The BC Government thinks Parent’s vote is worth $40 a day

The BC government, through Finance Minister Mike de Jong, has just announced a ‘plan’ to give BC parents $40 per school day to help pay for child care and ‘other’ costs if the teacher’s strike continues into the 2014-2015 school year. De Jong says that this initiative will be paid for out of the savings from not paying teachers, estimated to be $12 million a day. Not a lot of details are available, except that it will be provided to EVERY child under the age of 13.

This, my friends, is simply a way for the BC government to try to curry favour from voters in lieu of actually doing something productive, like reaching an agreement with teachers, and meeting is obligations under the court ruling.

That said, if the strike continues into September, indeed some parents will be incurring substantial costs. Is it the BC taxpayer’s responsibility to help cover these costs? That one is a challenging one. If you are a parent of school-aged child, you will say yes. But I do have to wonder about the implications this has on the bargaining between the government and the BCTF. It takes pressure off the government at having to reach an agreement and, I think, puts no pressure on the BCTF to acquiesce to the government’s proposal. So this is not helpful for getting an agreement. In fact, I believe it sends a clear signal that there won’t be an agreement.

Additionally, I do have substantial concerns about the implementation of this ‘plan.’

First, as parents get all excited about this money, I can’t imagine a situation where this money would not be considered taxable income. I ‘assume’ it will be taxable in the hands of the lower income parent. But, we don’t know. That announcement has not been made. Assuming so, unless your spouse earns less than the basic amount, your after tax benefit will be less than $40 a day.

Assuming the money is taxable, that means it is income. If it is income, that means, unless some real tax dancing is done with CRA, that income will factor into your eligibility for and payment amounts of income contingent benefits, like the GST/HST tax credit, the CCTB, and so forth. These benefits are clawed back for every dollar earned, chipping even more away at the $40 a day benefit, especially for low and middle income households.

Second, the money is not conditional on incurring any additional costs. If one parent is already a stay at home parent, if they are able to obtain free child care (e.g. grandparent, neighbor, friend, etc.), or if they qualify for government subsidized care, this money is an income supplement to these households. And in the case of the stay at home parent, the income supplement faces a zero tax liability. Perhaps, though, the ‘plan’ will be implemented such that if a spouse earns $0 then the other spouse must claim the amount , as we do see in some situations, but we don’t know.

Third, supply of child care spots is precious in most cities. Many families, even if they want, will not be able to find a child care spot if the strike continues. And these families are very likely to be low and middle income families, who have few affordable options available. This ‘plan’ comes with no resources or commitment to fund additional spots. I think a much better plan, other than reaching an agreement before September, would have been to focus these resources on creating and subsidizing spots for at-risk, low-, and middle-income households.

Fourth, having to pay for day care when you would not otherwise have to pay for it because your kid is in school, is not itself a rationale for government intervention. Many households can absorb this cost. Yet this subsidy will go to all households, including those high income households that we all want to tax the snot out of on any other day. The $40 a day is not income contingent. That is too bad, for if it were, we could be offering much more than $40 a day to low and middle income households, who will struggle with having to pay these additional care costs due to the strike. I also have to wonder why is it OK for households with kids under 5 to incur child care costs, but not OK for household with kids over five?

Fifth, there will be an online registration system and parents will have to identify themselves for the benefit. We already have very broad knowledge in this area that tells us that these two things in and of themselves mean that vulnerable households will miss out on this credit.

Sixth, I worry a great deal about the money going to households who do not have kids in public school. While the Minister of Finance has said that ‘safeguards’ are being implemented to ensure money only goes to parents who have children registered in public schools, I know there will be fraud. It also means that there will be additional administrative costs incurred, hoops to jump through, associated with these ‘safeguards’ and I am no longer convinced these costs outweigh the benefits.

Seventh, child care expenses are already deductible for tax purposes.

Eight, and here it is, this plan is potentially unaffordable, but it depends on your data source. The BC government says it will save $12 million a day from the teachers strike. According to the census, there are 457,700kids aged 5-14, which includes 2 years of kids that don’t qualify. According to BC stats, which is more up to date and finer gradients, there are 360,204 children aged 5-12. The BC government though says only 353104 of this number is enrolled in an educational institution in grades K-7 in 2013-2014 and only 304169 in a public school in K-7, though those figures are not perfectly correlated with age. So it does become quite a bit of a numbers game.  The plan will cost anywhere between $12.2M and $18.3M depending on which figure is ‘correct’.  Plus there will be administration costs. So even if we take the BC government’s number, as soon as you factor in administrative costs let alone a few students here and there because of ages not directly related to grade, and enrollment in 2014-15 being higher than 2013-2014 the plan will cost more than they save. Since enrollment increased 9% between 2012/13 and 2013/14, it is not unrealistic to expect more than the figure quoted by the BC government. Which leads me to the unhappy conclusion that the BC government wants and expects not all eligible children to apply.

We here in BC await further details, but I hang my head in shame, knowing that the Government is showing no signs of maturity regarding education in this province and knowing that those households most in need of support during a strike won’t get it.

[Updated to adjust for various estimates of eligible children].

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