OTTAWA – Just over half of the money the federal government is set to spend on child care will go to parents of teenagers or families who do not pay to put their kids in daycare, says a new report by the parliamentary budget officer.
Jean-Denis Frechette’s latest report comes days after the Conservatives introduced legislation to enact its so-called “family tax cut” — a multibillion-dollar suite of measures that includes the controversial income-splitting plan.
The measures would also bolster the universal child care benefit and place higher limits on the existing child-care expense deduction.
In October, Finance Minister Joe Oliver announced the government would replace the child tax credit with larger monthly universal child care benefit cheques, adding $60 to the monthly $100 cheque for kids under six and creating a new $60 benefit for children between ages six and 17.
These enhancements mean monthly government cheques will start arriving at the homes of qualifying families in July — three months before Canadians are scheduled to go to the polls.
But the PBO report says families with children under the age of 13 who pay for child care stand to receive a smaller proportion of the overall benefits than will those families with older kids or those who don’t pay for child care.
That’s because there are now more families eligible for the new monthly benefit of $60 for children aged six through 17. Previously, it only applied to families with kids under six.
“It used to be the universal child care benefit (was) only for families under the age of six,” said Mostafa Askari, the assistant parliamentary budget officer.
“Now, with the extension that they have done, all the families with children under the age of 17 will be eligible to get that $60 extra that they have added to the universal child care benefit.”
Frechette’s office said that in 2015-16, families with young children in child care will receive 49 per cent of the overall benefits. That’s down from about 66 per cent in 2013-14.
Meanwhile, families with older kids and families who don’t pay for daycare will see their share of the overall benefits rise to 51 per cent in 2015-16 from 34 per cent in 2013-14.
“Overall, federal child care benefits are progressive,” the PBO report says.
“At the same time, many of the families that benefit from federal child care initiatives do not incur child care expenses — either as a result of provincial child care subsidies, alternative arrangements such as having a relative provide child care, or because a parent is providing care.
“PBO estimates these families will receive the largest net gain of the recent enhancements to the (universal child care benefit).”
Minister of State for Social Development Candice Bergen said the PBO report under-represents the total value of child care because it fails to take into account the costs to parents who do not pay to put their kids in formal day care or home care.
“This is the reality — and I think any family you talk to with kids under the age of 18 … will tell you that there’s cost associated with raising them, with caring for them, with the care of that child,” Bergen said.
“What we have consistently been saying, and this is a (Statistics Canada) report that I’m sure the PBO would have seen as well, just over 50 per cent of families with kids don’t use child care. Now that’s not to say there’s not a cost associated … because there’s lost income, there’s cost associated with one parent deciding to stay home … it’s, I’m sure, just very difficult for him to ascertain those specific costs.”
The PBO also estimates the changes to the universal child care benefit and the child care expense deduction will cost the government $7.7 billion in 2015-16 — up from $3.3 billion in 2013-14.
By 2017-18, the PBO estimates the cost will grow to $7.9 billion.
The report also cites a Statistics Canada study that shows the average annual child care expense is $3,795.
Follow @steve_rennie on Twitter