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The economics behind the sacred baby bonus [CA-QC]

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Author: 
Yakabuski, Konrad
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Article
Publication Date: 
13 Nov 2008
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One week into a Quebec election campaign that was supposed be about nothing but the economy, the most noteworthy party promises are all about the family. Proof that, in Quebec, baby bonus is the surest shortcut to a ballot box bonus.

Deficit be damned, the Parti Québécois pledges 38,000 new subsidized daycare spaces in the first year of a PQ mandate. Ka-ching, $500-million, please. The Liberals promise a similar increase over four years, bringing the number of $7-a-day child care spaces to 235,000. Ka-ching, annual cost $2.3-billion.

Not to be outdone, the Action Démocratique du Québec is sticking to its plan from the last election to send a $100 weekly cheque to stay-at-home moms for every youngster under five. Ka-ching, at least $400-million annually, more if it prompts parents to pull their kids out of daycare.

Family policy is a fixation in Quebec, has been at least since the birth of the province's much-praised universal daycare scheme in 1998. From the most generous parental leave program on the continent and wage supplements for low-income parents, there's no better place in Canada - fiscally speaking - to raise young kids. No Quebec government that wants to stay in office could get away without promising more.

Jean Charest's Liberal government has increased direct spending on family policies to $5.1-billion annually, up 42 per cent since 2003. (The sum excludes the $1.5-billion - and rising fast - parental leave program, which is paid for out of employee and, especially, employer premiums.) Ontario spends barely half as much as Quebec on direct aid to families for a population two-thirds bigger.

But if most experts agree that Quebec has become a model for good family policy, does favouring those with children yield worthwhile economic dividends, too?

Researchers Luc Godbout and Suzie St-Cerny of the University of Sherbrooke think so. In their new study on the tax treatment of Quebec families, they note that the proportion of women between 25 and 44 with jobs soared in the first decade of the province's universal daycare program.

At 80.2 per cent in October, it is up a full 10 points from 1998. It is even higher than the proportion in Ontario, where the so-called employment rate was 78.6 per cent among women in that age group last month. Considering that Quebec women had long lagged behind their English-Canadian counterparts in joining the work force, it's a notable turnaround.

In Quebec, cheap daycare and generous parental leave have given the lie to the old adage that the more women work, the less they make babies. The birth rate in Quebec has risen in the past decade. The panoply of programs makes raising a family a financially attractive option.

...

Quebec's cheap daycare scheme also ends up saving Ottawa money, since most parents in the province don't have huge child care expenses to deduct from their federal taxes. Despite losing that tax break, though, most Quebec families still come out well ahead under the $7-a-day scheme.

Mr. Charest's popularity during his first term in office went south the moment he moved to boost the daily rate to $7 from $5. No wonder he vows not to touch the rate now, even if he wins a majority government on Dec. 8. He remembers what the wrath of the Romper Room lobby feels like.

- reprinted from the Globe and Mail

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