We can afford $10 a day child care in BC

July 12, 2015

For families with school-aged children, summer is one of the most stressful and expensive times of the year as they scramble to find and pay for child care.

But for parents of younger children, that’s a year-round struggle. At about $10,000 a year, four years of child care can easily add up to more than the cost of a university degree. And that’s if you’re lucky enough to find a spot, since BC only has enough regulated child care spaces for 27% of children under six.

Numerous studies have shown how our society benefits from quality child care being easy and affordable for all parents to access. Child care experts in BC have developed a plan that would reduce fees to $10 a day, create enough spaces for all families who want them, and increase the quality of care in regulated programs. This $10 a day child care plan has gathered support across the province, from businesses, local governments and academics.

However, when BC’s political leaders are asked about $10 a day child care, they wring their hands and tell us that unfortunately we simply can’t afford it, despite being one of the richest provinces in one of the world’s richest countries.

I bring you good news: the $10 a day child care plan is entirely affordable, in part because it would be largely self-financing.

In a new study, I build on research by economist Pierre Fortin, which found large and almost immediate economic benefits from Quebec’s child care plan, launched in the late 1990s. These benefits were the direct result of more mothers returning to work (Quebec’s program did not have a measurable impact on the working patterns of fathers).

If BC’s experience were similar, the $10 a day child care plan would lead to a significant increase in the number of women in the workforce, boosting our provincial economy by $3.9 billion per year. The provincial and federal governments would see benefits to the tune of $1.3 billion, split close to 50/50 between the two levels of government. These benefits come from higher tax revenues, fewer families with children needing social assistance, and reduced reliance on other income-tested transfers.

In other words, the direct returns to government from investing in the $10 a day plan would almost entirely cover the $1.5 billion annual cost of the plan (once fully phased in, which would take 10 years).

Since the federal government stands to see a boost in revenues from the introduction of quality public child care in BC (or any other province), it makes sense to share the costs. However, my analysis shows that in the absence of federal support, BC can afford to implement a provincial-only program like Quebec’s.

We’d need to raise a larger amount – approximately $870 million per year – because the boost in federal tax revenues could not be counted to offset the costs. But $870 million is just 2% of this year’s provincial budget, and we can comfortably afford it.

There are a number of ways BC could raise these revenues without cutting other programs. My study models one possible approach in the form of a series of modest tax reforms staged in gradually over a 10-year period.

Changes to the income tax brackets for the richest British Columbians, modest corporate tax increases and very small personal income tax increases could raise the revenues we need and still leave us with tax rates lower than the average for other provinces. For the vast majority of people, these changes would mean paying between $20 and $80 more per year.

Under this proposal, the typical BC family with children in child care would save more than $13,000 per year (at the median two-parent family income of $90,000, with two children aged two and four).

Families that directly benefit from child care would still contribute a large share of the program costs – but instead of paying through exorbitant fees up front they would pay through a combination of affordable fees and the income tax system.

For the rest of us, pitching in a little is a bargain for what we’d get with universal quality child care: healthy child development, improved social inclusion, more gender and income equality and economic prosperity.

This is the model we use for funding schools. It’s time to extend it to earlier years by building a quality public child care system.

Iglika Ivanova is a senior economist at the Canadian Centre for Policy Alternatives and author of Solving BC’s Child Care Affordability Crisis: Financing the $10 A Day Plan.