Quebec’s subsidized daycare policy is expensive and does not pay for itself.

Garderie

MAIN CONCLUSIONS

In 1997, Quebec instituted a system of subsidized daycare, providing daycare spots at a daily rate of $5 per day regardless of parental income. Despite some modest reforms, this universal daycare program retains its original structure.

Quebecs system is expensive. The government spends over $9,000 per child served, for a total cost of approximately $2.6 billion in 2014/15.

Nevertheless, Quebecs daycare system has been held up by some as a model for other provinces: advocates argue increased maternal labour-force participation generates tax revenue that offsets program costs and that the program produces beneficial child development outcomes.

These claims should be treated skeptically. The resulting tax revenues from increased maternel labour-force participation likely do not offset the full cost of Quebec’s program. What’s more, the effects upon labour-force participation in Quebec cannot easily be generalized to the rest of Canada and daycare based on Quebec’s model would likely have significant fiscal costs if adopted elsewhere.

Evidence for long-lasting child development gains from subsidized daycare is mixed. Troublingly, studies from Quebec show the program has contributed to significantly worse health and social development outcomes.

Although the program is often described as universal, Quebec has not solved the problem of access and waiting times despite very high levels of government spending. Lengthy wait times remain in many areas, and children from higher income families are more likely to obtain a place in daycare.

Conclusion

Quebec’s subsidized daycare policy has been singled out as a model by advocates for subsidized daycare in other provinces. However, claims about the benefits of Quebec’s model should be considered skeptically. The program is expensive, and the preponderance of the research suggests that it does not pay for itself, as has been suggested by some, through increased tax revenue. Furthermore, promises of big gains in children’s readiness for school and in long-term human capital lack a strong evidentiary base.

The reality is that for other provinces considering daycare programs based on the Quebec model, there is likely to be a substantial net fiscal cost, and there is reason to be skeptical about long-run returns from that spending in terms of the development of human capital. These realities should be borne in mind whenever any Canadian province is considering following Quebec’s lead on daycare