REAL-WORLD GUIDANCE ON $10-A-DAY CHILD CARE
Rhys Kesselman and John Richards find lessons from Quebec’s system.
While salaries will need to increase to attract, train, and retain good workers in an expanded B.C. (child-care) system, total costs may well rise higher than projected for the NDP plan.
Rhys Kesselman and John Richards, Simon Fraser University
The upside of big policy proposals is that they are bold, expansive, and exciting. The downside is that they often neglect real-world evidence. Both aspects are evident in B.C.’s new NDP-led government’s proposal to roll out universal $10-a-day child care.
At present, details of the NDP child care plan are nebulous beyond the marquee $10-a-day billing with no fees for families at incomes below $40,000. Before the election, NDP point person for the plan, then-MLA Jodie Wickens stated, “We can learn from Quebec, but we can do better.” To date, no details have followed.
By examining universal daycare in Quebec and subsidized child care elsewhere, we can distil guidance for the new government in designing its own plan.
The Quebec system offers direct subsidies for reduced fees in centre-based CPEs (centres de la petite enfance) and “family-based” care, each accounting for one third of children. Another third of Quebec children in care attend for-profit private garderies, which receive public support via direct subsidies or refundable tax credits for parents.
At its start in 1997, the directly subsidized entities charged parents a flat $5 per day of full-time care. Reflecting the increased costs of running the system, Quebec now has a base charge of $7.75 per day per child plus a supplementary charge for families with incomes above $51,000, rising to a total of $21.20 for incomes above $163,000.
While some garderies receive direct subsidies and charge the same reduced fees as the CPEs, others are not regulated but parents receive public support for the fees via refundable tax credits. Credits are 75 per cent of eligible care costs for family incomes below $35,000 and scale down with higher incomes to 26 per cent above $155,000.
Total costs to the Quebec government of the child care subsidies and tax credits now run about $2.5 billion per year. Costs rose quickly in the earlier years with ramp-up of the program and later extension of unionization to care workers. The province’s cost per directly subsidized child care space now approaches $10,000 per year.
A key benefit claimed for the Quebec child care scheme is a significant increase in women’s labour force participation. In 1997, the participation rate for Quebec women of child-bearing age was below the comparable rate in B.C.; currently it is above B.C.’s rate, which suggests potential for more work and earnings by B.C. mothers.
Some analysts have estimated that mothers’ higher earnings have yielded more taxes and reduced social benefits sufficient to make the Quebec child care system fully self-financing; others have estimated that these savings fall short of program costs. Expanded child care in B.C. would likely increase women’s employment less than in Quebec, so that the system would still impose a net burden on provincial finances. Apart from such savings, the estimated annual cost of the mature NDP plan is $1.5 billion.
A recent study of Quebec’s child care system concluded that 45 per cent of children in CPEs, but only 10 per cent of those in private garderies, are receiving services of “good or excellent” quality. Overall, the Quebec system has excess capacity, with most available spots in the garderies and long waiting lists for spots in the CPEs preferred by most parents. Higher-status parents at higher incomes have been more successful than lower-status parents in securing prized CPE spots for their children.
Rigorous evaluation of child care in the US and Quebec has yielded two key findings about children’s gains in social development and school readiness. First, quality matters: informal care without structured play and activities yields only minor benefits. Second, children of low-income families realize the largest benefits from participation in good quality centres, and children of higher-income families benefit to a lesser degree.
What useful guidance can B.C. policy derive from this evidence?
Subsidies and possibly refundable tax credits will need to be large enough to ensure an adequate supply of quality care spaces. And for desirable child development outcomes, all care providers receiving public support will need to be regulated and monitored for quality of staff, programming, and facilities.
The NDP plan mimics that of the Coalition of Child Care Advocates of B.C., which foresees $30 hourly compensation for the educators staffing care centres — higher than Quebec workers earn. While salaries will need to increase to attract, train, and retain good workers in an expanded B.C. system, total costs may well rise higher than projected for the NDP plan.
Moreover, Quebec’s unionization of this sector provides a cautionary note: a strike by the province’s daycare workers in 2014 held hostage parents of 90,000 kids.
To fill the unmet demand for additional quality child care and also satisfy parental preferences, B.C. will have to subsidize both non-profit CPE-style centres and other regulated providers. Parents value diversity in choice of programming, locations, and hours — aspects in which centre-based care is typically more rigid.
Even after 20 years of development, Quebec’s CPEs are accommodating only one third of children in care. Regrettably, on account of cost pressures, Quebec is tilting any expansion of the system via tax credits toward the unregulated, lower-quality garderies.
Quebec’s experience in moving from flat fees to fees scaled to family incomes is instructive. The flat $10 per day proposed by the B.C. NDP (with no charge at incomes below $40,000) will leave a great deal to be financed by the general taxpayer. It also reflects little of the full value of the service to middle and higher earners.
In Vancouver, the median cost of full-day regulated care in centres and homes is $65 per day for kids aged up to three years and $45 per day for preschoolers. Some centres charge over $90 per day for infants. A flat $10 per day would thus represent public subsidy rates of up to 90 per cent.
A more balanced approach for B.C. would follow Quebec and charge daily fees that increase with family income — perhaps rising beyond Quebec’s top fee at higher incomes. Fees might also be tied to the child’s age to reflect the much higher costs for infants, as well as their greater benefit from parental care. Yet, the NDP plan would prioritize access to care for children under age two years.
Fully exempting lower earners from daycare fees, as proposed by the NDP, is questionable; Quebec offers no comparable fee exemption. Low earners now receive $6,400 per child tax-free in annual Canada Child Benefits. Even more dubious is the B.C. Green party’s proposal of completely free daycare for children aged under three years.
Collecting more fee revenues from all parents partaking of subsidized child care would provide fiscal scope for a more rapid rollout of expanded access in B.C. It would also make participating parents more conscious of the scheme’s true costs. The NDP anticipates a 10-year period for implementing its program; faster would be better.
Given the time required for expanding the system, thought also needs to be given to prioritizing access for children from vulnerable families at lower incomes. Those kids will benefit most from quality care and early childhood education.
Unquestionably, B.C.’s envisioned universal child care system will be costly and cannot emerge overnight. But parents and children, and society at large, will reap significant long-run benefits from a high quality, welldesigned system of child care.
A more balanced approach for B.C. would follow Quebec and charge daily fees that increase with family income. RHYS KESSELMAN AND JOHN RICHARDS, Simon Fraser University
Rhys Kesselman and John Richards are professors in the School of Public Policy at Simon Fraser University.