The Government of Canada recently announced that it will now be using the Market Basket Measure (“MBM”) to measure Canada’s poverty line. Previously, Canada did not have an official measure of poverty; rather MBM was used along with Low Income Cut-Off (‘LICO’) and low income measure (‘LIM’). With Canada’s First Poverty Reduction Strategy, announced in August 2018, the Federal Government needed an official poverty measure to guide this new strategy.

MBM was first developed in 1997 – 1999, then officially released in 2002. This measure is meant to reflect “the cost of a basket of goods and services that individuals and families require to meet their basic needs and achieve a modest standard of living. The basket includes items such as healthy food, appropriate shelter and home maintenance, and clothing and transportation.” This is seen as a more comprehensive measure than the commonly used LICO, as MBM considers the actual costs of basic living costs.

Both LICO and MBM account for different costs of living in different areas of the country. However, MBM takes this one step further than LICO by considering the individual city in which an individual or family lives.

In light of this announcement, Statistics Canada has invited Canadians to fill out a short survey (about 5 minutes) on what are the costs of basic living expenses in a specific city or province. This survey is meant to test whether or not the current MBM numbers will be adequate enough for Canada’s official poverty line.

While we cannot speak to the full accuracy of the MBM numbers, as those numbers vary greatly between different locations in Canada and number of family members, we have noticed some off-numbers. For example, if you take the survey for a single person living in Toronto, you will see that they are suggesting $460/month for groceries (not including restaurants and alcohol) and $600/month for shelter. On the one hand, $460/month for groceries seems much too high, considering other estimates put the cost of groceries in Toronto to be around $283.60/month for a single person. On the other hand, anyone who has lived in Toronto recently knows that you would be looking for the needle in the haystack if you tried to find housing for $600/month (and would be one of many fighting to get that deal).

It is also interesting to note that Statistics Canada found that in 2015, using the third poverty measure, LIM, created higher poverty rates for Canada generally and for all provinces except for Alberta. This may suggest that Canada is strategically choosing the measure that shows lower poverty rates. However, this does not take into account that all three measures are useful, but none will be perfect and all will have to be reassessed and updated regularly.

The MBM survey will be open until January 31, 2019 and we encourage you all to participate. Here is a link to the survey.