Read the Fine Print: Five problems with the Ford government's CARE Tax Credit

The Ford government has announced a child care tax credit in 2019 provincial budget. While this may sound like “money in your pocket”, parents should check the fine print. Here are five problems with using a tax credit scheme for child care.

1. Read the fine print: It looks like more money than it is

- The Ford government will portray the rebate as “more money in parents’ pockets” and claim that families could get 75% of their child care costs back, but that is deceptive.

- Based on what the PCs promised during the election, families will have to earn less than $20,000 a year to be eligible for the advertised 75% rate. In addition, the annual claim limit of $8,000 in child care fees is far below the median fees in Ontario, which can be over $16,000 a year for many families.

- If families receive much less from the tax rebate than the actual cost of regulated child care, they will either have to pay significantly out of pocket or resort to the very cheapest unregulated arrangements that they can find.

- So lower, modest and even many middle income families who can’t afford to pay for child care still won’t be able to.


2. Smoke and mirrors: This new rebate is coming at the expense of cuts to education and social services.

- With a government so focused on spending cuts, we know that this hugely expensive rebate won’t come without cuts elsewhere.

- The 2019 cut funding to education, social services, legal aid, health care and more.

- The government will argue that the rebate supports “parent choice”, but it does nothing to create more good options for parents. By openly encouraging reliance on unlicensed care it places additional strain on parents to self-monitor unregulated care arrangements.

3. It doesn’t support educators and massively undervalues the cost of care

- With a recruitment and retention crisis in licensed child care, there is a desperate need for a plan that finally addresses the needs of educators. Instead the Ford government has been silent on even continuing the wage enhancement grant, let alone following through on a workforce strategy.

- This rebate does nothing to address the needs of the child care workforce, and drives parents to use unregulated and for-profit arrangements that undervalue care work.


4. Rebate schemes are ineffective, unaccountable and costly for parents

- Research shows that rebate schemes are not a good way to make child care more affordable.

- A 2019 study of child care fees in Canada by the Canadian Centre for Policy Alternatives showed the best way for governments to tackle unaffordable child care fees is to cap fees and make up the difference with operational funding – and 5 provinces have already started to do this.

- The rebate will draw new for-profit operators, as it has in Quebec, driving quality down, fees up and costing hundreds of millions of public dollars.

- Cash schemes like this rebate do nothing to cap the cost of child care, so for-profit operators can continue to raise fees. The new rebate could waste billions in public funds, while parents continue to be gouged, as has been the case in Australia and the UK, where fees are uncontrolled and most child care is now for-profit. 5.

5. The math is questionable. It will spend billions of public dollars, but won’t create an equitable system that will last

- The Ford government budgets the tax credit at $389 million but two different economists have estimated the cost at $1 Billion and $2 Billion.

- Tax credit schemes don’t help build child care spaces or a system. So billions of public funds will be spent without creating a system of quality child care for families. That’s not a smart way to spend child care dollars.

- Instead it is a scatter gun approach that gives a little bit of money to everyone, but doesn’t get folks what they need.

- It completely ignores the needs of children with disabilities, who are particularly underserved.


The child care community has the solutions to Ontario’s child care crisis. Parents, educators and the child care community have been campaigning for action on 3 Big Ideas for Child Care:


1) affordable fees;

2) decent work; and

3) expanding non-profit spaces.


With this budget the Ford government is taking Ontario child care in entirely the wrong direction. It will make child care:

x  less affordable for many families;

x  continues to undervalue educators’ work; and

x  won’t create more quality child care spaces.


In sum, the Ford child care tax credit is an unaccountable, risky, and deceptive use of public funds that will make the Ontario child care situation worse, not better.

 


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