July 16, 2012 - With a possible Quebec election fast approaching, funding for child care (and public services in general) may rise to the top of the policy agenda. In the study "Reforming the financing of child care in Quebec: Yes, but how?," (« Réformer le financement des services de garde au Québec : oui, mais comment? ») published today by the C.D. Howe Institute, Laval University's Jean-Yves Duclos and Nicholas James Clavet analyze the impact of two proposals on the issue, and propose a third option for consideration.
The first proposed measure is a family allowance of $100 per week ($5,200 per year) per child between 0 and 4 years, instead of direct grants to subsidize childcare rates to "$7" per day.
The second proposed measure is a fee increase from $7 to $10 per day for each subsidized space.
This analysis shows that "neither the one nor the other of these reforms is really possible in the short term or longer term sufficient," said Jean-Yves Duclos, study co-author and professor of economics at Laval University. A family allowance of $ 100 per week, although beneficial for working single mothers, would be more costly to taxpayers than the $7 childcare spaces, and would be difficult to implement in the short term given Quebec's fiscal situation.
On the other hand, increasing the cost of subsidized child care spaces from $7 to $10 per day would not facilitate the long-term achievement of greater efficiency and greater transparency in public funding. It would fail to contain rising costs, and would be unfair to Quebec's lowest income families.
The authors propose a different route, which would abolish direct subsidies and replace them with offsetting provincial tax credit for childcare expenses, "The tax credit would apply to now all fees paid by parents for child care, which is not the case now," said Nicholas James Clavet, co-author and researcher at the department of economics at Laval University.
This reform would achieve several objectives simultaneously. First, it would make the size of government assistance more transparent to families. Second, it would allow more effective selection and management of childcare costs. Thirdly, it would protect the income of poorer families (including single parents) and encourage mothers to participate in the labour force. Finally, this reform would increase significantly the participation of federal funding of child care in Quebec.