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.