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Subsidizing public childcare centres is the wrong approach

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In order to increase access to daycare services, the Quebec government recently announced the creation of 14,000 new subsidized daycare spaces over the next two years.

But with 51,000 children on the waiting list for subsidized child care, there is not a single space available. And despite the government’s good intentions, even this modest increase may not be achievable, given the inequitable circumstances in which unsubsidized child care centres find themselves.

In other words, the government is ignoring all the unsubsidized child care centres that could end up closing their doors because of the unequal working conditions of the public system.

The province will need no less than 18,000 additional educators to meet the needs of the expanding system. The government, however, is confident that it will be able to attract these workers thanks to the salary increase of up to 18 per cent for qualified educators granted in the new collective agreement signed in December. This substantial increase is, in fact, one of the elements that will jeopardize the thousands of spaces in unsubsidized child care centres.

KEEP AN EYE ON QUEBEC

In order to offer educators the same salary as the one they would receive in the public system, non-subsidized daycare centres will have to charge parents much more. In some cases, the daily fee could reach $65 just to break even. Even with the improved tax credit, these fees would represent a net expense of $32 per day for parents – $25 more than a subsidized childcare space, further exacerbating inequalities between institutions and families.

Private child care centres are therefore caught between a rock and a hard place: either they increase fees unreasonably to meet government promises, or they close and risk putting even more children on the waiting list, which is the last thing parents need. Some private child care centres may not even have a choice since they are already witnessing an exodus of their staff to the public system.

Even if the government’s intentions are noble, the creation of additional places in subsidized child care will have the effect of transferring educators from one part of the system to another, which risks eliminating thousands of existing places. Indeed, non-subsidized daycares make a significant contribution to the childcare system, representing nearly 23 per cent of daycare spaces in the province, and 32 per cent in Montreal.

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Quebec entrepreneurs have also proven their ability to meet growing childcare needs by increasing their number of spaces by an average of 25 per cent each year since 2003. Growth in subsidized spaces pales in comparison, with an average of about two per cent per year. In addition, non-subsidized daycare centres are less costly for taxpayers as they receive no direct government subsidy. In contrast, the annual financial contribution from Quebec for a single place in a public daycare center amounts to $15,500 – funds that should instead be directed to parents through the tax credit to offer them greater choice.

Quebec entrepreneurs have demonstrated their ability to increase the supply of daycare spaces without direct government subsidies. All that remains is to adopt measures that will genuinely make these services more accessible to all.

To do this, we must stop subsidizing childcare centres but rather directly subsidize parents, as is the case in several European countries. The funds could even be modulated according to household income and take the form of a refundable tax credit. If the money follows the child, establishments will be encouraged to offer the best possible quality of service, at the best price, while increasing the number of places to meet demand. After all, if competition is good for restaurants or clothing stores, why wouldn’t it be good for daycare?

Miguel Ouellette is Director of Operations and Economist at the Montreal Economic Institute.

Miguel is a Troy Media Thought Leader. For interview requests, click here.


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Miguel Ouellette

Miguel holds a master’s degree in economics from the University of Toronto. Prior to his graduate studies, he completed an honours bachelor’s degree with distinction in economics at the Université de Montréal.

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