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Old poverty measure new again as HRDC launches market basket.

OTTAWA -- Human Resources Development Canada presented its first report on low incomes based on the Market Basket Measure. The MBM is similar to a family budgeting system once used by social planing council's larger cities and still used by the Winnipeg Social planning Council, to rate welfare payments and services by voluntary agencies. HRDC hesitates to call it a poverty line, though many will describe it this way.

MBM shows that in 2000:

* 13.1 per cent of Canadians were living in poverty ranging from 11 per cent in Ontario to 23.4 per cent in Newfoundland,

* 29.5 per cent of children living in Canada were deemed low-income,

* Two-thirds of the children were in two-parent families where Average incomes were 30.9 per cent below the MBM poverty-cut off for those defined as low income by MBM standards.

MBM is based on the cost of food, clothing and footwear, shelter and transportation, such as public transportation or use of a used vehicle, and other household needs, including school supplies, personal care products and a telephone, for a family of four--two adults with two children. Single people are estimated as needing half of what the reference family of four would require.

Statistic's Canada's Low Income Cut-Off, MBM offers the possibility of a different measure for each region and urban area. The Statscan figures present one low income measure for all of Canada that will be more realistic in determining low income levels in Canada than the other Statistics Canada's low income measures.

The Market Basket's food component, which is based on Health Canada's National Nutritious Food Basket 1998, contains costs found in 40 urban centres while clothing costs were largely based on clothing needs estimates made by Winnipeg Harvest and the Winnipeg Social Planning Council.

The introduction of MBM has drawn praise and disdain. Social worker Reuel S. Amdur called in "truly monumental effort" in an article in Straight Goods, a web publication. "MBM is a powerful tool in examining welfare and minimum wage rates," Amdur said noting "in all provinces these rates fall far short on both counts."

The National Anti-Poverty organization was less enthusiastic.

The MBM examines income and compares it to the cost of the basket of goods and services for the year 2000. The measure accounts for geographic variations such as size of urban areas in each province as well as rural areas. Territorial comparisons are still under review and were not available at the time of the MBM's release.

The other low-income measures used by Statistics Canada measures low-income or the amount of income a family spends on basics on a Canada-wide basis. The LICO or Low-Income Cut-off identifies low income families as those who spend 64 per cent or more on food, shelter, and clothing.

LIM or Low-Income Measure defines low income people as those who have an income that is half the median income or less. The median income is the point where 50 per cent of people have higher incomes and 50 per cent have lower incomes.

One criticism of the LICO is that it ignores the variances in the cost of living in the different parts of Canada.

LIM was criticized due to its inability to deal with large changes in over-all income levels. For instance, if all incomes doubled, the people considered to be low income would remain defined as such even though their living conditions would be greatly improved. However, LIM is favored by advocates of more equal income distribution incomes, and was favored for many years in the Scandinavian countries.

Shelter costs, which were calculated as the average of median rents for two and three bedroom rental units, varied greatly from $4,965 annually in rural Manitoba to $11,399 in Toronto.
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Publication:Community Action
Date:Jun 16, 2003
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