Updates to Canada’s Official Poverty Measure
By Lee Stevens
Canada’s official measure of income poverty is the Market Basket Measure or the MBM. This measure is based on the cost of a basket of goods and services that a family or individual requires to meet their basic needs and achieve a modest standard of living. When the government of Canada launched the National Poverty Reduction Strategy, Opportunity for All, it made several commitments. The Poverty Reduction Act which received royal assent in June of 2019 legislates those commitments, one of which was to update the MBM every five years to ensure it reflects “up to date costs of a basket of goods and services.” The basket “items” include food, shelter, transportation, clothing, and an “other” category.
Statistics Canada has been leading a comprehensive review of the MBM and has recently published a preliminary “2018-base MBM” that includes changes and updates to some of the basket items. Most of the proposed changes include using data from the most recent federal census in 2016, and they include:
- Three new MBM regions in the provinces of Newfoundland, Ontario, and Manitoba
- Updates to the shelter component, moving from using the costs of a 2-3 bedroom rental to a 3 bedroom rental. This is important as costs are based on a reference family of four with one boy and one girl.
- Update to the clothing component, using data from the 2012 Social Planning Council of Winnipeg Harvest Acceptable Living Level Basket.
- Update to the food component using data from the 2019 National Nutritious Food Basket which is consistent with the new Canada Food Guide.
- Update to the transportation component to account for both modes of transportation, the use of public transportation and the use of a private vehicle, even for those living in urban centres. The cost of owning a car would also be updated to account for the increase in longevity of vehicles and improved fuel efficiency.
- Changes to the “other” category will include the provincial average expense of cell phone services.
The preliminary 2018-base MBM will be implemented in June 2020 and introduces a new income poverty threshold for Calgary moving from $40,452 in 2008 to $48,349 in 2018 for a family of four. For a single person the threshold would be $24,174. Interestingly Calgary will have the second highest MBM threshold in Canada, while Vancouver has the highest at $48,677. This will most likely change once Statistics Canada establishes MBM thresholds for the territories.
Other changes to the MBM apply to the disposable income concept. This concept means that to apply the MBM threshold to a person’s income that person would need to know their after- tax income, then further deduct other “non-discretionary” expenses which surprisingly include child-care. The review proposes to make adjustments to the disposable income, and to explore adding child-care expenses as a basket item rather than a deduction.
This review is important in addressing some of the limitations of the Market Basket Measure and ensuring that it accurately reflects low income status. Vibrant Communities Calgary (VCC) has committed to adopting the measure and will apply the MBM to the Enough for All aspirational goal to reduce income poverty by 30 per cent in 2023 using 2015 as a base.
Statistics Canada’s review of the MBM is ongoing until June 2020 and users can ask questions or share feedback by sending an email to firstname.lastname@example.org
Lee Stevens is a Public Policy Coordinator at Vibrant Communities Calgary. Please feel free to email Lee or comment below.