Question Period Note: RELEASE OF 2020 CANADIAN INCOME SURVEY DATA

Release of 2020 Canadian Income Survey Data

• Our Government introduced a number of measures to support Canadians through the pandemic and into the recovery, including the Canada Emergency Response Benefit, the Canada Recovery Benefit, additional payments through the Canada Child Benefit, and more recently, the Canada Worker Lockdown Benefit. These unprecedented measures provided timely support to millions of Canadians as they faced the historic challenges of COVID-19.

• The latest data from the Canadian Income Survey confirms that our efforts to support Canadians during the pandemic, alongside other measures implemented by provincial, territorial and municipal governments, were effective at helping millions of Canadians affected by job and income losses in 2020.

• The temporary emergency supports provided in response to the pandemic allowed Canada to reduce poverty significantly in 2020. Between 2019 and 2020, the poverty rate fell from 10.3% to 6.4%, representing over 1.4 million fewer Canadians living in poverty.

• Those results confirm that the government’s response to the pandemic was effective at protecting Canadians, including the most vulnerable. As we continue to overcome the challenges that lie ahead, the Government remains committed to building a more resilient, inclusive and stronger country for everyone.

If pressed on the rising cost of living:

• The Government recognizes that Canadians are worried about the recent increases in the cost of living and their impact on personal and household finances. The Government shares this concern and is committed to support Canadians through this emerging challenge.

• 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 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 and the Canada Recovery Benefit 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 as a result of the Covid-19 pandemic. Almost overnight, a vast number of workplaces closed, children were no longer in school or child care, and many workers faced health concerns.

• The emergency and recovery programs provided by the Government were designed to provide swift and temporary support.

• While a basic income could help to address poverty, there are significant design considerations that require further study, including funding, the implications for existing programs and the 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 2020 Canadian Income Survey (CIS) is the ninth edition 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 . It covers all individuals in Canada, excluding persons living on-reserve, the institutionalized population, and households in extremely remote areas with very low population density. Overall, these exclusions amount to less than 2 percent of the overall population.

• CIS data are usually published in the second year following the reference year, meaning that there is generally a 2-year data lag. The latest CIS data available is for 2020 and was released in March 2022.

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.

• 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 Poverty Reduction Act (2019) also established poverty reduction targets of 20% by 2020, and 50% by 2030, based on 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

• Canada’s Official Poverty Line is not currently available for the Territories. Statistics Canada, in collaboration with ESDC and territorial officials, is making significant progress towards developing an MBM for Canada’s North. The ‘MBM-N’ or ‘MBM-North’ is intended to capture the spirit of the existing MBM (i.e., represent a modest, basic standard of living), while accounting for adjustments to reflect life in the Territories.

• In January 2021, Statistics Canada published a discussion paper describing a provisional methodology for an MBM-N for Yukon and the Northwest Territories. A second discussion paper that included provisional MBM-N thresholds and poverty rate estimates for these two territories was released in November 2021. Work on developing an MBM for Nunavut is on a separate track and is ongoing.
Detailed 2020 CIS Results
• In response to the economic shutdowns and restrictions put in place during the pandemic, the Government of Canada introduced a number of income supports for individuals and businesses. It is therefore important to consider the 2020 CIS estimates in light of the unprecedented events during the first year of the pandemic.

• Although the national poverty rate for years before 2020 was generally trending downward,
the large decrease observed between 2019 and 2020 was mostly attributable to the increases in government transfers in the form of COVID-19 relief benefits.

Overall Poverty

• According to 2020 CIS data, Canada’s overall poverty rate fell by 56% between 2015 and 2020, from 14.5% to 6.4%. This represents close to 2.7 million fewer persons living below the poverty line over this five-year period. As a result, the 2030 target of reducing poverty by 50% based on 2015 levels was surpassed in 2020.

• The province with the highest poverty rate in 2020 was Nova Scotia at 7.7%, while Quebec had the lowest rate at 4.8%. Between 2019 and 2020, the largest absolute decrease in poverty rates was observed in Saskatchewan (a decrease of 5.2 percentage points), while the lowest decrease was in Alberta (a decrease of 2.2 percentage points).

Median Incomes

• COVID-19 relief benefits more than offset declines in market income, resulting in an increase in after-tax income. The increase in after-tax income was proportionately larger for lower-income families and unattached individuals. Average after-tax income of families and unattached individuals increased 16.2% in the bottom quintile and 8.5% in the second lowest quintile. Gains in after-tax income also reached the top quintile, in which average after-tax income grew by 2.4%.

• The median after-tax income of Canadian families and unattached individuals increased from $62,400 in 2019 to $66,800 in 2020 (a 7.1% increase).
o The median for families increased from $87,500 in 2019 to $92,400 in 2020.
o The median for unattached individuals increased from $32,200 in 2019 to $34,500 in 2020.

• The median after-tax income for families and unattached individuals increased for every province in 2020. Ontario had the largest annual increase of $5,000, going from $65,100 in 2019 to $70,100 in 2020. Conversely, the smallest increase was in New Brunswick, which went from $54,800 in 2019 to $56,900 in 2020.

• Considering COVID-19 relief programs (Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB) and the Canada Recovery Benefit (CRB)), as well as other government programs such as the Canada Child Benefit (CCB), Employment Insurance (EI), Old Age Security (OAS), the Canada Pension Plan (CPP) and the Quebec Pension Plans (QPP), median government transfers for Canadian families and unattached individuals doubled from $8,200 in 2019 to $16,400 in 2020.

Income Inequality

• In 2020, the share of Canadians' adjusted after-tax income that went to the bottom four income deciles increased from 21.0% in 2019 to 22.2% in 2020, representing the largest annual change and highest proportion since the beginning of the series in 1976. The share of income held by the top income decile was 22.0% in 2020, relatively unchanged from 2019.

• Canada’s Gini coefficient decreased from 0.299 in 2019 to 0.281 in 2020, tying the 1989 value as the lowest index value measured for Canada in 45 years.
On the revision of CIS estimates between 2015 and 2019:

• As is customary with the Canadian Income Survey, when revised population estimates become available following post-census coverage studies, survey weights get updated retroactively to better reflect the overall population. This is the case with the new 2020 CIS release, which published pre-2020 poverty estimates that are slightly different to those released in previous years. For example, with the current 2020 CIS release, the overall 2019 poverty rate was revised from 10.1% to 10.3%, while the number of persons living in poverty in 2019 was revised from 3.73 million to 3.79 million.

• As explained in the release’s Note to readers: "As of the 2020 CIS release, estimates are produced according to population estimates based on the 2016 Census of Population, and CIS data from 2012 to 2019 have been revised. In addition, sub-provincial geography variables from 2016 to 2019 have been updated to reflect the 2016 Standard Geographical Classification (SGC) boundaries, rather than 2011 SGC boundaries." Previous CIS estimates for 2015-2019 were based on population estimates from the 2011 Census and the coverage studies that followed it.

• Statistics Canada strives to produce the best possible estimates with the information it has at any given time, and therefore poverty estimates can get updated retro-actively when new population data becomes available.

None