Governments and the general public throughout Canada are showing renewed interest in developing educational childcare. The 2017 federal budget has pledged to transfer $700 billion per year for childcare to provinces over the next 10 years, which is a modest, but meaningful, step in this area.
Meanwhile, conservative think tanks such as the Montreal Economic Institute (MEI) and the Fraser Institute of Vancouver are on alert. They have published harsh negative assessments of Quebec's 20-year-old experience with low-fee universal educational childcare. (1) While their usual antigovernment bent is manifest, their arguments must be pondered seriously. I address these arguments in what follows, while taking stock of Quebec's childcare program and noting what other provinces seeking to develop comparable programs might learn from it.
Quebec's childcare program in a nutshell
What is Quebec's childcare program? In 1997 Quebec's Educational Childcare Act initiated a low-fee universal program with two explicit objectives: to improve work-life balance and to enhance child development, with an eye on equality of opportunity. Currently, regardless of their employment, marital or income status, all parents have access to low-cost spaces for their preschool children aged 0 to 5 years.
The system offers direct subsidies to three types of reduced-fee providers: centre-based nonprofit centres de la petite enfance (CPEs), family-based caregivers and for-profit private garderies that conform to specified conditions. In all, these three types receive 83 per cent of children in care. The reduced fee was initially set at $5, and increased to $7 in 2004. In 2014-15 an indexed fee schedule rising with family income was introduced. It currently runs between $7.75 and $21.20. The other 17 per cent of children in care attend for-profit private garderies that charge full fees. Even here there is a fee reduction, which comes through a provincial refundable tax credit that significantly lowers parents' net after-tax payment.
Table 1 summarizes the current characteristics of these four types of licensed care. The net after-tax daily cost is what remains after subtracting government assistance from the before-tax daily charge. Government assistance includes the federal child care expenses deduction and, where applicable, the provincial refundable tax credit and adjustments for the Canada Child Benefit and the GST credit.
How much does the program cost the provincial government?
In fiscal 2016, direct subsidies to the three reduced-fee providers cost the provincial government $9,985 per childcare space. This was 2.6 times more than the $3,900 cost in fiscal 1997. Two periods are highlighted in figure 1. In the first five years (1997 to 2002), the childcare system was in rapid development, and the cost per space doubled from $3,900 to $7,804. The percentage of spaces that were eligible for direct subsidies increased progressively as children of various ages successively became covered by the program. Also, basic quality standards concerning such things as personnel qualifications, child-staff ratios, class sizes and physical areas were set and many new centres were established. Over the 14 years following this period (2002 to 2016), the cost per space increased at the modest rate of 1.8 per cent per year. Government cost control measures and prudent management by individual childcare centres did the job.
Strangely, the MEI and the Fraser Institute have claimed that, following the 2008 extension of unionization to family-based childcare workers, there was a $1 billion wage hike for this group. This incredibly large figure is seven times the increase published by Quebec's ministry of the family. Statistics Canada's payroll survey shows that, from 2001 to 2016, the average weekly earnings of Quebec childcare workers increased in line with the provincial average, at 2.3 per cent per year. This is slightly faster than the average increase of elementary and secondary school workers, reflecting the enhanced professional qualifications that have been required for good-quality childcare.
In fiscal 2016, the total cost of direct and indirect subsidies to all four types of childcare was $2.5 billion, about 0.6 per cent of Quebec's GDP. Does this make Quebec's childcare program an "expensive" program? No, for two reasons. First, by international standards, 0.6 per cent of GDP is not excessive. It is just about equal to the current average spending that advanced countries allocate to early childhood educational development. (2) Second, the cost of a program cannot be assessed in the abstract, but has to be determined relative to the benefits generated. The right question to ask is: Have the effects of Quebec's childcare program on mothers' incomes and child development been positive and significant enough to justify the cost? The MEI and the Fraser Institute answer this question negatively. I show below that they are mistaken and that the benefits more than recoup the costs.
Has the program helped mothers reconcile work and family?
The Quebec program is hugely popular. In a 2009 survey, 92 per cent of users of low-fee childcare said that the system matched their preferences. (3) Women are much more comfortable with combining work and family duties now than 20 years ago. In 2016, the labour force participation rate of Quebec women aged 20 to 44 was 85 per cent, compared to 80 per cent elsewhere in Canada. Along with Swiss women, they had the highest participation rate worldwide. Between 1997 and 2016 the labour force participation rate of mothers of children aged 0 to 5 increased by 16 percentage points, from 64 to 80 per cent. Elsewhere in Canada, the increase was just four points, from 67 to 71 per cent.
The MEI and the Fraser Institute have been trying hard to deny the role of the new childcare policy in explaining the sharp increase in Quebec mothers' participation rate in the past two decades. They have pointed out that mothers' participation also increased significantly in Atlantic Canada. This was indeed the case: the labour force participation rate of mothers of children 0-5 years old increased by 10 percentage points in the four Atlantic provinces between 1997 and 2016. However, this was much less than the 16-point rise in Quebec, and was the outcome of much more vigorous economic growth and greater wage increases than in Quebec (and Ontario) over these two decades. There is nothing in this comparison to deny the key role played by the new childcare program in Quebec.
Crucially, the published research has been unanimous in concuding that Quebec's childcare program has had a large and significant impact on mothers' labour force participation. The main studies in this vein are due to three teams of labour economists: one from the Universite du Quebec a Montreal; a trio based at the University of Toronto, the Massachusetts Institute of Technology and the University of British Columbia; and a third team from Queen's University. (4)
They reached their unanimous verdict by using the detailed information contained in repeated individual interviews from two major longitudinal surveys conducted by Statistics Canada over the 15-year period...