Fiscal costs of expanding early childhood development services in Saint Lucia

Abstract

This study evaluated the fiscal costs associated with increasing public investment in early childhood development services in Saint Lucia. Two methods of public investment are considered: 1) increasing the number of public early childhood development centres (ECDCs), which is a direct intervention; or 2) increase access to ECDCs through subsidization, which is an indirect intervention. The scenarios suggest that direct intervention aimed at children living in households at or below the poverty line could cost the Government an additional XCD 123.4 to 188.7 million1 or 2.8 to 4.3 per cent of the Gross Domestic Product (GDP), while the additional funds needed to extend ECD services to all children under the age of five could reach XCD 378.9 million or 8.7 per cent of the GDP. Focusing only on operational costs associated with direct intervention – fiscal costs net of capital expenditures – the Government could spend an additional XCD 12.3 to 18.9 million or 0.2 to 0.4 per cent of the GDP if they focus on children living in households below the poverty line. Whereas operating costs for a universal childcare policy could amount to an additional XCD 37.9 million or 0.9 per cent of the GDP. In the indirect intervention simulation presented in this report, parents would receive a subsidy of XCD 2,555 per school year for each child so that the costs of private ECDCs better align with the costs of public ECDCs, thereby making private ECDCs more affordable to parents/guardians. If children from poor households are targeted this translates into an additional XCD 9.9 to 15.2 million per annum or 0.2 to 0.4 per cent of GDP spent on ECDCs; whereas under a universal childcare policy targeting all children under the age of five, this translates into an additional XCD 30.5 million or 0.7 per cent of GDP. While the upfront costs are high, estimates from applied studies on the economic and social returns on public investment in ECD services suggests the benefits (chief among being increased employment, economic growth and improved child outcomes) could outweigh the costs. Thus, additional spending on early childhood development services could be seen as an investment that will provide several public benefits to Saint Lucia in both the short- and long-term.