Towards a Poverty Reduction Strategy – Discussion Paper

Towards a Canadian Poverty Reduction Strategy

The Government of Canada is committed to developing a Poverty Reduction Strategy. Governments can make a difference. However, poverty is a complex problem that requires involvement from a wide range of partners. For this reason, the Government of Canada is reaching out to its provincial, territorial and municipal partners, Indigenous people, community organizations, poverty experts and academics, the business community and, notably, those who have a lived experience of poverty to work together towards reducing poverty.

Governments at all levels have made efforts to reduce poverty. This includes the development of several poverty reduction strategies already in place across Canada’s provinces, territories and municipalities. At the federal level, the Government has made several recent announcements on initiatives that will support its poverty reduction efforts (Annex A). The Government of Canada is seeking views on how to build on and align with these existing efforts. Developing a Canadian Poverty Reduction Strategy also presents an opportunity for government to examine its programs to see if they can be strengthened to address the causes of poverty in Canada.

Give the Government your views on the Strategy

The Government of Canada wants to hear from all interested Canadians on developing a Canadian Poverty Reduction Strategy. Youth are particularly encouraged to share their thoughts and ideas as they are not only the beneficiaries of poverty reduction measures but active agents of change.

To begin, the Minister of Families, Children and Social Development, the Honourable Jean-Yves Duclos, will engage with members of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities to discuss their views and their work on poverty reduction strategies. This work will focus on improving the delivery of federal resources and services to inform the Poverty Reduction Strategy. For more information on the work of the Committee, including how you can participate, please visit Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

In the coming months, an online engagement website will be launched where interested individuals and organizations can participate in developing the Strategy. There will also be discussion forums and online town halls with the Minister of Families, Children and Social Development.

The online engagement will be complemented by in-person roundtables with Indigenous organizations, businesses, community organizations, academic experts and, notably, Canadians who have a lived experience of poverty.

The Government of Canada will also work closely with partners in provincial, territorial and municipal governments—which deliver many programs focused on improving the well-being of Canadians—to discuss how the federal government can strengthen its contribution to reducing poverty.

Questions or comments can also be emailed to: povertyreduction@canada.gc.ca

Income

When many think about poverty, the first thing that comes to mind is income. Income is an essential component of well-being. Adequate income allows individuals to satisfy basic needs like shelter and food. It can also protect them from unexpected life situations (e.g. job loss, illness) that could lead to poverty. Income is also associated with non-economic benefits, such as better health status, educational outcomes and life satisfaction.

Far too many Canadians lack an adequate amount of income to meet their basic needs. According to Statistics Canada’s after-tax Low Income Cut-offs—a threshold below which an individual or family may find it difficult to meet their basic needs—an estimated 3 million Canadians are living in poverty. That is about 1.9 million families or close to 1 in 10 Canadians. ^{Footnote 5} This number has declined little over the last decade. ^{Footnote 6}

While anyone is susceptible to experiencing poverty, certain groups are more likely to live in low income than others—single parent families, single individuals aged 45–64, people with work-limiting disabilities, recent immigrants (those who have been in Canada for 10 years or less) and Indigenous people. In addition to being more likely to experience low income, these groups are also more likely to live in low income for long periods of time. This is troubling because the longer a person is poor, the harder it is to get out of poverty.

Housing and homelessness

Housing is not just about bricks and mortar. Safe, adequate and affordable housing is vital for one’s well-being. It gives us all a place where we can raise our families, build financial security, feel included in society and be able to participate in education, work and other activities. ^{Footnote 7}

However, too often, poverty means poorer housing outcomes. In 2011, 1.6 million Canadian households were in “core housing need” because they did not have access to housing that was not in need of major repairs, was affordable (cost less than 30% of their before-tax household income) or was suitable for the size and makeup of their family. ^{Footnote 8} Of these 1.6 million households, 655,000 were considered to be in “severe housing need” because they spent at least half of their income on shelter—an issue that has grown since 2006. ^{Footnote 9}

In extreme cases, poverty leads to homelessness. An estimated 35,000 Canadians are homeless on any given night and over 136,000 Canadians access emergency shelters yearly. ^{Footnote 10}

Jobs, training and the workplace

Employment is an important dimension of poverty and well-being. Not only do most jobs provide the income needed to avoid poverty, they also provide people with a chance to contribute to society, achieve their ambitions, develop their skills and feel included. However, there are some changes in Canada’s labour market that are putting more Canadian workers at risk of poverty.

The nature of work has changed. Over time, temporary and part-time work has grown at a faster rate than permanent, full-time work. While some welcome the flexibility this type of work affords them, these positions can be associated with fewer benefits like paid vacation and sick leave, and workplace pension plans. ^{Footnote 11} This can have significant repercussions for a family’s well-being.

Today, being poor does not mean that you are jobless. About 746,000 Canadians live in a household where the main income earner is considered “working poor.” ^{Footnote 12} These individuals work similar hours to the average Canadian worker but earn less money and their hours are more likely to rise and fall unpredictably. This can make it hard to balance work and family responsibilities. ^{Footnote 13}

In Canada’s rapidly changing job market, industries that were once major sources of employment, at times, fail to adjust, and this in turn impacts the demand for labour. This can leave some workers without jobs or even in poverty. Lifelong training and skills upgrading is increasingly important to help Canadians adjust to changing market conditions. However, adult participation in education and training in Canada is near average among peer countries. ^{Footnote 14} Further, adult education and training rates are significantly lower for those with poor literacy scores. Aligning training programs with labour market needs and ensuring that those who need training receive it would help more Canadians get and keep jobs that offer better wages, more job security and opportunities for advancement.

There are also certain barriers that hinder an individual’s ability to find and keep a job. For example, public transit plays an important role in supporting an individual’s commute to and from work, in addition to helping them access basic needs, health services and feel connected to their community. However, for many, public transit is not accessible or affordable. Improving supports that help facilitate employment could help more Canadians avoid and exit poverty.

Higher education

More than ever before, higher education is essential for avoiding poverty and improving one’s well-being. Lack of education limits a person’s chances in life, including their earnings opportunities and economic security. Those with more years of schooling have longer lives, report a better health status with a lower occurrence of chronic diseases and disabilities, and are more likely to vote and participate in the community. ^{Footnote 15}

In today’s rapidly changing labour market, people without post-secondary education, like college, university, technical or vocational training, are often at a disadvantage. For example, Canadians with a high school education or less have higher unemployment rates than their peers with a college or university education (9.9% compared to 5.2% in 2015). ^{Footnote 16}

However, there are several barriers, both financial and non-financial, that make post-secondary education out of reach for many low-income Canadians. Addressing these barriers will help break the cycle of poverty and improve the well-being of all Canadians.

Health

Poverty and health are closely connected. When one lives in poverty, they are more likely to have poor health. When one is in poor health, they are more likely to experience poverty as good health is crucial for achieving other dimensions of well-being, such as attending post-secondary education, having a job that provides an adequate income, and being able to socialize with others and participate as full citizens in community life.

Poverty in Canada is associated with shorter life expectancy and higher rates of chronic diseases, certain cancers, stress and mental health problems. This is because low-income individuals are less likely to have access to nutritious food, adequate housing and safe working conditions. They are also more likely to have unmet health care needs due to a number of factors, such as out-of pocket expenditures, lower health literacy, transportation costs, ability to navigate the system, and typically less flexible working arrangements. ^{Footnote 17}

Many Canadians also lack access to nutritious food. Every year from 2007 to 2012, approximately 5% of children and 8% of adults lived in food ^{Footnote 18} insecure households because they could not afford to eat a sufficient variety or quantity of food. In addition, in 2015, food bank usage reached its highest point since a low in 2008. ^{Footnote 19} Northern and remote communities, families that rely on government benefits as their main source of income and single-parent families have significantly higher rates of food insecurity than other Canadians. ^{Footnote 20}

Mobility and equality of opportunity

There is a connection between poverty, weakening social mobility and the declining middle class. There are signs that it is getting harder for poor Canadians to exit poverty and join the middle class. For example, between 2006 and 2011, only 60% of Canadians with the lowest incomes moved up the income ladder. ^{Footnote 21} This is significantly less than their peers in the 1980s and 1990s, when 70% to 74% of those with the lowest incomes were able to move up the income ladder. Growing the middle class and promoting inclusive growth includes fostering equality of opportunity so no one is left behind.

Allowing income inequality to rise and social mobility to decline undermines core Canadian values of fairness and equality of opportunity. Hard work should pay off and all children should have the opportunity to succeed.

Faces of poverty in Canada

The various dimensions of poverty cut across diverse groups of people and impact them in different ways. In other words, poverty affects people differently

Partnering

Building partnerships will be important to deliver results. Community organizations, including charities and non-profit organizations, play a vital role in supporting individuals and strengthening communities by delivering programs and services tailored to the individual and community. In regard to poverty reduction, community organizations are well placed to improve the well-being of individuals with complex and multiple barriers—those who may need wrap-around supports in order to thrive. The Government welcomes suggestions on how it can strengthen partnerships.

Choosing a target

The most effective investments are those based on evidence, lessons learned and best practices. Although poverty is complex, it is possible to measure the Government of Canada’s progress in poverty reduction. In designing their respective poverty reduction strategies, many provinces, municipalities and international jurisdictions have chosen to set targets to guide their actions and serve as the basis of public reporting. These targets are designed with local context and priorities in mind. The Government is interested in learning from the experience of other jurisdictions and welcomes input regarding what targets and timelines should guide its efforts.

One challenge in determining a target for the Strategy is that Canada does not have an official definition of poverty, nor an official measure to track it. In fact, many countries do not. This is partially explained by the lack of consensus over how poverty should be defined when it is such a personal experience. For one person, it may be a lack of income, while another may feel poor because they face barriers to their inclusion in society.

Living in low income and lacking sufficient financial resources to afford adequate food, shelter, clothing, transportation and other necessities of economic and social well-being is widely acknowledged as an indicator of being in poverty. The most common way to measure poverty is by looking at income levels compared with pre-established thresholds. Canada has three main measures of low income that could be used to choose a target for the Strategy: Low Income Cut-offs, the Low Income Measure and the Market Basket Measure.

These measures give a generally consistent picture of low-income status over time and are robust and accurate. They can show how certain groups are doing (e.g. people with disabilities, single-parent families) and can track various aspects of poverty, including the time spent in low income and the depth of poverty. While none of these measures are perfect, each contributes its own perspective and its own strengths to the study of low income.

• The most widely used measure of low income in Canada is the Low Income Cut-offs. Low Income Cut-offs are income thresholds below which a family is likely devoting a larger share (at least 20 percentage points more) of its income on the necessities of food, shelter and clothing when compared to the average family. Low Income Cut-offs are adjusted for seven family sizes and five different community sizes to capture differences in the cost of living.
• The second measure of low income is the Market Basket Measure. According to this measure, a family is living in low income if it is unable to afford the cost of a pre-defined set of goods and services that together, make up a “basket” of necessities for that family size. The basket includes the costs associated with a nutritious diet, clothing, footwear, transportation, shelter and other expenses. The Market Basket Measure identifies disposable income levels that are required to purchase this selected basket of goods and services in various communities across Canada.
• For the purpose of making international comparisons, the Low Income Measure is the most commonly used measure of low income. An individual or family is considered to be in low income if their income is less than 50% of median household income. The Low Income Measure is adjusted for household size but does not account for community size. It is a relative measure, which means that no matter how strong incomes are in Canada, families with an income of less than 50% of the median will be considered low income. This does not necessary reflect their ability to purchase basic necessities.

Making data improvements and building on best practices

While a target could be chosen using one of Statistics Canada’s existing low-income measures, Canada could explore improving the existing measures to make them more accurate or introduce a completely new measure.

To help make existing measures of low income a more accurate reflection of life in poverty, Canada could start accounting for supports like in-kind benefits (e.g. rent-geared-to-income subsidies) that may improve the living standard of low-income households. Alternatively, Canada could pursue a completely new measure of poverty, such as a material deprivation index. A material deprivation index is based on a group of tangible items and/or activities that are generally considered by society as being needed in order to achieve an adequate standard of living. These measures rest on shared judgments about which items are more important to provide a “decent” living standard. Being unable to afford a certain number of these items and/or activities defines being in a state of poverty and social exclusion.

This is another area where provinces and territories have made progress. The Government of Canada looks forward to drawing on their expertise and welcomes input on how to improve the measurement of poverty.

Choosing indicators

To complement an overall poverty-reduction target, other indicators could also be selected to track progress on certain dimensions related to poverty, such as education, employment, health and/or housing. Indicators could also be chosen to track how certain vulnerable groups are doing, like Indigenous people or people with disabilities. Input on possible indicators for the Canadian Poverty Reduction Strategy is welcomed.

Governance and reporting on progress

Reducing poverty in Canada is a long-term goal requiring partnership, commitment and accountability from all actors. Various structures have been used in other jurisdictions to support existing poverty reduction strategies in Canada. Some have relied on expert advisory panels or non-governmental organizations, while others have leveraged existing government capacity. Some jurisdictions have introduced legislation as part of their strategy.

The Government of Canada is committed to reporting publicly on progress in a meaningful way. This will include updating Canadians on the implementation of the Strategy, lessons learned and progress towards the overall target, as well as carrying out a regular review of the selected indicators.

The Government welcomes input on how the Strategy should be governed and how Canadians should be updated on progress.

Children and families

• Introduced the Canada Child Benefit, which is tax-free and provides up to $6,400 annually per child under the age of six and $5,400 annually per child aged 6–17.
• Working with the provinces, the territories and experts to develop a framework on early learning and child care to address the need for access to affordable, high-quality child care.
• Develop a strategy against gender-based violence.

Seniors

• Increased the Old Age Security and the Guaranteed Income Supplement top-up for low-income single seniors by $947 per year.
• Cancelled the age of eligibility increase from 65 to 67 for Old Age Security and the Guaranteed Income Supplement.
• Reached an agreement-in-principle with provincial governments to expand the Canada Pension Plan. This expansion will ensure that the Canada Pension Plan replaces 33% of Canadians’ incomes in retirement, up from the current rate of 25%. It will also ensure that more income is subject to Canada Pension Plan contributions.
• Committed to increase the Working Income Tax Benefit to ensure that lower-income workers have larger Canada Pension Plan benefits in retirement without feeling the burden today. This benefit provides tax relief for eligible, working low-income individuals and families who are already in the workforce, and encourages other Canadians to enter the workforce. The enhancement will provide a higher benefit and reach more working-poor Canadians.

People with disabilities

• Developing accessibility legislation. This legislation will be developed following consultations with stakeholders, most importantly Canadians with disabilities. Consultations will explore who should be covered by the legislation, what accessibility issues and barriers should be addressed, how it could be monitored and enforced and how to raise awareness to improve accessibility.
• Committed to reinstate the Court Challenges Program of Canada to ensure that vulnerable groups have improved access to the justice system and confirm their constitutional rights under the Canadian Charter of Rights and Freedoms.

Innovation in poverty reduction

• Working with its partners to develop a Social Innovation and Social Finance Strategy to support community organizations working to tackle persistent social challenges in new, innovative ways.

Indigenous people

• Developing an Indigenous Early Learning and Child Care Framework that recognizes the need for access to affordable, quality child care that is culturally appropriate for Indigenous parents and children. The Government will also review its existing early learning and child care programming to ensure it continues to meet the needs of Indigenous children.
• Investing $2.6 billion over five years starting in 2016-17 for improvements to primary and secondary education on reserve to address immediate programming needs, program cost growth, language and cultural programming, literacy and numeracy, and special needs education.
• Investing $969.4 million over the next five years for school infrastructure on reserve.
• Investing an additional $634.8 million over five years beginning in 2016-17 in the First Nations Child and Family Services Program to help improve child welfare services. Improvements to the Program will be made in partnership with First Nations and jurisdictional partners, and will focus on preventing the conditions that lead to separating children from their families.
• Investing over $3.5 billion in social and green infrastructure:
  • Cultural and recreational facilities: Over the next two years, $76.9 million will be invested in cultural and recreational facilities.
  • First Nations community health facilities: Over the next five years, $270 million to improve the condition of nursing stations, health centres, hospitals, and drug and alcohol treatment centres.
  • First Nations community housing: Approximately $554.3 million over the next two years to improve housing conditions and reduce overcrowding in First Nations communities.
  • Northern and Inuit housing: $177.7 million to help address urgent housing needs in the Canada’s northern and Inuit communities.
  • Water, wastewater and waste management: Over the next five years, almost $2.24 billion will be invested in clean drinking water and the treatment of waste and wastewater on reserve.
  • Community infrastructure: $255 million over two years will be invested in the First Nations Infrastructure Fund.
• Investing $10.4 million over three years to support the renovation and construction of shelters for victims of family violence in First Nations communities. The Government will also invest up to $33.6 million over five years and up to $8.3 million ongoing in additional operating resources to better support shelters. Over $53 million is being invested over two years into the Inquiry into Missing and Murdered Indigenous Women and Girls.
• Invest $69 million over three years to support mental wellness on reserve and in the territories, particularly in communities facing mental health and suicide crises; an additional $9 million will be invested over three years to support the Inuit Tapiriit Kanatami in the implementation of its National Inuit Suicide Prevention Strategy.
• Investing $15 million over the next two years to better align training with community priorities in the areas of housing construction, water treatment, child care and local administration. Over the next year, the Government will engage stakeholders on a renewed and expanded Aboriginal Skills and Employment Training Strategy.
• Strengthening and renewing the Urban Aboriginal Strategy.
• Invest an additional $4 million per year in the Aboriginal Courtwork Program so Indigenous people going through the criminal justice system understand their rights and the charges against them.
• Supporting economic development for the Métis Nation by investing $25 million over five years.
• Investing $5 million per year to promote, preserve and enhance Indigenous languages through the Aboriginal Languages Initiative. The Government is committing to working with Indigenous groups to consider how best to support Indigenous language and culture beyond 2016-17.

Housing and homelessness

• Developing a National Housing Strategy. Among other things, the National Housing Strategy will aim to reduce core housing need; reduce the gap in core housing need between renters and homeowners; and reduce the incidence of severe housing need.
• Investing an additional $504.4 million over two years in the Investment in Affordable Housing program. Under this initiative, provinces and territories match federal investments and have the flexibility to design and deliver programs tailored to local housing needs and pressures.
• Investing an additional $111.8 million over two years in the Homelessness Partnering Strategy.
• Investing $200.7 million over two years to increase affordable housing for seniors.
• Support shelters for victims of family violence by investing $89.9 million over two years.
• Providing $573.9 million over two years towards the renovation of existing social housing.
• Investing $208.3 million over five years towards an Affordable Rental Housing Innovation Fund to help encourage the construction of affordable rental housing.

Health and food

• Developing and negotiating a health accord with provincial and territorial governments aimed at transforming key parts of Canada’s health care system.
• Providing additional funding of $64.5 million for five years, as well as $13.8 million per year ongoing, to expand Nutrition North Canada to additional isolated northern communities.

Post-secondary education

• Increased Canada Student Grants for low- and middle-income students from $2,000 to $3,000 a year.
• Improved the Canada Student Loans Program to better meet the needs of low-income students. Starting in 2017, students will contribute a fixed amount toward the costs of their education. In return, their financial assets and student income will not be considered.
• Changed the repayment rules for the Canada Student Loans Program so that graduates with loans will only have to start repaying their loans when they begin to earn at least $25,000 a year.
• Improved access to the Canada Learning Bond for children from low-income families.

Support for low-income workers and the unemployed

• Reduced Employment Insurance premiums, effective 2017.
• Working to reduce the waiting period to enhance income support through Employment Insurance.
• Eliminated higher eligibility requirements to the Employment Insurance program for the New-Entrant and Re-Entrant to the Labour Market categories.
• Extended the Employment Insurance program’s Working While on Claim pilot and working to develop a long-term solution.
• Temporarily extended Employment Insurance benefits to regions that have experienced significant job losses as a result of the commodity price decline.
• Committed to enhance parental and caregiving benefits delivered through Employment Insurance.
• Invested an additional $125 million in 2016–17 in the Labour Market Development Agreements and an additional $50 million in 2016–17 in the Canada Job Fund Agreements to support training and skills development.
• Introduced initiatives to promote good-quality jobs and decent work in the federally regulated private sector.
• Invested $4 million in 2016–17 to extend the Northern Adult Basic Education Program for one year while the Government reviews the program with a view to determine how best to support the participation of Northerners in the labour market.