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More than two years ago, Jayant Gupta worked the cost of day care for one child into his family budget. Then he and his wife found out they were having twins.
Putting daughter Asha and son Rohan, both now three years old, into child care cost the family about $20,000 annually per child. The couple, though well paid as architects, watched their savings dwindle.
“It’s more than our housing costs,” Gupta says. “That’s where I wonder how people can do it, how people who aren’t professionals can both work and put their kids into a decent day care.”
The child care system, Gupta says, could “definitely use a lot more public funding.
“I wouldn’t want to see social programs that bankrupt the province, like Quebec, but this could really help parents and the economy.”
Quebec’s struggle to make its popular subsidized child care system financially viable has been a point of debate over whether such a system could work countrywide. Quebec’s shaky finances, however, have forced a change in the program: The price is still about $7 a day, but those with higher incomes will be asked to pay more for day care on their taxes next year, and see a new sliding scale fee structure instituted in 2016.
For advocates of a publicly funded universal child care system, the plight of Quebec’s finances is a reason the federal government should invest billions of dollars — to help that province or any other province that wants to go down the same road.
Opponents, however, say that the proposed additional spending, part of the federal NDP’s platform, is too much and wouldn’t help bring costs under control — there is even evidence to suggest the opposite may occur. They also say the sort of tax breaks the Tories propose instead would help young families more than diverting billions from federal coffers.
What both arguments miss is that billions already flow from the federal treasury to help with the costs of child care. Much of that flow is hidden, or indirect. And there is little empirical evidence to be able to tell if this money is meeting its goals.
What the federal government spends
The myriad federal spending streams for child care add up to about $7.1 billion for the 2015-16 fiscal year, according to data from the Parliamentary Budget Officer. This will rise to $8.2 billion in the next fiscal year, including spending streams the government identifies as part of its child care strategy that the PBO didn’t include in a fresh report released March 31. These spending items include: the universal child care benefit, which will cost $6.7 billion this fiscal year once increases to the monthly benefit come into effect; $1 billion in the child care expense tax deduction; and a $250-million transfer payment to the provinces specifically to create child care spaces.
The federal government also forgoes GST on child care costs, which, according to the Department of Finance’s annual report on tax expenditures, cost the government about $185 million in the 2013 tax year.
A national child care program of the sort the NDP envisions can’t just be added on to all of this; the law of unintended consequences starts to apply. Quebec’s experience shows just how finicky the projections can be.
For instance, Quebec’s spending on its day care expense tax credit declined between 1999 and 2007 as the province instituted a heavily subsidized day care system with low costs to parents. The problem for Quebec was that the day care program was too popular and demand for spaces outstripped supply. To meet demand, Quebec loosened rules and allowed more private, non-subsidized spaces. Then, to help those parents paying the higher prices in these private spaces, the province made the day care expense tax credit more lucrative. Benefits to parents through the tax credit then rose to about $350 million from about $160 million, according to researchers at the University of Sherbroooke.
Ottawa mother Rebecca Hall uses the child care benefit to fund an RESP for her almost two-year-old daughter, Eliza.
The problems with federal funding
There is little data to show that federal funds are being used as the government intends. The only evaluation of the universal child care benefit (UCCB), in 2011, found 82 per cent of recipients “understood that the purpose behind the benefit was to support child care or child-care related expenses.” However, the report didn’t say whether that was how parents actually spent the money.
“The only thing that’s related to child care is its name,” says Gordon Cleveland, an economist from the University of Toronto who has studied child care funding in Canada.
Related
Kevin Milligan, an economist at the University of British Columbia who is an advisor to the federal Liberals, identified another problem with this complicated federal system: while most tax credits encourage mothers to return to the workforce, the universal child care benefit can do the opposite.
Here’s how it works: The universal child care benefit provides $100 per child, per month, to parents. (It will rise to $160 per month starting in July.) At the end of the tax year, the lower income earner in the family, usually the mother, is taxed on the $1,200 benefit. The more the lower income earner works, the more of the benefit is clawed back. Working less means a family keeps more of the benefit.
“Why not make that tax-free?” said parent Rebecca Hall, who uses the child care benefit to fund an RESP for her almost two-year-old daughter, Eliza. She also wonders why the government wouldn’t allow parents to write off the full cost of day care, rather than setting caps.
Other federal initiatives are equally shrouded in mystery. For instance, the Canada Revenue Agency wouldn’t say how much it has cost the government for a special tax credit to businesses that create child care spaces in the workplace. A spokeswoman said “there are not enough businesses claiming the credit” to allow the agency to release the information and still maintain the confidentiality of those businesses.
Nor is it clear that the $250-million federal transfer payment to the provinces has created any day care spaces. Employment and Social Development Canada couldn’t directly attribute any of the increases in child care spaces over the past seven years to this federal spending.
Gupta pointed to another issue with tax breaks: You only get the break after you put up the initial cash.
“Tax benefits help people who have money to spend,” he says.
The provinces already spend billions on child care – mainly in Quebec – and that does not include what is spent on programs such as full-day kindergarten in Ontario.
What the provinces spend
The provinces spend about $4 billion on child care, most of it accounted for by Quebec’s $2.4-billion program, according to the Childcare Resource and Research Unit in Toronto. Those numbers refer to what is spent on child care and not what is spent, for instance, on full-day kindergarten in Ontario, which could be considered a child care expense for the province.
The majority of the provincial spending is in the form of fee subsidies to families who need help paying for day care.
Only three provinces step in to regulate prices charged by day care operations: Quebec, which has a publicly funded system; Manitoba, which sets limits on fees and the number of children per day care; and Prince Edward Island, which sets standards for fees.
Other provinces provide subsidies directly to day care operators (Ontario helps some day cares cover the costs of providing services, thereby bringing down parent fees, or provides assistance to low-income families struggling to cover costs so they pay a lower rate than other parents) but they don’t regulate fees, nor do they have a provincially run universal system such as Quebec’s. Parents cover most of their family’s day care costs through fees. These provinces leave fees to the market, but regulate the care itself, including staff-to-children ratios, the qualifications of staff, as well as health and safety issues.
Municipalities, meanwhile, may offer grants to day care facilities to help cover the cost of employee wages, or operating grants to non-profit centres to defray some of their costs with the hope that these savings will be passed on to parents.
Not including Quebec, spending on subsidies to operators and parents amounts to, on average, about 42 per cent of provincial spending on child care, according to an analysis of the figures from the Childcare Resource and Research Unit. Alberta uses about 65 per cent of its child care spending on subsidies to day care operators and parents — the highest of any province outside of Quebec.
In actual dollars, fee subsidies to parents amounted to more than $717 million in 2012, not including Quebec, according to the Childcare Resource and Research Unit. When Quebec is added, the fee subsidies nationally rose to more than $2.9 billion in 2012.
That creates a combined funding envelope from provincial and federal governments of more than $11.1 billion, rising to about $12.2 billion in the next fiscal year (remembering that the federal government is to increase the value and scope of the universal child care benefit, and introduce income splitting).
Jayant Gupta and his twins Asha, left, and Rohan. ‘If it (publicly funded child care) helps people get out there and get a job and better their lives, it’s only going to be better for all of us,’ he says.
How much we should spend
Funding for a child care program to meet the international average among OECD nations would require governments in Canada to directly spend approximately $2 billion more annually on child care than they spend now.
That, however, would not be enough to meet the OECD’s actual standards for child care spending: According to the organization, countries should spend about one per cent of GDP on child care. That one per cent figure is the result of European Commission research in 1996 that found one per cent of GDP would “cover the running and capital costs of services,” as well as oversight and staff development. In Canada, one per cent of GDP would require an $18-billion commitment annually.
The NDP plan calls for $5 billion in annual spending by 2023, matched by $3.3 billion in spending from the provinces. (But given that the provinces already spend about $4 billion annually on child care, this analysis assumes they will maintain spending rather than decrease what they dole out.)
Add in $6.7 billion more in universal child care benefits, which the NDP intends to safeguard — even though the benefit is a Conservative policy promise, not theirs — and joint federal and provincial spending would be more than the $15 billion. That amount would fall below one per cent of GDP today, and, likely, future GDP.
The country’s fiscal situation would of course play a factor in whether governments of the day feel they can afford a publicly funded child care program. Late last year, there appeared to be space in the federal government’s long-term fiscal framework to handle the billions the NDP hopes to eventually spend. Now, experts say, the Conservatives have almost emptied that capacity for more spending through tax breaks and benefits, including the increase in the universal child care benefit. And government revenues are falling due to dropping oil prices.
If you’re a supporter of universal day care, what do you do?
“I believe in the balance between people’s personal rights and social values,” Gupta says. “If it (publicly funded child care) helps people get out there and get a job and better their lives, it’s only going to be better for all of us. I consider this an investment.”
jpress@ottawacitizen.com
Twitter.com/jpress
Where the parties stand
Conservatives
Position
The party believes in tax breaks and benefits rather than a federally funded child care system. The Tories have outlined their child care plan by raising the monthly universal child care benefit to $160 per child under six from $100, increasing the child care expense tax deduction to $8,000 from $7,000 starting in the 2015 tax year. There is also income splitting, which would allow eligible couples to receive a tax credit of up to $2,000.
Context
In an election year, the Conservatives want to ensure that parents continue to receive money in their accounts. The increased universal child care benefit will arrive in the summer, months before the scheduled election in October 2015. Conservatives argue that they want to put money into the hands of parents to make decisions about care, rather than creating new spending programs.
Need to know
Economists who study child care are blunt in their assessment of the Conservative plan. Their conclusion: it isn’t a child care plan at all. The funding to parents through the universal child care benefit covers about one-tenth of the average cost of child care. And the benefit itself is taxed, rolling back the payment with increases in income. The tax benefits still require parents to pay up front, which isn’t easy for low-income families. By supporting a demand-side funding approach, the Conservatives miss out on dealing with supply side issues. Parents don’t always judge the quality of a day care well, nor do they have a plethora of child care possibilities to choose from, usually jumping at the first available spot that’s affordable and in a convenient location.
New Democrats
Position
The NDP wants a national child care system that is publicly funded and costs parents at most $15 a day. The NDP plan calls for an eight-year ramp-up in spending to $5 billion annually to subsidize about one million spaces — a combination of existing and new spaces — across the country. Provinces would be expected to spend at least $3.3 billion as part of the proposal. Federal funding details would be negotiated on a province-by-province basis along with benchmarks to assess how the money is being spent.
Context
The NDP sits third in the polls. The party is trying to hold on to seats in Quebec where the provincial government is raising child care fees in the wake of mounting pressures on its budget. Appealing to those voters who helped the NDP to Official Opposition status through an issue they feel passionate about — low-cost child care — is not a bad way to help your electoral fortunes. The issue is convincing the rest of Canada the NDP plan won’t land them in the same financial straits that currently plague Quebec.
Need to know
The average cost of a child care space nationally would actually go up under the NDP plan. Currently, the average cost is $11,000 a year. The NDP plan would average out at $12,200 — and there’s no guarantee that once money is poured into the system that costs won’t increase further, according to experts. The NDP pledge is for fees up to $15 a day, meaning families would likely pay according to their means. Whether spaces are allotted to families using the same test is unclear. (Quebec’s experience has shown that middle- and upper-income families who were faster to apply for spaces squeezed low-income families out of subsidized spaces.) The one million spaces the NDP wants to fund would only cover half of the approximately 2.2 million child care spaces across the country. Then there is the promise to negotiate agreements with the provinces, which is easier said than done. Even experts wonder if the NDP can pull off the “Dryden miracle.”
Liberals
Position
The party supports the idea of a federally funded child care system with funding and standards based on negotiated agreements with each province.
Context
The Liberals have long supported federal funding for child care, but never delivered on the promise. They were on the verge of delivering just before an election was called in late 2005. Ken Dryden, then a Liberal cabinet minister in charge of the child care file, negotiated agreements with each province only to watch the party lose the election to the Conservatives, who promptly cancelled the agreements. Looking to secure more seats in the 2015 vote, the Liberals may be hoping to play the same card as the NDP: appeal to voters in Quebec to deliver badly needed seats.
Need to know
Now the third party in the Commons, but polling solidly, the Liberals continue to be short on details about the finances of their proposal. Liberal Leader Justin Trudeau’s general support for a national day care plan was met with mutters and laughs by child care advocates at a conference last November. Without any details, the NDP have staked out space that was once Liberal domain, leaving the party squeezed to find policy space with voters.
查看原文...
Putting daughter Asha and son Rohan, both now three years old, into child care cost the family about $20,000 annually per child. The couple, though well paid as architects, watched their savings dwindle.
“It’s more than our housing costs,” Gupta says. “That’s where I wonder how people can do it, how people who aren’t professionals can both work and put their kids into a decent day care.”
The child care system, Gupta says, could “definitely use a lot more public funding.
“I wouldn’t want to see social programs that bankrupt the province, like Quebec, but this could really help parents and the economy.”
Quebec’s struggle to make its popular subsidized child care system financially viable has been a point of debate over whether such a system could work countrywide. Quebec’s shaky finances, however, have forced a change in the program: The price is still about $7 a day, but those with higher incomes will be asked to pay more for day care on their taxes next year, and see a new sliding scale fee structure instituted in 2016.
For advocates of a publicly funded universal child care system, the plight of Quebec’s finances is a reason the federal government should invest billions of dollars — to help that province or any other province that wants to go down the same road.
Opponents, however, say that the proposed additional spending, part of the federal NDP’s platform, is too much and wouldn’t help bring costs under control — there is even evidence to suggest the opposite may occur. They also say the sort of tax breaks the Tories propose instead would help young families more than diverting billions from federal coffers.
What both arguments miss is that billions already flow from the federal treasury to help with the costs of child care. Much of that flow is hidden, or indirect. And there is little empirical evidence to be able to tell if this money is meeting its goals.
What the federal government spends
The myriad federal spending streams for child care add up to about $7.1 billion for the 2015-16 fiscal year, according to data from the Parliamentary Budget Officer. This will rise to $8.2 billion in the next fiscal year, including spending streams the government identifies as part of its child care strategy that the PBO didn’t include in a fresh report released March 31. These spending items include: the universal child care benefit, which will cost $6.7 billion this fiscal year once increases to the monthly benefit come into effect; $1 billion in the child care expense tax deduction; and a $250-million transfer payment to the provinces specifically to create child care spaces.
The federal government also forgoes GST on child care costs, which, according to the Department of Finance’s annual report on tax expenditures, cost the government about $185 million in the 2013 tax year.
A national child care program of the sort the NDP envisions can’t just be added on to all of this; the law of unintended consequences starts to apply. Quebec’s experience shows just how finicky the projections can be.
For instance, Quebec’s spending on its day care expense tax credit declined between 1999 and 2007 as the province instituted a heavily subsidized day care system with low costs to parents. The problem for Quebec was that the day care program was too popular and demand for spaces outstripped supply. To meet demand, Quebec loosened rules and allowed more private, non-subsidized spaces. Then, to help those parents paying the higher prices in these private spaces, the province made the day care expense tax credit more lucrative. Benefits to parents through the tax credit then rose to about $350 million from about $160 million, according to researchers at the University of Sherbroooke.
Ottawa mother Rebecca Hall uses the child care benefit to fund an RESP for her almost two-year-old daughter, Eliza.
The problems with federal funding
There is little data to show that federal funds are being used as the government intends. The only evaluation of the universal child care benefit (UCCB), in 2011, found 82 per cent of recipients “understood that the purpose behind the benefit was to support child care or child-care related expenses.” However, the report didn’t say whether that was how parents actually spent the money.
“The only thing that’s related to child care is its name,” says Gordon Cleveland, an economist from the University of Toronto who has studied child care funding in Canada.
Related
Kevin Milligan, an economist at the University of British Columbia who is an advisor to the federal Liberals, identified another problem with this complicated federal system: while most tax credits encourage mothers to return to the workforce, the universal child care benefit can do the opposite.
Here’s how it works: The universal child care benefit provides $100 per child, per month, to parents. (It will rise to $160 per month starting in July.) At the end of the tax year, the lower income earner in the family, usually the mother, is taxed on the $1,200 benefit. The more the lower income earner works, the more of the benefit is clawed back. Working less means a family keeps more of the benefit.
“Why not make that tax-free?” said parent Rebecca Hall, who uses the child care benefit to fund an RESP for her almost two-year-old daughter, Eliza. She also wonders why the government wouldn’t allow parents to write off the full cost of day care, rather than setting caps.
Other federal initiatives are equally shrouded in mystery. For instance, the Canada Revenue Agency wouldn’t say how much it has cost the government for a special tax credit to businesses that create child care spaces in the workplace. A spokeswoman said “there are not enough businesses claiming the credit” to allow the agency to release the information and still maintain the confidentiality of those businesses.
Nor is it clear that the $250-million federal transfer payment to the provinces has created any day care spaces. Employment and Social Development Canada couldn’t directly attribute any of the increases in child care spaces over the past seven years to this federal spending.
Gupta pointed to another issue with tax breaks: You only get the break after you put up the initial cash.
“Tax benefits help people who have money to spend,” he says.
The provinces already spend billions on child care – mainly in Quebec – and that does not include what is spent on programs such as full-day kindergarten in Ontario.
What the provinces spend
The provinces spend about $4 billion on child care, most of it accounted for by Quebec’s $2.4-billion program, according to the Childcare Resource and Research Unit in Toronto. Those numbers refer to what is spent on child care and not what is spent, for instance, on full-day kindergarten in Ontario, which could be considered a child care expense for the province.
The majority of the provincial spending is in the form of fee subsidies to families who need help paying for day care.
Only three provinces step in to regulate prices charged by day care operations: Quebec, which has a publicly funded system; Manitoba, which sets limits on fees and the number of children per day care; and Prince Edward Island, which sets standards for fees.
Other provinces provide subsidies directly to day care operators (Ontario helps some day cares cover the costs of providing services, thereby bringing down parent fees, or provides assistance to low-income families struggling to cover costs so they pay a lower rate than other parents) but they don’t regulate fees, nor do they have a provincially run universal system such as Quebec’s. Parents cover most of their family’s day care costs through fees. These provinces leave fees to the market, but regulate the care itself, including staff-to-children ratios, the qualifications of staff, as well as health and safety issues.
Municipalities, meanwhile, may offer grants to day care facilities to help cover the cost of employee wages, or operating grants to non-profit centres to defray some of their costs with the hope that these savings will be passed on to parents.
Not including Quebec, spending on subsidies to operators and parents amounts to, on average, about 42 per cent of provincial spending on child care, according to an analysis of the figures from the Childcare Resource and Research Unit. Alberta uses about 65 per cent of its child care spending on subsidies to day care operators and parents — the highest of any province outside of Quebec.
In actual dollars, fee subsidies to parents amounted to more than $717 million in 2012, not including Quebec, according to the Childcare Resource and Research Unit. When Quebec is added, the fee subsidies nationally rose to more than $2.9 billion in 2012.
That creates a combined funding envelope from provincial and federal governments of more than $11.1 billion, rising to about $12.2 billion in the next fiscal year (remembering that the federal government is to increase the value and scope of the universal child care benefit, and introduce income splitting).
Jayant Gupta and his twins Asha, left, and Rohan. ‘If it (publicly funded child care) helps people get out there and get a job and better their lives, it’s only going to be better for all of us,’ he says.
How much we should spend
Funding for a child care program to meet the international average among OECD nations would require governments in Canada to directly spend approximately $2 billion more annually on child care than they spend now.
That, however, would not be enough to meet the OECD’s actual standards for child care spending: According to the organization, countries should spend about one per cent of GDP on child care. That one per cent figure is the result of European Commission research in 1996 that found one per cent of GDP would “cover the running and capital costs of services,” as well as oversight and staff development. In Canada, one per cent of GDP would require an $18-billion commitment annually.
The NDP plan calls for $5 billion in annual spending by 2023, matched by $3.3 billion in spending from the provinces. (But given that the provinces already spend about $4 billion annually on child care, this analysis assumes they will maintain spending rather than decrease what they dole out.)
Add in $6.7 billion more in universal child care benefits, which the NDP intends to safeguard — even though the benefit is a Conservative policy promise, not theirs — and joint federal and provincial spending would be more than the $15 billion. That amount would fall below one per cent of GDP today, and, likely, future GDP.
The country’s fiscal situation would of course play a factor in whether governments of the day feel they can afford a publicly funded child care program. Late last year, there appeared to be space in the federal government’s long-term fiscal framework to handle the billions the NDP hopes to eventually spend. Now, experts say, the Conservatives have almost emptied that capacity for more spending through tax breaks and benefits, including the increase in the universal child care benefit. And government revenues are falling due to dropping oil prices.
If you’re a supporter of universal day care, what do you do?
“I believe in the balance between people’s personal rights and social values,” Gupta says. “If it (publicly funded child care) helps people get out there and get a job and better their lives, it’s only going to be better for all of us. I consider this an investment.”
jpress@ottawacitizen.com
Twitter.com/jpress
Where the parties stand
Conservatives
Position
The party believes in tax breaks and benefits rather than a federally funded child care system. The Tories have outlined their child care plan by raising the monthly universal child care benefit to $160 per child under six from $100, increasing the child care expense tax deduction to $8,000 from $7,000 starting in the 2015 tax year. There is also income splitting, which would allow eligible couples to receive a tax credit of up to $2,000.
Context
In an election year, the Conservatives want to ensure that parents continue to receive money in their accounts. The increased universal child care benefit will arrive in the summer, months before the scheduled election in October 2015. Conservatives argue that they want to put money into the hands of parents to make decisions about care, rather than creating new spending programs.
Need to know
Economists who study child care are blunt in their assessment of the Conservative plan. Their conclusion: it isn’t a child care plan at all. The funding to parents through the universal child care benefit covers about one-tenth of the average cost of child care. And the benefit itself is taxed, rolling back the payment with increases in income. The tax benefits still require parents to pay up front, which isn’t easy for low-income families. By supporting a demand-side funding approach, the Conservatives miss out on dealing with supply side issues. Parents don’t always judge the quality of a day care well, nor do they have a plethora of child care possibilities to choose from, usually jumping at the first available spot that’s affordable and in a convenient location.
New Democrats
Position
The NDP wants a national child care system that is publicly funded and costs parents at most $15 a day. The NDP plan calls for an eight-year ramp-up in spending to $5 billion annually to subsidize about one million spaces — a combination of existing and new spaces — across the country. Provinces would be expected to spend at least $3.3 billion as part of the proposal. Federal funding details would be negotiated on a province-by-province basis along with benchmarks to assess how the money is being spent.
Context
The NDP sits third in the polls. The party is trying to hold on to seats in Quebec where the provincial government is raising child care fees in the wake of mounting pressures on its budget. Appealing to those voters who helped the NDP to Official Opposition status through an issue they feel passionate about — low-cost child care — is not a bad way to help your electoral fortunes. The issue is convincing the rest of Canada the NDP plan won’t land them in the same financial straits that currently plague Quebec.
Need to know
The average cost of a child care space nationally would actually go up under the NDP plan. Currently, the average cost is $11,000 a year. The NDP plan would average out at $12,200 — and there’s no guarantee that once money is poured into the system that costs won’t increase further, according to experts. The NDP pledge is for fees up to $15 a day, meaning families would likely pay according to their means. Whether spaces are allotted to families using the same test is unclear. (Quebec’s experience has shown that middle- and upper-income families who were faster to apply for spaces squeezed low-income families out of subsidized spaces.) The one million spaces the NDP wants to fund would only cover half of the approximately 2.2 million child care spaces across the country. Then there is the promise to negotiate agreements with the provinces, which is easier said than done. Even experts wonder if the NDP can pull off the “Dryden miracle.”
Liberals
Position
The party supports the idea of a federally funded child care system with funding and standards based on negotiated agreements with each province.
Context
The Liberals have long supported federal funding for child care, but never delivered on the promise. They were on the verge of delivering just before an election was called in late 2005. Ken Dryden, then a Liberal cabinet minister in charge of the child care file, negotiated agreements with each province only to watch the party lose the election to the Conservatives, who promptly cancelled the agreements. Looking to secure more seats in the 2015 vote, the Liberals may be hoping to play the same card as the NDP: appeal to voters in Quebec to deliver badly needed seats.
Need to know
Now the third party in the Commons, but polling solidly, the Liberals continue to be short on details about the finances of their proposal. Liberal Leader Justin Trudeau’s general support for a national day care plan was met with mutters and laughs by child care advocates at a conference last November. Without any details, the NDP have staked out space that was once Liberal domain, leaving the party squeezed to find policy space with voters.
查看原文...
