Revisions to the MBM bring welcome improvements, but measure still falls short
FOR IMMEDIATE RELEASE
Unceded Algonquin Territory [Ottawa, ON]: February 24, 2020 — Statistics Canada is to be commended on the process and results of their most recent review of the Market Basket Measure (MBM), Canada’s Official Poverty Line. The updated methodologies proposed in their Report on the Second Comprehensive Review of the Market Basket Measure, released this morning, bring in welcome changes to better reflect the cost of living in many parts of Canada.
Unfortunately, through no fault of Statistics Canada, the MBM still falls short of being an adequate or appropriate official measure of poverty for Canada. The most glaring shortcoming of the MBM is that these measures are unavailable for people living on reserves, in the territories, or in remote communities where people experience disproportionately high rates of low income, food insecurity, and core housing need.
Recognizing these shortcomings, StatsCan is working with the territories to develop specific MBM thresholds for these regions and commitments have been made to consult with Indigenous people to identify and co-develop indicators of poverty and well-being, including non-income-based measures of poverty. However, there is no set timeline for this process and questions remain as to how these measures will be folded in together to track Canada’s progress in poverty eradication.
“We welcome the changes proposed to the Market Basket Measure,” says Natalie Appleyard, Socio-Economic Policy Analyst at Citizens for Public Justice, “and we commend the responsiveness and transparency of Statistics Canada throughout these consultations. But we cannot fathom how a measure that excludes the territories, people living on reserve, and people living in remote communities could possibly merit selection as Canada’s Official Poverty Line. The MBM may very well be a useful measure to track, but it is certainly not the most representative available to us.”
The Poverty Reduction Act mandates Statistics Canada to review the MBM on a regular basis “to ensure that it reflects the up-to-date cost of a basket of goods and services representing a modest, basic standard of living in Canada.”
Following consultations with a variety of stakeholders, StatsCan has proposed several changes to how the MBM thresholds are calculated, both in terms of costing out the “basket” of goods and services, as well as in calculations of disposable income.
Notable changes to the basket of goods include increasing the shelter component to better reflect updated rental prices using the results of the 2016 Census, and basing the amount on the rental of a three-bedroom dwelling, rather than a two- or three-bedroom dwelling in the 2008-base MBM to better reflect people’s actual cost of living. The clothing component has been updated to correct gender imbalances in the amounts allocated for work wear and shoes. Cell phone use was recognized as a widespread need and was added to the “other expenses” component and the transportation methodology has been updated to better reflect transportation patterns and needs for people living in cities, especially those who require private transportation to get to work.
On the income side, adjustments have been proposed to reflect the lower costs faced by homeowners without a mortgage or those receiving housing subsidies; updated estimates for medical expenses; and a proposal to cease deducting capital gains taxes from pre-tax income.
The proposed change to disposable income for those receiving rental subsidies highlights the need to recognize that the MBM takes into account existing government transfers, benefits, and subsidies and tells us how many people are able to afford the basket post-interventions. This is a critical distinction. Statisticians have been adamant that the MBM should not be used to determine people’s eligibility for social programs or benefits. Appleyard shares, “Many anti-poverty advocates are concerned that this has not been well-communicated. We are hearing that provinces and municipalities may be using the MBM to determine eligibility for their own benefits and programs. And this is not surprising, given that the MBM is Canada’s Official Poverty Line. Clarification here will be essential.”
Not surprisingly, the proposed updates to the MBM result in higher estimates of people living in poverty in Canada (outside of the territories, reserves, or remote communities). In all provinces, the percentage of people deemed to be living in poverty increased between 1.5 to 3.2 per cent. Notably, the largest increases in poverty rates as determined by the MBM would be found among singles and lone-parent families (4.4% and 4.6% increases respectively). Stats Can reports, however, that the proposed rebasing would not result in any significant change in the measured trend in poverty over time.
Compared to other measures of low-income, MBM estimates of poverty rates remain significantly lower, even with the updated thresholds. Concerns that the MBM continues to under-report the incidence of poverty in Canada and overestimate progress in reducing poverty have been voiced by several anti-poverty organizations such as CPJ, Dignity for All, and Campaign 2000, leading them to call for multiple targets to be tied to other indicators such as the Low Income Measure.
For more information, contact Brad Wassink at ac.jpc@darb.