Could the Conservatives’ tax credit help create more child-care spaces?

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EDMONTON — Access to affordable child care has become a hot-button issue, especially for women, during the federal election campaign, as party leaders eager to return to the post-pandemic workforce to support parents Huh.

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The Liberals, the NDP, the Bloc and the Greens are all in favor of some form of national child care program, a Liberal leader Justin Trudeau’s government announced during this year’s budget, including funding for much-needed child care spaces. was promised to be given priority.

Conservatives, on the other hand, have pledged to replace the Liberals’ program with a refundable tax credit of between $4,500 and $6,000 per child, aimed at covering up to 75 percent of child care costs for low-income families. . According to the party’s platform, the money will be paid out during the year so that families don’t have to wait until the end of the year to get a refund.

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However, their proposal does not specifically mention plans to create more child care spaces – one of the biggest problems facing the child care sector in this country.

Claim

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This week, when faced with questions about this gap in her plan, Conservative leader Erin O’Toole said the money her policy would put into the child care system would fuel the creation of those spaces.

“This is an area that is not well understood, it will create more space … just by providing more resources to families,” he said during an interview with CBC. “Is every dollar tied to a place? No, it’s tied to allowing the family to make decisions.

In other words, the Conservatives’ plan rests on stimulating the market enough to create more demand and, consequently, more space.

Analysis

It is estimated that hundreds of thousands of new child care spaces are needed across the country to expand access to every family that needs it.

According to Latest data from Statistics CanadaNearly four in 10 parents who were using regulated or unregulated providers had trouble finding child care at the end of 2020, with parents of one to three-year-olds reporting difficulties finding child care was most likely to do.

More than half of Canadian parents, 56 percent, reported that they were unable to find care in their community, and 43 percent had difficulty finding affordable care.

But policies based on the simple logic of supply versus demand may not be enough to create those much-needed spaces.

“The first thing I would say is that there is a huge confusion created by politicians when they talk about spot building programs at daycare – they are not talking about spot building programs at daycare, They’re talking about a policy of increasing demand,” Vincent Geloso, professor of economics at George Mason University, told Granthshala.ca over the phone.

“Any form of subsidy, either universal from liberals or targeted measures from conservatives, is essentially a shift of the demand curve.”

Geloso says promises of increased access at the federal level are difficult to fulfill because municipal and provincial policies have a greater impact in terms of costs and supplies.

“Regulations in Toronto, for example, restrict the supply of housing and, by accident, increase the cost of rent and daycare. Therefore, in areas that have less regulation, daycare prices are lower than it is in new locations. It is easy to open,” he said.

“So, what the federal government can do is very limited because the only thing they can do is play with demand. Both policies are unlikely to have the big impacts they promised in terms of access. They Not going to give any effect, but they are giving very little yield.”

David MacDonald, senior economist at the Canadian Center for Policy Alternatives, says the tax credit does not include additional transfers to provinces to create more space.

More importantly, he says without specifying where the money is going to go, it is likely to end up in high fees.

“The trouble with this type of simplistic analysis is that the new money doesn’t have to go to space construction, [it] McDonald’s told Granthshala.ca by email, private for-profit providers in particular can easily turn to higher fees.

“BC’s example should be a cautionary tale in this regard, they established a set fee reduction ($100/month for preschoolers). However, the average fee for eating a portion of what parents were getting Growing rapidly, this was especially true for cities with more profitable providers.

The idea of ​​a refundable tax credit for child-care expenses is not new. In fact, three provinces already have them: Quebec, Ontario, and Newfoundland and Labrador.

In Quebec, there are two parallel systems, a subsidized program that costs $8.35 per child per day and an income-linked tax credit that covers up to 75 percent of the cost of those paying market rates. The latter is very similar to O’Toole’s proposal.

“What we have found is the introduction of tax credits has, in fact, increased the supply of market-based child care, which has been found to be of very low quality and also very expensive,” said Morna Ballantyne, executive director of the National Child Care Advocacy Association. Child Care Now told Granthshala.ca over the phone.

In addition to concerns about high costs, advocates such as Ballantyne – who support a universal system, such as the one proposed by liberals – worry that a market-driven approach to child care could reinforce existing problems in the system. , even if there are small improvements in infrastructure.

“When you rely on the market to fund the demand side, you’re really relying on private and individual providers to essentially set up shop. Then they’re going to be able to keep the doors open for the mother- Going to count on dad’s fees,” Ballantyne explained.

“Then they cannot respond to the very unique and more expensive provision of child care. What is needed, for example, to meet the needs of parents that meet non-standard hours or the needs of children with special needs accomplish.”

Conclusion

“As an economist, I can’t say that a subsidy won’t create more demand because it’s essentially a subsidy,” Geloso said. “But I claim this step will be too small.”

Macdonald says the overly simplistic demand versus supply argument doesn’t always mean that the extra money will go toward creating new locations.

Finally, while Ballantyne says that the tax credits in Quebec have actually increased the supply of market-based child care, he says the quality of care under this type of policy is lacking.

“The market outlook is really what we’ve had in Canada forever… and it’s a complete failure,” she said.

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