What’s the difference between the parties’ child-care plans? For some Toronto families it could be $10,000 a year

OTTAWA—A Toronto family that pays full-fees for an infant in licensed daycare could save $10,000 more per year under the Liberal child care plan than with the tax credit the Conservatives are proposing, according to an independent analysis of the policies.

The published Friday by the Canadian Centre for Policy Alternatives assumes the New Democratic Party’s child-care proposal — which is outlined as “universal $10-a-day child care” in the — is identical to the $30-billion program the Liberals already started implementing with seven provinces and one territory before the election was called on Aug. 15.

The Liberals have pledged these agreements will see average fees for regulated child care cut in half by the end of 2022 and result in $10-a-day care by 2026.

Erin O’Toole’s Conservatives, on the other hand, have promised to bring in a tax credit to cover up to $6,000 in child-care expenses for families earning less than $150,000.

According to economist David Macdonald, who authored Friday’s policy analysis, the Conservatives’ proposal would cost the federal government less money but result in fewer savings for most families that pay for child care.

The Conservatives’ tax credit would cost the federal government around $2.3 billion in 2022, the study says, while the average family with children in daycare would receive around $500 to $1,000 a year.

In Toronto, where daycare fees are among the most expensive in Canada, families are paying an average of $22,000 per year for each infant in licensed daycare, Macdonald said.

That means, if the province signed on to the Liberal/NDP child-care plan and costs were cut in half next year, these families would save roughly $11,000. That’s $10,000 more than the average payout under the Conservatives’ tax credit, Macdonald said.

The Liberal plan would cost more than $3 billion in 2022, with annual costs increasing to more than $8 billion in the 2025-26 fiscal year.

Average families with infants in licensed care in other cities in the Greater Toronto Area, British Columbia and Alberta would also save between $5,000 and $8,000 more per year, per child under the Liberal/NDP plan than the Conservatives’ proposal, said the study, which included an analysis of costs in 37 cities across the country.

“It’s a huge difference,” Macdonald said, adding that the gap is especially stark in cities like Toronto.

Of course, the savings discussed in Macdonald’s report hinge on whether the Liberal/NDP plan would apply in Ontario. The province did not sign a deal with the federal government before the election.

Jennifer Robson, a professor of political management at Carleton University, also cautioned that Macdonald’s analysis does not factor in provincial subsidies that some families receive in Ontario for child care — meaning the large savings in places like Toronto wouldn’t apply to all families.

The analysis also assumes the existing Ontario provincial child-care tax credit would apply to families that spend more than $8,000 each year on daycare.

Robson also raised the question of child-care spaces, stating that the Conservative tax credit wouldn’t do anything to increase capacity, whereas the Liberals’ deals with provinces are meant to bring in more staff and spots for more kids in regulated child care.

Gordon Cleveland, an emeritus associate professor of economics at the University of Toronto, said the main difference is that the $10-a-day vision would create a “system” for affordable child care by expanding regulated spaces, while the Conservative tax credit would cover a portion of child-care costs for fewer people without accompanying efforts to increase capacity for child-care programs across the country.

The policy analysis concludes around 6,600 households across Canada would receive the maximum annual $6,000 tax credit under the Conservatives’ plan.

According to data from Statistics Canada, at least half of families with kids five and under in 2020 had their children in licensed child care centres where the Liberal/NDP savings would apply.

“With the tax credit, child-care affordability will definitely be improved,” but the savings it would bring “pales in comparison” to those under $10-a-day child care, Cleveland said.

Cleveland also said the Conservatives’ plan would be less effective at reducing barriers to women in the workforce. That’s because high child-care costs can discourage some parents — usually mothers, Cleveland said — from entering the labour force, since the wages they earn might not sufficiently exceed daycare fees.

With less-generous savings under the proposed tax credit, Cleveland said the party is leaving “the barrier to entering the labour force very high.”

For Robson, the Carleton professor, Canadians shouldn’t have to choose between the plans — she argued people should expect governments to create more regulated child-care spaces at the same time as they increase tax credits aimed to help families with lower incomes.

“Why the hell can’t I have both, right?” she asked. “I want tax treatment of my child-care expenses … and I want to know that governments are working together to actually make more quality spaces.”