Government-run daycare: Another white elephant

Author: Pierre-Guy Veer 2015/02/25

The “Quebec model” – which has yet to be imitated anywhere else in Canada – is under attack.

The ruling Liberals have dared to end the government-subsidized daycare rate of $7 per day and have introduced a “progressive tariff” (meaning subsidies will be prorated according to parents’ income). This is merely putting a Band-Aid on a gaping wound, as the Centre de la petite Enfance (CPE) system is completely unsustainable.

Created in 1997 by then-education minister Pauline Marois, these public daycare centres were meant to help lower-income children develop normally and help women join the workforce.

According to a study by economist Pierre Fortin, the latter has worked, since women’s participation rates have increased.

He ignored the fact that other provinces have seen their female participation rates increase too. According to Statistics Canada, the female participation rate increased by seven percentage points to 60% between 1997 and 2014 in Quebec. It is the sixth-highest rate, barely ahead of BC and Nova Scotia, and the fifth-fastest rate of increase for that period.

This increase has come with a hefty price tag. A CPE spot costs taxpayers between $40 and $60 per day per child, or $2.5 billion per year. It shouldn’t be a surprise since, according to columnist David Descôteaux, the money was given to “the system” rather than to parents.

As a result, unions have increased the costs sevenfold while there are only three times as many spots. Workers greatly benefited from unionization; their salaries increased between 51% and 61% since 1997. Unions also helped create a generous retirement plan to which workers only contribute 5.9% of their taxable income (including those having a daycare centre in their houses), the rest being paid by taxpayers – $80 million for 2013-14, a 72% annual increase since the inception of the plan in 2005-06.

Furthermore, UQAM professor Pierre Lefebvre concluded that the CPE has no notable influence on low-income children’s cognitive development, as their test results are within range of everyone else in the country.

In short, the CPEs failed by whatever metrics one considers. They haven’t improved children’s development, their influence on female participation rates (if any) is expensive and they have created unfair competition for private daycare centres.

Unlike the CPE, private daycare centres have to pay taxes (sales, municipal, school) and receive no direct subsidy. This means that they have to charge full price ($35-$45), according to the Private Daycare Association. Many have shut down since 1997 because they can’t compete.

So if Premier Philippe Couillard truly wants to restore fiscal sanity in Quebec, he needs to abolish the CPE altogether. If government is still to have a role in daycare, then it should be in the form of vouchers so parents can choose and private daycares can compete.