Quebec’s 1998 early childhood education and care (ECEC) policy ”” exemplified in the media and public opinion by the $5-per-day, per-child service ”” is perceived as bold and innovative and has strong popular sup- port. Not surprisingly then, the recent decision by the Liberal government to increase the parental contribution from $5 to $7 by January 1, 2004 was described by commentators and supporters of the program in catastrophic terms. They pre- dicted dire consequences: that the increase would violate Quebec’s superior values in terms of solidarity and justice; that social cohesion would be threat- ened; that the disparities between social groups would increase; that the varied social mix of children would be lost; that community democracy and social capital would diminish; that good jobs occupied mostly by women would be lost and replaced by marginal ones offered by providers supplying low quality services in the grey economy.

Unfortunately, very few of these critics have adopted a public policy perspective. What are the objectives? Are they being reasonably met? Does the policy fulfill the usual criteria of efficiency (highest benefit per dollar spent), solid social investment (high social return), positive incentives (sup- ports desirable behaviour), fairness (equal treatment of families), and jus- tice (equalizes opportunities among children)? This article adopts such a public policy perspective and describes the policy on a more factual basis, points to some of its weaknesses, and proposes some alternative measures.

Historically, Quebec has always provided more financial support for families than have other provinces. Even before the Péquistes reformed the province’s family policy in 1995, total provincial family benefits amounted to $2.6 billion annually. The sheer size of this budgetary envelope helps us understand how Quebec could intro- duce its $5-a-day policy. The govern- ment merely restructured existing programs and reoriented the manner by which public support to families was delivered: monetary assistance was reduced and the focus was shifted to in-kind assistance. Overall, public sup- port for families increased only mod- estly, from $2.6 billion in 1995 to $3.0 billion in 2004, but the por- tion dedicated to child-care services rose very rapidly, increasing from 14.6 per- cent to 50.4 percent (from 8.0 percent to 44.7 percent for the in-kind services reserved for 0- 4-year-olds). Table 1 presents these family assistance measures and their evolution from 1995 to 2004.

Probably inspired by the 1993 feder- al reforms and the introduction of the National Child Benefit initiative, Quebec replaced its nontaxable universal family allowance and the child’s portion of wel- fare with a new child benefit allowance closely targeted (income-tested) to family income. This was meant to get children ”œoff welfare.” This benefit was designed to complement the federal child tax cred- it, since the guaranteed maximum amount per child takes into account the federal child benefit. Each time the feder- al benefit (base and supplement) is raised (every year), Quebec’s benefit decreases accordingly. In effect almost all the increases in the federal child tax benefit since 1999 have been denied low-income families who received the provincial ben- efit and the funds used instead to finance child-care services.

Simultaneously, starting from September 1997, the government imple- mented a plan to create new child-care facilities and pay for additional daycare places. The parental contribution was set at $5 per day per child, irrespective of family income. In the first year, the low- fee policy applied to four-year-olds; in 1998, to three-year-olds, and in September 2000, to all children aged 0-59 months (who were not in kindergarten). Currently, Quebec finances this program to the tune of $1.3 billion. The depart- ment of education was required to con- tribute as well. From September 1997, kindergarten (which was not made com- pulsory, but almost all children of kinder- garten age now attend) was extended from half-day to full-day for all children who were aged five by September. Schools were also compelled to offer before- and after-school child-care servic- es at the same $5-per-day fee, when there was sufficient demand.

Considering the tasks of finding premises and qualified providers and the delays in making new services opera- tional, the expansion of the network was very rapid, since over five years the num- ber of spaces doubled. Table 2 presents the evolution of the number of places in the three subsidized settings responsible for child care and the number of children aged 0-4 years. The expansion of spaces in for-profit centres was frozen, while the government favoured the creation of spaces in not-for-profit centres (centres de la petite enfance, or CPEs) and in family-based daycare (where an adult provider cares for a maximum of six chil- dren, subject to some constraints as to the number of very young children), which are supervised by the CPEs. For- profit centres with an agreement with the government could also offer child- care services for $5 per day.

Still, many parents complain that they cannot find a place for their child (children) in subsidized child-care. It is difficult to assess whether actual needs are not being met, since the very low price paid for the services has generat- ed a large demand for child care. But one fact is clear: not all children are in the child-care system. Table 2 shows that the number of facilities (defined as offering child-care services for 262 days a year) can only accommodate about half the number of children aged 0-4 years in Quebec. The new government has restated the promise to create new facilities and support the target of 200,000 places by September 2005.

Parallel with the creation of new places, wages paid to educators and all types of employees in child-care centres were steeply increased and regulated after negotiations with the main unions representing them. According to wage schedules published by the ministé€re de l’Emploi, de la Solidarité sociale et de la Famille, in 2004 educators with recognized training in child care are paid between $13.86 and $18.36 an hour according to their experience (from one to ten years, defined as job-based in the education or social sectors). For educa- tors with no specific training, more years of experience compensate for training. For a person in a management job in a centre, the wage schedule starts at $37,000 and goes to $49,000 for 13 years of experience. The usual social benefits are attached to child-care jobs. The government has also agreed to pay a special $50 million over four years toward a retirement fund. The increase in the number of places and the improvements brought to the working conditions of child-care providers explain the rapid increases in the public subsidy (from $209 million in 1995 to $1.3 billion for fiscal year 2003-04).

These numbers could well go up. Most of the employees in CPEs are unionized with either one of the two main federations representing workers in the education sector, and union lead- ers maintain that educators are under- paid and that their wages do not respect gender equity (since a large majority of educators are women). They also main- tain that family-based child-care providers affiliated with a CPE (currently considered self-employed persons) should be considered employees of the centres. The current government has re- enacted and passed a law initiated by the previous government to exclude family- based child-care providers from unions.

Much of the current public debate about the future of the child- care system, its financial viability and the parental contribution is tainted by wishful thinking, specifically about how to produce quality in child care, how much it will cost, the type of qual- ity that matters for children’s develop- ment, the actual level of quality in child-care services, and the effective- ness of the current system in reducing inequalities in developmental out- comes among young children from different socio-economic backgrounds.

A closer and colder look at the poli- cy shows that it is weak on most of these counts. Some of these weaknesses could be alleviated by adding more resources, but others would require different sup- port measures with fewer resources for the policy. I shall review some of the most important weaknesses before suggesting possible improvements.

The lack of transparency: Although the aggregate subsidy for the program is known, it is likely that not one parent can state correctly the value of the sub- sidy (per day or per year) for the place occupied by his or her child. With patience and an ability to interpret bureaucratic jargon, the subsidies can be approximately calculated from the 100- page document on budgetary rules post- ed on the Web site of the department of Emploi, Solidarité sociale et famille. Here one discovers that the subsidies per day differ mainly according to the set- ting and the age group of the child, and that the amount paid to a child-care service is calculated per place, per day (on the basis of 262 days a year). It also takes into account the cost of the prem- ises, general expenses, optimization (all subsidized spaces must be occupied, but children can be absent 15 percent of the time annually), and child-care and edu- cational expenses.

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For 2002-03, a not-for-profit cen- tre (CPE) with 60 places (a typical organization) received $60 per day for each child aged less than 18 months and $44 per day for a child aged 18-59 months. The value of the subsidy ranges from $11,528 to $15,720 per year, depending on the age of the child. The other types of child-care services receive lower subsidies: about $32-$49 per day, per child, in a for- profit centre, and $30-$35 per day, per child in family-based care. If we assume that a child born in September enters a not-for-profit child-care centre in his or her ninth month and receives care until his or her enrolment in kindergarten (a total of 40 months), the public subsidy amounts to around $41,000. For a child born later than September who receives care for 52 months, the public subsidy amounts to $51,000. Comparatively, the cost of a five-year-old child in full-day kindergarten ”” with universal access ”” was $4,749 in the school year 2001-02. On that basis, the cost of a full-day space in a junior kindergarten within the school system, with a ratio of two educators for twenty children, would be only $6,137 (this would not, however, cover the summer months).

The dynamics of the program, partly imposed by the government (wages schedules, spaces creation) and partly generated by the large increase in the demand for the services has prevented the government from considering other types of programs in favour of families with young children. It is also likely that the in-kind subsidy received by families and the low yearly parental contribution of $1,310 (a child must be enrolled for five days a week to be guar- anteed place) relative to the real cost of the service have distorted parents’ child-care choices. Many families, given the choice between subsidized child care and cash transfers, would likely have chosen the second option and opted for other care arrangements, especially for their infants and toddlers.

One size fits all: The Quebec model of child-care services implemented dur- ing the last seven years is very ”œone- dimensional,” in the sense that it serves well the needs of parents working full- time, five days a week with a standard working schedule. Parents working part-time or with nonstandard hours and those with intermittent employ- ment are excluded from the system.

Inequity: Families with young chil- dren who choose to care for their chil- dren themselves or do not use nonparental child care, even though they are employed part time or full- time (parents who coordinate their working time), are not treated equally. The value of the subsidies attached to in-kind child care is not matched by the other forms of family support for families caring for and educating their children or using other types of child care, such as part-time or full-time, family, home-based care. Even though there is a generous provincial refundable tax credit based on family income for child-care expenses, it is not suffi- cient to match the subsidies offered to families using $5/day child care.

In addition, because the subsidy is in-kind and the $1,310 yearly child- care expense deduction (that can only be claimed at the federal level) is very low, lower-income families (those with family incomes of less than $40,000) pay more federal income taxes and receive lower federal child tax benefits when compared with similar families in the rest of Canada or compared with the previous system in Quebec (federal deduction and provincial refundable credit for child care).

Bias toward higher income families: There is strong evidence from various large data sets with information on child-care uses, labour force patterns and family income (the National Longitudinal Survey on Children and Youth, the Longitudinal Study of Child Development in Quebec, the Survey of Household Spending, and the Survey on Labour and Income Dynamic) that a very large majority of children in subsi- dized child-care services are from fami- lies in the upper income categories. Table 3 shows that in 2000-01, 64 percent of all children aged 1-4 years in two-parent families were in a child-care service. But the proportion of children attending daycare rises steeply with family income, and children from more affluent families are over-represented. For instance, 58 percent of children attending daycare (in the subsidized settings) were from two- parent families with incomes higher than $60,000. But these children count for only 49 percent of children in Quebec. In contrast, children whose family income is lower than $40,000 represent 26 percent of all children but account for only 18 percent of all the children using subsidized child-care serv- ices. The same assymetric distribution is apparent for two-parent and single-par- ent families. 

Vulnerable children: Most young chil- dren from very low-income families or families on welfare do not benefit from subsidized child care, even though it is precisely these families who could bene- fit most from ECEC. Quebec did not sign the 2000 Early Childhood Development Agreement; nonetheless it will receive $520 million over the years 2001-06. The 2003 federal budget announced that $985 million would be added to these transfers, with Quebec’s portion at $210 million. To date, the provincial govern- ment has not made public which early childhood development activities or investments in young children were financed or committed to, apart from the $5-per-day program, out of the federal transfers. Too few programs and resources are dedicated specifically to helping vulnerable children and families.

Intensity of nonparental care: In the past, mothers in Quebec always had a lower labour force participation rate, worked fewer hours and earned less income than mothers in the rest of the country. Now, according to pre- liminary results from our research (using labour market data from 1993 to 2001 for mothers with at least one child aged 0-12 years), since 1997 the rate of participation in the labour force of moth- ers with children aged under five years has increased more in Quebec than in the rest of Canada. One disturbing fact is that, concomitant with this evolution, the intensity of child care (number of hours per day a child is in nonparental care) among very young children (less than three years) has increased signifi- cantly in Quebec compared with the other provinces. In other words, it seems that the low-price policy for services encourages intensity of child care. The scientific literature on the developmental effects of child care suggests that too much nonparental care may be detri- mental to the very young.

Mediocre quality of care provided: Over the years 2000-02, the Longitudinal Study of Child Development in Quebec conducted on-site evaluations of the quality of the different settings where children aged 30 to 48 months were cared for, using well-known instruments. Data from the 1,188 evaluation visits show that the majority of settings (59 percent of not-for-profit and 53 percent of for-profit centres) scored rather low on a scale from inadequate (1) to excellent (7). Although not-for-profit centres are of better quality than for-profit centres, about only one-third of the not-for-prof- it centres (34 percent) are of good quality (5 or more on the scale), whereas only 7 percent of the for-profit centres were of good quality. About one-third of the for- profit centres (34 percent) are of poor quality (1 on the scale), whereas only 7 percent of the not-for-profit centres have this rating. Also disturbing from this sur- vey is the evidence that socio-economi- cally disadvantaged children are more likely to be cared for in poor quality serv- ices than are children from more affluent families. Children from low-income or less-educated families may be triply dis- advantaged by being less likely to receive stimulating care at home, less likely to be enrolled in educationally oriented care outside the home and more likely to be receiving low-quality service when they are in child care.

Quebec’s family policy suffers sev- eral weaknesses but the aura that surrounds it seems to be preventing a real debate from occuring and serious consideration being given to measures that could improve the ECEC content of the policy. It is to be hoped that the Charest government won’t be satisfied with raising the parental contribution by a few dollars and will undertake a review of the policy to deal with the equity and efficiency issues.

The following measures, developed by Philip Merrigan and myself in a June 2003 essay (IRPP Choices) on the family and public policy, would go a long way toward achieving these improvements in Quebec and would also benefit all children in Canada: 1) provide full-day public kindergarten for all four- year-olds; 2) guarantee more flexibility and diversity in child- care services (e.g., specific subsi- dies for part-time services); 3) enhance maternity and parental leave provisions and extending them to nonbeneficiaries of employment insurance (which implies non-subsidized child care for infants aged under one year); 4) offer the option of home-care allowances for par- ents of children under the age of three who are not using subsi- dized child-care services; 5) pro- vide more resources for part-day pre-school programs dedicated to at-risk children, emphasizing early language development and parental involvement and offering comprehensive services; 6) provide a more level playing field in terms of sub- sidies for the various child-care settings, and for family-based, subsidized child care, a lower ratio than one educator for six children; 7) collect a fair contribu- tion, indexed to inflation, from those parents who use subsidized child care; and 8) make periodic on-site assessment of the quality of child-care services.

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