Election platform pledges 75 per cent tax credit for child-care costs, more flexibility in parental leave

On the first full day of the federal election campaign, the Conservative Party of Canada unveiled its party platform. Among the campaign pledges was a commitment to move away from the Canada-wide child-care plan introduced earlier this year by the Liberal government and replace it with a new plan.

This Conservative plan is a package consisting of four pieces:

  1. Transforming the currently regressive Child Care Expense Deduction into a progressive refundable tax credit that will cover up to 75 per cent of child-care costs paid, with the biggest refunds going to the lowest-income households
  2. Changing maternity and parental leave to allow for greater flexibility for parents who wish to work
  3. Expanding the Canada Child Benefit to allow parents to prepare for their child’s arrival, expanding Employment Insurance coverage those who lose children in miscarriages or while on maternity or parental leave, and expanding bereavement leave to those who lose a child
  4. Expanding parental policy to include and support parents who adopt a child

A glance at the available details of the CPC plan suggest that it is expansive, equitable, comprehensive, remarkably progressive, and takes significant steps to modernize child-care and family policy in Canada. How?

While there are some who believe that “tax credits do nothing to create desperately needed spaces” or that the plan will not have an impact on women’s participation in the labour market, evidence suggests otherwise.

Pierre Fortin studied the impact of $10-a-day daycare in Quebec — the same price point the federal Liberal government aimed to reach with its Canada-wide child-care strategy. Fortin notes that after the policy was introduced, there was a massive shift in demand to subsidized spaces, resulting in overall shortages. Those shortages were addressed by the introduction of a tax credit that is almost identical to what the CPC proposes. As Fortin notes, the introduction of the tax credit resulted in a significant increase in spaces. Evidence suggests that tax credits do, in fact, affect supply.

Perhaps most importantly, the CPC plan would apply to 100 per cent of parents who pay for child care of any sort, rather than a $10-a-day plan, which is focused almost exclusively on the minority (32 per cent) who use centre-based care.

The Conservative plan relies heavily on papers written by Kevin Milligan, Jennifer Robson and Ken Boessenkool. Robson and Boessenkool recommended that “the existing Child Care Expense Deduction (CCED), a regressive tax deduction that reinforces patriarchal gender roles for parents, be replaced with a more generous, progressive and more frequently paid refundable tax credit.” The CPC plan does just that.

Milligan and co-author Alexandre Laurin note that as a result of such a credit, “lower-income families would see a larger reduction in net childcare costs . . . than higher-income families.” This is in contrast to the evidence on $10-a-day daycare, which sees significantly lower levels of access among those with lower incomes.

And contrary to those saying that credits don’t affect supply of child-care spaces or female labour force participation, Milligan and Laurin note that a tax credit like that proposed by the CPC “allows diverse child-care providers to offer services, rather than the government-driven system” and “that 13 to 19 per cent of stay-at-home mothers would enter the labour force as a result of lower net child-care costs.”

Perhaps most importantly, the CPC plan would apply to 100 per cent of parents who pay for child care of any sort, rather than a $10-a-day plan, which is focused almost exclusively on the minority (32 per cent) who use centre-based care.

The CPC plan also modernizes maternity and parental leave policy that currently penalizes parents who wish to work while on leave. Allowing parents more flexibility on when and how they balance their parental and work responsibilities, and expanding the amount that can be earned before experiencing EI clawbacks, is good policy that reflects modern work-life balance and encourages the connection with workplaces that influences long-term employment behaviour.

Support for parents who lose children through miscarriage or during their maternity or parental leave is a much-needed, humane and compassionate update to our parental leave policies. The health and psychological effects of losing a child are massive, and providing financial support and leave for those grieving and dealing with that loss is long overdue. There are many good questions about how this policy will be worked out, but it’s a good start.

Finally, I was encouraged to see the inclusion of greater supports for parents who wish to adopt. There are approximately 30,000 Canadian children (and many more worldwide) who are awaiting adoption into families, and many observers (including former governor general David Johnston) have decried the obstacles that stand in the way of those children finding permanent homes with loving parents. While there are many questions about how the CPC strategy will work itself out, its inclusion in national family and parental policy is something to applaud.

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Brian Dijkema is Vice-President of External Affairs at Cardus.