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OP ED: Ontario’s child-care cuts will hurt low-income parents working or studying full time

The Conversation by Linda A. White, Elizabeth Dhuey, Michal Perlman, and Petr Varmuza 16 May 2019

Ontario’s recent provincial budget claimed to help families access quality child care — but in reality, the province’s budget masks what are emerging as massive cuts to child-care funding that will have far-reaching consequences for families and communities.

The provincial budget promised a $1.7 billion investment in 2019-20 “to help families access child care and early years programs to support them while they earn a living.” It touted a child-care tax credit and policy changes to loosen child-care regulations that would purportedly help all families access the child care they need.

In fact, the province has cancelled a $50-million fund that helped care providers absorb labour costs and other child-care funding for a minimum total of an estimated $80-million loss in funds. The figure does not include additional cuts municipalities will be expected to bear due to changes in the province’s cost-sharing model.

Toronto estimated to lose 6,000 care subsidies

Meanwhile, Toronto city manager Chris Murray advised the mayor and city council that he’s done the math based on both cuts to direct child-care funds plus the cumulative impact due to cost-sharing changes — leading him to estimate nearly $85 million in immediate child-care funding cuts to the City of Toronto alone.

A spokesperson for the Ministry of Education issued a statement arguing: “The City of Toronto should be looking at ways to make their operations more efficient instead of passing on these costs to parents… Any reductions in child care spaces would be the result of the City of Toronto’s own decision making.’”

So how should the city absorb these cuts? Should the city gut its Assessment for Quality Improvement (AQI) program — a child-care support program that sets service standards and guidelines to child-care service providers in approximately 70 per cent of all licensed care in Toronto? This is an innovative quality-assurance program built on transparency that improves quality and safety for all children served.

The Toronto city manager warned that the city may have to cut more than 6,000 subsidies for low-income families. According to figures obtained from Toronto Children’s Services, 64 per cent of families that received a subsidy were led by a single parent whose average taxable income was $22,700 in 2017. The average income for two-parent families receiving a subsidy was $38,300.

Reducing the number of subsidies will mean that these parents, many of whom are already struggling, will not be able to support their families or continue their studies.

Far-reaching consequences for child care

Other municipalities are similarly calculating the impact of cuts that will have far-reaching consequences for parents and all employers of parents who rely on child-care services.

In our view, the province’s cuts are an anti-anti-poverty measure. Provincial transfers to municipalities for children’s services, among other things, help share the costs for child-care subsidies, a crucial support for low-income families.

The parameters of eligibility for assistance are set by the province under the Ontario Child Care Service Management and Funding Guideline 2018; the amount of parental contribution is stipulated in the regulations under the Child Care and Early Years Act.

But municipalities share responsibility for subsidy funding with the province. Through service-planning processes, municipalities have limited discretion to determine priorities for types of care, age groups and geographic location and the mechanism for calculating the subsidy amount paid to service providers. Municipalities are solely responsible for eligibility assessments and allocation of subsidies to individual families.

Early childhood: A critical developmental time

There is unequivocal evidence that early childhood is a critical period in terms of children’s developmental trajectories and growing recognition that high-quality early childhood education and care programs can enhance child development.

Evidence shows that the potential effects of high-quality early childhood education and care are strongest for children from families with low incomes.

Supporting vulnerable children is especially important now as the latest Ontario provincial Early Years Report (2018) noted that nearly 30 per cent of children across the province were identified as vulnerable. This means that in kindergarten they were ranked in the lowest 10th percentile in at least one of the following five domains: physical, social, emotional or language development and general knowledge.

A figure of 30 per cent vulnerability is the highest percentage since 2004 when these data on children’s developmental well-being were first collected. The data strongly suggest children and families need more, rather than less, support. Low income has been identified as one of the contributing factors to children’s developmental vulnerability.

Bad economics, bad child-care policy

Aside from the direct benefits to parents and children, the child-care sector is a significant source of local economic development. Not only do child-care jobs provide worker income, but subsidized child care also increases maternal labour supply when the labour supply levels are low – in other words, it allows struggling parents the opportunity to work more, or more consistent, hours.

Having those parents work increases tax revenue which ultimately increases GDP. Removal of the subsidy means these parents do not have the opportunity to contribute to the economy, and increases the inequality gap, now and in the future.

The province’s child-care tax credit is not going to help very low-income families. A tax credit does not provide a way to handle the immediate costs of child-care services. Even the maximum $6,000 tax credit does little to offset the actual costs in a city like Toronto where child care for an infant can easily cost upwards of $20,000 per year.

The proposed changes will significantly weaken a system that is already struggling to help children and families who face significant challenges. Gutting the already weak support for low-income families is wrongheaded and will cause immediate and long-term harm.

In the absence of measures long recommended by child-care policy advocates (such as operating grants to centres, sliding fee scale rates tied to income and wage enhancements for providers), the subsidy system is the one plank of the system that should be expanded, not cut.

Linda A. White is a Professor of Political Science and Public Policy at the University of Toronto. Elizabeth Dhuey is an Associate Professor of Economics, Department of Management, at the University of Toronto. Michel Perlman is a Professor of Applied Psychology and Human Development, at the University of Toronto. Petr Varmuza is a PhD Candidate, Ontario Institute for Studies in Education (OISE), at the University of Toronto.