposing a program on a province. I'll just get off my little soapbox.

My question on the Saskatchewan piece is, how many students were counted?

[Karen Hogan]

I'll have to see if someone can give us that level of detail. The only comment I would make as they're searching for that information is that the agreement to develop Canada-wide early learning was a collaborative agreement. Provinces and territories contributed to what the five goals would be, and one of the conditions of accessing funding federally is to provide information.

All I can point out is that the federal government should have set itself up better to get comparable and consistent information.

I'm just going to see if someone can give you that answer. Do you want that answer?

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

I have one more quick question on this.

Are we also counting how many spaces closed as a result of this? Are we tracking any of that?

[The Chair, Conservative, John Williamson]

Ms. Goodridge, the time is up.

I will let you answer both of those questions, if you like.

[Ewa Jarzyna, Director, Office of the Auditor General]

Very briefly, it comes down to the wording in the agreements. Some agreements specified that the space creation targets were net new and some did not specify that.

The measurement of what was reported against those objectives can be a mixed bag of things. For the Saskatchewan example, it is an estimated number of spaces, because about a quarter of the family home spaces in Saskatchewan are for school-aged children. That shouldn't have been counted depending on how you define the parameters of new space creation.

[The Chair, Conservative, John Williamson]

Thank you very much.

Up next is Mr. Osborne.

You have the floor for six minutes.

[Tom Osborne, Liberal, Cape Spear, NL]

Thank you, Mr. Chair.

For full disclosure, I will say that I was the minister of education in Newfoundland and Labrador when we signed the agreement and started this process.

There is a huge benefit to transferring unregulated spaces to regulated. If they're unregulated, we can't measure quality. We had a huge concern in Newfoundland and Labrador, but not with all unregulated spaces. Some of them were fantastic operations and did a great job, but some of the unregulated ones did not. I think there is some merit in counting transferring a space from unregulated to regulated, because now you know the quality, and there's a set of criteria they must follow.

I'm wondering if Ms. Adam or Mr. Thompson wants to speak to that for a moment.

[Paul Thompson]

Sure, I can start out.

It was indeed our objective to expand the regulated child care space, and as an assurance of quality, the province has a degree of oversight on the quality of the care being provided. When we went into the program, we had a benchmark of approximately 908,000 existing regulated spaces across the country. That was the mark from which we were trying to grow by 250,000 regulated spaces.

It could indeed be the case that there are spaces converting from non-regulated, but similarly, we're not tracking the growth of the non-regulated space either, so it's possible they've been backfilled by other non-regulated spaces. The program is an investment to grow the regulated space with a greater degree of quality assurance.

I don't know if Catherine wants to add anything to that.

[Catherine Adam]

No, I think that's great.

[Tom Osborne, Liberal, Cape Spear, NL]

The second point I will make is that in Newfoundland and Labrador, when we transferred unregulated spaces to regulated, they took advantage of the $10 a day. They went from $25, $30 or $40 a day to $10 a day, so there's another benefit to going from unregulated to regulated. I'll leave it at that for a moment.

When we signed the agreement, we went from whatever the price had been, and in some cases, it had been $40, $45, $60 or $70 a day. We initially went to $25 a day and then to $10 a day. I will say that the number of spaces in Newfoundland and Labrador has increased significantly—not nearly where it needs to be yet, but it is growing.

As costs go down, demand goes up, and that has created some issues with unmet demand. When we went to $25 a day, we saw a huge increase in demand. Going to $10 a day, the demand grew exponentially. There may be more people on the waiting list, but the demand is there because families that could not afford $50 a day can afford $10. They're now on a list, but the number of spaces also grew.

I understand, having signed the agreement and the objectives of the agreement, that growth is more heavily weighted in years three and four because, as we say in Newfoundland, you can't knit an early childhood educator. They have to be educated, and that takes two years.

We had fewer than half of the spaces that were forecast, which was the goal. I'll ask you to speak to what the likelihood of meeting the 250,000 spaces is, but I understand that growth happens as early childhood educators are educated.