Feds can af­ford more on child care, IMF says

Re­searchers say $8B a year could spur eco­nomic growth

The Hamilton Spectator - - CANADA & WORLD -

OT­TAWA — In­ter­na­tional Mone­tary Fund re­searchers say the fed­eral gov­ern­ment can af­ford to spend $8 bil­lion an­nu­ally to re­duce the cost of child care spa­ces na­tion­wide be­cause the pro­gram would pay for it­self.

The pro­posal is more than 10 times what the Lib­er­als have promised to spend an­nu­ally over the next decade on child care.

The IMF pre­dicts the cash would bring down the na­tional av­er­age for child care fees by about 40 per cent, a fig­ure ex­pected to be high enough that it could en­tice more women into the work­force and drive greater eco­nomic growth.

By the or­ga­ni­za­tion’s es­ti­mates, there are about 150,000 highly-ed­u­cated women who are stay-ath­ome parents.

If they all en­tered the work­force and started pay­ing taxes, the IMF says, they would boost eco­nomic growth by two per­cent­age points, equal to about $8 bil­lion more in fed­eral in­come tax rev­enue — enough to cover the cost of the pro­gram. But the IMF adds a caveat to the pro­posal: It should be con­di­tional on em­ploy­ment so that highly-ed­u­cated moth­ers are prod­ded into the work­force.

A spokesper­son for Social De­vel­op­ment Min­is­ter Jean-Yves Du­c­los said the gov­ern­ment’s com­mit­ment of $7.5 bil­lion over 11 years to­ward child care would in­crease women’s labour mar­ket par­tic­i­pa­tion.

“When qual­ity ed­u­ca­tional child care ser­vices are af­ford­able, parents — par­tic­u­larly women — can more eas­ily par­tic­i­pate in the labour mar­ket and in­vest in their ca­reers. Tak­ing gen­der equal­ity se­ri­ously means tak­ing child care ser­vices se­ri­ously, and our gov­ern­ment will con­tinue to work on im­prov­ing gen­der equal­ity,” Em­i­lie Gaudu­chon-Campbell said.

“Canada suc­ceeds when women and girls are given op­por­tu­ni­ties to suc­ceed.”

The Lib­er­als’ eco­nomic growth coun­cil, which met with IMF re­searchers as part of the study, rec­om­mended in a Fe­bru­ary, pre­bud­get re­port that the gov­ern­ment con­sider cre­at­ing a na­tional child care pro­gram to boost pro­duc­tiv­ity by get­ting more women, par­tic­u­larly those with younger chil­dren, into the work­force.

Ma­ter­nal labour force par­tic­i­pa­tion rates have risen in re­cent decades, but the IMF re­port notes there re­mains a gen­der gap in par­tic­i­pa­tion and wages — one that isn’t as wide in Que­bec, where there is a sub­si­dized sys­tem.

The Lib­er­als un­veiled their child care pro­posal in this year’s bud­get, pledg­ing $7.5 bil­lion over 11 years, be­gin­ning with $500 mil­lion this year and in­creas­ing to $870 mil­lion an­nu­ally by 2026 in order to fund spa­ces — or im­prove­ments — in prov­inces and ter­ri­to­ries.

The money could po­ten­tially cre­ate 40,000 sub­si­dized spa­ces over the next three years at a cost of $1.3 bil­lion.

The fed­eral gov­ern­ment has to sign fund­ing agree­ments with prov­inces and ter­ri­to­ries be­fore the money can flow. A key step in that process took place last month when Du­c­los and his pro­vin­cial and ter­ri­to­rial coun­ter­parts signed a na­tional frame­work that sets the goals for fed­eral child care spend­ing. At the time, Du­c­los hinted that the deal could one day lead to a na­tional sys­tem sim­i­lar to the one in Que­bec.

But the IMF also be­lieves the Lib­er­als’ Canada Child Ben­e­fit might be hav­ing the op­po­site ef­fect on women in the work­force.

The $23-bil­lion-a-year ben­e­fit is worth up to $6,400 an­nu­ally for a child un­der six, and up to $5,400 a year for chil­dren six to 17. The ben­e­fit is in­come tested, mean­ing that the less a fam­ily earns, the more it re­ceives in ben­e­fits per child.

The IMF says the ben­e­fit doesn’t pro­vide in­cen­tives for parents to work or get job train­ing.

The ef­fect on low-in­come fam­i­lies may be largest, with the IMF cal­cu­lat­ing that they would see their fi­nances worsen if both parents work due as a re­sult of a re­duc­tion in the child ben­e­fit, in­creases in taxes, and cov­er­ing the high cost of child care. Mid­dle­and high-in­come fam­i­lies see their fi­nances im­prove or not change if both parents work, it says.

Gaudu­chon-Campbell said the Lib­er­als in­tro­duced the ben­e­fit to help more women and girls. She said the gov­ern­ment also in­tends to in­tro­duce pay eq­uity leg­is­la­tion next year.


The Lib­er­als un­veiled their child care pro­posal in this year’s bud­get, pledg­ing $7.5 bil­lion over 11 years.

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