With a federal election under a year away and the Harper government poised to introduce its fall economic update in the coming weeks, the primary debate for Canadians in the next election is shaping up to be what to do with the projected surplus?
We are not talking about chump change here, either. The Parliamentary Budget Office predicts that the government is on pace to run a $3.6-billion surplus in 2014-15, with subsequent surpluses to average about $10 billion annually for at least five years. That’s a lot of money – and lo and behold, there are many politicians salivating at the opportunity to spend it for you.
Earlier this month, the NDP announced its proposal for a $15 per day nationwide child care program. If it looks anything like the Quebec model, it would inevitably end up as a subsidy to those who need it least. In fact, studies show that the Quebec system results in middle and upper-income families securing most of the spots, leaving children of poorer families on long waiting lists.
The NDP assume provincial governments would be willing to bankroll a large part of the cost. This is a big assumption, especially considering the Quebec government is weighing a major overhaul of the program. The province’s auditor general identified a litany of problems in 2011. Not exactly a rock solid model upon which to launch a massive new federal program.
What’s more, the NDP proposes this new spending in addition to, rather than in place of, the existing system of payments to parents of children under age six in the form of the $100 per month Universal Child Care Benefit (UCCB). Incredibly, under the NDP plan you can have your cake and eat it too – so long as you’re prepared to pay for twice as much cake.
The Conservatives, for their part, are rumoured to be looking to expand the UCCB, either in amount (more) or scope (by making it applicable to children up to age 12). This would also cost a hefty sum – comparable to the cost of the NDP plan. On the plus side, more money would be going directly into the pockets of Canadian families rather than funding one type of program. This would give greater flexibility to parents and keep thousands of stay-at-home moms who run day-homes, in business.
Yet, when it comes to support for child care, there are better ways than creating vast new government bureaucracies, or cutting Canadian families cheques with their own money and then taxing part of it back: the government could simply take less from Canadian families in the first place.
If the objective were to put more money into the hands of Canadian parents, why not consider increasing the existing child care deduction? Parents are already able to deduct up to $7,000 for child care costs for children under seven, and $4,000 for children under 17. Raising that limit would benefit all parents, regardless of the form of child care they opt for – especially if a working parent was permitted to pay their stay-at-home partner and claim the deduction.
One of the best ways the federal government can support Canadian families is by lowering their tax burden. Looming budget surpluses mean at long last they have the flexibility to do so – and they should.
Aaron Wudrick, Federal Director, Canadian Taxpayers Federation
