Moms go to work — and pay more taxes — when child care is affordable: report

Much of B.C.’s proposed $10-a-day program would pay for itself through increased taxes and reduced need for welfare, argues think tank

Pre-school children play at Collingwood Neighbourhood House daycare. A new study argues that the cost of an affordable daycare program for British Columbia would be offset by significant economic benefits | Jen St. Denis

The hardest part of Sharon Gregson’s job is having to tell families their children can no longer attend daycare because they have fallen so far behind on their monthly payments.

“What I hear from working mothers is that if they lose their childcare space they’ll lose their job,” said Gregson, director of child and family development services at Collingwood Neighbourhood House and an advocate for a $10-a-day child care program for British Columbia.

“We bend over backwards to help families and extend payment plans, but at the end of the day when people owe thousands of dollars, we reach a place where we can’t carry that debt any more.”

B.C. parents know all too well the pain of waiting for sparse daycare spaces, and then, if their child is lucky enough to get a space, paying what can amount to a second mortgage.

But aside from providing a helping hand to parents, there are compelling economic reasons for governments to fund child care.

In Quebec, which first introduced a $7-a-day program in the late 1990s, the number of women with young children who worked increased almost immediately.

Source: Statistics Canada, Canadian Centre for Policy Alternatives

“The fiscal harvest of the three levels of government from having many more mothers back in the labour force sooner than they would otherwise return, or maybe they would never have returned, is so large that it makes the program pay for itself,” said Pierre Fortin, an professor of economics at the University of Quebec at Montreal.

Between 1996 and 2008, the number of working women with pre-school-aged children increased nearly 22 percentage points in Quebec, according to a 2012 study by Fortin and his colleagues. Meanwhile, the number of single-parent families on welfare dropped, from 99,000 in 1996 to 45,000 in 2008.

In a new analysis, Iglika Ivanova, an economist at the Canadian Centre for Policy Alternatives, says that much of B.C.’s proposed $10-a-day program would pay for itself through a similar phenomenon.

Previous work by the University of British Columbia estimates that B.C.’s program would cost $1.5 billion per year. The CCPA calculates that if the federal government does not help fund the program, the B.C. government would have to pay $202 million per year after realizing $630 million a year from increased taxes, economic growth and reduced use of government benefits.

Meanwhile, the federal government would see increased revenues of $688 million a year.

In the report, Ivanova laid out a 10-year implementation period, with the program coming into full effect and costing the entire $1.5 billion in year 10. That phased process is similar to the way it was done in Quebec.

“In year one, we propose to lower the fees immediately for infants and toddlers, and build some new spaces and start raising the educational standards for providers,” Ivanova said. “By year five we propose having the fees down for all children to $10 a day.”

Vancouver has the second-highest child care fees in the country. Source: Canadian Centre for Policy Alternatives

The report proposes raising taxes in order to fund the plan: raising the small business tax rate from 2.5% to 3%, raising the corporate income tax from 11% to 12%, increasing taxes on high-income earners and eliminating certain tax credits.

All evidence shows unaffordable and unavailable child care is a barrier to women working, said Kevin Milligan, an economics professor at the University of British Columbia.

But he questioned whether the CCPA’s estimation of the revenues brought in by increased participation of women in the labour force, as well as the money brought in by raising taxes, are overly optimistic.

“Their estimates look a bit aggressive on how much tax revenue you’d raise from the extra rates, but I’m glad they’re advocating that you’d have to pay for it somewhere,” he said.

Jock Finlayson, vice-president and chief policy officer at the Business Council of British Columbia, was skeptical about how much Quebec’s child care program has boosted the province’s economy, given Quebec’s high public debt, low growth in GDP and incomes and lower levels of business investment compared with Canada and the western provinces. He noted that social programs such as universal daycare and comparatively low university tuition have resulted in high taxes.

A provincial child care program funded by tax increases would be much less risky if the federal government contributed a large share of the funding, Finlayson said.

Universal daycare is often blamed for contributing to Quebec’s high public debt, but Fortin believes that’s unfair.

“It costs a lot, but you get more out of it than the cost. It’s profitable,” he said. “Whatever the cost is, we need to make sure it’s not inflated to the extent it becomes unprofitable.”

Dual income families as a proportion of couple families with at least one child under 16 years. In 1976, Quebec had the second-lowest proportion of families where both parents worked, at 28.7%. Today it has the second highest rate, at 72.8%. Source: Statistics Canada

For Fortin, one of the most compelling reasons for affordable child care is that it provides women with financial autonomy; he noted that in Canada, couples stay together an average of eight years.

In Quebec, women with young children are more likely to be working a full-time job, and to continue working after their children become school-aged. This effect especially benefits women with a high school education, since they are less likely to return to work after a four or five year gap than women with university degrees.