The Ontario government’s proposed childcare rebate could spur as many as 112,787 mothers to enter the workforce, resulting in an increase of tax revenues for the provincial and federal government, according to a new report by the C.D. Howe Institute.
The report found a rebate would likely incentivize mothers who are sensitive to childcare costs to return to work. Ontario is proposing reimbursing low-income families up to 75 per cent of their childcare expenses, with that rate gradually declining as family income grows.
It’s important for families to have choices, says Nora Spinks, chief executive officer of the Vanier Institute of the Family, noting they lose that when they’re faced with unaffordable childcare and precarious employment.
Families are likely to enter the labour force once there are refunds or subsidies available to them, she says. “The second [barrier] is about employment stability, and it’s easier to get a stable job and be securely attached to the labour force if you have high quality, dependable, affordable childcare.
“It’s why a lot of governments around the world are focusing investments in early learning and childcare because it’s sort of a win-win,-win,” says Spinks. “It’s a win for the child, for the family, for the parent and it’s a win for the employers.”
Indeed, if mothers felt financially secure to enter the workforce, the government would inevitably benefit from extra fiscal revenues, noted the report.
While the initial fiscal cost of Ontario’s proposed childcare rebate would cost the province about $945 million per year, more working Canadians would provide tax revenue that would reduce the initial cost by about 38 per cent, to $588 million annually, according to the report.
Notably, the federal government, which hasn’t indicated whether it will participate in funding the program, would be the largest beneficiary of more mothers in the workforce, said the report. It estimated Ottawa would rake in a windfall of $1.1 billion per year in the long term from additional tax revenues.
The federal government is in a better financial position to implement the childcare rebate scheme and should consider transferring some of its profit back to Ontario in support of childcare, the report concluded.