Question Period Note: THE MARKET BASKET MEASURE POVERTY INDEX

Release of the Market Basket Measure Poverty Index (MBM-PI) to Track Poverty Reduction Targets based on the MBM - Canada’s Official Poverty Line

• The Government welcomes the publication of the Market Basket Measure Poverty Index as a tool for tracking progress towards poverty reduction targets. This new indicator will help bring transparency and accountability to current and future efforts to reduce poverty.

• The Government remains committed to achieving the 2030 poverty reduction target of reducing poverty by 50%, relative to 2015.

• The Government will continue to support Canadians with social and economic measures to make life more affordable and build a strong economy that benefits everyone.

On the Market Basket Measure – Canada’s Official Poverty Line

• The Poverty Reduction Act (2019) established the Market Basket Measure (MBM) as Canada’s Official Poverty Line. The MBM is an absolute measure of low income developed in Canada.

• The MBM establishes poverty thresholds based upon the cost of a basket of food, clothing, shelter, transportation, and other items representing a modest, basic standard of living. The current MBM determines thresholds for different regions in Canada, which can be adjusted to families of different sizes. If a family’s disposable income is below the threshold for the region in which they live in a given year, they are considered to be living 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 thresholds are currently available for all Canadian provinces and the three territories.

On comprehensive reviews of the MBM

• To ensure that MBM basket costs are up-to-date and that basket contents continue to reflect the items required to meet basic needs and achieve a modest, basic standard of living, the Poverty Reduction Act (2019) also requires that Canada’s Official Poverty Line be reviewed regularly.

• While the legislation does not specify the frequency of the reviews, Statistics Canada and ESDC have agreed to undertake a comprehensive review of the MBM methodology every five years.

• Comprehensive reviews and re-basings of the MBM are critical to the maintenance of the MBM as an absolute measure of poverty. The reviews are undertaken to ensure that:
a) the MBM basket continues to use the most recent standards established for Canadian families to represent a modest, basic standard of living;
b) MBM basket components and costs are benchmarked using the latest available data and up-to-date methodologies, and are appropriately estimated for MBM geographical regions; and,
c) the income available to families to determine their poverty status continues to be appropriately defined.

• Previous comprehensive reviews of the MBM produced two previous MBM methodologies: a ‘2008 base’ and the current ‘2018 base’. The current Third Comprehensive Review of the MBM was launched in June 2023 and will end in fall 2025 with the creation of the 2023 base of the MBM.

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