Brief on Division 20 of Bill C-97, Amending the Poverty Reduction Act

Submitted to the Standing Committee on Finance

May 3, 2019

By the Regroupement des groupes de femmes de la région de la Capitale-Nationale

(Québec-Portneuf-Charlevoix)

The Regroupement des groupes de femmes de la région de la Capitale-Nationale (Québec-Portneuf- Charlevoix) (RGF-CN) is composed of some 40 member groups that work together to defend women’s rights and interests and improve their living standards. Since 1990, the organization has been working on issues related to the fight against poverty and violence, women’s health and the role of women in local and regional development.

Background In the context of the Government of Canada’s Poverty Reduction Strategy and Statistics Canada’s consultation on the use of the Market Basket Measure (MBM) as the official poverty line in Canada, we conducted a gender-based analysis of the MBM.

Given that the Government of Canada’s Standing Committee on Finance is currently studying Bill C-97, which amends the Poverty Reduction Act (Division 20 of the bill), we believe it is appropriate to share our recommendations with the committee.

Research and writing Anne-Pierre Bélanger, Development Officer

Revision

Judy Coulombe, Development Officer

Acknowledgements The RGF-CN would like to thank the Collectif pour un Québec sans pauvreté for the helpful comments on the contents of this brief.

Introduction Bill C-97 will formalize adoption of the Market Basket Measure (MBM) as the official poverty line. As such, people whose income is above the MBM threshold will be referred to as having “exited” poverty, and the rest, as living in poverty. RGF-CN has found several limitations of the MBM for measuring the poverty experienced by women and girls. The purpose of this brief is to explain these limitations and make recommendations to both the Standing Committee on Finance and the council or individuals responsible for reviewing the content of the MBM. First, we will set out the general limitations of the MBM for monitoring progress in the fight against poverty. We will then explain the more specific limitations respecting the circumstances of women and girls through a gender-based analysis plus (GBA+). For the sake of brevity, only the most relevant observations have been included in this document.

1. The MBM is not an indicator of exiting poverty

1.1 The MBM underestimates the financial resources needed to sustainably lift people out of poverty

Experts agree that there is currently no meaningful measure of exiting poverty (IRIS, 2018; CPCE, 2009). The MBM is a popular choice for the Canadian and Quebec governments, which view it as an indicator of exiting poverty. Under Bill C-97, the Canadian government wants to adopt the MBM as the official measure of poverty, and the Government of Quebec has used it as a target threshold in its recent anti- poverty plan, and even—and here lies the problem—as an indicator of exiting poverty.i

However, the MBM is only an indicator of coverage of basic needs in a given region. It was developed by Employment and Social Development Canada (ESDC) to reflect a standard of living that is between subsistence and social inclusion, and that takes into account regional disparities in the cost of living (Hatfield, Pyper and Gustajtis, 2010). As such, the MBM does not measure factors providing for a sustainable exit from poverty, such as being able to put money aside for the unexpected, having access to the healthcare required to maintain adequate health for full-time employment and paying for housing in a neighbourhood close to services.

1.2 The elements included in the MBM do not cover those in the definition of exiting poverty adopted by the Government of Canada The governments of Quebec and Canada have adopted almost the same definition of poverty, with one difference. The Government of Canada’s definition (2017) is: “While there are many definitions of poverty, it can be understood as the condition of a person who is deprived of the resources, means, choices and power necessary to acquire and maintain a basic level of living standards and to facilitate integration and participation in society.”ii

In contrast, exiting poverty should mean that a person has the resources, means, choices and power necessary to acquire and maintain a basic level of living standards and to facilitate integration and participation in society. In its Act to Combat Poverty and Social Exclusion, the Government of Quebec refers to “economic self-sufficiency,” as opposed to the Canadian government’s reference to “a basic level of living standards,” which directly links the exit from poverty to the MBM threshold.iii However, as we have demonstrated above, while reaching the MBM threshold can mean acquiring a basic level of living standards, it cannot guarantee it will be maintained or ensure integration and participation in society mentioned in the Canadian definition. Rather than the MBM, the Institut de recherche et d’information socio-économique (IRIS, 2018) proposes “living income” as an indicator of exiting poverty, because in addition to covering basic needs, it includes spending on items that reflect social norms for participating in economic and civic activities (e.g., an inexpensive cell phone) and those that enable people to exit poverty and look after their health (e.g., university tuition, savings, holidays).iv

2. The MPM does not take into account the circumstances of women

2.1 The childcare, healthcare and education spending needed to cover basic needs, as well as provide a way out of poverty, are excluded, or are not calculated at a fair value The MBM is calculated as follows (Hatfield et al., 2010, p. 50):v

Gross income – Income tax – Discretionary expenses = Income available for purchasing goods and services to cover basic needs

Discretionary expenses include basic elements that are required to lift people out of poverty, notably unreimbursed healthcare (dentists, optometrists, physiotherapists, psychologists, etc.) and childcare costs. However, they are not calculated on the basis of a minimum coverage for basic needs, which is the principle of the MBM. On the contrary, discretionary expenses are based on household consumption patterns. This assumes that modest-income households generally cover their unreimbursed health and social service needs. However, like any flexible expenditure, healthcare and social services are among the budget items that are cut when resources are limited. This has a major impact on people’s health, creating new conditions or aggravating existing ones, leading to a vicious circle of absenteeism from work, reduced financial resources and continued poverty (RGF-CN, 2017).vi The researchers who developed the MBM have observed that “households that must spend significant sums of money on these items [non-insured healthcare spending recommended by a health professional] obviously experience a lower living standard than do those with the same income who do not have to bear such costs.”vii (Hatfield, 2002).

Human Resources and Skills Development Canada (2010) justifies its position by stating that spending on childcare and non-insured healthcare recommended by a health professional “varies so widely from family to family depending on the availability of free or subsidized childcare and the health needs of family members. No ‘standard’ basket component for either category of expenditure could be reasonably set.”viii Difficult, and yet that’s what it does in using as a “standard” the spending of families unlikely to be covering their health needs.

Women are the biggest users of healthcare and social services, they access healthcare more during their various life stages (puberty, menstruation, contraception, pregnancy, childbirth, breastfeeding, menopause, aging), and they take more responsibility for the health and care of children.ix They are therefore particularly disadvantaged by the lack of consideration for minimum health and social service needs within the consumption basket.

Basic healthcare needs can be quantified just as well as the other components of the basket by following public health recommendations (e.g., an annual dental cleaning) and adding a contingency reserve based on available data on the consumption patterns of middle-class families (more likely to meet their basic healthcare needs). The same is true for childcare costs, for which the regional variations are known and can be compiled, using the assumption that the typical family pays at least full-time childcare costs for one child and incidental school fees for another (e.g., special programs or extracurricular activities).

In order to make the MBM a real indicator of exiting poverty, a minimum amount of savings should also be deducted for a 3- to 6-month emergency fund, retirement, children’s education or the tuition required to obtain skilled employment.x

In areas served by public transit, the MBM provides for only two adult transit passes and one children’s transit pass in family transportation costs (Hatfield, 2010). This does not cover the basic needs of a family with two children. If the reference family were real, this situation would considerably limit the parents’ mobility and autonomy, given that school is not always close to home and school transportation is not always free or available in the Quebec City area. Consideration should also be given to the fact that parents may travel on weekends or during holidays, while they have their child(ren).

The MBM alone is therefore insufficient as a threshold for covering basic needs if disposable income and essential needs are not accurately calculated.

2.2 The needs of single mothers and unattached individuals are significantly underestimated

The MBM thresholds, based on a reference family of two adults and two children, underestimate the actual expenditures of unattached individuals or single parents with dependent children, particularly for housing and transportation.xi The MBM calculation puts the needs of a single-parent family with two children under 16 years of age at 86.5% of the reference family’s market basket (see the equivalence scale in CEPE, 2010, p. 7).xii However, housing and transportation costs are major expenditure items and are the same for a single mother with two children as for a couple with two children. These expenses are not adjustable: you cannot own 86.5% of a car or rent 86.5% of a two-bedroom unit. Accordingly, the market basket for single-parent families may not be sufficient for their actual needs. The same is true for unattached individuals, whose basket is estimated at 50% of the reference family. The average cost to rent a one-bedroom apartment, which is $720 in the Quebec City Census Metropolitan Area (CMA), is not half of the $839 it costs to rent a two-bedroom apartment (CMHC, 2018).xiii

2.3 Women’s nutritional needs at all stages of life are not taken into account (pregnancy, breastfeeding) The foods included in the food basket reflect the nutritional needs of a man, a woman, a pre-teen and a teenager (Hatfield et al., 2010: Table A.3). However, “the nutrition needs for pregnant women and women who are breastfeeding are generally greater than those of other women.”xiv This food basket therefore does not meet the needs of women at all stages of their lives.

2.4 Actual expenditures of women and girls are not included The items in the MBM basket are carefully selected to meet the needs of two children—a 9-year-old girl and a 13-year-old boy—based on a specific basket of products (Hatfield et al., 2010: Tables A.5 and A.8).xv However, many expenditures are more costly for women and girls than for men and boys, either for reasons related to their reproductive capacity (menstruation, pregnancy, breastfeeding) or because women face more restrictive social norms than men.

By choosing the needs of a male teenager as the basis for calculating the basket, several expensive products are missing from the children’s basket: bras, feminine hygiene products, etc. In addition, a US study reported that 42% of basic hygiene products for women are more expensive than similar products for men—particularly personal care products—and that women pay an average of 7% more.xvi This “pink tax” is not included in the MBM calculations. Other expenses related to women’s life stages are also excluded, such as temporary maternity wardrobes (winter coats and maternity wear, nursing bras, etc.). Finally, the cosmetics required for women’s social participation—for whom social standards are more restrictive than for men—are rolled into the “other items” category of the consumption basket.

Have data on these elements been disaggregated by gender to ensure fair representation of women’s needs?

Conclusion

This brief feminist analysis shows that women are disadvantaged by the current MBM calculation because they have additional costs for certain items, that single women and single mothers may not be able to cover their basic needs with the current equivalence factors, that the MBM does not apply to people with health problems, and that the elements included in the MBM are insufficient to make it an indicator of exiting poverty that meets the Canadian definition of poverty reduction, i.e., maintenance, integration and participation in society.

As a result, gender-based analysis plus (GBA+) should be used to revise the MBM to include gender and health status, thereby creating separate measures of needs coverage. It is important to avoid the kind of confusion demonstrated by the Government of Quebec, which has established a basic income using the MBM for people with severe employment constraints (and therefore significant healthcare needs). Finally, a new indicator should be used to measure exiting poverty that includes the fundamental elements necessary for that exit (e.g., education, savings). The “living income” measure developed by IRIS is one example.

Recommendations 1-Adopt or develop a measure of exiting poverty that includes, in addition to meeting basic needs, the means to maintain one’s living standards and integrate and participate in society, as defined in the Poverty Reduction Strategy.

2-Adopt or develop a measure of exiting poverty based on gender and health status (apply GBA+) to take into account different circumstances.

References i Government of Quebec. (2017). Government Action Plan to Foster Economic Inclusion and Social Participation 2017-2023. Government of Canada. (2017). Opportunity for All–Canada’s First Poverty Reduction Strategy. ii Government of Canada.(2017). Op. Cit. iii Government of Quebec. (2002). Act to Combat Poverty and Social Exclusion, L-7, section 2. iv IRIS. (2018). Le revenu viable: indicateur de sortie de la pauvreté 2018. Written by Philippe Hurton. Montreal [In French only]. v Hatfield, Michael, Wendy Pyper and Burton Gustajtis. (2010). First Comprehensive Review of the Market Basket Measure of Low Income. Final Report. Human Resources and Skills Development Canada and Statistics Canada, Government of Canada. vi Chaire Claire-Bonenfant – Femmes, savoirs et sociétés et Regroupement des groupes de femmes de la région de la Capitale-Nationale. (2017). Se mobiliser pour la santé des femmes de la région de la Capitale-Nationale! Quebec City: Université Laval, 54 p. [In French only]. vii Hatfield, Michael. (2002). Constructing the Revised Market Basket Measure. Applied Research Branch. Human Resources Development Canada, Government of Canada. viii Human Resources and Skills Development Canada. (2009). Low Income in Canada: 2000-2007–Using the Market Basket Measure, p. 57. ix Conseil du statut de la femme (CSF). (2013). Avis Femmes et santé : plaidoyer pour un accès ouvert à la première ligne médicale. 46 p. [In French only]. x As recommended by the Government of Canada. Making a budget. xi Statistics Canada. “Low Income Lines. Introduction.” xii Centre d’étude sur la pauvreté et l’exclusion (CEPE). (2010). Equivalence Scales: An Empirical Validation. Government of Quebec, 26 p. xiii Canada Mortgage and Housing Corporation. (2018). Rental Market Report. Québec CMA. xiv Government of Canada. (2009). Prenatal Nutrition Guidelines for Health Professionals – Background on Canada’s Food Guide. xv Hatfield, Michael, Wendy Pyper and Burton Gustajtis. (2010). First Comprehensive Review of the Market Basket Measure of Low Income. Final Report. Human Resources and Skills Development Canada and Statistics Canada, Government of Canada. xvi New York City Department of Consumer Affairs. (2016). From Cradle to Cane: The Cost of Being a Female Consumer.