The Ford government’s promised child care tax rebate, expected in Thursday’s provincial budget, will make things worse, rather than better for Ontario families, a Toronto economist and leading expert on the issue predicts.
Only families who use cheap, unlicensed care will see close to the 75-per-cent rebate for families earning less than $35,000 that was part of the Progressive Conservatives’ election platform last spring, said Gordon Cleveland, a University of Toronto economics professor who has written major reports on child care affordability for the City of Toronto and the former Liberal government.
The PC promise was in response to the previous Wynne government’s plan to offer free child care for children between the ages of 2-1/2 and 4 and the NDP’s commitment to $12-a-day care.
Under the PC plan, budgeted at $389 million a year, families with incomes under $35,000 would receive a tax rebate worth up to $6,500 on annual spending of up to $9,000. Any type of paid care for kids up to age 15 while parents work or study would be eligible, according to the election platform.
Families with incomes of between about $50,000 and $100,000 would be eligible for a 60-per-cent rebate, while those earning $150,000 or more could get up to 26 per cent — or about $2,340, as promised by the PCs.
But with the average cost of licensed infant care in the GTA pegged at over $20,000 a year, and preschool care running at about $14,500, few families will see significant savings, Cleveland said.
What’s worse, Cleveland said, the rebate would encourage families to seek cheaper, unlicensed care to maximize government support.
“Ford’s tax credit sets a maximum ($9,000) that is below the cost of good quality child care for preschool children, and parents will only get a fraction of this maximum as child care assistance,” he said.
“Low-quality, low-fee providers will enter the market and will thrive compared to their higher-quality rivals,” Cleveland said, quoting American research that has studied this phenomenon.
Ford spokesperson Simon Jefferies said the government “can’t confirm tax changes that may or may not be in the budget” to be delivered Thursday.
“Premier Doug Ford and the Ontario PCs campaigned on making child care more affordable and accessible, while ensuring parents have the flexibility and choice to make the best decisions for their family,” Jefferies added.
Cleveland is also concerned the Ford government’s promised spending on the tax rebate is a “gross underestimate” of what it would cost.
Based on the number of children using paid child care in Ontario and what families are currently spending, Cleveland estimates the cost of the PCs’ refundable tax credit would be over $2 billion per year.
Even the right-leaning C.D. Howe Institute, which analyzed the PC election proposal in January, said it would cost provincial taxpayers almost $1 billion a year, Cleveland noted.
Laurie Monsebraaten is a Toronto-based reporter covering social justice. Follow her on Twitter: @lmonseb
Kristin Rushowy is a Toronto-based reporter covering Ontario politics. Follow her on Twitter: @krushowy