Question Period Note: CANADA’S OFFICIAL POVERTY LINE

Canada’s Official Poverty Line

• For the first time in Canada’s history, the Government has set an official measure of poverty: Canada’s Official Poverty Line.

• Canada’s Official Poverty Line will be used to measure progress toward two ambitious targets:
o By 2020, reducing the poverty rate by 20 percent from its 2015 levels; and
o By 2030, reducing the poverty rate by 50 percent from its 2015 level.

• Based on the 2017 Canadian Income Survey data, Canada has reached its 2020 target to reduce poverty by 20% based on 2015 levels, a full three years ahead of schedule. This represents approximately 825,000 fewer individuals living in poverty than in 2015.

If pressed on who is responsible for conducting the MBM review:
• Canada’s Official Poverty Line (COPL) is based on the Market Basket Measure (MBM). The MBM is a made-in-Canada measure that reflects the combined costs of a basket of goods and services that individuals and families require to meet their basic needs and achieve a modest standard of living.

• The Poverty Reduction Act requires COPL to be reviewed regularly to ensure that basket costs are up-to-date and that basket contents reflect the items required to meet basic needs.
o The last review of the MBM took place in 2010 for the 2008 base year. Basket items and costs require a new update.

• A joint Statistics Canada - ESDC review of the MBM is underway. Statistics Canada is responsible for launching the review, updating the statistical methodology, and leading public consultations. ESDC is responsible for determining the scope of the review and setting the policy direction.

• Recognizing the need for a non-partisan and statistically-robust official measure of poverty, decisions related to the MBM review have been delegated to the Deputy Minister of ESDC and the Chief Statistician.

• The current update of the MBM could be controversial: decisions on items to include in the basket may be criticized as being too generous by some or not generous enough by others, and the new basket’s composition could increase poverty rates.

• To mitigate these risks, the review is informed by broad consultations with Canadians, experts from across the country, and provincial and territorial officials, and is based on a transparent process where progress is publicly communicated.
o Statistics Canada published an update in July 2019 and will publish two papers in December 2019: one on MBM basket components and another on MBM disposable income.

• On August 21, 2018, the Government of Canada released Opportunity for All: Canada’s First Poverty Reduction Strategy.

• Opportunity for All lays out a bold vision of a Canada without poverty and will use Canada’s Official Poverty Line to measure progress toward two targets for poverty reduction: reduce the rate of poverty by 20% by 2020; and by 50% by 2030.

• Opportunity for All includes long-term commitments to guide current and future government’s actions and investments, including the setting of Canada’s first Official Poverty Line.

• The Government of Canada continues to assess poverty by measuring the number of Canadians with low incomes, and Statistics Canada publishes data on three measures of low income:

o Low-Income Measure (LIM) – a relative measure defining low income as being below 50% of median household incomes.

o Low-Income Cut-Offs (LICO) – originally designed as a relative measure but now based on a fixed income threshold, the LICO is considered to be an absolute measure under which a household is in low income if it spends 20% more on food, shelter and clothing than the average family in 1992.

o Market Basket Measure (MBM) – an absolute measure tracking the inability to purchase a specific basket of goods and services that is updated over time to reflect current standards. The MBM is the basis for Canada’s Official Poverty Line.

• The MBM is a robust measure of poverty that reflects a modest, decent standard of living. To ensure it continues to do just that, from September 2018 to January 2019, Statistics Canada undertook consultations with experts, as well as other groups of interested Canadians, as part of the review. These consultations included an anonymous online survey with Canadians regarding the existing MBM thresholds; a series of face-to-face and focus group sessions with Canadians with lived experiences of poverty; an online “Chat with an Expert” question and answer session; a two-day meeting with provinces and territories; and a two-day meeting with academics and non-governmental organizations interested in poverty. Statistics Canada released An Update on the Market Basket Measure Comprehensive Review report in July 2019 that describes the consultations, provides highlights of what Statistics Canada heard, outlines the roles and responsibilities of Statistics Canada and ESDC, and describes next steps for the MBM review.

• In addition, Statistics Canada released the Dimensions of Poverty Hub on their website in July 2019. The Hub features a dashboard of indicators to help Canadians track progress on many aspects of poverty.

• Unlike relative low income measures, the MBM reflects families’ capacity to afford to meet their basic needs and achieve a modest standard of living. By contrast relative low income measures reflect how well off families are relative to other families across the country (i.e., the overall income distribution).

• Medical and childcare expenses are deducted from disposable income to reflect the actual resources a family has at its disposal to purchase the contents of the MBM basket. This way, each family’s actual expenses are factored into their low-income status.

• There was a decrease in the overall poverty rate in 2017. According to Canada’s Official Poverty Line, there were approximately 3.4 million people in poverty in Canada in 2017 (9.5 percent), a decrease of more than 20% from 2015, meaning that approximately 825,000 fewer Canadians were living in poverty.
• There was a decrease in the poverty rate for children under 18 in 2017. According to Canada’s Official Poverty Line, there were approximately 622,000 children in poverty in Canada in 2017 (9 percent), a decrease of more than 30% from 2015, meaning that approximately 278,000 fewer children were living in families in poverty in 2017.

• There was a decrease in the poverty rate for seniors in 2017. A total of 238,000 seniors lived below Canada’s Official Poverty Line in 2017 (3.9 percent), a decrease of more than 20% from 2015, meaning that approximately 51,000 fewer seniors were in poverty in 2017. This decline reverses the trend of increased seniors’ poverty that had been observed between 2014 and 2015.