Question Period Note: RELEASE OF 2020 TERRITORIAL INCOME ESTIMATES FROM THE CANADIAN INCOME SURVEY AND POVERTY RATE ESTIMATES FOR YUKON AND THE NORTHWEST TERRITORIES

On November 3, 2022, Statistics Canada released 2020 income estimates from the Canadian Income Survey (CIS) for each of the three territories. This is the third release of territorial income estimates from the CIS. In addition to this release, Statistics Canada also published a final paper on the MBM-N methodology for Yukon and the Northwest Territories, which includes official poverty rate estimates for the years 2018, 2019 and 2020. The first paper on the MBM-N methodology for Nunavut is forthcoming.

• The release of 2020 income estimates for the territories enhances our evidence base on the socioeconomic conditions of Canada’s northern residents. This newly released data is the product of ongoing investments to expand the Canadian Income Survey to Canada’s territories.

• Our Government has reached an important milestone in developing a robust methodology for estimating poverty rates in Yukon and the Northwest Territories, providing official poverty estimates for these territories for the first time. The official poverty measure for these two territories captures the spirit of Canada’s Official Poverty Line, while accounting for adjustments to reflect the realities of life in Canada’s North.

Canadian Income Survey in the Territories

• The Canadian Income Survey (CIS) was administered in Canada’s territories for the first time in 2018. The release of income data for the 2020 reference year, along with data from 2018 and 2019, further strengthens our understanding of the socioeconomic conditions of Canada’s northern residents. The data collected by the CIS in the territories is also essential to the estimation of official poverty rates.

• CIS coverage of the territorial population is approximately 96% for the Northwest Territories, 93% for Nunavut and 92% for Yukon. Households in remote areas with very low population density are excluded from the survey due to data collection challenges. In comparison, the CIS covers over 98% of the population living in the provinces.

Overview of Canada’s Official Poverty Line (the Market Basket Measure or MBM)

• The Poverty Reduction Act (2019) established the Market Basket Measure (MBM) as Canada’s Official Poverty Line and requires it to be reviewed, on a regular basis, to ensure it reflects the up-to-date cost of a basket of goods and services representing a modest, basic standard of living.

• The total costs of the MBM basket represent income-based poverty lines (“thresholds”) applicable to different regions across Canada that are adjustable to different family sizes. These poverty lines are compared to a person’s or family’s disposable income. If a person’s or family’s disposable income is below the applicable MBM threshold in their region in a given year, they would be considered to live in poverty.

• Disposable income for the purposes of the MBM is based on total income (including government transfers) after deducting not only income taxes but also several non-discretionary expenditures such as EI and CPP/QPP contributions, child care expenses and direct medical expenses. It also takes into account the financial impacts of different housing tenure types such as mortgage-free home ownership and subsidized rental housing.

MBM-N methodology for Yukon and the Northwest Territories

• A “Northern” MBM, denominated MBM-N, is now available in Yukon and the Northwest Territories for the first time. The development of the MBM-N is an important step towards the commitment made in Canada’s First Poverty Strategy to develop Canada’s Official Poverty Line in the territories.

• Statistics Canada published an initial discussion paper describing the MBM-N methodology for Yukon and the Northwest Territories in January 2021, titled “Proposals for a Northern Market Basket Measure and its Disposable Income. This first paper described the methodological changes proposed by Statistics Canada to adapt the MBM to the North, in view of consultation feedback.

• A second paper on the MBM-N for Yukon and the Northwest Territories, titled “Construction of a Northern Market Basket Measure of Poverty for Yukon and the Northwest Territories”, was released in November 2021. This paper provided provisional MBM-N poverty rates for 2018 and 2019 based on the proposed MBM-N methodology.

• On November 3, 2022, Statistics Canada published a “Technical paper for the Northern Market Basket Measure of poverty for Yukon and the Northwest Territories”. This paper described the results of the review period during which Statistics Canada and ESDC engaged with experts, Indigenous organisations and federal, provincial and territorial officials to help validate results from the proposed MBM-N methodology. This paper marks the end of the review period for the MBM-N for Yukon and the Northwest Territories by presenting official poverty rate estimates for 2018, 2019 and 2020.

• In general, the statistical approach in the MBM-N methodology mirrors that of the 2018-base MBM (applied in the provinces), with adjustments to better account for the realities of life in Yukon and the Northwest Territories. Differences between the MBM-N and the MBM include:

o The MBM-N shelter component would not include a separate category of expenses related to the purchase of household appliances. Consultations with territorial statistical focal points indicated that the vast majority of rental units in the territories included appliances as part of the rent.

o The clothing and footwear component of the MBM-N in Yukon and the Northwest Territories continues to reflect the Social Planning Council of Winnipeg and Winnipeg Harvest Acceptable Living Level (ALL) 2012 clothing basket for the reference family. However, the methodology makes adjustments to the clothing basket to reflect the need for warmer clothing and higher replacement rates for such clothing.

o The food component of the MBM-N continues to be based on Health Canada’s 2019 National Nutritious Food Basket (NNFB). However, the MBM-N makes adjustments to food costs in remote areas outside of territorial capitals using spatial indices that reflect higher transportation costs and costs associated with travelling long distances to make purchases in stores.

o The MBM-N removes public transportation from the transportation component and uses the weighted cost of operating a utility vehicle and a compact car (the MBM for the provinces only includes compact car costs in its calculation). The proposed transportation component would also include adjustments specific to communities without road access to the territorial capitals to reflect the amortized purchase and operation of an all-terrain vehicle (ATV).

MBM-N methodology for Nunavut

• Work to develop an MBM-N for Nunavut is on a separate track due to several factors. First, Nunavut officials did not fully support the use of Statistics Canada’s previous Northern Market Basket Measure Feasibility Study (conducted in 2012) as a starting point for developing an MBM-N for Nunavut, citing that the study’s key findings did not reflect the socio-economic and geographic realities of Nunavut. Second, Nunavut officials requested additional time to engage with Nunavut communities in order to better inform the development of an MBM-N. Third, Nunavut officials faced capacity issues around this work and required additional time to identify new staff to work on this file.

• Collaborative work on the MBM-N for Nunavut is progressing and a proposed methodology is expected to be released through a separate discussion paper in the coming months.
On the co-development of indicators of poverty and wellbeing with Indigenous organizations
• In Opportunity for All, the Government of Canada committed to “work[ing] with National Indigenous Organizations and others to identify and co-develop indicators of poverty and well-being, including non-income-based measures of poverty, that reflect the multiple dimensions of poverty and well-being experienced by First Nations, Inuit and Métis.” During the consultations for Opportunity for All, the Government of Canada heard that it should take a strengths-based approach to poverty reduction that focuses on well-being and supporting resilience. Indigenous women also indicated that poverty is about more than a lack of income; amongst other things, it is also about social disconnection, and explained that cultural activities promote social and economic well-being by improving, self-confidence and building identity.

• In response, the Government is currently working to better understand poverty and well-being from the perspective of Indigenous peoples, and to encourage the co-development of complementary indicators of poverty and well-being, including non-income-based measures of poverty, that reflect the multiple dimensions of poverty and well-being experienced by First Nations, Inuit and Métis. Given that there is a higher proportion of individuals reporting an Indigenous identity in the territories when compared to the rest of Canada, integrating such additional indicators of poverty in analyses pertaining to these regions is particularly important.

If pressed on multidimensional poverty rates in the North:
• The Government is currently working to better understand poverty and well-being from the perspective of Indigenous peoples and to encourage the development of complementary indicators of poverty and well-being, including non-income-based measures of poverty. Work on this area is currently underway.

If pressed on the MBM methodology for Nunavut:
• The Government is currently working to develop an official poverty measure for Nunavut. This work is in its final stages and a provisional methodology is expected to be released publicly in the coming months.