Question Period Note: RELEASE OF 2021 CANADIAN INCOME SURVEY DATA

Release of income and poverty statistics from the 2021 Canadian Income Survey

• The latest release of the Canadian Income Survey shows that Canada’s overall poverty rate was 7.4% in 2021, remaining well below the pre-pandemic level of 10.3%.

• Between 2015 and 2021, close to 2.3 million Canadians have been lifted out of poverty, including 653,000 fewer children and 11,000 fewer seniors. This represents a 49% decrease in poverty compared to 2015 (14.5%), the baseline year for Canada’s legislated poverty reduction targets.

• The Government will continue to support Canadians currently struggling with higher costs of living, to make life more affordable, and build a strong economy that benefits all Canadians.

If pressed on the rising cost of living / food insecurity:

• The Government recognizes that many Canadians are concerned about higher costs of living and their impact on personal and household finances. The Government is also aware of rising food insecurity across the country. The Government shares these concerns and that is why the Government has taken many measures to support Canadians throughout these challenges.

• Key federal income supports are designed to keep up with inflation. Benefits like the Canada Child Benefit, the Canada Workers Benefit and the GST/HST tax credit, as well as Old Age Security and the Guaranteed Income Supplement, are indexed to the Consumer Price Index, allowing them to keep up with increases in the cost of living.

• The Government has also provided significant funding for programs that make life more affordable for Canadians, such as the enhancement to the Canada Workers Benefit, the introduction of a Canada-wide early learning and child care system, the new Canada Dental Benefit, and the one-time Grocery Rebate announced in Budget 2023.

• The Government is committed to ensuring that Canadian families, workers, and seniors are able to make ends meet and have a fair chance to succeed.

If pressed on implementing a basic income program:

• Benefits such as Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB) were introduced on a short-term basis to provide support to many Canadians who were unable to work and experienced a sudden loss of income because of the COVID-19 pandemic.

• These emergency and recovery programs were designed to provide swift and temporary income support.

• While a basic income could help to address poverty, there are significant design considerations that require further study, including funding, implications for existing programs and potential effects on the labour market.

• We will continue to monitor research and analysis on basic income and we are exploring potential shorter and longer-term policy responses to address the needs of Canadians.

Canadian Income Survey (CIS)

• The 2021 Canadian Income Survey (CIS) is the tenth cycle of the survey since 2012, when it replaced the Survey of Labour and Income Dynamics (SLID). The CIS is administered by Statistics Canada and is currently the official data source for annual income and poverty statistics.

• The CIS is conducted nationwide in both the provinces and the territories . However, it excludes the population living on-reserve, the institutionalized population and households in extremely remote areas with very low population density. These exclusions amount to less than 2 percent of the overall population.

• CIS data are usually released with a 2-year lag. The latest CIS data available is for the 2021 reference year and was released in May 2023.

Canada’s Official Poverty Line

• 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 as determined by Statistics Canada, to ensure it reflects the up-to-date cost of a basket of goods and services representing a modest, basic standard of living.

• The MBM establishes poverty thresholds based on the total cost of basket components, which include food, shelter, clothing, transportation and other necessities. These thresholds vary across different regions and can be adjusted to reflect families of different sizes. If a person’s or family’s disposable income is below their applicable threshold, 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.

• The MBM currently reflects poverty thresholds for 53 regions across Canada’s provinces, including specific 19 communities.

• A second comprehensive review of the MBM was jointly launched by Statistics Canada and ESDC in the fall of 2018 and was completed in August 2020. Statistics Canada was responsible for launching the review, updating the statistical methodology and leading public consultations. ESDC was responsible for determining the scope of the review and setting the policy direction. The second comprehensive review of the MBM produced the current 2018-base for the MBM. The third comprehensive review of the MBM is expected to start in 2023.

• The Poverty Reduction Act (2019) also established poverty reduction targets: a 20% reduction in poverty by 2020, and a 50% reduction by 2030, compared to 2015 levels. The Act also states that progress towards these targets is to be measured using Canada’s Official Poverty Line.
Canada’s Official Poverty Line in the Territories

• Statistics Canada has finalized the MBM methodology for Yukon and the Northwest Territories, also known as the MBM-North or MBM-N. A paper describing the MBM-N methodology as well as official poverty rates for Yukon and the Northwest Territories was released in November 2022. The release of 2021 poverty statistics for Yukon and the Northwest Territories is expected to occur in June 2023.

• The development of the MBM methodology for Nunavut is in its final stages. A discussion paper describing a proposed MBM methodology for Nunavut is forthcoming.
Detailed 2021 CIS Results
In response to the onset of the COVID-19 pandemic in 2020, the Government of Canada provided emergency income supports to individuals and families. The Canada Emergency Response Benefit (CERB), provided between March and September of 2020, supported eligible Canadians with a $500 weekly benefit.

• The observed increase in poverty rates between 2020 and 2021 reflects the phaseout of pandemic related income supports and increases in the cost of living, as reflected by increases in the Consumer Price Index or CPI.

Overall Poverty

• According to 2021 CIS data, Canada’s overall poverty rate increased from 6.4% in 2020 to 7.4% in 2021. This represents approximately 400,000 more persons living below the poverty line in 2021. Despite this increase, Canada continues to meet its 2020 poverty reduction target of a 20% reduction in poverty based on 2015 levels.

• The poverty rate in Canada has followed an overall downward trend since 2015, going from 14.5% in 2015 to 7.4% in 2021. This means that since 2015, close to 2.3 million Canadians have been lifted out of poverty, corresponding to a 49% decrease in the national poverty rate during this time

• The province with the highest poverty rate in 2021 was Saskatchewan at 9.1%, while Quebec had the lowest rate at 5.2%. Between 2020 and 2021, the largest absolute increase in poverty rates was observed in Saskatchewan (an increase of 2.4 percentage points), while poverty rates decreased in Prince Edward Island and New Brunswick (0.2 and 0.9 percentage point decrease, respectively).

Median Incomes

• In 2020, pandemic emergency relief benefits had more than offset declines in market income, resulting in higher after-tax incomes, particularly among lower-income families and unattached individuals. However, the phaseout of emergency benefits in 2021 contributed to a decrease in government transfers compared to 2020 (the median transfer decreased from $17,000 to $13,300).

• The median after-tax income of Canadian families and unattached individuals decreased slightly from $69,000 in 2020 to $68,400 in 2021 (a 0.09% decrease).
o The median for families decreased from $95,500 in 2020 to $95,200 in 2021.
o The median for unattached individuals increased from $35,700 in 2020 to $36,100 in 2021.

• In terms of median after-tax income for families and unattached individuals, Alberta had the largest decrease in 2021, going from $80,300 in 2020 to $77,000 in 2021 (-$3,300). Conversely, New Brunswick observed the largest increase, going from $58,800 in 2020 to $60,000 in 2021 (+$1,200).
Income Inequality

• Gini coefficient is an index that takes a value ranging from 0, which indicates a state of perfect equality, to 1, which indicates a state of perfect inequality. Canada’s Gini coefficient based on adjusted after-tax income decreased from 0.299 in 2019 to 0.281 in 2020 but increased slightly to 0.288 in 2021.

• Results from the 2021 Canadian Income Survey show that the overall poverty rate in Canada, as measured by Canada’s Official Poverty Line, was 7.4% in 2021, up from 6.4% in 2020.

• The increase in the overall poverty rate between 2020 and 2021 reflects the phaseout of key temporary COVID-19 emergency income supports provided in 2020, most notably the Canada Emergency Response Benefit (CERB), as well as the onset of higher inflation rates in 2021. Approximately 400,000 more Canadians were living in poverty in 2021 compared to 2020.

• The 2021 rate represents a 49% decrease in the overall poverty rate compared to 2015 (14.5%), the baseline year for Canada’s legislated poverty reduction targets. There were close to 2.3 million fewer people living in poverty in 2021 compared to 2015.

• According to the 2021 CIS, the median market income of families and unattached individuals grew by 7.3% to $61,700 in 2021, erasing losses experienced in 2020. On the other hand, the 2021 median government transfer for families and unattached individuals was estimated at $13,300, below the 2020 median ($17,000) but above the 2019 median ($8,500). It should be noted that pandemic recovery benefits such as the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and Canada Recovery Caregiving Benefit (CRCB) continued to provide support to Canadians into the 2021 calendar year.

• Overall, he median after-tax income for families and unattached individuals decreased slightly from $69,000 to $68,400 between 2020 and 2021.

• The poverty rate for children was 6.4% in 2021, up from 4.7% in 2020.
o Approximately 129,000 more children were living in poverty in 2021 compared to 2020.
o The 2021 poverty rate for children represents a 61% decrease in poverty compared to 2015 (16.3%). There were 653,000 fewer children living in poverty in 2021 than in 2015. The number of children living in poverty in 2015 was estimated at 1.12 million.

• The poverty rate for seniors was 5.6% in 2021, compared with 3.1% in 2020.
o Approximately 176,000 more seniors were living in poverty in 2021 compared to 2020.
o The 2021 poverty rate for seniors represents a 21% decrease in poverty compared to 2015 (7.1%). There were 11,000 fewer seniors living in poverty in 2021 than in 2015. The number of seniors living in poverty in 2015 was estimated at 394,000.

• The poverty rate among Indigenous people living off-reserve and aged 16 and older was 13.9% in 2021, compared with 11.8% in 2020.
o The poverty rate among First Nations people living off-reserve was 17.2% in 2021, up from 14.2% in 2020.
o Among Métis, the poverty rate was 10.5%, up from 8.1% in 2020.
o Separate estimates for the Inuit population could not be published because of the small sample size.

• 2021 poverty rates for key vulnerable groups were as follows:
o Recent immigrants (arrived in Canada in the past 10 years, aged 16 and older): 10.3% in 2021 compared with 8.6% in 2020.
o Persons with a disability: 10.6% in 2021 compared with 8.5% in 2020.
o Persons in lone-parent families: 16.1% in 2021 compared with 13.5% in 2020.
o Persons not in an economic family: 21.9% in 2021 compared with 20.9% in 2020.
o Persons designated as visible minorities: 9.5% in 2021, compared with 8.0% in 2020. The 2021 poverty rate for different groups designated as visible minorities were as follows:
o Persons identifying as South Asian: 7.0%
o Persons identifying as Chinese: 11.7%
o Persons identifying as Black: 11.5%
o Persons identifying as Filipino: 2.9%
o Persons identifying as Arab: 12.8%
o Other visible minority: 14.4%
o Not a visible minority: 6.5%

• The 2021 Canadian Income Survey also reported that 12.9% of the Canadian population experienced food insecurity in 2021 (measured as moderate or severe food insecurity) - higher than the 10.8% estimate for 2019 and the 11.2% estimate for 2020. The increase in food insecurity observed between 2020 and 2021 was observed across family types and demographics groups.
o Food insecurity is most acute among persons in lone-parent families (30% experiencing food insecurity in 2021), and particularly among persons in lone-parent families headed by a female (34.1%).

• 2021 poverty data from the CIS reflects in part the impact of increases in living costs observed throughout 2021. The Consumer Price Index, a key indicator used to monitor inflationary pressure, rose 3.4% on an annual average basis in 2021, following a much smaller increase of 0.7% in 2020. The impact of high inflation in 2022 will be reflected in poverty statistics for 2022, expected to be released in the Spring of 2024.