The Canadian Government’s “Capitation” Clause

Ontario weakened its $10-a-day child care funding rules. Now the federal government is demanding answers from the province, and the opposition is fighting for its economic survival.

For years, Ottawa had a plan for funding child care. It was called the federal Liberal initiative to reduce poverty. Its goal was to support the child-care system of the provinces using a formula based on their population. Ottawa hoped to help them with financial assistance for the provision of child care, especially for the most economically vulnerable families.

In 1998, the Liberal governments of Prime Minister Jean Chrétien and then-premier Kim Campbell brought in the formula. The provinces were told: “We want you to pay the same amount of money as the federal government does.”

The provinces didn’t like the idea of paying the same amount of money to Ottawa that the federal government received. They balked at the federal government’s “unfunded mandate” and “capitation” clause.

So they set up their own system to fund child care on their own. “Capitation” is a bit of political mumbo-jumbo. It means that provinces will pay as much as they can, and the federal government can collect only its share.

But Ottawa didn’t give in. So it kept insisting on the federal un-funded mandate.

In 2001, the federal government announced a new formula based on the number of child-care workers needed. The provinces fought to set up their own funding formula, arguing that it would give provinces more control over the funding and that the provinces would save money.

The provinces had their way in 2003, with a formula that was based on the number of nurses or doctors working in child-care centres. It was called the “capitation” clause. It’s a bit of political mumbo-jumbo again, and it means that the provinces would pay as much as they could and Ottawa would collect only its small share.

But Ottawa refused to give in again. So the provinces fought in court on the issue, saying the federal government had overreached by adding the capitation provision. Ottawa said it was in contempt, and eventually was ordered by the courts to change its formula.

In 2005, the federal government gave up on its $10-an-hour minimum payment

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