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Mitchell and Mrozek: A national daycare system is simply a bad idea

Commentary

It took 50 years to get to this point because it’s a bad idea.

The 2021 federal budget offers $30 billion over five years for a national daycare system. The promise dangles a sizeable amount of money in front of the provinces in exchange for the burden of doing the work and assuming significant financial and political risks that come with the made-in-Ottawa plan. While the federal government is promising 50-50 cost sharing by year five of the plan, the devil will be in details yet to be negotiated. And while the amount of money is sizable, it’s not enough for a quality system for children.

The sales pitch for the National Early Learning and Child Care Plan involves the promise of low user fees for families. Yet, the proposed national system is structurally opposed to equity for all families because it limits funding to the type of care the government chooses. All families will pay for the plan, but only families who want or are able to access the regulated care on offer will receive the subsidized benefit.

How did national child care find its moment?

The idea of a national program has been debated for half a century, but has simmered on the back burner ever since the Liberals were unable to implement a plan following the 2006 federal election loss. Since then, sitting governments including Liberal governments, have continued with a mix of tax credits, cash payments and government transfers.

The COVID 19 pandemic provided what Finance Minister Chrystia Freeland called “a window of political opportunity” to advance a national child care system. The purpose of the program is clear; increase the workforce participation of mothers to grow the GDP.

When the global pandemic came to Canada early last year, advocates reasonably argued that many care options would shutter leaving growing demand as parents, and women in particular, were ready to return to work. They argued the current child care ecosystem was too fragile and establishing a new national program would be the key to economic recovery.

A year later, hard data suggests supply is available, in part due to emergency funding. While many provinces temporarily closed child care services, the sector was largely back online by the fall. Ontario and Alberta reported over 90 percent of licensed operators were up and running by the end of September 2020. Thanks in part to emergency funds, a majority of parents were able to return to their pre-pandemic arrangements as illustrated in an Angus Reid Institute poll published in March 2021.

Some provinces like Alberta with a near full return of licensed spaces report a provincial vacancy rate of 50 percent. Statistics Canada data released earlier this month reports a national decline in the use of non-parental care of about 8 percentage points compared to pre-pandemic use. Budget 2021 has arrived at a time when supply has largely outpaced demand. In keeping with this data, the text of the budget says little about supply and instead focuses on reducing the cost of existing care.

What’s in Budget 2021

The headline number of $30 billion is spread over five years starting with $4.1 billion in 2021/2022, climbing to $7 billion by year three to $9.2 billion by 2025/2026. The budget promises 50/50 cost sharing with the provinces and territories by year five. Funding beyond this commitment will be determined based on provincial progress and need.

The central feature of the program is to reduce user fees for licensed care to $10 a day by 2025/2026 The program begins with a 50 percent reduction in average fees for those who use regulated care outside of Quebec. The program also promises to increase child care spaces among not-for-profit providers. The focus on not-for-profit, licensed care, among other factors, is a significant risk, leaving the provinces needing to play catch up right from the beginning.

Why? The intention of reducing fees for licensed care by 50 percent in the first year is to draw parents into the paid labour force. Lowering the cost in one segment of the sector will push those already in the paid workforce but using unregulated care to seek out the cheaper, publicly subsidized care. Driving up demand by slashing prices for one type of care will likely result in supply issues including long wait lists. It could also lead to job losses as unregulated providers, like the neighbour down the street offering care for a handful of neighbourhood children, will not be able to compete. The federal plan does include space creation, but focuses only on the licensed not-for-profit providers. In short, the plan triggers demand it can’t meet, by destabilizing good choices in the existing ecosystem of care.

When Quebec introduced its universal system, the independent sector collapsed. Unable to meet the new demand for subsidized spaces in the network of Centres de la petite enfance (CPE), the province introduced tax credits to encourage the growth of the independent sector. Two decades later, only a third of children attend the higher quality CPE network. Despite the $2.4 billion spent annually on the province’s system, the Quebec auditor general’s fall 2020 report found that 46,000 children are waiting to access the CPE network and an additional 9,000 children are in non-subsidized care. In short, the Quebec model the federal government desires to emulate remains a two-tiered system.

The Quebec model is not an example, but rather a cautionary tale. Peer-reviewed studies show child outcomes associated with the system are poor, including outcomes like worse health and lower satisfaction among children into the school years. Another study found lower parental consistency and fewer positive parental interactions particularly among girls associated with the Quebec system. Scaling up care for vulnerable populations like children, is very expensive and difficult to do well.

Some parents would benefit from lower user fees, but only those who choose to or are able to access the subsidized care. Families have diverse care needs, and pre-pandemic data shows 40 percent of families do not rely on non-parental care. They’ll all pay for the governments $30 billion commitment, but many will not get the benefit.

In 2015, Liberal MP Adam Vaughn criticized the short sightedness of Thomas Mulcair’s $15 a-day child care proposal arguing the NDP didn’t know how to pay for the federal portion and required the provinces to foot a hefty portion of the total cost. He said Mulcair is “asking them (the provinces) to do all the heavy lifting but hasn’t spoken to the Premiers about it.” In a sense, Budget 2021 is taking the same blind leap without accounting for what lies below. It promises big spending with few details, but requires the provinces to do the heavy lifting while assuming a lion’s share of the risks.

Parent will only benefit from the system if they use the care options the government subsidizes. Child care is the care of a child, no matter who does it, and the federal government had the policy levers to support all families regardless of their care needs. Instead they chose a one-size-fits all government monopoly that treats families inequitably based on their care needs.

Sean Speer: The budget is a sign that progressives are winning the battle of ideas

Commentary

The world of political ideas moves similar to the way Ernest Hemingway described going bankrupt in his novel, The Sun Also Rises: “gradually, then suddenly.”

It wasn’t that long ago that British Prime Minister Tony Blair was talking about “third way” Labourism, U.S. President Bill Clinton was declaring the “era of big government was over,” and Canadian Finance Minister Paul Martin was balancing the federal budget “come hell or high water.”

The end of the twentieth century and the start of our current one seemed to mark the ascendancy of a new, limited government orthodoxy that prioritized low taxes and balanced budgets and was wary of the economic and fiscal costs of large welfare states. That the chief proponents of this nascent consensus were often center-left politicians spoke to its fecundity.

It didn’t happen overnight of course. It took years — even decades — for conservative intellectuals such as economists Friedrich Hayek and Milton Friedman and social scientists Irving Kristol and Nathan Glazer to chip away at the “mixed economy” model (including large-scale entitlement programs, high marginal tax rates, and a “visible hand” in market outcomes) that was popularized in the immediate post-WWII era.

These intellectual activities, including conferences, policy papers, journal articles, and so on, mostly occurred outside the mainstream of western politics. They weren’t quite fringe ideas, but they didn’t have much purchase in the political arena either. Conservative politicians like Republican President Richard Nixon or British Prime Minister Edward Heath were mostly upholders of their era’s big government consensus.

Yet these intellectuals continued to cultivate a new ideational framework in waiting. They sharpened their critiques of government intervention in the marketplace and the failings of welfarism and began to develop an alternative policy programme that sought to reduce the size and scope of the state in the economy and society.

As important as these efforts were, ideas alone weren’t enough to change the course of history. Events also needed to conspire. It required a crisis of the prevailing system — the so-called “stagflation” crisis of the 1970s — to fully open the door to a conservative revolution in ideas. A combination of Britain’s “winter of discontent” in late 1978 and Jimmy Carter’s famous “malaise” speech in July 1979 in hindsight marked key intellectual turning points.

By then, both Hayek and Friedman had won the Nobel Prize and Margaret Thatcher had been elected prime minister. Ronald Reagan would follow in November 1980. What had started slowly soon moved quickly. It spread across the developed world including, of course, Canada.

The subsequent 30 years or so were mostly shaped by this broadly-defined center-right orthodoxy. Although governments sometimes deviated for various political economy reasons, the overwhelming policy trends were in the direction of significant tax reductions, free trade agreements, privatization efforts, and lowered expectations for the welfare state. That these policy reforms spanned the political spectrum reflected how overwhelmingly conservatives had wrestled control of the terms of contemporary policy debate.

The side that’s shaping politics is typically the one that is genuinely and relentlessly committed to the realm of ideas.

I retell this abridged version of the Right’s slow yet steady intellectual ascendancy in the late-20th and early-21st century because I was reminded of it by yesterday’s federal budget.

In response to the Trudeau government’s announcement of massive new funding for universal childcare, a $15 minimum wage and various other progressive priorities, University of Victoria economist Robert Gillezeau tweeted the following:

I’m halfway through #Budget2021 and it’s amazing to see a decade of work from progressives bearing fruit. Universal child care, a $15 federal minimum wage, and expanding the Canada Workers Benefit…. if folks put aside cynical politics this could be a Pearson-Douglas moment.”

As a social democrat this is a moment of triumph. Many of the centrepieces of the policy agenda that Jack [Layton], Tom [Mulcair], and Jagmeet [Singh] have articulated are here. They have shaped not just our dialogue, but the direction of the country.”

Are there pieces missing? Of course and social democrats should offer a path there (particularly on housing and inequality), but we can also acknowledge our successes as progressives.”

Although I generally disagree with Gillezeau on politics and policy, I think he’s both highly smart and highly decent. I also think he’s right.

Yesterday’s federal budget (along with the Biden Administration’s activist ambitions in the United States) signals the rise of a new, confident progressivism that has set its sights on the commanding heights of policy and governance.

It mostly rejects concerns about the disincentives of high rates of taxation, the economic costs of deficits and debt, or the limits of state action. Instead it advances a governing vision rooted in the idea that inclusion and equity are not only greater priorities than economic efficiency but are actually themselves drivers of growth and long-term value. This is a far cry from limited ambitions of Blairism, Clintonism or what the Fraser Institute has described as the “Chrétien Consensus.”

As Gillezeau observes, this progressive advance similarly didn’t occur overnight. It started as an intellectual movement that rejected centrist compromises and instead sought to restore a more robust left-wing politics that more closely resembled the post-war orthodoxy that Hayek, Friedman, and others had undone. Its ideas were mostly confined to university campuses and the world of social activism. Its chief political proponents were third parties like the New Democratic Party or outsiders like U.S. Senator Bernie Sanders.

But progressive intellectuals kept up the important work of ideation and policy thinking in academic journals, think-tank reports, and other venues. They utilized their privileged position in academia to build support among young people and became effective users of multimedia channels to promote and disseminate their ideas.

Eventually, though, as in the past, events have contributed to their growing salience. If the global financial crisis was a pivotal moment, the COVID-19 pandemic has created a massive opening to see these political ideas come to fruition. The Trudeau government’s adoption of some of them in yesterday’s budget represents the culmination of these efforts. It’s a powerful (and perhaps sobering) sign that progressives are winning the battle of ideas.

There are a couple of key lessons here. The first is that there are no permanent intellectual victories. One can never become complacent because a combination of new generations, new challenges and unexpected events are bound to threaten previous intellectual advances. It’s incumbent therefore for intellectual movements to remain rigorous and dynamic.

The second is related: political progress starts with ideas. They may not be all that matters but they matter more than we often realize in the moment. The side that’s shaping politics is typically the one that is genuinely and relentlessly committed to the realm of ideas.

Depending on one’s persuasion, a recognition of the rising progressive tide is either a cause for celebration or a call to intellectual action. Either way, it’s a reminder of Richard Weaver’s famous adage: “ideas have consequences.”