Daycare: Money for Parents or for the System?
In the latest federal budget, the Liberal Party announced $4 billion of spending to encourage the provinces to create a national childcare system inspired by the Quebec model. Some, overly enthusiastic, even compared the positive economic impact of such a policy to that of a free trade agreement.
But speaking of the “economic spinoffs” of a daycare program is hazardous. In Quebec, it has always been difficult to properly gauge the effects of this policy. In certain Canadian provinces, both the birth rate and the participation rate of women in the labour market have increased more than in Quebec over the past 15 or 20 years, even though these provinces do not have subsidized daycare programs. Clearly, other factors must therefore be taken into account.
A study by Professors Luc Godbout, Pierre Fortin, and Suzie St-Cerny calculated that the subsidized daycare system had “paid off” for Quebec. Their logic is that subsidized daycares allow thousands of mothers to participate in the labour market. These mothers (and fathers) earn wages and pay taxes, which increases government revenues, and by more than what the program costs.
But here’s the rub: Any form of investment, tax credit, or funds directly paid out to families would have the same effect. And as a bonus, this would avoid the bureaucratic, unionized system that has led to an explosion of costs in Quebec, and that every two or three years takes parents—and taxpayers—hostage.
In sum, it’s the low cost of daycare services—the subsidies—that allow mothers to access the labour market, not the daycare system as such.
Yet, as is too often the case, the laudable intentions of a policy are confounded with the means chosen to make them a reality. In Quebec, instead of giving money to parents, we gave it to the system, which is to say, we subsidized childcare centres.
The Canadian provinces that will receive the billions of dollars from the federal government in the coming months could make another choice. They could give the money directly to parents, based on income. Or they could emulate social democratic countries like Norway and Finland, which pay out a parental allowance, and you decide whether to keep your children at home or send them to daycare.
The government is set on imposing quality standards? It can do so by overseeing and regulating the market, all while letting daycares compete among themselves to offer the best service in order to attract parents. This would cost the government less, and provide parents with more choice.