Federal childcare subsidies can create aid addiction and lower wealth levels, experts warn


The Liberal Party made Universal Child Care an election promise during the suspension of the campaign in Ontario on August 17, the day after Prime Minister Justin Trudeau called for an early election on September 20.

However, as more states enroll in the federal government’s universal childcare program, experts warn that subsidies can lead to aid dependence and lower levels of wealth between day care centers and parents. To do.

The federal budget for 2021 will reduce childcare fees at regulated centers across the country to an average of $ 10 a day and spend up to $ 30 billion over the next five years to support early childhood learning services. I made a suggestion.

Douglas Allen, a professor of economics at Simon Fraser University, says childcare subsidies will have different effects for families with different income levels.

For two households already using childcare services and earning more than $ 100,000 a year, “what you are doing is already giving a large family a gift.” For families who earn $ 40,000 a year while one parent is raising children at home, it can induce an unemployed spouse to join the workforce.

“But that’s not our wealth increase, because the only reason we see it as a wealth increase is because we ignore the fact that our mother had previously provided day care. She services. GDP account. I think that’s a big problem, “Allen said in an interview.

“You are actually destroying wealth.”

This approach is similar to the so-called “parable of the broken windows”. People come to the conclusion that he has benefited the community as the boy breaks the window and his father has to pay the glazier to repair the glazier. damage. Glaziers now get the money to buy bread from bakeries, and bakeries will be able to buy suits from tailors, stimulating the local economy.

“It’s a famous fallacy, and that’s exactly what this is. [policy] That is, ignoring costs can make an action seem beneficial, but only because it ignores costs. In this case, you ignore the fact that mom is probably the most efficient parenting provider, “he said.

“Usually, when the government gets involved in something, I think it should generate very strong social benefits, and I think the best people to raise and care for children are parents and family. increase.”

In order for the initiative to proceed, all states and territories need to be part of it, and each needs to plan for a reduction in funding. So far, eight states and three regions have reached an agreement with Ottawa.

However, the Ontario and Alberta governments are becoming more cautious and are continuing to negotiate with Ottawa.

“We promise a lot for Ontario, but we have to deal with the unique benefits of this state,” said Stephen Lecce, Ontario’s Minister of Education, at a press conference on August 16. It must not be. “

Alberta wants more flexibility when it comes to financing. “The needs of hundreds of thousands of Alberta families,” said Prime Minister Jason Kenny. [that] You need to consider “using a combination of different solutions, including informal care.”

After Saskatchewan announced its participation in the program on August 13, the federal government issued a press release, and by the end of 2022, Saskatchewan families would have an average parental fee for regulated children under the age of six. He said it would be reduced by 50%. Childcare.

Pas Gomez, a researcher at the Frontier Public Policy Center, describes the grant as “a shallow top-down policy that creates addiction to nursery schools and parents.”

He also said that grants could reduce competition between daycare centers and have other unexpected consequences.

“High prices often result from awkward regulations that keep out competitors. Subsidies may act as short-term band-aids, but if you increase demand significantly without increasing supply, the cost Will increase and reduce the pressure to improve quality, “Gomez wrote in a recent commentary.

“Adjusting state-sponsored child care alone cannot produce better quality and more affordable service. If policies ignore household needs and lifestyles, taxpayers will literally childcare Canada. It will only fund the whims of officials to turn it into a nation. “

One of the goals of the childcare plan is to help women return to work, as nearly 500,000 women have been unemployed in the COVID-19 pandemic, of which more than 200,000 have been unemployed for at least 12 months, according to reports. Is to do. According to RBC.

But while drawing more people into the workforce seems to increase overall GDP, subsidies may have the effect of reducing overall wealth, Allen said.

“All the problems that arise for subsidies-that is, tax increases are needed, taxation reduces people’s workforce, and people’s workforce causes lower GDP-it is our level of wealth. Will reduce, “he said.

There is also the question of whether subsidies mean that the state is more involved in providing day care, Allen said.

“If the government is subsidizing, they will be interested in day care supervision. If you are interested in day care supervision, that means we are imposing restrictions on day care. So they have to join a union and are they probably run by the government? “

Andrew Chen