Roslyn Kunin: More access to childcare is needed - but $10/day daycare will end up subsidizing many parents who can easily pay more - is that really the best system?
Providing quality care for preschool children is a good thing. Children learn to socialize in groups beyond their family. They acquire the skills and readiness that will allow them to succeed in elementary school and later in life.
With children well looked after, all parents are free to take jobs or pursue careers contributing to their family’s financial well-being and to the Canadian economy through their productive work and the taxes they pay.
However, childcare, like housing, has become scarce and unaffordable for most; $800 to $1,000 per child per month, if you can find a space. The pandemic has shown that the cost to the economy of keeping parents – mainly mothers – at home looking after children is high.
The federal government proposes a solution: universal childcare at $10 per day. Spaces will be generated. In-home childcare providers will be supported. Those employed to care for children will be trained and receive a minimum salary of $25 per hour.
Though ideal for parents, this solution bumps into several hard realities. First, full implementation will take five years, benefiting very few existing or expected children. Second is the enormous cost of such a program.
Andrea Mrozek and colleagues have taken a detailed look at how much will have to be paid to operate this ambitious program and who will pay. Very little will be paid by parents. Ten dollars a day covers less than half an hour’s time for one child care worker. The remaining costs are to be shared by the federal and provincial governments.
Let’s look five years down the road when the program is expected to be fully implemented. Mrozek has compiled two cost estimates. One is a low-cost model, which has a higher ratio of children to staff. The higher-cost model with more staff is felt to provide better care.
At the national level, the total cost of the less expensive model would be $17 billion. Parents’ fees would cover $3.6 billion of that. The federal government has said it will put in $9.2 billion, leaving $4.2 billion to be picked up by the provinces.
The higher-cost model requires $36.3 billion. If the federal and parental contributions remain essentially unchanged, this leaves the provinces with a huge obligation of $23.3 billion. And since wages and other costs tend to grow over time, this number will increase. The federal government has said it will share any increased cost 50/50, but that would still leave the provinces with a bill of over $10 billion.
Higher-than-expected childcare costs and ongoing competing demands for government services make it likely that, over time, governments will adjust downward their stated financial contributions. Spaces won’t be universally available. As a result, many families will still find childcare unaffordable and/or inaccessible.
The program could be made much more viable if we dropped the word ‘universal,’ at least with respect to the $10-a-day fee.
Daycare should be available in all communities across Canada. But should Canadian taxpayers be paying billions of dollars a year to subsidize the many parents who could easily afford to pay more than $10 a day?
The maximum amount payable could still be kept below what private care costs today, falling to $10 or even lower for those in the lowest income brackets.
Canada is a prosperous society. We can and should be providing an acceptable quality of life for those Canadians in need. Government revenue (tax dollars) isn’t infinite. If government expenditures go to those already well provided for, there won’t be enough for the needy.
A recent example of such misallocation is the federal government gift of $500 to all seniors over 75. Not all seniors are poor. For many, this amount made no real difference in their lives.
On the other hand, some seniors have incomes so low that they must be federally supplemented. These are the ones who should have received the bonus since their income barely covers their basic living expenses. Instead, we’re hearing about such seniors having COVID-19-related benefits clawed back to the point where they can’t pay their rent. Let’s not make the same mistake with child care.
Governments should do what they can to ensure that sufficient childcare spaces exist throughout the country. They should set good, realistic standards but not make them so extravagant as to be unaffordable.
Wages in daycare should be high enough to ensure we have an adequate supply of the kind of people we want to care for our children. Care should be subsidized for those who couldn’t otherwise afford it.
But we taxpayers shouldn’t be paying to look after children whose parents can well afford to provide such care themselves.
Troy Media columnist Roslyn Kunin is a consulting economist and speaker.