Budget promises child care but misses opportunities in care economy

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Playground and swing set. Image credit: hpgruesen/Pixabay

The growth potential from a care economy was not too evident in the first budget of Finance Minister Chrystia Freeland. 

The big news, and good news, is the promise to spend up to $30 billion over five years for child care. Still, it's not clear when the five years will begin, or if it all can be spent, since it requires provincial negotiations. These negotiations might be tricky for a whole host of reasons related to provincial jurisdiction, but most significantly, it will probably only begin to be negotiated after the next election. 

Getting this new child-care spending could take quite some time and might not occur across the country. No spending for this is listed in the next year's budget. 

But when it happens, it will be a fabulous change in Canada and one that politicians have recognized as necessary since the 1988 election. The current budget shows its significance to the economy; it will create more child-care workers (up to 240,000) and it will also create significant economic growth and raise GDP by as much as 1.2 per cent.  

But other than child care, growth is seen in the budget as coming from the usual industries and sectors of the economy through support for business, infrastructure investment related to construction projects, and support for specific industries in distress from the pandemic. All of these things are important to get people working again and business back to where they were before the pandemic. 

But the government missed the opportunity to make significant investments in other parts of the service sector that are related to care. Any investment in care is much more effective in increasing employment than other sectors. The usual way governments attempt to increase growth is to stimulate construction (which has a high employment multiplier) so comparisons of care work with construction are appropriate.

Because care work is labour intensive and has relatively few non-labour inputs (like machinery and raw materials), money invested there has a bigger impact on employment. Studies with input/output analyses in other countries have shown that investment in elder and child care has an employment impact that is three times greater than investment in construction. Part of this is because it is such a low-wage industry, but even when assumptions of similar wages are included, care work still provides a greater employment effect. This is not to say construction is not important, but to show that the care sector is very important.

The care sector is large, it's dynamic, and it is growing fast in Canada. Also, as the pandemic showed so clearly, Canada is a poor provider of care relative to other countries, and tends to treat the workers in parts of this sector abysmally. 

The two biggest disappointments for those who were hoping that the recovery program would focus on care issues, is the absence of funding for a pharmaceutical program, and very little for long-term care. The amount for long-term care is comparatively little over a long time -- $3 billion over five years, but this includes $824 million in the fiscal year just ending, and $516 this fiscal year. So basically, subtracting the emergency funding for last year and this year, it leaves $1,660 million for the three subsequent years.    

The bad part of the budget is that there is no attempt to have a long-term care program that is nation-wide. This too should be negotiated with the provinces, as is the child-care program. People in Canada died at rates unseen in any other countries because of the haphazard nature of provision and regulation of long-term care. Its workers are exploited, and so are those who need this care. Canada should do lots better. The budget mentions an attempt to get "standards" in this sector in the future. That is necessary, but a poor substitute for a real program coordinated by the federal government. 

Serious structural problems became evident throughout the COVID-19 pandemic. This budget addresses one of the very crucial care issues that the Liberal Party has promised many, many times over many, many years -- child care. And it looks like once again, there will be an election with this as a promise. It has looked so possible many times in the past; let's hope this time will be different. And, let's hope if it succeeds, subsequently government will recognize that there is a care economy, and it is large, and should be supported.

Marjorie Griffin Cohen is a feminist economist who is professor emeritus at Simon Fraser University.  She is also part of the care economy initiative: Thecareeconomy.ca

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