OTTAWA — The minority Conservatives unveiled on Tuesday their $3.7-billion, two-year child-care allowance, which will provide families with $1,200 in pre-tax funds for every child under six.

If the budget is passed, the Conservatives would also commit $250 million in annual tax credits starting in 2007 to fund a program to create 25,000 new child-care spaces.

But the Universal Child Care Benefit (UCCB) plan is sure to draw fire from Opposition MPs who supported another arrangement the Liberals negotiated with the provinces to build a national child-care program.

The budget reveals that the Conservative allowance, which favours stay-at-home parents, will replace the Liberals' $5-billion plan.

The Tories extended Liberal child-care agreements signed with every province until the end of March, 2007, when they will be phased out.

"It's a real disappointment, it sets us back about 30 years in terms of trying to getting a system in place that is truly universal and really does support children in their development," Shellie Bird of the Ontario Coalition for Better Child Care, told CTV.ca.

"The Harper government talks about delivering real results for Canadians, but providing families $1,200 a year for their cost of child care will not allow families to cover the actual cost for young children," she said.

The details released in the budget show:

• The child-care allowance will be effective July 1, 2006;
• Amounts received under the UCCB will be taxable in the hands of the lower-income spouse;
• All families with a child under the age of six will be eligible; and

In a nod to critics, UCCB payments would not trigger clawbacks from those who are paid under the Canada Child Tax Benefit (CCTB) or the goods and services tax credit.

With the creation of the UCCB, the government will also phase out the CCTB supplement for children under the age of six as of June 30, 2006.

The elimination of the young-child supplement of the CCTB, which was due to hit $249 a year in July, is expected to draw criticism from social policy groups.

Under the terms outlined by the budget, the current CCTB supplement will remain in place until June 30, 2007, for children who turn six before that date.

Child-care spaces

In addition to cash for parents, the Conservatives is offering $250 million in annual tax credits to fund a community child-care investment program, which the budget claims will create 25,000 new child-care spaces over the next five years, starting in 2007-2008.

The Conservatives have said that the Liberals' day-care plan's flaw is that it doesn't benefit families in rural areas.

"We would challenge the whole notion that the Liberal plan would not deliver in rural areas," Bird said.

"We know that in the province of Ontario under the federal provincial agreement, that child-care spaces would be created in rural areas," she said.

Opposition MPs and non-partisan critics have charged that higher income families with stay-at-home spouses fare better under the allowance than low-income families with two earners.

"It's unfair because it favours higher income families who do not require access to child care, at the expense of lower income families who really do genuinely need support," Bird said.

According to The Canadian Press, a two-earner Ontario couple with a $50,000 yearly household income and has a four-year-old child would keep $871 after taxes.

In comparison, a stay-at-home parent would keep $1,134 even if the working spouse earns a six-figure salary.

However, Conservatives point out that families at all income levels are slightly better off when all child-support credits are considered.

Last month, Prime Minister Stephen Harper challenged Opposition parties that don't approve of his government's child-care allowance to vote against the budget, which is considered a vote of confidence.

If the Conservative government were to be defeated on its budget, an election would be triggered.

For all the bluster, though, defeating the Tories is unlikely given that no parties wish to be held responsible for another election so soon after the January 23 vote.