Question Period Note: RELEASE OF 2022 CANADIAN INCOME SURVEY DATA

Release of income and poverty statistics from the 2022 Canadian Income Survey

• The latest release of the Canadian Income Survey shows that Canada’s overall poverty rate was 9.9% in 2022, which remains lower than pre-pandemic levels.

• Between 2015 and 2022, there were 1.3 million fewer Canadians living in poverty, including 380,000 fewer children. This represents a 32% decrease in poverty compared to 2015 (14.5%), the baseline year for Canada’s legislated poverty reduction targets.

• Budget 2024 proposes several measures to make life more affordable and strengthen Canada’s social safety net. From building more affordable homes to making life cost less with new programs to help with the cost of going to the dentist and pharmacy, the Government will continue to support and invest in Canadians.

Canadian Income Survey (CIS)

• The 2022 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 1.5-year lag. The latest CIS data available is for the 2022 reference year and was released in April 2024.

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 current MBM establishes thresholds for 53 different geographic regions in the provinces, including 19 major cities, and 13 geographic regions in Yukon, the Northwest Territories and Nunavut.

• The Third comprehensive review of the MBM was jointly launched by Statistics Canada and Employment and Social Development Canada (ESDC) in June of 2023. Similar to previous comprehensive reviews, the Third Comprehensive Review of the MBM is a joint effort by Statistics Canada and ESDC, with input from a variety of stakeholders across Canada. The release of proposed changes to the MBM methodology and a provisional 2023 MBM base are anticipated for early spring 2025. The review is expected to end in the fall of 2025 with the release of the official 2023 MBM base.

• The review and update of the MBM methodology ensures that Canadians can be confident that poverty is measured and reported using an approach that is up-to-date, transparent and informed by a diversity of stakeholder perspectives.

• 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

• The Northern Market Basket Measure or MBM-N for Yukon and Northwest Territories is comprised of the same five major basket components (i.e. food, shelter, clothing, transportation and other necessities) as the MBM methodology for the provinces, with some differences to reflect the realities of life in Canada’s North. For example, the shelter component does not include a supplement for appliance costs and the transportation component estimates only private transportation costs and includes no costs for public transportation.

• The MBM-N for Nunavut (Nunavut MBM-N) establishes poverty thresholds based on the cost of a basket that includes the same five components present in the other MBM methodologies (i.e., food, clothing, shelter, transportation, and other necessities) with the addition of a separate “Inuusiqattiarniq” component. This component captures the costs associated with the preservation of Inuit knowledge, culture, traditions and way of life, and is only applied to Indigenous families.

• In addition, to reflect the fact that families in Nunavut are on average larger and younger than elsewhere in Canada, the size of the MBM reference family for the Nunavut MBM-N was increased from 4 to 5 persons by adding a four-year-old child.

Detailed 2022 CIS Results
Context
• The COVID-19 pandemic led to the introduction of pandemic-related income supports at various levels of government in both 2020 and 2021. In particular, the federal Canada Recovery Benefit (CRB) provided temporary income support from September 27, 2020 to October 23, 2021. Additionally, pandemic-related modifications to the Employment Insurance (EI) program were removed by the end of 2022. By the start of 2022, most pandemic-related supports had phased-out, leading to decreases in income from government transfers.

• At the same time, inflation rates began to increase sharply. The Consumer Price Index (CPI) increased to 6.8% on an annual average basis in 2022, following a 3.4% increase in 2021.The 2022 annual average inflation rate was the highest rate recorded in the previous 40 years. Higher inflation in 2022 led to higher poverty thresholds for Canada’s official poverty line, the Market Basket Measure (MBM).

• In summary, the increase in poverty rates between 2021 and 2022 reflects the end of pandemic-related income supports made available throughout 2021, as well as the significant increase in inflation experienced in 2022, which contributed directly to increase costs of living across Canada.

Overall Poverty

• According to 2022 CIS data, Canada’s overall poverty rate increased from 7.4% in 2021 to 9.9% in 2022. This represents approximately 1 million more persons living below the poverty line in 2022. Despite this increase, Canada continues progress towards its 2030 target of 50% 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 9.9% in 2022. This means that since 2015, there have been 1.3 million fewer Canadians living in poverty, corresponding to a 32% decrease in the national poverty rate during this time.

• The province with the highest poverty rate in 2022 was Nova Scotia at 13.1%, while Quebec had the lowest rate at 6.6%. Between 2021 and 2022, the largest absolute increase in poverty rates was observed in Nova Scotia (an increase of 4.5 percentage points), while poverty rates also increased noticeably in New Brunswick and Ontario (4.2 and 3.2 percentage point increase, respectively).

Median Incomes

• The median government transfer decreased from $14,200 in 2021 to $10,100 in 2022 (in 2022 constant dollars), reflecting the end of temporary income supports provided throughout 2021.

• The median after-tax income of Canadian families and unattached individuals decreased slightly from $73,000 in 2021 to $70,500 in 2022 – a 3.4% decrease (in constant 2022 dollars).
o The median for families decreased from $101,600 in 2021 to $ 99,800 in 2022.
o The median for unattached individuals decreased from $38,600 in 2021 to $37,800 in 2022.

• In terms of median after-tax income for families and unattached individuals, Nova Scotia- had the largest decrease in 2022, going from $64,300 in 2021 to $58,500 in 2022 (-$5,800). Conversely, Alberta was the only province observing an increase, going from $82,300 in 2021 to $82,700 in 2022 (+$400).

Income Inequality

• The 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 0.281 in 2020 to 0.288 in 2021, but increased to 0.300 in 2022.
Footnote: The 2022 CIS data examined here is limited to Canada’s 10 provinces. 2022 CIS data for the territories is released separately by Statistics Canada at a later date

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