This chapter provides background information on defining and measuring poverty in Canada as well as a statistical profile of poverty in our country. It also describes what the Committee heard about the importance of having a comprehensive poverty reduction strategy and the important role that the federal government can play in reducing poverty.

A.  Defining Poverty

Poverty is complex. It has many dimensions that go far beyond inadequate income. The Committee heard that it was important to arrive at a common understanding of poverty that not only incorporates a lack of income but also lack of access to essential resources such as: nutritious foods, decent housing, cultural activities, comprehensive healthcare (prescription medications, vision and dental care) and recreational activities. It was noted that in addition to income and resources, a definition of poverty also needs to address access to opportunity. Several witnesses referenced the Nobel prize-winning economist Amartya Sen:

… the success of a society is to be evaluated primarily by the capability that members of a society enjoy, and that poverty is not just a lack of money, but not having the capability to realize one's full potential as a human being.[5]

Reference was also made to the Quebec government’s definition:

Poverty is defined as: the condition of a human being who is deprived of the resources, means, choices and power necessary to acquire and maintain economic self-sufficiency or to facilitate integration and participation in society.[6]

B.  Measuring Poverty

There is no official standard of measuring poverty. However, having a low income is an important dimension of poverty and Statistics Canada uses several indicators to measure low income: the low income cut-offs (LICO), the low income measure (LIM) and the market basket measure (MBM).[7] As illustrated in Table 1 different measures generate different estimates of the number of Canadians living in low-income. While these estimates differ, they do, however, consistently identify certain vulnerable sub-populations in Canada that are more likely to be living in low income. These sub-populations are: female lone-parent families, people with disabilities, unattached individuals,[8] Indigenous people,[9] and recent immigrants. Table 2 illustrates the different low-income measurements of vulnerable groups.

Table 1: Low-Income Measures Used in Canada

Measure	Definition	Estimate
Low income cut-offs (LICO)	Income thresholds below which a family will devote a larger share of its income on the necessities of food, shelter and clothing than the average family. A family is considered low income if it spends 20 percentage points more on these necessities than the average family. It is a relative measure of low income.	8.8% or 3 million Canadians were living in low income in 2014
Low-income measure (LIM)	Defines low income as being below a fixed percentage of income. A household is considered low income if its income is below 50% of median household incomes. It is a relative measure of low income.	13.0% or 4.5 million Canadians were living in low income in 2014
Market basket measure (MBM)	A family is considered low income if it does not have enough money to buy specific goods and services in its community. It is an absolute measure of low income.	11.3% or 3.9 million Canadians were living in low income in 2014

Source: Table prepared by the authors using data obtained from Government of Canada, Employment and Social Development Canada, Towards a Poverty Reduction Strategy – A backgrounder on poverty in Canada, 2016.

Table 2: Vulnerable Sub-Populations - Low Income Measures, 2014

Sub-population measures	LICO %	LIM %	MBM %
Children in female lone-parent families	29.6%	44.9%	41.9%
People with disabilities (2012 data)	22.5%	n.a.*	n.a.*
Unattached individuals	25.9%	27.4%	27.1%
Unattached seniors	11.3%	28.8%	10.3%
Indigenous people off reserve (2009 data)	15.1%	22.5%	16.3%
Recent immigrants (2009 data)	18.4%	22.0%	17.4%
All Canadians	8.8%	13.0%	11.3%

Source: Table prepared by the authors using data obtained from Statistics Canada, CANSIM Table 2016-0041; Statistics Canada, Low Income in Canada - A Multi-line and Multi-index Perspective, 2015; and Government of Canada, Employment and Social Development Canada, Towards a Poverty Reduction Strategy – A backgrounder on poverty in Canada, 2016.

Note: *n.a. – the data was not available at the time of publication.

Charts 1 and 2 illustrate low-income trends over time both in terms of the percentage of population (POP) and the total number of Canadians living in low income.

Chart 1: Low Income trends: number of Canadians living in poverty by low-income measure

Source: Chart prepared by the authors using data obtained from Statistics Canada, CANSIM Table 206-0041.

Chart 2: Low-income Trends: % of population living in low income by measure

Source: Chart prepared by the authors using data obtained from Statistics Canada, CANSIM Table 206-0041.

1.   Indices that complement low-income measures

Several witnesses noted the limitations of low-income measures, which fail to capture non-income based measures of poverty.

Our near exclusive focus on low income as an indicator of poverty leads us to exclude a significant number of Canadians who may be experiencing poverty.[10]

The Committee heard testimony about several indices that could be used to complement low-income measures in order to arrive at a more complete picture of Canadians who are living in poverty. One such index is the Human Development Index. It is a broader index that does not measure poverty narrowly but includes indicators for educational attainment, life expectancy and gender equity.[11]

The Committee also heard testimony related to the Material Deprivation Index.[12] The Material Deprivation Index complements low-income measures by gathering data on families’ ability to afford typical necessities (examples of survey questions include: the number of times per week you can afford to buy meat or fish; do you have a warm coat?; would you be able to pay an unexpected expense of $300?; are your heating, plumbing and drains in good working order?). Material Deprivation Indices are being widely adopted in Europe.[13] The data is used together with low-income data to arrive at a more complete picture of who is living in poverty and what policy responses may be required.[14]

The Committee also heard about the government’s work to develop a price index for seniors. The seniors’ price index is not a complementary measure but rather a policy tool that can be used to adjust income benefits such as the Guaranteed Income Supplement (GIS)[15] or investments in social housing. Seniors are vulnerable to increases in the cost of living as their ability to increase their income is limited after they retire. This has been critical since 2008 as interest rates have been historically low.[16]

C.  The Cost of Poverty

There are strong moral grounds for reducing poverty. In a country as prosperous as Canada, every year the number of people living in poverty should be fewer. Yet, there are sound socio-economic reasons to reduce poverty as well. There are significant costs to government and society when people live in poverty. These costs lie primarily in three areas: increased health care costs, increased spending in the criminal justice system and lower levels of productive economic activity. People with lower incomes are often in poorer health. The result is higher costs for the public health care system. There is also a relationship between lower levels of education, literacy and success in school (conditions strongly correlated with living in poverty), and the likelihood of coming into conflict with the law. Finally, when people are in a vicious cycle of inter-generational poverty, have low education and skills levels and are dependent upon income support benefits, they are not engaged in productive activities that contribute to economic growth and prosperity. Estimates of the cost of poverty vary. One recent study estimates the cost of poverty for the city of Toronto alone range from $4.4 to $5.5 billion per year.[17]

D.  Towards a Poverty Reduction Plan

The Committee heard about the need for a comprehensive plan that includes an agreed upon framework, poverty reduction targets, timelines and clear roles and responsibilities. Many acknowledged the government’s recent announcement to develop a Canadian poverty reduction strategy[18] and to consult broadly with Canadians. Witness testimony and submissions called upon the government to base its poverty reduction strategy upon a human rights framework and to put in place mechanisms that ensure people with lived experience of poverty are included at every step in the process. A human rights framework could provide a solid foundation on which to understand the numerous interconnected issues that impact poverty. It could also help to inform and coordinate policy responses and associated activities that are required to address them.[19] The rationale for integrating people with lived experience in every step of the process is demonstrated by this quote the Committee heard while travelling:

I spoke at the social audit that we had in Hamilton in February.... That is one of the best experiences I've had, with people genuinely listening and wanting to know what it's like to live in poverty. One of the best recommendations I could give for anyone to get even a taste of what poverty is like is to go with someone to a food bank. Help them out with the trip. You'll be there half the day.[20]

The Committee also heard that real, measurable targets need to be set and that progress should be publicly reported. Measureable targets could be set for every dimension in the poverty strategy: income, housing, education, community development and mental health.[21]

Full-time working people in this country should not be living in poverty. Many are. A zero percent poverty for working people is a target we should set. We should have a target of zero percent poverty rates for people who have disabilities. As for children, not a single child in this country should live in poverty. We should set a target to do that.[22]

Witnesses at the community level who have successfully launched poverty reduction initiatives stressed forming coalitions and agreeing upon clear targets and timelines. This was an important way to get diverse groups to work together towards common objectives.[23]

E.  Governmental Roles

The increasing public policy resolve to address poverty in Canada is evident in the poverty reduction strategies developed in almost all provinces and territories in recent years. Municipalities, of all sizes, across the country have also taken the initiative and created their own poverty reduction strategies, with targets, milestones and detailed plans of action. While municipal, provincial and territorial poverty reduction strategies generally focus on similar issues (e.g. child poverty, food insecurity, housing, transit, early childhood development and child care) both municipalities and provincial/territorial governments work within the resource limits, authorities and capabilities of their respective jurisdictions.

Nevertheless, the Committee heard witnesses enthusiastically support the federal government’s decision to develop a national poverty reduction strategy, pointing to the need for the federal government’s unique resources, leadership role and jurisdictional responsibilities. For example, the federal government has authority over the Income Tax Act, and administers important income support programs for families, people with disabilities and pensioners. The federal government is also in a unique position to survey the range of policies and programs across Canada and bring different levels of government, stakeholders and constituents together to share information and develop best practices. Finally, First Nations living on reserve falls within the jurisdiction of the federal government.[24]