Childcare activists often point to Quebec’s universal childcare system as a model for the rest of Canada. Quebec provides heavily subsidized childcare to parents across the income distribution at a nominal fee of $7 per day, with taxpayers covering the rest of the bill. While politically popular, this system is inefficient and subsidizes economically comfortable households to the detriment of families in greater need. Instead of subsidizing formal childcare for all families regardless of income, governments should dedicate scarce public funds to providing assistance to lower-income families.
The most important reason governments should prioritize access to early learning opportunities for low-income families is that we know these interventions can have lasting effects on cognitive and behavioural development for children in this income bracket.
Several convincing studies have demonstrated that participation in high-quality childcare programs targeted at economically vulnerable families can result in improved academic performance, increased productivity and other social benefits. This kind of targeted approach to public spending is a worthwhile investment in human capital.
Proponents of universal programs frequently err by generalizing these findings across the entire population. This is a mistake because the evidence surrounding lasting impacts from childcare participation for children from economically secure families is far less conclusive.
In fact, the best evidence compiled to date suggests that while high-quality childcare programs can improve school readiness and academic performance at the moment of school entry for children from middle- and upper-income families, these benefits fade out quickly. Multiple longitudinal studies in the United States have found that positive developmental effects from childcare participation for children from non-poor families are short-lived, fading out almost entirely by the end of grade three.
The evidence from Quebec points in the same direction. There is some evidence the province’s childcare program has produced improvements in early learning for children from economically disadvantaged families, but there is little evidence of significant benefits for other children. A key argument for the creation of Quebec’s childcare program was that it would produce cognitive development gains. Sixteen years later, there is little evidence of broad, enduring effects on developmental outcomes.
The problem with universal programs like Quebec’s is that they spread out public spending across the entire income distribution, diluting the potential public benefits that could be produced by focusing on the families in greatest need.
In fact, Quebec’s system disproportionately provides subsidies to upper-income families. Recently reported statistics show that families in the top 25 per cent of the income distribution are almost twice as likely as families in the bottom 25 per cent to have a child enrolled in one of the province’s $7 per day childcare programs.
The reason for this outcome is that at a flat, nominal fee, demand for childcare spaces significantly outstrips what the government can provide, despite spending an eye-popping $2.7-billion a year. This results in wait lists, and affluent families tend to have more social capital and ability to spend time navigating the system, and so have more success getting their children to the top and capturing the subsidy.
These numbers show that instead of going to the families who need it most, and where it can have the greatest impact on child development, more money is flowing to the province’s most economically secure families, who would generally have access to a wide range of childcare options even if the program did not exist at all.
Eliminating the subsidies for wealthier citizens and using the savings for targeted efforts to provide early learning opportunities for lower-income families can reverse this indefensible outcome of the Quebec model.
These same principles indicate that a re-think of the design of the federal government’s signature childcare policy, the Universal Child Care Benefit (UCCB) is overdue. The UCCB program sends a $100 cheque to parents of all children under age six each month to help defray childcare expenses.
Providing cash allowances to parents instead of directly subsidizing childcare spaces is a defensible policy approach, and it has the advantage of providing assistance and access to enriching developmental resources to parents regardless of the childcare arrangements they prefer. However, this type of program should also be targeted rather than universal. There are much better uses for scarce public dollars than sending $1,200 per year to affluent parents. Eliminating payments to high-income families while using the savings to provide more resources to families near the bottom of the income distribution would improve program design.
Neither providing subsidized childcare spaces for upper-income families nor giving them unneeded cash allowances qualifies as a wise use of taxpayer money. Instead, governments should pursue a focused, targeted strategy that provides assistance to lower-income families. This approach directs scarce resources where they are most needed, while making a sound long-term investment in Canada’s future store of human capital.
Ben Eisen is the Director of Research and Programmes at the Atlantic Institute for Market Studies
