Analysis: What The Guardian can teach Canada about Ontario and New Brunswick’s private child care bet

Last month, it was reported that Ontario and New Brunswick were pushing the federal government to lift the cap on for-profit child care providers, a departure from the model most of the country has built around public and community-based care.

Quebec’s public child-care model is well-known. However, eight of twelve provinces and territories restrict their capital funding grants to non-profit, public, or First Nations organizations only.

The Canadian child care gap and how it is addressed

Ontario and New Brunswick argue that private capital can help close a gap; as of the third quarter of 2025, only Quebec and Prince Edward Island had reached the federal government’s target of 5.9 licensed child care spaces for every 10 children under six,  according to the Canadian Centre for Policy Alternatives’ (CCPA) national space-tracking database.

Nationally, provinces remain roughly 90,000 spaces short of the commitments they made to deliver by the March 2026 deadline under the Canada-Wide Early Learning and Child Care (CWELCC) agreements.

That shortage is real, but for-profit providers are not simply filling it as independent local businesses.

The CWELCC agreements were explicitly designed to create new spaces primarily in the non-profit and public sectors.

However, the opposite has occurred: since 2022, 57 per cent of all net new licensed child care spaces created nationally have been for-profit, with large for-profit chains alone accounting for a quarter of that growth. For-profits’ overall share of licensed spaces rose from 52.7 per cent to 54.8 per cent between 2022 and 2025, according to Child Care Now’s 2026 growth report.

Large chains raise a question local operators don’t: who owns them, and what do those owners want from the business?

Some of that capital comes from private equity firms, which typically buy a company outright, often using significant amounts of borrowed money, with the goal of reselling it within five to seven years for a profit. During that window, they usually restructure operations to boost returns before the exit. 

Some firms instead take a minority stake and a board seat to influence strategy, often as a step toward full ownership later.

U.K. research offers one indication of where that return can come from.

A 2025 UCL study funded by the Joseph Rowntree Foundation found that only 8 per cent of private-equity-backed nurseries in England’s most deprived areas received an “outstanding” Ofsted rating, compared to more than 27 per cent of private-equity-backed nurseries in the wealthiest areas — and that these providers were also more likely to open new locations in wealthier neighbourhoods.

Canada isn’t the only country testing the for-profit, investor-backed model in child care right now.

A Guardian investigation published in June 2026 found that £1 in every £11 the UK government spends on contractors, nearly £24.4 billion a year, now flows to companies controlled by private equity firms, including child-care centres.

Research cited in the investigation found private child care owners typically offer lower pay and fewer opportunities for parental involvement than public or non-profit centres.

What the research says about child care quality

The comparison between for-profit and non-profit child care has been studied in Canada since the 1990s, and independent measurements taken years apart converge on the same finding.

A national dataset compiled by economists Cleveland and Krashinsky (2004) found non-profit centres rated roughly 10 per cent higher on standardized quality measures than for-profit centres.

Quebec’s own 2003 government survey, Grandir en qualité, found that for-profit infant centres were eight times more likely to be rated unsatisfactory on quality than non-profit centres.

A decade later, a 2014 survey cited by the Globe and Mail found 4 per cent of non-profit CPEs (Centres de la petite enfance) were rated “inadequate,” compared to 36 per cent of for-profit garderies — a gap consistent in direction with the 2003 finding, measured roughly ten years apart.

 In Calgary, researcher Barry Friesen (1992) found 60 per cent of non-profit centres rated “good,” compared with 15.6 per cent of for-profit centres.

There is also a stability dimension relevant to the current expansion debate. 

Kershaw, Forer, and Goelman (2004), studying British Columbia, found non-profit centres were 97 times more likely to still be operating four years later than for-profit centres. Capacity that opens and closes within a few years does not resolve a persistent space shortage in the same way durable capacity does.

The OECD’s 2004 review of Canadian early childhood policy recommended that public funding flow only to public and non-profit providers, describing this as a “protective mechanism” for quality.

Quebec’s own experience with mixing models is on the public record.

Quebec’s ex Minister of Families, Mathieu Lacombe, told the Globe and Mail in 2022 that allowing the expansion of for-profit daycare in the mid-2000s, as a response to waitlist pressure, was “the biggest mistake the Quebec government committed in the last 25 years.”

Quebec has run a public, non-profit-anchored child care system since September 1997 — one of the first jurisdictions in the world to do so at this scale — and has been studied continuously for nearly three decades. 

That record, together with a comparable ownership record in a different but related sector, long-term care, points in a consistent direction.

The parallel case: long-term care

Child care and long-term care are structured differently, but they share the feature that matters most for this question: both are essential services, largely funded by public money, where non-profit and for-profit providers operate side by side under the same subsidy regime.

That makes long-term care a useful second test of the same underlying question — does ownership structure affect the quality of a publicly funded care service — in a sector with its own, independent research record, including data from a period, the COVID-19 pandemic, that let researchers observe outcomes under acute stress.

Martine August, a University of Waterloo planning professor who has tracked ownership of Canadian seniors’ housing for over a decade, found that financialized firms — a category spanning private equity, pension funds, publicly traded companies, and real estate investment trusts (REITs) — own 33 per cent of seniors’ housing in Canada, including 22 per cent of long-term care beds and 42 per cent of retirement homes. Canada’s ten largest financial firms doubled their holdings between 2003 and 2020.

The composition of that ownership is not primarily foreign private equity.

Of the seven largest owners August identifies, in a report for the Office of the Federal Housing Advocate: Chartwell, Extendicare, and Sienna Senior Living are Canadian publicly traded corporations; Welltower and Ventas are U.S.-based, also publicly traded rather than private equity funds; and Revera is owned by PSP Investments, the Crown corporation that manages pensions for federal public servants, the RCMP, and the Canadian Armed Forces. Some of this financialized ownership is Canadian public pension capital, operating under the same return expectations as private buyers.

August’s research describes financialized firms generating returns through cost reductions in staffing and services, and through using government grants and subsidies to upgrade properties, thereby raising resale value independent of care delivery, in her Healthcare Papers analysis.

A study published in the Canadian Medical Association Journal, examining all 623 long-term care homes in Ontario, found that for-profit status was associated with nearly double the extent of COVID-19 outbreaks and 78 per cent higher resident death rates compared to non-profit homes, after adjusting for region.

Municipally run public homes outperformed both for-profit and non-profit facilities in the same study.

The underlying question

Ludovic Phalippou, a financial economics professor at Oxford’s Saïd Business School, told the Guardian that the relevant risk is not private equity ownership by itself: “It is for-profit provision, plus high leverage, in an essential service where the state has little room to walk away.”

Non-profit and public providers already operate in both sectors in Canada, with a research record spanning nearly three decades in child care and documented ownership and outcomes in long-term care. 

Both Ontario and New Brunswick are proposing to direct new public funding toward for-profit expansion in a sector where that record exists.

The evidence gathered here does not resolve the policy debate. It does raise a specific, answerable question for provincial and federal officials as Ontario and New Brunswick proceed: what ownership disclosure requirements, staffing standards, or conditions on public funding will apply to for-profit providers receiving it?