Child Care Premises - Parents Know Best

(Note: This is a continuation of this post and this one)

So the first theoretical child care program we're going to look at is one based on the premise that parents know what is best for their children, so a child care plan should maximize the choices available to parents.

So how do you increase the choices available to a parent? This is a little hard to nail down, but broadly there are two ways. Obviously, there are some two income families which have two incomes because they can't afford to do without the second income. These families would have more choice if they could afford to have one parent stay home. Equally true, many families which use child care would have more choice if they could afford higher quality care, care closer to their home or work, care with more flexible hours and so on.

In the large majority of cases, an annual salary is higher than the cost of high quality child care (~$10,000/year, from most estimates), which means that the large majority of families with a stay at home parent could choose high quality child care for their children if they wanted to. Therefore, these families already have the maximum possible choice so any funds directed their way will be wasted, according to our premise. Similarly, there are many families which use child care but have one income which is high enough to support having the other parent stay home with the children - if that is what they chose. Again this group already has maximum choice so any funds directed towards them are wasted. Finally, there are some single parents whose income is high enough that they can already afford the best child care available to them. Again, these parents already have optimal choice.

In general, I'm just making the obvious point that people beyond a certain income already have maximum choice, so any program with the goal of increasing parental choice should be means-tested - i.e. only given to those who need it, in order to have more choices.

Another question is whether it makes more sense to give the money to parents or to fund child care programs directly. Funding child care programs directly has the benefit of ensuring that 100% of the program dollars goes towards child care. On the other hand, giving money to parents provides greater fairness because it (can) include those who don't pay money out of pocket for child care (i.e. have a stay-at-home parent or have a relative take care of the kids), whereas money given directly to day care providers only increases choice for those who use child care.

As is typical with this kind of efficiency/fairness tradeoff it is hard to say where it is best to draw the line. Some combination of a benefit which is given to all parents and funds which are specifically directed towards child care funding would seem to be appropriate.

One final method in which the government can increase choice in child care is by taking measures to increase the proliferation of a wide range of child care options. For example, any measure which reduced barriers to entry in child care might create more options. Similarly, certification programs can be designed to foster the availability of different levels of care.

Putting it all together, the ideal program for giving parents maximum choice in child care would tend to:
a) Be means tested
b) Include a mix of universal payments to parents and funding tied specifically to child care
c) Include measures to foster the development of a diverse and plentiful child care market

Now let's see how the party's measure up against these criteria (note: I recapped the party child care platforms in the previous post in this series):

First, the Conservatives:

Means-tested? No.

Mix of universal payments and funding tied specifically tied to child care? Yes, but funding is heavily weighted towards the $1,200 payments which go to all parents - that is, towards fairness to stay at home parents at the expense of efficiency.

Include measures to create more choices in the child care market? Yes, the offering of tax credits for organizations which create new child care spaces should, in theory, create more competition and hence more choice in the market for parents.

The Liberals:

Means-tested? In principle, no. In practice, it's hard to say. The Liberal platform says that their child care agreements are based on QUAD principles, where the U in QUAD stands for universality. This would imply that they are only providing funds for programs which are available to everyone and not means tested (as is the case in Quebec, for the most part). On the other hand, the Liberal plan largely amounts to just giving money to provinces to spend on child care, and most provinces (except Quebec) have means-tested child care programs.

Mix of universal payments and funding tied specifically tied to child care? Some provinces may provide some universal payments (e.g. B.C.), but for the most part, all the money is tied specifically to child care programs and very little will go to parents who do not use child care programs.

c) Include measures to foster the development of a diverse and plentiful child care market? Nothing specific.


The NDP:

Means-tested? Yes. The NDP plan is basically a combination of the Liberal plan with an increase in the Child Tax Benefit. As we noted, the Liberal-style part is not means-tested, but the Child Tax Benefit is.

Mix of universal payments and funding tied specifically tied to child care? Yes. The Child Tax Benefit is available to all families regardless of whether they use child care or not, while the Liberal style funding for child care programs is targetted specifically towards spending on child care.

c) Include measures to foster the development of a diverse and plentiful child care market? No. In fact, the NDP insistence on excluding private child care providers from the market is likely to have the opposite effect.

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It's all a bit of a mess, and makes a mockery of what might be considered typical left-right roles for the party's to play. For one thing, as Robert McLelland notes, Conservatives typically favour decentralization and want to keep national governments from infringing on the role of provincial governments. This is considered to be especially true of the Harper government. But here we see that it is the Conservatives who want to create a plan to spend billions of dollars, bypassing the provinces altogether.

For a second thing, when it comes to balancing efficiency with fairness, the stereotype is that conservatives prefer efficiency are regard any sacrifice of efficiency for fairness sakes as misguided socialism. But here we see that it is the Conservative plan which most sacrifices efficiency for the sake of fairness. To understand why this is the case, it is worth noting that the Conservative plan is designed to be taxable in the hands of the lower income earner. As a practical matter, this means that the Conservative plan gives more money to families with stay at home parents. So, having sacrificed efficiency for the sake of fairness, they then turn around and sacrifice fairness for ... well for nothing really.

The policy only makes sense if one has decided that there is a greater value in providing money to families where a parent stays home than in providing money to parents who use child care. In other words, implicit in the policy is a value judgement that families which use child care are inferior and less worthy of support than those who do not.

For a third thing, the NDP is the party most associated with universal social programs, but in this case, because of the NDP commitment to increase the Child tax Benefit, it is the Liberals who are most in support of Universality, while the NDP is taking a more mixed approach.

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Looking at the different platforms, I'd have to say that the NDP program is the most efficiently designed from the perspective of providing more choice to parents. Having said that, the restriction on private health care providers is a big drawback. The ideal program would likely combine an increase to the Child Tax Benefit with a (smaller than the NDP and Liberals have proposed) program along the lines of the Liberal / NDP plan of deals with the provinces, combined with the Conservative plan for tax credits for those who create new spaces.

Additionally, one thing no party is proposing, but which exists in the B.C. system (I should probably do a post on the provincial systems at some point) is a series of graduated subsidies for different types of child care, with care that meets higher quality standards receiving a greater subsidy. I think that a policy along these lines would work to create a tiered system of child care which might provide more choices to parents, but, like I said, nobody is proposing such a thing.

The next post in this series will look at the premise that, provincial governments are responsible for implementing child care programs so a Federal program should just provide funds to provinces as part of some sort of framework, like in health care. Thankfully, it should be a little shorter.