Likely increase in low income rates, if StatsCan sets to redraw poverty line

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Ottawa, Dec 23 (Canadian-Media): An increase in the number of Canadians regarded as living below the low-income threshold would result if changes to the federally adopted poverty line being looked at by the national statistics office, are approval, media reports said.

Statistics Canada. Image credit: Wikipedia

Raising of financial cut-off used to define low-income had resulted an increase in the poverty  by 2.2 percent in 2008. 

According to experts, Statistics Canada's plan next year to recalculate the threshold by changing the "market basket measure" could lead to a similar bump in poverty rates.

The measure calculates the minimum earnings a family requires to afford a basket of goods and services needed to reach a modest or basic living standard.

After adopting the measure as the country's official poverty line last year, the Liberals set aside $12 million over five years to update the basket, which currently doesn't include things like wireless services.

Federal officials would decide on the actions to be taken with Statistics Canada's recommendations  including which to implement and on which more research is needed.

Statistics Canada's final report is expected in February.

Statistics Canada's published reports' possible updates to the cost of items in the basket of goods and services, as well as disposable income thresholds indicate a family's income left over after accounting for taxes and payroll deductions.

If the basket of goods strips away too much of their disposable income a family or individual would be considered in poverty .​

Statistics Canada's other proposed updates include changes to the national food guide in the cost of food, updating transportation costs showing that while some low-income earners take public transit, others drive, exclusion of capital gains taxes when calculating disposable income and putting homeowners with a mortgage and people in subsidized housing on more equal footing with renters when determining who is in poverty.​​​

In 2008 update, she said a similar effect happened when costs rose faster than incomes.

The continued trend of the faster growth in costs compared to the average income would therefore translate to a higher poverty level, said Garima Talwar Kapoor, director of policy and research  at the charitable foundation Maytree.

There would be an increase not only in the percentage of people in poverty but a slight increase in the raw numbers as well by the changes to measuring poverty, Kapoor said.

The Liberals said more than 800,000 people — including some 280,000 children — have been lifted out of poverty, and rates have dropped by about 20 percent compared to those in 2015. The figures are key benchmarks both politically and from a policy perspective  to track the path of the government's anti-poverty strategy.

The changes could drop those just above the line into poverty with no material changes to their circumstances, she said.

Updates to the measurement, Iglika Ivanova, a senior economist at the Canadian Centre for Policy Alternatives said,  will help in identification of the financial pressure points for people in poverty, which in turn would help governments set anti-poverty plans.

"It's just important to keep updating these things because sometimes they are used to say we've done enough by the government — provincial or federal."