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Tories say child-care credit lets parents decide ‘what works best’
April 15, 2019
Laurie Monsebraaten

The Ford government says it wants to put CARE in child-care arrangements for Ontario parents.

The proposed Childcare Access and Relief from Expenses tax credit, announced by Finance Minister Vic Fedeli on Thursday in the Ontario budget, is one of the “most flexible child care initiatives ever introduced” in the province, the government says.

Robert Benzie breaks down the highlights from the Ontario 2019 budget.

The credit is aimed at helping parents with children up to age 16 and annual family incomes below $150,000.

Worth an average of $1,250 per family, it can be used for a broad range of child-care options, including care in centres, homes and camps, Fedeli said.

“The previous administration took an outdated and rigid ‘government knows best’ approach,” Fedeli said in his budget speech.

“We disagree. Why don’t we let parents decide what child-care options work best for them?”

But NDP Leader Andrea Horwath slammed the measure as a “rebate rip-off.

“You are not going to see more new, high quality child-care spaces that are affordable,” she told reporters. “You are going to see more privatized child care. You are going to see more home child care that is not easily monitored … This is about little children, toddlers and babies … and this is what the government offers?”

The tax credit would provide annual rebates of up to $6,000 per child under age 7 and up to $3,750 for those between ages 7 and 16. Families whose children are disabled could get up to $8,250 per child.

About 300,000 families would be eligible for the credit that would cost taxpayers about $390 million a year, according to the budget.

The money would be in addition to the existing Child Care Expense Deduction. But unlike that non-refundable credit, which provides more tax relief to higher-income families, Ontario’s would benefit low- to moderate-income families the most, budget documents say.
Toronto parents Lisa Okun, a self-employed mortgage agent, and Ilios Steryannis, a musician, can afford to pay only $400 a month for three mornings a week of care for their daughter Nina, 16 months.

Under the CARE rebate, the couple would get about $2,000, according to government officials.

Okun welcomed the initiative.

“Anything the government can do to help people have a family and have a job -- which is not an unreasonable thing -- is going to be good,” she said.

“Just because someone has chosen flexible work arrangements doesn’t mean they shouldn’t have access to the same kind of assistance as someone who has their child in full-time care,” Okun added.

Along with financial support for parents, the government is proposing to spend about $1 billion over the next five years to create 30,000 more licensed child care spaces in public schools, including 10,000 spots in new schools. This is in addition to about 45,000 new licensed spaces, also mostly in schools, funded by the previous Liberal government, education ministry officials said.

But unlike the previous Liberal government that limited school-based child care to non-profit operators, Fedeli said the new centres could be run by for-profit businesses.

Carolyn Ferns, with the Ontario Coalition for Better Child Care, is pleased the government plans to expand the licensed system, but worries about “the creeping privatization of education.

“Schools are public spaces. This is public education. There should only be non-profit child care in schools,” she said.

If the budget is passed, families will be able to claim the proposed CARE credit against their child-care expenses when they file their 2019 tax returns.

By 2021, parents would be able to apply for advance payments during the year that would help offset child-care expenses as they are incurred, according to the budget.

The credit will put “parents at the centre of the decision-making process, not bureaucrats and politicians,” Fedeli said.

A recent C. D. Howe analysis of the child-care rebate proposed by the Progressive Conservatives during last year’s election pegged its annual cost at almost $1 billion.

University of Toronto economist Gordon Cleveland, one of Canada’s leading experts on child-care financing, estimated the cost at closer to $2 billion a year.

But government officials said they were able to reduce the price tag by limiting the benefit to families with incomes below $150,000 and reducing the maximum annual pay-out to $6,000. The PCs had originally proposed offering the tax credit to families with annual incomes of up to $250,000 and a maximum rebate of $6,750.

Cleveland and others have been critical of the tax credit because they say it would not increase the number of high-quality, licensed child-care spots that most families seek. Nor would the rebates make licensed child care affordable, especially in Toronto, where the annual cost of care tops $20,000 for infants and is more than $14,500 for pre-schoolers, he said.

The new spending comes in addition to previously announced regulatory changes that will increase the number of young children that regulated and unregulated home daycare providers can have in their care, a move critics warned would make home-based care less safe.

Details on the future of the $200-million annual wage enhancement grant, worth $2 an hour for about 30,000 chronically low-paid child care workers, will be released “soon,” a ministry official said.