Fraser Institute says that the government's formula for calculating poverty includes some families on near middle class incomes
The Canadian government introduced its re-defined measure of the official poverty line in 2018 but is it accurate?
Not according to a new report from the Fraser Institute, which says that the official poverty line calculation, which was updated in 2020, means that some families who earn more than $60,000 a year, are considered impoverished.
That’s because, using the low-income measure known as the Market Basket Measure (MBM), poverty is defined by income and also by “social inclusion”.
Taking into account location and some other factors, that puts some of those with $60K+ incomes below the official poverty line.
Christopher Sarlo, a senior fellow at the Fraser Institute, professor emeritus of economics at Nipissing University and author of A Critical Assessment of Canada’s Official Poverty Line, says that there are several problems with the MBM but the main one is conceptual.
“By essentially defining poverty as an inability to participate in society, the government has rendered poverty as immeasurable because there’s no reliable way to connect societal participation or inclusion to an income level,” Sarlo said.
He added that the way the MBM works fails in addressing the needs of those who are genuinely struggling.
“There’s real poverty in Canada—hunger, misery and serious housing inadequacies—but Ottawa has now lumped in families and individuals with near middle-class incomes, which will do nothing to help eliminate serious deprivation in this country,” he said.
