The federal government should embrace “aggressive incrementalism” on their promised path toward a national childcare system and quickly build on what’s already there rather than push wholesale change, according to a new report by the C.D. Howe Institute.
The report suggests that trying to revamp how childcare is delivered in Canada by moving responsibility to Ottawa from the provinces appears unlikely to succeed. Provinces aren’t likely to agree to national standards, the authors write, pointing to recent federal efforts on childcare.
According to the report, accessible and affordable childcare will play a significant role in determining whether parents — primarily mothers — can return to their pre-pandemic trajectories of employment and wages. It stated growth in family income during the 1980s and 1990s came largely from rising female labour-force participation rates and, since then, largely from rising average wages for female employees, specifically via the increased representation of women in high-paying managerial and professional occupations.
The think-tank’s report said the federal government should bundle funding for childcare into an annual transfer payment similar to one it already provides to help provinces cover the cost of health care. The report’s authors say the money should focus first on expanding the supply of licensed childcare spaces.
The authors add that any federal government moves need to be aimed at quickly building up childcare services nationally because the status quo isn’t sustainable. The report is the latest in a series of arguments being put before the federal Liberal party on the road to the budget on April 19, in which childcare is expected to feature prominently.
Federal Finance Minister Chrystia Freeland has promised the budget will outline a plan for a national childcare system, modelled on the publicly-funded program in Quebec. Childcare has been debated federally for decades, including the role Ottawa should play in an area of provincial jurisdiction.
Ken Boessenkool, a professor of practice at the Max Bell School of Public Policy at McGill University and one of the C.D. Howe report’s authors, said in the report there’s no need to shift jurisdictions but rather have Ottawa help the country do more of what has worked and do it better. He said the federal government should pick a lane on what it wants to do on childcare to drive the agenda, specifically focusing on funding the expansion of childcare spaces where they’re needed most.
A report this month from Deloitte Canada estimated the government could spend between $7 billion and $8 billion on childcare, which would return between $1.50 and $5.80 for every dollar spent through a combination of new revenues and reduced spending on social supports.
The two reports argue the federal government is better placed financially than provincial governments to boost spending on childcare because federal fiscal room should loosen when emergency coronavirus pandemic spending subsides.
To help with household finances, Boessenkool and co-author Jennifer Robson, an associate professor of political management at Carleton University, said the government should make the federal childcare tax deduction refundable, meaning that eligible parents could get more money back from the government. At the moment, it’s deemed non-refundable, so it can only lower amounts owed, not boost a tax refund.
The authors contend the change in tax treatment would help low-income families qualify for the deduction and help middle-income families more easily afford daycare.