Child care benefits shifting away from families with kids in daycare: PBO
WATCH: The Parliamentary Budget Office analyzed the plans for the family tax cut and found the biggest share doesn’t go to those who need it most. Jacques Bourbeau explains.
OTTAWA – It appears families with older children or those who don’t pay for daycare stand to benefit more from the Conservative government’s proposed family tax-and-benefit package than families with young kids who pay for child care.
That’s one of the findings of a new report released Tuesday by the parliamentary budget officer.
Jean-Denis Frechette’s latest report comes days after the Conservatives introduced legislation to enact its so-called “family tax cut” — a multibillion-dollar suite of measures that includes the controversial income-splitting plan.
The measures would also bolster the universal child care benefit and place higher limits on the existing child-care expense deduction.
In October, Finance Minister Joe Oliver announced the government would replace the child tax credit with larger monthly universal child care benefit cheques, adding $60 to the monthly $100 cheque for kids under six and creating a new $60 benefit for children between ages six and 17.
These enhancements mean monthly government cheques will start arriving at the homes of qualifying families in July — three months before Canadians are scheduled to go to the polls.
But the PBO report says families with children under the age of 13 who pay for child care will receive a smaller proportion of the benefits than will those families with older kids or those who don’t pay for child care.
That’s because the new monthly benefit of $60 for children aged six through 17 now covers more families — those with older kids who don’t require daycare — than when it only applied to families with kids under six.
Read the full report below
“It used to be the universal child care benefit (was) only for families under the age of six,” said Mostafa Askari, the assistant parliamentary budget officer.
“Now, with the extension that they have done, all the families with children under the age of 17 will be eligible to get that $60 extra that they have added to the universal child care benefit.”
Frechette’s office said that in 2015-16, families with young children in child care will receive 49 per cent of the benefits. That’s down from about 66 per cent in 2013-14.
Meanwhile, families with older kids and families who don’t pay for daycare will see their share of the benefits rise to 51 per cent in 2015-16 from 34 per cent in 2013-14.
“Overall, federal child care benefits are progressive,” the PBO report says.
“At the same time, many of the families that benefit from federal child care initiatives do not incur child care expenses — either as a result of provincial child care subsidies, alternative arrangements such as having a relative provide child care, or because a parent is providing care.
“PBO estimates these families will receive the largest net gain of the recent enhancements to the (universal child care benefit).”
The PBO also estimates the changes to the universal child care benefit and the child care expense deduction will cost the government $7.7 billion in 2015-16 — up from $3.3 billion in 2013-14.
By 2017-18, the PBO estimates the cost will grow to $7.9 billion.
© 2015 The Canadian Press