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Day care dollars: How many child care spaces does a billion bucks buy? By Robert Sheppard, CBC.ca Reality Check Team | Dec. 8, 2005 | More Reality Check

The Liberals and the Conservatives have different visions for childcare.
The Promises

The governing party entered the campaign with a five-year, $5-billion agreement, signed in principle at least by all ten provinces. This agreement would set the stage for a national system of regulated community-based programs.

As federal-provincial deals go, this one was unusual in that it didn't require matching provincial funding; it also allowed considerable provincial flexibility on how the money might be spent which means funds can go to regulated for-profit centres. And to give the provinces more certainty, Martin added another five years and $6 billion to the plan as the election campaign took off.

The Harper plan, by contrast, eschews formal agreements with the provinces and would give tax money directly to parents to make the kind of child care choices that best suits their lifestyle. Designed to help those parents who work nights when daycare is not normally available, or who would rather see their children cared for by a friend or family member, the Conservative plan resembles a revised "family allowance" in that it would give parents of children five and under $1,200 a year. As an added incentive, the Harper plan would offer businesses or non-profit institutions healthy tax credits of $10,000 for each child care space they created. The Party estimates that money would lead to the creation of an additional 125,000 daycare spaces.

Leader Jack Layton came latest to the day care debate with a plan that is a modified version of the Liberals. The main difference is that his would be based on a federal Child Care Act that would, like the Canada Health Act, limit child-care funding to non-profit centres and so would require renegotiating the agreements already in place with the provinces. The NDP would increase the federal child tax credit by $1,000 over four years to help lower-income families. On the federal-provincial front, it is promising to invest $1.8 billion next year with annual increases of $250 million over the ensuing three years. It claims this would generate 200,000 day care spaces in the first year and 25,000 each year after that based on an average cost of $9,000 a space.

The Analysis

All three parties are basing their expectations on highly questionable assumptions.

On their website, the Liberals say they expect their child- care proposal to create 625,000 new spaces over the next five years at a cost of roughly $8,000 a space. The $8,000 figure seems to be based on the operating costs of Quebec's highly popular child care system, which charges parents $7 a day, up from $5 when it was first introduced in 1997. But there are a couple of problems with this assumption. One is that many of the capital costs of setting up and operating Quebec day care centres are hidden in its education budgets. (Schools have been mandated to offer full-day kindergarten as well as after-school care for certain primary grades.) Another is that Quebec's subsidized system reaches less than half the pre-school age population and many are turned away.

By contrast, in early December, when Ontario announced plans to utilize its share–$1.1 billion over three years of federal funding–it said it would be creating 25,000 new spaces. That works out to $44,000 a space.

Ontario's Best Start plan is a kind of Cadillac version, mind you. It covers both the capital and operating costs of new centers, as well as planned subsidies for low-income families.

But provincial officials and child-care advocates both say you cannot just count operating costs, at least 80 per cent of which are salaries, when you are trying to create new spaces. The rule of thumb is that new spaces, whether they have to be built or rented, cost between $15,000 and $20,000 each, depending on the locale. Annual operating costs run between $8,000 and $9,000 for toddlers; and upwards of $11,000 for infants who require more caregivers. Groups like the Child Care Advocacy Association of Canada also estimate that 10 per cent of new spaces will be, perhaps even mandated, for kids with disabilities. The care costs for these children can amount to about $20,000 a year.

Kira Heineck, executive director of the Ontario Coalition for Better Child Care, says Ottawa was talking much more modest numbers–roughly 100,000 new daycare spaces–when the $5 billion was first put on the table a year or so ago, a far cry from the 625,000 they are now claiming.

The Conservative plan suffers from some of the same fiscal optimism–it's $10,000-a-space tax credit may not be enough real incentive to create the 125,000 new spaces the party is hoping for, especially in the absence of other direct operating subsidies. The $10,000 is a one-shot, one space offer; costs in subsequent years would have to be carried by the operator.

The plan also seems to have another flaw. The $1,200-a-year allowance is to go to all families with kids five and under and is estimated to cost a substantial $10.9 billion over five years. But Statistics Canada reports there are 2,057,848 children five and under at the moment which would bring the five-year cost of the program to $12.3 billion. The Conservatives may be thinking that some of this money will be taxed back from higher income families. But by the same token, families in this bracket who do not require daycare can simply redirect the new-found money to a tax-protected RESP and perhaps escape the taxman's claw altogether.

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