How much parents across Canada could save per year with the national child-care plan

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The Liberals’ proposed $10-a-day national child-care plan could save some parents up to tens of thousands of dollars a year, according to a recent analysis by the Canadian Centre for Policy Alternatives (CCPA).

In provinces outside Quebec, which already has its own version of universal child care, Ottawa endeavours to cut child-care fees in half by 2022 and bring costs for parents down to $10-a-day by 2026. The plan was one of the signature promises of Prime Minister Justin Trudeau’s 2021 federal budget.

Those fee reductions, if they happen, would result in annual savings of up to around $10,000 per child by 2022 and almost $20,000 per child by 2026, writes David Macdonald, senior economist at CCPA.

Across Canada and with the exception of Quebec, parents with the youngest children would stand to save the most, the report notes. Fees for infants under 18 months tend to be the highest because of the higher required ratio of staff to children.

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Geographically, the biggest savings, unsurprisingly, would go to families who live in the cities that currently have the steepest fees for child care. That puts Toronto at the top of the list, with parents of infants looking at average annual savings of $11,200 for an infant child care spot for a 50 per cent reduction from 2020 fees.

With the introduction of $10-a-day care, parents of infants in the city would save nearly $20,000 a year.

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In Iqaluit, families with infants could save nearly $8,500 a year on average with fees reduced by half, with savings of more than $14,000 with a $10-a-day fee.

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In big cities in B.C. and Alberta, average savings for families with an infant in would average $6,000 with a 50 per cent fee reduction and $10,000 when paying just $10 a day for care.

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Even in provinces like Manitoba and P.E.I., which already subsidize child care, parents could see their costs shrink substantially. With fees of $10 per day, families would save $3,900 per infant annually in Winnipeg and $4,400 a year in Charlottetown.

“A national child care plan targeting fees will deliver more savings to parents than a tax credit or a monthly cheque ever could,” Macdonald said in a statement.

But whether those potential savings will actually materialize remains an open question, he adds. Ottawa must negotiate agreements with each province to keep its pledge of a national plan. While the Liberals have already announced agreements with B.C. and Nova Scotia, provincial governments in Ontario, Alberta and Manitoba have voiced reservations about the Liberals’ vision.

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It isn’t just a matter of winning over every province, either, Macdonald writes. Whether parents will actually gain access to affordable child care also hinges on significant increases in the number of child-care spots to accommodate an expected increase in demand for cheaper daycare and preschool care. Without additional resources, a reduction in fees would likely lead to ballooning wait lists for families, Macdonald warns.

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“Reducing fees must be part of a broader plan, one that includes capital funding for more spaces but it must also include higher wages for childcare workers to attract and retain them as the system expands,” Macdonald said.

Critics of the Liberals’ plan have pointed to the expected cost to taxpayers. The Trudeau government has promised to spend $30 billion over five years to set up the plan and cut fees. They also say the plan would curtail choice for parents, imposing a national, homogeneous child-care system.

Some also question Ottawa’s flat-rate approach, asking why higher-income families shouldn’t pay more into the system.

Some argue a better approach to help families shoulder the cost of child care would be through tax credits or financial transfers to parents like the Canada Child Benefit.

“Ottawa could have used a model like the Canada Child Benefit, a federal program that supports low-income families to encourage parents to move from welfare to work. This has reduced welfare costs for the provinces,” Janice MacKinnon and Jack Mintz recently wrote in a report for the C.D. Howe Institute.

Similarly, Ottawa could increase child care spaces through federal subsidies to child care centre operators, MacKinnon and Mintz argue.

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Macdonald, however, is skeptical of similar proposals.

“’Cash for care’ approaches,” he writes, “often lead to higher fees, not lower ones, eroding affordability a year or two down the road.”

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