Status of Women Committee on March 21st, 2017

[The Chair, Conservative, Marilyn Gladu]

Good morning and welcome.

We are returning to our study on the economic security of women in Canada.

We're very pleased today to have with us Martha Friendly, who is the executive director of the Childcare Resource and Research Unit. She's with us by video from Toronto.

We are also hearing from Pierre Fortin, who is a professor in the Department of Economics at the Université du Québec à Montréal.

Welcome.

We're going to start with Mr. Fortin for 10 minutes.

[Professor Pierre Fortin, Professor, Department of Economics, Université du Québec à Montréal, As an Individual]

I will begin.

I want to begin by thanking you from the bottom of my heart. Being invited to testify before a committee like yours always stirs up special emotions in me, as several people in my family have been members of the House of Commons over the past 135 years.

Here is my list of questions and answers.

Number one: how does the child care system impact women's economic security? The answer is that the affordability of child care is a crucial consideration for the mother who has to decide whether she will return to work after she has had a new child.

The lower the cost of child care, the greater the interest of the mother in working during the period until the entry of child into kindergarten, and having a job then improves her economic security in many ways. I will name three: one, it gives her an independent source of income; two, it makes her career less discontinuous, which accelerates her acquisition of experience and raises her wages; and, three, perhaps new to you, but extremely important nowadays, it allows her to better face the financial consequences of the risk of separation, which is very high nowadays. The probability that a separation will occur within 10 years after a first union is currently in excess of 50% in Canada.

Number two: why is it important to focus on the Quebec low-fee universal child care system that was started in 1997? The answer is that the cost of child care varies enormously between cities and regions of Canada. It ranges from 5% of women's average earning power in Quebec to 35% in Ontario. On average, the Quebec system makes regulated child care five times more affordable than in other provinces. The consequence is that child care utilization and the labour force participation of mothers are very much higher in that province than elsewhere.

This is making a major contribution to the economic security of Quebec women. In 2014 there were regulated child care spaces for 60% of children from zero to four years in Quebec, but for only 28% of children in other provinces. Furthermore, from 1998 to 2014, the labour force participation rate of mothers of young children zoomed by 13 percentage points from 66% to 79% in Quebec, but outside the province, it increased by only four points on average.

Number three: how do we know that the increase in labour force participation of Quebec mothers has been caused by the low-fee universal child care system of that province? Causality has been carefully identified by teams of researchers from UQAM, which is my own university, and the University of Toronto, MIT, UBC, and Queen's. Their studies have been refereed and published in reputable scientific journals internationally. Their evidence is compelling and unanimous that, relative to other parts of the country, the increase in the labour force participation rate of mothers in Quebec was to a large extent an outcome of its low-fee universal child care system.

Crucially, the UQAM team—my colleagues, not me—showed that Quebec mothers participated more in the labour force not only when their children were very young but also later, when the kids had entered school. In other words, if you continue to work after you have your child, you have more of a chance to continue after that. Based on these results, my Université de Sherbrooke colleagues and I estimated that in 2008 there were 70,000 more Quebec mothers in employment than there would have been otherwise.

Number four: isn't pulling mothers away from home bad for child development?

There's no question that the family is and should remain the bedrock on which child education is built.

However, in a world where already more than 70% of Canadian mothers of very young children work, the question is not whether this is acceptable in theory, but what to do in practice, given that this is a reality we have to cope with. How do we ensure that the 70% majority of young children whose mothers work in Canada get the high-quality child care they need to complement the care they receive at home? This is the question.

Why is it preferable to run a low-fee universal system instead of simply enriching the existing traditional system outside of Quebec with higher quality and better targeted child care? The answer is because a low-fee universal system is more effective and less costly than the traditional, purely targeted system providing child care.

First, more than two-thirds of all vulnerable children come from middle- and higher-income families. Only a universal system can effectively catch all of them.

Second, the Quebec experiment has shown that the low-fee universal system can attract so many more mothers into the labour force that the additional taxes collected by the two levels of government, in total, come to exceed the additional subsidies that the province has to pay over what the targeted system would otherwise cost. There is a net fiscal dividend that can then be used to improve the quality of child care and respond to the special needs of disadvantaged children. There is no net cost to taxpayers. The traditional system cannot perform this financial trick. There is no revenue, just the cost, and it must be financed by higher taxes.

Does this mean that the Quebec child care system is near perfection? Not at all. It is far from perfect. Far too few children receive education and care of good to excellent quality, and far too few disadvantaged children access the good part of the system and have their special needs attended to. The network of high-quality, non-profit early childhood centres, the CPE in Quebec, does a very good job, but in order to economize on costs, the provincial government over the years has used its tax and subsidy policies to push parents away from the high-performance CPE and entice them towards low-quality private garderies.

Not surprisingly, with the distribution of children in care thus skewed toward low-quality providers, studies—by all those guys from Toronto, UBC, UQAM, and Queen's—have shown that the Quebec system as a whole does not seem to have improved child development. The main failure of the Quebec system is not that it is a universal low-fee system, but that it has badly managed quality. The main challenge now for the provincial government is to correct this policy error.

I end with my recommendation. The government, in my view, should quickly make good on its 2015 platform promise to deliver “affordable, high-quality, flexible, and fully inclusive child care for Canadian families”. Specifically, it should push forward the national early childhood education and care agenda by introducing a Canada child care act. Under this act there would be an annual financial contribution made by the government to provinces and territories on the condition that their educational child care programs be low fee and universal in design. That would contribute mightily to building a solid educational infrastructure in Canada.

[The Chair, Conservative, Marilyn Gladu]

Those were excellent remarks, very well done to the time.

Now we go to Martha Friendly.

You also have 10 minutes. Go ahead.

[Martha Friendly, Executive Director, Childcare Resource and Research Unit (CRRU)]

Thank you very much committee members and Madam Chair. I very much appreciate the opportunity to speak with you today. In a way, maybe you don't need to hear from me, because I think Professor Fortin has made a number of the points I wanted to make.

I think I'll be making them in a different way, though. I’ve also submitted a written brief that you don't have. This will form the basis of my remarks today. I will more or less be summarizing it in point form.

First, I want to take as a starting point that 21st century women's economic security is closely linked to decently paid employment. I don't think I need to spend time arguing that the days when women’s economic security came from marriage to a man earning at least the "family wage" has been over for decades. I'm not going to take any time making that point.

My second point, which others have made, is that access to child care is absolutely fundamental to advancing women's economic security. Many of us remember Justice Rosalie Abella's definitive quote from the time she was heading the Royal Commission on Equality in Employment, in 1984, “ Child care is the ramp that provides equal access to the workforce for mothers.”

I think it's really evident that if mothers of young children are to be in the workforce, accessible, affordable, and also, I would argue, high quality child care for their children is needed to cover their absence. This is merely common sense. If they're not there, something good has to be done for their children in their absence.

The third point I want to make is that having young children makes employment much harder for women. The data shows that mothers of young children are more disadvantaged in employment than women without children. Women with young children, especially single mothers, are less likely to be employed and to be well employed, thus undermining their own economic security as well as that of their families. I want to emphasize also that this is so, not only for low-income women, but for modest- and middle-income women as well, all of whom may have difficulty accessing the reliable, affordable child care they need to be well employed.

In my brief, I point to Finance Minister Morneau’s interest in bringing more women with young children into the workforce, as his advisory council on economic growth has advised, in order to tap economic potential through greater workforce participation. The advisory council also links Quebec’s much better funded child care to Quebec women's employment rate, which is much higher than women’s employment rates in the rest of Canada. Of course, you've heard this in more detail from my colleague, Professor Fortin.

It's noteworthy, also, that not only does Quebec fund child care much more generously than elsewhere in Canada, but it's the sole province that has abandoned the ineffective fee subsidy system that is still used in other provinces and territories, presumably to target child care to those who are low income. I'm pointing this out because it's a really graphic illustration that's current, of the strong link between affordable child care and women's economic security. I just want to add that the International Monetary Fund has made this same point in its study of Canadian productivity.

The fourth point I want to make is about Canada's child care situation. I'm sure you've heard from other witnesses that this is demonstrably a very weak child care situation.

There are two characteristics that have particular relevance to women's economic security. The first of these is the severe space shortage in every province and territory. It's very hard to get a space, especially if you have an infant, a toddler, or a child with special needs; if you're indigenous; or if you live in a remote or rural community.

The second key characteristic of our child care situation is the sky-high parent fees in most of Canada. These prevent many families, including middle-income families, from using regulated child care, even if they can find a space. One study found that 75% of families in Toronto couldn't afford child care in Toronto, which is really significant.

My brief also points out that quality is a third, important, main element. This is of key importance because considerable research shows that quality is the key in determining whether child care is beneficial for children or negative for children.

This means that quality as well as the availability of spaces and whether the spaces are affordable need to be taken into account. I want to point out that these features are all directly linked to structural aspects of child care policy and they're amenable to policy solutions, as the evidence from Quebec and from other countries show.

The fifth point that I want to make is that the Government of Canada has made a commitment on child care. In the last federal election the federal Liberals committed to developing a national early learning and child care framework in collaboration with provinces and territories and indigenous communities under the rubric of economic security for middle-class families. The purpose of this policy framework is “to deliver affordable, high-quality, flexible, and fully inclusive child care for Canadian families”. We understand that the senior levels of government have already developed a list of principles—accessibility, affordability, quality, inclusivity, and flexibility—and that initial funds will be committed in tomorrow's federal budget.

The sixth point I want to make is that all of the best evidence shows that the relationship of child care to women's economic security shows that Canada needs to develop a much improved child care situation. I know you've heard this from other witnesses. This needs to be a transformative shift, not just more of the status quo, which is already not working for women or children or families, or for meeting other goals such as productivity.

To even begin to meet the anticipated principles, child care services need to be supported by two things: first, by substantial, long-term public funding; and second, by robust, well-designed policy based on the best evidence. Without both of these, much more money and much more and better policy, real economic security will continue to be elusive for women in Canada.

Just to summarize, my overall point is that the Government of Canada cannot address women's economic security without finally tackling child care, and overall poor access to child care wastes both women's and public resources.

[The Chair, Conservative, Marilyn Gladu]

You have two and a half minutes.

[Martha Friendly]

Before I conclude with a couple of concrete recommendations, I want to take a minute to comment personally. I've been a policy researcher on early childhood education and child care even before I immigrated to Canada in 1971, and I'm very familiar with child care issues not only from my work as a policy researcher, but personally, as many women and family members are.

When I was a young working mother in the 1970s and 1980s, both my children went to excellent, non-profit child care. One of them was a parent co-op. But I'm now a grandmother of four-year-old twins, and they also have been in excellent municipal child care since they were babies. My daughter, who's a young academic, and her partner can afford the fees only because they are lucky enough to have a fee subsidy. Virtually nobody in Toronto can afford those fees for two children. Just to point out the luck piece, there are 18,000 children on the Toronto subsidy waiting list at any one time now. So you can see that the subsidy system does not work, and you can appreciate that this has made all the difference in my life, and it's making a difference in my daughter's life.

Since I was a day care parent 30-odd years ago, however, around the time that the Status of Women minister released the “Report of the Task Force on Child Care”, on International Women's Day in 1986, little about child care has fundamentally changed in Canada. It's still very hard to get a space, outside of Quebec it's exorbitantly expensive, and too often the quality isn't good enough to qualify as “high” or “educational”. What has changed, though, is that we we know much more about what governments need to do to change the status quo. Today there is so much more international and Canadian information about what should be done.

Based on all of this, here are my recommendations.

First, I echo what other people have said: the Government of Canada needs to act decisively to put in place its 2015 platform promise “to deliver affordable, high-quality, flexible, and fully inclusive child care for Canadian families”. The process of achieving a system that will deliver this will take many years. It will probably take a decade to put this in place, but it needs to begin now with a clear vision for the future. To make this happen, it needs to start with a robust policy framework that will be based on the best available evidence. It also needs to be supported that changing child care needs substantial, long-term, sustained funding that ramps up predictably over time to be at least the international benchmark of 1% of GDP.

Just to conclude, because I'm getting a signal—

[The Chair, Conservative, Marilyn Gladu]

I'm sorry to cut you off, but that's your time.

[Martha Friendly]

That's okay.

[The Chair, Conservative, Marilyn Gladu]

We're going to start with our questions.

Mr. Fortin has requested that everyone ask their questions slowly and clearly, as he has difficulty hearing.

We'll begin with Ms. Damoff, for seven minutes.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Ms. Friendly, if you wanted to just finish what you had to say, that's fine if it's brief.

[Martha Friendly]

I urge you to do all you can to ensure that Canadian women don't have to wait.

Thank you.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Thank you both very much for being here and for sharing what we've heard before about the importance of quality universal child care for children.

Professor Fortin, I'm wondering if you've ever done an estimate on how much tax revenue would be generated by the federal government if women were working and able to access universal child care?

[Prof. Pierre Fortin]

In 2013 I published a paper with my Université de Sherbrooke colleagues, Luc Godbout and Suzie St-Cerny. Luc is the chair of the centre for research on tax policy. Our paper shows that in 2008, as a result of the Quebec system having generated much higher labour force participation among Quebec mothers, the federal government had cashed in $650 million. Overall, the two levels of government got $900 million in associated tax revenues that year, 2008.

Of course, the $250 million that Quebec got was net of what it had to pay for the system itself. In other words, the federal government doesn't pay a penny for that system, but cashes in everything. There is no absolute necessity that the federal government return something to the population, to the province, or to the system, but it would seem more fair if the revenue coming from more mothers being in the labour force were shared between the two levels of government.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

You also talked on the issue of quality child care. One of the issues that has arisen in Quebec—and they've made some changes—is that it isn't necessarily quality child care.

If the federal government were looking at implementing some kind of universal child care system, what would your recommendations be so that we avoid those pitfalls and ensure that universal and quality child care is available for children?

[Prof. Pierre Fortin]

I would say it would be to avoid the big refundable tax credit system that Quebec instituted in 2009. In 2008 and starting in 2009, it decided to enlarge the refundable tax credit for parents who were sending their children to a private garderie so that the net cost after tax credit would be similar to the $7 a day fee that they had to pay in the licensed subsidized sector so that there would be full competition between the private garderies and the non-profit sector.

The incentive for the government to do that is, for example, that, if you look at 2016, it paid on average $45 to any CPE or early childhood centre non-profit, but only $21, or 60% of $35, is the refundable tax credit, which is the daily cost in a private garderie. The government pays 60% of that in a refundable tax credit to the parents so it makes a profit of $24—$45 minus $21—when a parent decides to go to a private garderie instead of a CPE.

I said that the government was pushing people toward the private garderies. The problem with the private garderies is that they have been universally, and by many studies, calibrated as giving just average or totally inadequate services to the population as opposed to the CPE system, where about half of the centres have been measured as giving good to excellent quality services, with the rest giving average quality services.

This is what we would have to avoid. The problem, of course, is to what extent here our government can contribute to financing a national child care system by imposing some constraints on the provinces. Of course, just as in the Canada Health Act, there could be some dispositions, some clauses, that would help to avoid that trap, because in Quebec it's really a low-quality trap we're in now.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

I have only about 30 seconds left. I think basically you're saying core funding versus tax credits is—

[Prof. Pierre Fortin]

Yes. You can achieve the same level of net after tax credit, which is the case now for various....

The stupidest thing the provincial government has done is to maintain the financial incentive for poorer families to send their kids to those private garderies. It's less costly for them to go to the private garderies than to go to a CPE, which is totally the reverse of what you should have for those people whose children have many more needs.

[The Chair, Conservative, Marilyn Gladu]

Thank you.

We'll go to Ms. Vecchio for seven minutes.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Good morning.

Martha, I would like to start with you. It's nice to see you again today.

You talked about Toronto and how in Toronto over 12,000 people are on the waiting list for the subsidy. Have you seen an impact or a stalling out due to the child benefit that was released last year? Has this had any impact on the subsidy wait-list, or do you find more families are still asking for that subsidy even with the child benefit that incorporates all three benefits for families?

[Martha Friendly]

Child care, which is what the subsidy pays, costs much more than the amount of the child benefit. Nobody has studied this, but the subsidy waiting list has been at about 18,000 generally for the last five to six years.

From a practical point of view, I don't think anybody has seen any impact, but just from a common sense point of view, it's too little money to pay for child care. It's not intended to pay for child care.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

The reason I asked that was because it actually does have that component in there, because the universal child care was folded into the CCB. I appreciate that, but that is one thing that was missing.

I want to go on to a quote. This is something that when we talk a lot about Quebec day care—I am a parent of five children, and I believe parental choice is still my number one priority. We talk about these facilities and the subsidies and a variety of things. Back in 2014, there was a debate within the provincial government. They had a look at making some changes, specifically because greater than 50% of the families who were using child care had the opportunity to plan for it because they were the wealthier families. I quote:

Spots don't necessarily go to families who need it most. Because the very nature of universal childcare means that everyone is eligible, wealthier families inevitably occupy spots that could go to families in desperate need of affordable daycare. In fact, families with the highest annual incomes in the province are twice as likely to have a child enrolled in the universal program as compared to families earning the lowest incomes.

For me, that's an important fact, because we're still leaving out the people who need to have this financial support. They're on waiting lists that can be two to three years long as well.

When we're talking about this subsidy, I recognize it's not perfect. We realize there's going to be a child care framework that's going to be put forward by this government. Therefore, we need to make sure that it's going to be flexible, and it's going to be something that can be seen from coast to coast, even if you're living in a community of 300 people with the closest city 25 minutes or an hour away.

What do you see as something that's going to still be able to target...? I believe it's important to make sure that those people who need to get back in the workplace, and who need the financial assistance, still have these opportunities, and wealthier families are not taking these spots, because they're not getting these opportunities to go forward and for work.

How can we make a flexible plan that will work for communities of three million or 300, which will work and be flexible for people who, in my community, work a lot of shift work? What do we have there?

I'd like you both to speak to this and also, what do we do for workers? I'm thinking of a mother I know who puts her children to bed at 11 p.m. and comes home every morning at 7 a.m. How do we help families like hers who want their children to be home? She works the night shift and allows them to sleep in their own beds.

If you can come up with a formula for that, that would be awesome. Thanks.

[Martha Friendly]

Karen, let me answer this in several ways. First, we who work on child care policy agree with the idea that families need to have options, call it choice, options. All of the evidence that we have reviewed, and all of the research shows that the best way to do that is by developing a comprehensive, publicly funded system.

There are a lot of things in what you said. For example, I've done a lot of work on rural child care, on non-standard hours child care. The things that mitigate against developing that are that we don't have a system; we have a market. A child care centre that springs up and that's very small, for example, in a rural community, has to make it on its own and cover its own costs. This is one of the reasons they either don't spring up, or they don't survive.

I would be very happy to forward some of our recommendations to you that talk about developing a comprehensive system that includes, for example, part-day child care, which we call nursery school in much of Canada, which parents can't get unless they can pay fees for it, and a range of services, including regulated home child care—

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Martha, I want to be a little more specific. I'll be happy to read the study, but because you have so much work in this background, what would you do for smaller communities where there are 300 to 500 people? People want to go to work, but the child care facilities are going to be outside of their community. What does that look like? Say that it is comprehensive and that we have a formula, where are we at steps 3 and 4 then?

[Martha Friendly]

There isn't any reason that a small community or collection of small communities cannot have a small child care facility. You see this all around Europe. You see it at the top of Norway on the tundra. You can also incorporate regulated home child care into the system as it is all around Canada.

The reason we can't have small child care facilities that may be located in the school or in a public building is that there isn't any way for them to operate. There is no operating funding system. We're proposing that that be changed.

When we talk about a comprehensive system, that's what we mean. It's that you have a system—and this works very well in other countries—where you turn it around, and it's not up to parents to fund it. Therefore, you don't necessarily give them money, a tax credit, or a cheque to pay for it, but rather you fund the services. This way you can actually make them work for all kinds of communities, and this way—

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Martha, I have about 30 seconds and I quickly want to hear from Pierre on that, but I would love to talk to you more some time, if you don't mind.