New federal law creates official definition of poverty line

Posted on November 7, 2018 in Social Security Policy Context – Politics
November 6, 2018.   

New federal legislation sets Canada’s first official definition of poverty and lays out a timeline for lowering the number of Canadians who struggle to afford necessities such as food and shelter.

Families, Children and Social Development Minister Jean-Yves Duclos released the Poverty Reduction Act on Tuesday and said he hopes Parliament will pass it into law before next year’s federal election.

The six-page bill sets targets of reducing poverty to 20 per cent below 2015 levels by 2020 and 50 per cent below 2015 levels by 2030. The target is based on a measure that lists 4.2 million Canadians as low income in 2015.

Until now, discussions of poverty reduction have focused on three different ways of measuring poverty. Tuesday’s bill selects one of those – the market-basket measure – as Canada’s official poverty line.

The market-basket measure is focused on the cost of buying basic goods and services such as food, clothing, transportation and shelter. Statistics Canada also produces the low-income measure, defined as 50 per cent of median household incomes.

A third measurement called the low-income cut-off is based on the percentage of income spent on necessities.

Mr. Duclos said the government concluded that the market-basket measure was superior after consulting broadly on a national poverty-reduction strategy.

“The problem is that better measure – designed 20 years ago and used since then – was never called official,” he said. “Now the picture is changing.”

The minister made the announcement at an Ottawa food bank. While the legislation does not include any measures for reducing poverty, he said the targets and definitions are part of a larger strategy that includes previously announced increases to the Canada child benefit and other programs aimed at reducing poverty.

A third element of the legislation creates a national advisory council on poverty.

Michèle Biss, a co-ordinator with the advocacy group Canada Without Poverty, said the market-basket measure would not have been her first choice as an official poverty indicator.

“While it might not be the one we would necessarily push for, which is the low-income measure, we do celebrate the fact that there is an official line,” she said.

“One of the greatest benefits of the low-income measure is that it’s internationally comparable. So it gives us a better sense of where we’re going in the world.”

Ms. Biss said a poverty-reduction plan needs to consider several statistics, including usage rates for food banks and shelters.

According to a 2017 report by the Parliamentary Budget Officer that looked into the three main measures of poverty, Canada’s performance varies considerably based on which one is used.

According to the low-income measure, the percentage of Canadians with low income fell from 13 per cent in 1976 to 10.5 per cent in 1989, before rising gradually to 14.2 per cent in 2015. In contrast, the percentage of Canadians below the low-income cut-off has been on a steady decline to about 9 per cent in 2015 after reaching a peak of about 15 per cent in the mid-1990s.

The market-basket measure results land between the other two, showing that 12.1 per cent of Canadians – or 4.2 million – had low income in 2015.

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