Childcare costs are higher in Canada than in most of the world

Image copyright Reuters Image caption About a million children and teens are getting financial help from the government

How does the Canadian system work? For eight-year-olds, government subsidies supplement what they receive from parents. Young children in daycare are given government vouchers and most older children get free or very low-cost tuition at public schools.

Individual provinces are responsible for setting their own rules. For example, Ontario provides subsidies to families who send children to independent daycare centres and it doesn’t require them to accept children of all abilities or the same income bracket.

Parents in Alberta pay more for daycare than in many other provinces but the lowest-income families receive public subsidies.

Government tuition rates are determined by each province. Low-income parents can get partial reimbursement through different tools at individual schools and public daycares.

You might be surprised to learn that nearly every Canadian child in daycare is eligible for government subsidies.

Many provinces provide a larger subsidy for the middle income bracket. Such money allows parents to make more of a choice about where to take their children to daycare.

How does Canadian child care compare with the United States?

A 2012 study from the Fraser Institute found childcare costs in Ontario (the largest province) were 35% higher than in Maine, and 45% higher than in New Hampshire.

That year, California also had the highest rate of child care costs per child, at $35.40 (CAD).

The Canadian government offers an additional subsidy to the education system to deal with some of those higher costs.

This encourages parents to have more children or delay career options in order to pay for the public system, which is a gamble.

Is there a specific reason why child care costs are so much more in Canada?

Research suggests there is a strong link between cost and access.

Many provincial governments charge less for childcare than they do for daycare. However, to open a daycare centre requires a licensed facility.

Some provinces invest more into child care centres than others. And there is a link between the amount of subsidies a province doles out and the number of centres they support.

Stricter regulations at the national level mean more equipment and access to qualified child care workers.

A 2013 report by the University of Ontario Institute of Technology looked at differences in financing between provinces and found Ontario has more government spending, especially on child care, than other provinces.

And Ontario actually has many more subsidies than any other province, which likely makes the country’s child care system the most expensive in the world.

The cost of childcare is also determined by individual students in the workforce.

For example, higher education tuition is also indexed, which means tuition payments also set the cost of child care.

How did we get here?

Over the past 15 years, the Canadian government has been far more reliant on tax revenue than public spending.

In fact, federal tax receipts in 2013, the last year for which statistics are available, were the lowest in the past 50 years.

Despite the strain on public spending, Canadian Premier Doug Ford and Justin Trudeau were locked in a fight over child care, one that was compounded by a domestic political climate that many suggest is souring in Canada.

We can only speculate on what the two leaders might be thinking, but policy initiatives are a way for them to score political points at home.

One of the main issues for Ms. Trudeau was the dollar figures parents were paying for child care. They had increased 33% since 2013.

According to a Canadian Press report, Mr. Ford’s government inherited the highest child care taxes in the world and is trying to slash spending for it.

His recently proposed cap-and-trade system for carbon dioxide emissions is also an attempt to cut government spending and keep a promise to cut taxes.

The story of Ontario and the current difficulties around child care are a symptom of the overall strain the federal government is under in dealing with the United States.

Mr. Trudeau had to choose between keeping the promises he made to voters in the 2015 election, keeping the carbon tax and supporting a program that has enraged politicians on both sides of the aisle in the United States.

There is no doubt that child care costs in Canada are going to go up for a variety of reasons, the chief one being an increase in the cost of labour as baby boomers retire.

But at the same time, legislators have to find a balance between ensuring all Canadians have access to affordable child care and making sure quality is high enough to ensure participation in the labour force.

– NICK DESLUXIS is a policy analyst at the Fraser Institute.

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