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Childcare • Jobs • Economy

A childcare win-win

Pierre Fortin - 09 April 2015

Quebec’s low-fee childcare programme created more jobs, more than paid for itself and raised the province’s GDP

In Canada, responsibility for health, education and welfare lies with provincial governments. Beginning in 1996, Quebec – the second largest province – adopted an ambitious set of family policies, including a universal low-fee childcare programme. This new system replaced the traditional one, in which parents normally pay the full cost of childcare, but have access to tax deductions. The Quebec programme is unique in Canada. In all other provinces childcare has continued to operate in the traditional way.

The programme was started by the Quebec provincial government in September 1997. At that time it cost parents C$5 per day, and was targeted at four-year-olds. Simultaneously, full-time kindergarten was extended to all five-year-olds. The programme was then progressively extended to younger children. It was finally opened to all preschool-age children in September 2000. In January 2004, the daily fee was raised to C$7. Over the past 15 years, there has been a spectacular rise in the proportion of Quebec children aged four and under attending regulated childcare. That jump was from 19 per cent in 1998 to 54 per cent in 2012, with a reasonably good balance of children from high- and low-income classes. Elsewhere in Canada, the attendance rate for children under five in regulated childcare in 2012 was 27 per cent.

A rough indication that the impact on the labour force participation of Quebec mothers has been substantial is that the overall participation rate of women aged 25 to 44 went from three percentage points lower than the national average (excluding Quebec) in 1996 to three points higher than average in 2014. Furthermore, the number of lone-parent families on Quebec social assistance has declined sharply from 99,000 in 1996 to 39,000 in 2015. At C$2.4bn in 2014-15, the provincial government’s spending on subsidies to childcare facilities represented 0.6 per cent of Quebec’s GDP.

Viewed as a ‘natural experiment’, Quebec’s childcare reform has provided researchers with a great opportunity to get a reliable estimate of the impact of this type of policy on mothers’ labour force participation. So far, two teams of researchers have published research in major scientific journals. One team included three researchers from the University of Toronto, the Massachusetts Institute of Technology (MIT) and the University of British Columbia (UBC). The other came from the University of Quebec at Montreal (UQAM). The two groups have used various data sources on the behaviour of tens of thousands of individual Canadian mothers over time.

One crucial piece of evidence reported by the UQAM team has been that the use of low-fee childcare when a child is of preschool age raises the mother’s employment rate not only during this early period of the child’s life but also later, once the child has entered school. In other words, the programme’s impact on mother participation in the labour force is not only static, but also has a dynamic extension: it persists over the long term.

Tallying up the (consistent) results of the Toronto-MIT-UBC and UQAM teams, a third group, including myself at UQAM and colleagues from the University of Sherbrooke, has calculated that, in 2008, Quebec’s low-fee childcare programme was responsible for about 70,000 more mothers being in work. This means that there were 3.8 per cent more employed women than if the programme had not existed – a large impact by any standard. The long-term increase in provincial GDP resulting from this supply-side increase in employment would be of the order of 1.7 per cent.

Our UQAM-Sherbrooke team has also assessed the impact of the new Quebec childcare programme on the combined fiscal balance of the federal and provincial governments. Our estimate is that, in 2008, the replacement of the traditional childcare system by the new low-fee programme was making fiscal revenues (including consumption as well as income taxes, and net of tax expenditures and family transfers) larger by about C$2.1bn, while the additional cost of subsidies was C$1.2bn. The combined fiscal balance of the two levels of government was thus made C$900m larger. Each C$100 of additional childcare subsidy paid out by the provincial government generated a return of C$175 to the two levels of government. Put succinctly, the new low-fee childcare system was more than paying for itself.

It is in itself interesting and reassuring that Quebec’s low-fee childcare programme is financially ‘profitable’ for both the provincial and federal levels of government – more for the latter, which has nothing at all to pay out. However, we ought to remember that what we want is better child development, a better balance between work and family for parents and greater long-term financial autonomy for women. Making governments richer is not an objective of childcare policy. It is neither a necessary nor a sufficient condition for a programme to qualify as a ‘good’ one. But the financial success of the Quebec experiment may in the future help convince not only ministers of labour and the family, but also ministers of finance, that a low-fee childcare programme is a good idea.

At the same time it needs to be recognised that the rapid growth of the Quebec programme has given rise to a number of problems. Above all, the demand for subsidised spaces still considerably exceeds the supply. Moreover, the development of new facilities, place assignment rules, the flexibility of operating hours, the quality of educational services (particularly for children from low-income backgrounds), short- and long-term effects on child development, the rate of investment in staff training, and the universal nature of the programme are regular topics of debate. The programme is currently under review by the provincial government and will probably soon be amended in various respects. But all that said, it is extremely popular with young families of all incomes and is definitely here to stay. Many of its problems must be viewed as challenges to be met rather than as threats to the programme’s survival.

Pierre Fortin is professor emeritus at the University of Quebec at Montreal. This essay draws on a longer paper in which references to the research mentioned above can be found

This is a contribution to Policy Network's work on Social Policy and Changing Welfare States.

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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