Quebec’s costly daycare experiment

One of the issues at play in the current election is subsidized daycare for Canadian families with young children.

The leaders of both the NDP and the Liberals made headlines again last week promising federal investment in daycare spaces across the country. But Quebec’s 20-year experiment in this area should serve as a cautionary tale for those who want to help families.

First of all, the cost of Quebec’s daycare program has skyrocketed since its inception. Annual expenditures rose from some $300 million in 1997-1998 to $2.6 billion in 2014-2015, an increase of over 700%.

Even taking into account inflation and the increased number of spaces, the cost per child has more than doubled.

Supporters of a model similar to Quebec’s in the rest of Canada should also be aware of another unintended consequence in this province: child care workers at public centres, as well as those providing home-based daycare, are now all unionized.

These unions are in a position of strength, and they have no qualms about taking parents hostage in order to get the wage increases they want. Indeed, it’s no surprise that unions are generally very proactive in supporting these kinds of schemes.

For the Quebec government, however, the cost of the 2008 unionization of home-based child care workers alone was estimated at more than $1 billion.

Some will undoubtedly accuse me of being cold-hearted for complaining about costs. Isn’t the extra public expense worth it if it helps poorer families get a leg up? The thing is, most of the spaces in the province’s “Centres de la petite enfance” have gone to children of families that are fairly affluent, with the less well-connected often languishing on waiting lists for years.

Budget constraints are forcing the provincial government to limit the supply of new spaces, and there are now waiting lists of up to three years at some child care centres.

Other hoped-for benefits have also failed to materialize or been vastly overstated. For instance, Université du Québec à Montréal Professor Pierre Lefebvre found that the province’s child care system did not improve children’s cognitive development scores.

And while Quebec’s female labour participation rate did increase between 1996 and 2014, it also increased across the country, with some Maritime Provinces improving even more than Quebec on this score.

Having said all this, the Conservative approach to the child care file is also problematic. The Universal Child Care Benefit of $100 per month for every child under age six, introduced in 2006, has just been boosted to $160, and a new $60 monthly payment for children aged six to 17 has been introduced.

While this has the advantage of not promoting daycare over other child-rearing choices, it is nonetheless a poorly-targeted way of helping disadvantaged families.

In most cases, it amounts to bribing people with their own money, at the cost of further complicating an already overly-complex tax code.

As many suspect, there is indeed a better option, but it’s not the one Quebec has chosen. To the extent that its model has had positive effects, the Quebec government could have achieved the same goals without bringing an entire area of economic activity under its control.

It could have simply given money directly to parents who needed it so that they could better care for their children, whether or not they decided to avail themselves of the services of daycares, which would have remained entirely in the private sector.

If the provincial government had done this, it would have saved billions, and waiting lists would be nonexistent.

Quebec policymakers may have had admirable goals when they decided 20 years ago to subsidize child care services. But before emulating their costly daycare experiment, federal policymakers would do well to learn from the serious shortcomings of the Quebec model.

Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. The views reflected in this column are his own.
This op-ed was also published in the Calgary Sun, the Ottawa Sun, the Edmonton Sun, the Winnipeg Sun and the Daily Herald-Tribune.