Canadian Policy

Our Children’s Future: Child Care Policy in Canada (Studies in Comparative Polititcal Economy and Public Policy)

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Excerpts from the Introduction

Most young Canadian children use non-parental care arrangements every week. The CanadianNational Child Care Survey of 1988 found that 74% of all children in Canada who are between18 months old and 6 years of age are in regular non-parental care arrangements This statistic should give all of us considerable pause — the large majority of young children in Canada already use non-parental care. Given this reality, the endless discussion about whether nonparental care is optimal is beside the point. The key issues for policy makers to ask and answer are “what kind of care could and should our children receive?” and, especially, “what can and should governments in Canada do to encourage the use of good quality child care?”

The world of young children has changed dramatically in the past 30 years. First of all, most mothers of young children now work in the paid labour force. In 1967, 17% of mothers with preschool children were in the labour force. Today, over two-thirds of these mothers are in the labour force. This phenomenal growth trend does not appear to be slowing down.

Second, young women are more career-oriented and education-oriented today than their mothers were. A quick look at the proportion of undergraduates and graduates in virtually any university program will confirm this. So, mothers today are more likely to have a career and to be accustomed to working in full-time employment than mothers were a generation ago.

Third, fertility rates have fallen dramatically in the last 40 years. From an average of 4.0 children per mother in the early 1960’s, fertility has fallen to less than replacement level (about 1.6 to 1.7 children per female). Many children do not have siblings. For many of their early years, most Canadian children are “only” children.

Fourth, the use of care by non-relatives and, in particular, licensed or regulated forms of child care and early education has grown dramatically. In 1967, only 2% of preschool children having an employed mother used day care or nursery school (about 7,000 children). By 1994-95, nearly 22% of preschool children with a mother engaged in employment or studying used either a child care centre, nursery school or a regulated family day care home (about 270,000 children). Over the same period, the number of children using other forms of care by a nonrelative approximately tripled. Over 500,000 preschool children now use kindergarten for several hours a day at age four or age five.

Fifth, most mothers stay at home with their children for a little while after they are born, but “stay-at-home motherhood” is more likely a transitory status than it is a permanent life choice. Most first-time mothers are in the labour force at the time of their first birth and the majority are eligible for maternity benefits and parental benefits paid through Employment Insurance. It is typical for parents to use nearly all the benefit weeks to which they are entitled. A large number of mothers are therefore at home with most of the first six months of life. Some union or nonunion contracts provide extended benefits for up to a year or longer. The large majority of mothers taking maternity leave return to the labour force; in Statistics Canada’s 1988 National Child Care Survey, 98% of mothers currently on maternity leave indicated an intention to return, sooner or later, to their previous employer.

Sixth, mothers who decide to stay at home with their children nearly always decide to use senior kindergarten and junior kindergarten services where they are available, and those with higher family incomes are increasingly likely to use nursery schools and other forms of non-parental care as well. As a result, many families with a mother at home use some form of early childhood care and education.

In sum, non-parental child care is a reality for most young children most of the time; this is often, but not always, associated with parental employment, and all the evidence suggests these trends will continue.

Despite the radical changes in children=s lives over the last 30 years, and despite the very considerable use of non-parental child care, most governments in Canada have done surprisingly little to affect the quality, affordability and availability of early childhood care services that families use.

Child Care Policies in Canada

Over time, a pastiche of child care policies and programs in Canada has developed, introduced by different levels of government, and designed to achieve diverse objectives. There is no overarching vision of how child care ought to be provided and what the goals of the system ought to be. There are five types of public programs currently oriented towards providing early childhood education services in Canada. Kindergarten

Kindergarten is not typically considered to be a program delivering child care services. In reality, however, it is the only program (with the partial exception of child care in Quebec) providing early childhood education and care that is universally available, regardless of income, labour force status or other criteria. Virtually all Canadian children who are between four years eight months of age and five years eight months of age at the beginning of September will attend kindergarten in the public school system. In Ontario, most children who are a year younger than this will attend junior kindergarten. Kindergarten is nearly always offered on a part-time basis (whether in the morning, the afternoon, or on alternate days). Several years ago, New Brunswick moved from having no public kindergarten, to offering it on a full-day basis. In 1997, as part of wholesale child care reform, Quebec began to provide full-day kindergarten for five-year-olds within the school system.

Maternity Benefit

Maternity benefits are provided to eligible mothers through the Employment Insurance scheme. In effect, maternity is considered to be a legitimate cause of absence from work, like unemployment or sickness, and therefore eligible for payment of insurance benefits. One of the reasons for providing maternity benefits through the Employment Insurance program (E.I.) is that payment of unemployment benefits is constitutionally a federal responsibility; other maternity issues, such as eligibility for maternity leave, fall under provincial jurisdiction. However, because E.I. rules were designed to apply to those seeking unemployment benefits, they also affect maternity benefit claimants. For instance, there is a two-week waiting period for maternity benefit (out of 17 weeks of leave, only the last 15 are paid). Intended to discourage those who are unemployed for very short periods of time from making claims for unemployment insurance, this rule is completely inappropriate when applied to new mothers. Similarly, new eligibility rules for unemployment insurance restrict eligibility for maternity benefits in unfortunate ways.

It might be argued that maternity benefit policy and child care policy are quite distinct and different things. However, most new mothers do not medically require a full 15 or 17 weeks to recover from childbirth. Some of the time is designed to allow mother and child to bond, the mother to continue breastfeeding, and the mother to adjust the household arrangements to the arrival of the new family member. The child care function of this leave is even more obvious with the adjunct to maternity leave known as parental leave (or child care leave). Parental leave is, since 1991, available to either parent (with, however, an additional two-week waiting period if taken by the father) for 10 weeks following maternity leave, also paid by E.I.

Child Care Expense Deduction

The Income Tax Act has, since 1972, allowed families with child care expenses related to work to deduct these expenses from taxable income before income tax rates are applied. Logically, the income used to pay these expenses is not properly considered to be part of discretionary income which should be subject to tax. Expenses are claimable only if they are required to earn income, so they can only be claimed by either a single parent who works or the lower-earning parent in a two-parent family if both spouses are in the paid labour force. A limit of $7,000 per child under 7 and $5,000 per child between 7 and 16 is intended to ensure that only the necessary level of child care expenditures can be claimed. This does not cover the costs of licensed child care for infants and toddlers in some parts of Canada.

Many observers argue that the Child Care Expense Deduction reduces the cost of child care, but this is a misleading observation. The Child Care Expense Deduction is properly seen as part of the process of defining taxable income. We allow families to deduct child care expenses from income for the same reason that we allow a self-employed person to the deduct the cost of renting office space – both are necessary expenses of earning income. Put another way, it is only earned income net of child care expenses that would be available for discretionary spending by the family, hence it is only earned income net of child care expenses that should be taxed.

Child Care Subsidies

Families with sufficiently low incomes are eligible in all provinces and territories for child care subsidies which may reduce the price of licensed child care to zero or to a relatively small amount. Eligibility for child care subsidy is determined partly by family income, but partly by social criteria as well. For instance, most subsidies are only available to families in which the parent(s) are employed or in training for employment. Subsidies are generally also available when children have specific developmental handicaps or when family functioning is impaired in specific ways. As may be obvious from the description, the origins of child care subsidy rules, and the primary functions of child care subsidy policies, are strongly related to welfare and social assistance objectives. In most provinces and territories, the income criteria ensure that only single parent families will get full subsidy; child care subsidies are intended to permit eligible parents to be employed, or train for employment, in order not to establish long-term dependence on public assistance. The punitive, small-minded features of many social assistance programs are reproduced in child care subsidy rules in many jurisdictions; these are purported to ensure that adequate incentives to work exist for low-income parents. Approximately 163,000 children received subsidies for the use of regulated child care services in 1998. Subsidies provide approximately 30% of revenues in an average child care centre.

Operating Grants

Some provinces and territories provide regular operating grants to licensed or regulated child care facilities (centres and family homes). The purpose of these grants may be to stabilize funding to these services and/or to enhance the wages and benefits of low-paid staff in this primarily parent-funded service. This operational funding for child care has been highly variable across provinces/territories and across time within individual provinces/territories. In 1998, operating and other grants from government provided approximately 18% of revenues of an average child care centre.

It may seem, to the casual reader, as if the sum of kindergarten programs, maternity/parental benefits, tax benefits, child care subsidies and operating grants is a considerable amount of assistance to child care. However, in the case of child care funding in Canada, the whole is less than the sum of its parts. In other words, available assistance covers (some or many) new born children until they are about six months of age, some children in poor families whose parents meet strict eligibility criteria, some reduction of taxes on income which is not truly disposable income in the first place, and nearly all children for 2 1/2 hours per day once they reach age five. This contrasts sharply with prevailing policies towards early childhood care and education in many other countries in the world. In France, Spain, Denmark, Sweden, Finland and many other European countries (and, now, in Quebec), universal early education for 3-5 year-olds or 2-5 year-olds is the norm and low-cost publicly-subsidized arrangements for large numbers of children younger than that is typically available. Unfortunately, the countries with predominantly Anglo-Saxon heritages (United States, Great Britain, Australia, New Zealand, and Canada) share the very weak development of public support for early childhood care and education. Although there are considerable differences among the Anglo-Saxon countries, their similarities in child care policy outweigh their differences.

Read more in the Introduction