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Apr 07, 2010

Why Canada Needs a New Approach to Child Care

April 7, 2010

Mowat Centre associate Luc Turgeon on the benefits of investing in child care programs.

Canada has one of the worst early childhood education and care systems among advanced industrialized countries. It spends significantly less than most countries, not only compared to countries like Sweden and France, but also less than the United States and the United Kingdom – countries not known for large public investment in social programs.

Considering that the labour force participation of women is relatively high in Canada and that Canadian children perform well in international standardized testing, those opposed to greater government intervention can legitimately ask why we should spend scarce taxpayer dollars on this issue. After all, governments are already grappling with deficits and escalating program costs associated with an ageing population. Why should governments build a child care system?

The answer has a lot to do with Canada’s economic challenges. Women now constitute a majority of university graduates, yet, too often, these highly educated women are forced to make career sacrifices due to a lack of adequate and reliable child care services, with negative consequences for our economy. Women are more likely to work part-time than men (70% of part-time jobs are occupied by women) and are much more likely than men to have to have to take time off for family reasons. In fact, this trend is increasing at a dangerously fast pace with potentially negative consequences for Canada’s productivity.

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The average days lost from work due to personal or family reasons for employed women in Canada has increased from 1.9 in the 1970s to 9.7 in 2004, while it only increased from 0.7 to 1.6 for employed men during that same period. It is incredibly bad public policy to have invested so heavily in the post-secondary education of young women without providing the child care infrastructure that will allow them to put that education to good use after having children.

The challenge though is not simply more money, but to invest what we do spend in a more efficient way. The current system subsidizes child care services for the poorest citizens while also providing limited cash transfers and tax exemptions that benefit disproportionately the wealthiest Canadians; it offers very little support to middle-class families. Outside Quebec, parents may be paying $1000-2000 a month for each child care space – an enormous percentage of a middle class family’s income. The result is that the best day care services are available only to low-income Canadians who have access to subsidies, and to high-income earners who can afford such services.

Federal policy has focused on the demand-side of the equation, when it is really a supply problem. Simply increasing transfers to parents in the name of “parental choice” and subsidizing demand does nothing to increase the supply of spaces.

This approach has not worked when tried in other countries. Indeed, in Australia and Great Britain, where governments have tried to expand services by increasing fiscal transfers to parents, providers have simply increased their fees. The affordability and availability of child care spaces did not improve significantly. Such a public policy choice is driven by misplaced ideology – or misplaced politics – rather than evidence.

In 2008-09, the Canadian government spent around 3.2 billion dollars on demand-side programs such as the taxable universal child care benefit and the child care expense deduction. This is a significant public expense and the evidence is that it hasn’t done much good in achieving the objective of creating more spaces that are affordable for parents.

The federal government should abolish current fiscal exemptions and transfers to parents, which have limited impact on the availability and affordability of spaces. Such funds could then be transferred to the provinces for the purpose of directly funding child care centers or family day-care providers to ensure the expansion of spaces. Under this system, provincial governments could more easily establish standards regarding the quality of services delivered and fees charged to parents, and integrate services with early childhood education and learning programs more generally.

This approach is in place in most OECD countries. It was also adopted in Quebec, where it has rapidly expanded child care spaces and significantly increased the labour force participation among women. Higher labour market participation also has the benefit of serving to offset the operating cost of the program.

Child care services are critical to the well-being of many children, and crucial for making Canada a more equitable place for women, who still bear overwhelming responsibility for child care. More importantly, though, at a time of economic challenge, the reality is that child care is simply good for our economy. Such a view might not have the noble ring of “investing in children”, but it has the merit of addressing a key challenge that Canada can ill afford to ignore.

It also has the merit of understanding the real problem and aligning it with a real public policy solution: addressing the supply issue.

Author

Luc Turgeon

Release Date

April 7, 2010

ENTIRE ACTUAL ARTICLE PASTED AND HIDDEN HERE.

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