Investing in childcare pays dividends

When I was expecting my daughter, I was asked on more than one occasion if I had put my name on a list for childcare yet. Here in Ottawa, the waiting lists for some childcare centres can be more than a year – requiring parents who need childcare to signup before their child is even born. Parents who can’t afford the fees (which for young children can outstrip university tuition!) can wait even longer for a subsidized childcare space.

Meanwhile, just across the river in Gatineau, all parents have access to $7 a day childcare. Approximately 50% of children under 5 receive this care, which can take place in many different settings from home-based care to a regulated daycare centre. While other Canadians gaze jealously in the direction of Quebec, the argument is often made that a government-funded childcare program is expensive and unwieldy and doesn’t facilitate “true choice.”

The true choice argument really doesn’t hold water, since nothing constrains choice like year-long waiting lists that need to be signed up to before your child is even born or paying one-third to one-half of your salary in childcare costs. But a new study by a Quebec economist also suggests that the expense argument is similarly off-base.

The Toronto Star reports that Pierre Fortin, an economics prof at the University of Quebec at Montreal, has calculated the income the Quebec government receives from taxes – both income and consumption – from women who are able to work because of the inexpensive and accessible childcare option, and discovered that the government reaps more than it pays.

Quebec gets $1.05 for every dollar it invests in childcare. The number of women with young children who entered the workforce because of the program is around 70,000. Their employment boosted GDP by 1.7%.

In addition to Quebec’s increased tax revenues, the program increased federal tax revenue by about $700 million. The federal government makes no contribution to Quebec’s program.

But Quebec’s example indicates that investing in childcare is a cost-effective choice for other provincial governments. It also suggests that the federal government would be well-advised to make a contribution to provincial childcare plans, since it too reaps the fiscal benefits.