The Quebec government had admirable goals when it decided 20 years ago to subsidize childcare services,in particular that of encouraging more women to enter the workforce. But it committed a huge error in the way it sought to fulfil this goal, something that other provinces tempted to imitate its program should avoid repeating: rather than subsidize parents directly, it gave the money to the “childcare system.”
Not surprisingly, costs have exploded. The program’s annual costs went from nearly $300 million in 1997-1998, to $2.6 billion in 2014-2015, a 767 per cent leap. This far exceeds the increase in the number of places provided, which did not even triple. Even with inflation taken into account, the cost per child has more than doubled.
These costs might have been justified if the system mainly benefited disadvantaged children, but that has not been the case. A majority of places in the Centres de la petite enfance (childcare centres) have gone to well-off families, while single-parent mothers see their children languish on waiting lists for years.
Other assumed benefits of this type of system have failed to materialize. For example, in comparing the academic performance of children under the age of five in Quebec and the rest of Canada, professor Pierre Lefebvre at the Université du Québec à Montréal found that the childcare system did not improve children’s cognitive development scores.
It is true that Quebec has caught up significantly in terms of women in the workforce. However, the female labour participation rate increased across the country between 1996 to 2014, even in provinces without $7-a-day childcare. Some provinces did even better at this than Quebec, notably the Maritime provinces. In other words, the link is not as clear as some people claim.
Moreover, exactly the same result could be achieved by giving the money directly to mothers, so that they can put their children in private childcare centres. What enables these women to enter the workforce is not the actual subsidized childcare centres, but rather the subsidy itself, which reduces the cost of childcare services.
The system of subsidized childcare centres has also led to unexpected consequences, which should be of concern to supporters of a similar model in the rest of Canada: childcare workers at public centres, together with those providing home-based daycare, are now all unionized.
This puts the unions in a position of strength, and they do not hesitate to take parents hostage when their members are denied the wage increases they want. Unionization of home-based childcare workers alone was estimated in 2008 to cost the Quebec government more than $1 billion.
Budget constraints are forcing the government to limit the supply of new places, producing waiting lists of up to three years at some childcare centres. And the sad truth is that many get around these waiting lists through unethical means, such as bribes and favouritism, of which numerous cases have been reported in the media.
The Quebec government could have met the same goals without bringing an entire area of economic activity under state control. It could have paid parents an income-based allowance and then let them select the childcare centre of their choice, paying fair market price. It could still have imposed quality standards, and competing private childcare centres would in any case have an interest in enhancing their service to attract more parents. If it had done so, waiting lists would not exist and the government would undeniably have saved billions of dollars.
Those in the rest of the country who cast envious glances at the Quebec childcare model should keep these mixed results in mind before setting off on a similar adventure.
Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. Yanick Labrie is an Economist at the MEI. The views reflected in this column are their own.