Childcare expenses: Of pivotal economic importance in this election
Although Canada is one of the richest countries in the world, it provides less support for affordable childcare services than any of the other highly industrialized countries monitored by the Organization of Economic Cooperation and Development (OECD).
Although technically Greece provides slightly less support than Canada, more of Greece’s childcare services are provided in kind. Much of this is done through early childhood education programs, which reduce out-of-pocket costs to parents by providing direct, state-sponsored early childhood education services.
In contrast, Canada mainly provides cash for care or tax credits. The bulk of Canada’s support for childcare is distributed in the form of the Universal Child Care Benefit, a small cash payment given to all parents with minor children, regardless of whether that parent engages in paid work. This is accompanied by a small tax credit for paid childcare costs incurred by parents who engage in paid work.
On a per-child basis, this “universal” benefit is just $160 per month for each child under age six. In Ontario, that would only cover about 18% of the average $900 monthly cost of fulltime childcare for a preschool-aged child.
On a per-child basis, the combined federal and provincial income tax credit for a parent with fulltime childcare expenses of $900 a month ($10,800 annually) gives the average parent a tax credit in the range of $1,600-$2,900 per year. This leaves the parent with a whopping $8,000-$9,000 in childcare expenses that must be paid out of their earnings.
In Ontario, the average woman entering paid work can expect to spend an average of 27% of her gross earnings on childcare.
Experiences both in other countries and in Quebec prove government programs reduce childcare costs increase all parents’ access to good paid work. Such programs also enhance household financial stability and increase the supply of trained and educated workers. All this ultimately increases government revenues.
The Conservative Party has no proposals to help increase the affordability of childcare services. They increased the universal benefit and childcare tax credit last fall but have not indicated whether they plan to provide any direct childcare subsidies or services.
The NDP announced in 2014 that it will introduce a maximum $15/day childcare program nationally, modeled on the very successful Quebec program that is currently $7/day.
The Liberals have proposed increased infrastructure spending to build more childcare facilities, but they have not yet proposed any measures to change existing childcare support measures for parents themselves. However, the party may not yet have announced the full extent of its proposed changes.
To compare: if the NDP $15/day maximum cost of childcare proposal type of proposal were to come into effect, it would cost parents working fulltime just $322 per month for childcare—just $3,870 per year. This would cut the net cost of fulltime childcare under existing law in half, which comes to more than double that figure.
Voters who consider affordable childcare essential to maintaining their careers and raising children should follow developments on this issue very closely in the final weeks leading up to the election.
This is especially pressing for students graduating with increasingly large debt loads, which are often made of both government loans and private credit card debt at levels unheard of even in the early 2000’s. This increased debt load has emerged in no small part from former Premier Dalton McGuinty’s establishment of the Reaching Higher investment plan in 2005 that allowed for an annual 4-8% tuition increase. Because of this, Ontario has some of the highest tuition rates in Canada.
The costs of childcare plus the costs of student loan payments for a decade or more after graduation can make it difficult to imagine how students can manage their financial situations. After all, it is known to be difficult to simultaneously pay for student loans, childcare, save for a home, and also save for future retirement!
Kathleen Lahey is a Professor of Law at Queen’s University. She is a contributor to Juris Diction.