moved that Bill C-256, an act to amend the Income Tax Act (transfer of income to spouse), be read the second time and referred to a committee.
Mr. Speaker, I am pleased to rise in the House of Commons to present for debate at second reading my private member's bill, C-256.
Every member of Parliament looks forward to an opportunity to bring before the House matters of importance not only to themselves but to all Canadians. Bill C-256 is a proposal which is foremost about the family and which also has implications for jobs, child care, tax equity and the cost of health, social services and criminal justice.
The United Nations General Assembly has proclaimed 1994 as the International Year of the Family. However, in my view this is not as much a celebration as it is a warning.
In the last 30 years changes in our social and economic environment have been dramatic. Family and social values have clearly eroded. We no longer feel safe in our communities. Demand for social services has expanded beyond our means and family breakdown has become the norm. Everyone knows a lone parent, but did you know that 60 per cent of them are living in poverty?
In 1961, 65 per cent of families with children under six years old had one stay at home parent. In 1991, 30 years later, this type of family structure accounted for only 12 per cent of families. In addition, today more than 70 per cent of preschool children are now in non-parental care arrangements on a regular basis while parents work.
Much of this movement has been caused by economic circumstances. Growth in incomes has been stagnating in real terms since the mid 1970s and younger families have been hit the hardest. Their incomes are in dramatic decline and the incidence of poverty is increasing. For example, among families with a head under age 25 the incidence of poverty nearly doubled from 21 per cent to 37 per cent between 1981 and 1991.
I am therefore extremely pleased that today the Minister for Human Resources Development reaffirmed our commitment to the elimination of child poverty. He has clearly stated that this is our top priority in the restructuring of our social programs.
It should be noted however that as personal home parenting becomes increasingly uneconomic, it is being portrayed as decreasingly desirable. Instead of recognizing that there may be problems with our priorities, we somehow rationalize that the choice is best for the children.
In addition, there are a number of other contributing factors to the family and social ills we are experiencing today. We appear to have designed most of our services to kick in after problems become apparent. By then the need to respond is urgent but the remedial efforts are often unsuccessful.
According to the May 1994 report of the Ontario premier's council on health, well-being and social justice, critical development outcomes are rooted in early experiences and influences. These outcomes include good physical health, the ability to learn, the ability to cope with stress, being able to relate well with others and to have a positive self-esteem.
Where, how and with whom children spend their time in the early years has a major impact on their healthy development. A secure attachment to a nurturing adult is essential and who is better than one of the parents to provide that care.
Dr. Fraser Mustard, chair of the Canadian Institute for Advanced Research, has long advocated focusing some of our limited resources to children in the first three years of life. Their extensive research shows dramatic links between future problems and poor child care during infancy.
Dr. Mustard cites a 19 year study of early childhood enrichment in the United States. As a result, the group of children had a higher proportion who graduated from high school and went on to college. There was a 50 per cent lower incidence of mental health problems, 40 per cent fewer on welfare, and there were 50 per cent fewer teenage pregnancies.
Dr. Penelope Leach, renowned author on child care, masterfully stated the case when she said: "The real issue is not motherhood or career, but something closer to parenthood and paid work". Today, children are more a part of paid work than of home life. As such, they are currently of secondary importance in our society. Those priorities will have to shift.
The critical importance of quality child care is particularly dramatized by the facts related to young unmarried mothers. Each year over 20,000 unmarried women aged 12 to 19 give birth with the majority choosing to raise the children themselves. As a result, most do not finish their education and are likely to become dependent on subsidized housing and welfare. Their offspring are at a higher risk of being premature or low birth weight, more likely to experience difficulty in school, and more likely to become single parents themselves.
These facts raise serious questions. What has become of the traditional family? Are we fully aware of the potential consequences to our children's future development by having both parents work? Is it really up to governments to take the responsibility for the future development of our children? Has society decided that managing the family home and caring for preschool children is no longer important?
Who would dare say that a stay at home parent does not work? A parent working in the home has chosen a very honourable profession which contributes more to the quality of our society than most jobs. Yet it is a profession which is not specifically compensated in recognition of the value of the work done. That is the reason why I have tabled this bill. It is an attempt to provide a modest financial benefit to families who choose to have one parent work in the home and care for preschool children.
As a consequence of the bill, jobs in the external work force would be freed up for those who urgently need them. In addition, child care spaces would be freed up to partially address the critical shortage we are now experiencing.
Take the example of two working parents with two children in day care with the lower income earning spouse earning $25,000. After income tax, child care expenses and the cost of employment, the net take home pay is less than $100 per week.
Parents in this situation often question why they are sacrificing so much for so little. Their lives are driven by a child care schedule. They rush in the morning to get their child ready, they rush to deliver the children to day care, they rush to work to put in a full day and they cannot delay leaving work because the children must be picked up and taken home to be fed dinner. By the time they settle in the home, it is time to get the children ready for bed. Parents may want to spend family time with children but often it is the case that the children are too tired or not in the mood to play when the parents have the time.
What do parents do when their children are sick? That much stress cannot be helping the family unit. The amount of time that parents and children spend together has dropped by 40 per cent in a single generation. As a rationalization we dreamed up the notion of quality time. However, that implies that to spend a small amount of time with a child is satisfactory if it is quality time whereas if you are around the child all of the time only some of that time is quality time. That kind of thinking is simply flawed.
Economic considerations are important, but in certain circumstances parents are struggling to decide whether the modest take home pay of the lower income earning spouse is worth all the family sacrifices they are making. Although the vast majority of parents do work, a 1991 Decima poll found that 70 per cent of women would choose to provide direct parental care if they could. This bill would provide a financial bridge to assist those parents, and I stress, who would like the option to make that choice.
It should also be noted that our present income tax system in fact discriminates against one income families. The child care expense deduction permits two income families to claim up to $5,000 of child care costs per child under the age of seven regardless of how much income they have. No such deduction is available to one income families due to the false assumption that they have no child care costs.
Child care costs exist not because both spouses work but rather because children exist. The child care expense deduction has an inverse relationship to need. That means that the higher the family income, the higher the savings to the two income family.
Consider also the case where two neighbours each have children. One neighbour can be paid to take care of the children of the other neighbour and vice versa. Each family then gets to claim the child care expense deduction because they care for each other's children. Ironically, however, you do not get any deduction when you care for your own children. This favoured tax treatment may produce financial savings for those who care for the children of others but it does nothing for those who care for their own children.
The child care expense deduction should be means tested and extended to all families to address the profound inequities in our Income Tax Act. This initiative would provide equitable benefits to all families based on financial need. Accordingly, I will
shortly be tabling in the House a motion to effect this change and I hope it will have the support of all hon. members.
Bill C-256 specifically seeks to amend the Income Tax Act to permit one spouse to split up to $25,000 of their income with the spouse working in the home and caring for at least one dependent child who has not commenced full time attendance at school.
As a result of the graduated tax brackets presently in our income tax laws, this would result in a lower tax burden on family income. Depending on the level of incomes and deductions the benefit could be as much as $3,500 per year or about $65 per week.
In the example I cited if instead of forgoing $100 per week of net take home pay it were reduced to only $35 per week the option to have one parent work in the home would be much more attractive to the family. The income split with the spouse working in the home would be treated as self-employed income and as such would not be eligible for unemployment insurance. The income would however qualify for the purchase of RRSPs.
Under the Canada Pension Plan Act this income would not qualify for CPP benefits. I have however tabled in the House Bill C-269 which would change the CPP act to make such earnings pensionable. That change will require approval of two-thirds of the provinces representing 50 per cent of the population, plus Quebec which operates its own Quebec pension plan.
If we truly believe that working in the home and caring for preschool children is an important job, should we also not acknowledge the fairness of providing pension benefits?
The benefits of this bill do not stop there however. This is not just a bill which would give a tax break to some Canadians. If a lower income earner withdraws from the external workforce to work in the home, a job would be freed up or created depending on how we looked at it. With 10.7 per cent of our workforce unemployed the importance of job creation cannot be overstated.
Furthermore the person filling the vacated job will likely have been on UI which can be up to $429 a week, or on welfare which can be up to $663 per week. Under these circumstances the government will in fact be saving on the cost of these social benefits. As well the new taxpayer would not likely have the same level of child care expenses, which means that more tax would be paid by the person on the same job than by the person who formerly held that job.
A further consequence of the bill is the freeing up of child care spaces. In its red book the government has committed to create 50,000 child care spaces per year for three years following the achievement of 3 per cent growth in GDP. Since that growth will be reached this year these 150,000 spaces will be created at a cost of $1.4 billion split between the federal and provincial governments. That represents $9,600 per space per year.
It is also expected that the users will pay $2,400 per year for the space. Therefore, in total each of these spaces will cost $12,000. That is a fair indicator of just how much value should be attributed to caring for a child in the home.
While it is certainly true that more day care provision would increase the number of mothers in the external workforce, it is also true that more financial help with the costs of being a parent would reduce that number no matter how much affordable day care was available. In the long term it is crucial for us to realize that direct parental care will also contribute to savings in the areas of health, social programs and criminal justice.
Each year it costs literally billions of dollars to respond to the problems rooted in poor child development. Today we face serious challenges related to the family which are complex. We must however remember that there are no simple solutions. We need a range of initiatives spanning both preventive and remedial approaches. Bill C-256 represents an important preventive approach which recognizes the value of work in the home, creates jobs and provides child care spaces.
Since introduction of the bill over 160 members of Parliament have indicated their support for having the bill referred to committee. In addition, thousands of Canadians across the country have told us through letters and petitions that they want to see the subject matter of the bill pursued.
In the year of the family I believe the House of Commons should embrace every possible opportunity to examine initiatives which may help Canadian families to raise our children who are of course our future.
Private members' bills require unanimous consent of the House at second reading in order to proceed to the next stage. Such consent is very rarely achieved but the value of the process is the extensive dialogue generated not only in the House but also among Canadians interested in the subject matter.
This morning I had the opportunity to speak with the Minister of Human Resources Development about the issue of benefits for those who give care. I have his assurance that the subject matter of Bill C-256 can be addressed as part of the review of the social programs outlined in his discussion paper tabled today in the House of Commons. This will allow a broader consideration of the issues and the options to Bill C-256.
One such option to spousal income splitting is the creation of a caregiver tax credit which would be available to those Canadians who provide care directly rather than relying on extensive social services. Caregivers would include those who care for preschool children in the home or who care for the disabled, the chronically ill, or seniors requiring continuous care. These
Canadians have put their family members first, ahead of their own interests, and they should be recognized.
I am grateful for the opportunity to continue the fight on behalf of parents and all caregivers who provide care in the home. The dialogue has just begun. I thank all hon. members for their interest and their support.
