Finance Committee on May 6th, 2019

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

Now that we've cleared up that Statistics Canada will do the stats and Employment will do the policy, who decides what is in the basket?

[Karen Hall]

I think I would just respond again to the question of what is in the basket. The statistical elements are decided by Statistics Canada and the policy elements are decided by ESDC.

[Pierre Poilievre, Conservative, Carleton, ON]

I will define what I mean by basket, then.

The market basket measure is based on the assumption that there is a certain number of goods and services that a person needs to have a modest standard of living. If you add something to that basket, then you increase the number of people who can't afford it. If you subtract something from the basket, then you reduce the number of people who can't afford it.

In other words, the poverty rate can move up and down based on what is in the basket. It's different from the other measurements. LIM is very mathematical, very simple. It's median income divided by two. Anyone below that is considered low income. LICO is very simple, very mathematical. Anybody who spends more than 20% as a share of their income on basic necessities of life than was the case in 1992 is considered to be poor. It's mathematical. There is no human intervention at all. It's literally just mathematical. Above it, you're not in poverty; if you are below it, you are.

The market basket measurement has a whole basket of stuff that we say you need in order to have a modest quality of life: a house, presumably some form of transportation, food, etc. If you add a bunch of things like a smart phone, for example, then you move the poverty line very dramatically, through human discretion rather than a mathematical measurement.

That's why I'm coming back to the question again. Who decides what's in that basket?

[Karen Hall]

If I may, the market basket measure has been calculated since the early 2000s. It's a measure that has been in place over time. It was rebased in 2008 through the similar sort of measure review that's under way now. It's a measure that does provide, as you said, a basket of goods and services that are determined to form the basis of a modest but basic standard of living across the country.

It's available in 50 different locations across the country. Ranging from rural areas to urban Alberta, there are 50 different locations all across the country. It provides a very precise measure of poverty in different places which is an advantage compared to the LIM or the LICO.

The basket itself is something that we will be working on with Statistics Canada. Statistics Canada has undertaken a consultation process over the last few months. It has spoken with the provinces and territories. It has spoken with stakeholders. It has spoken with people with lived experience in poverty, because we felt it was very important to ensure that people who lived in poverty have the opportunity to provide input on the basket and what they considered to be important for their standard of living.

We did an online consultation. Then, in addition, Statistics Canada did an “ask me anything” session which was an opportunity to take questions, but also to hear from a wide range of Canadians. The input that's been received from that whole range of consultations is also going to be taken into consideration by Statistics Canada in determining the contents of the basket.

[Pierre Poilievre, Conservative, Carleton, ON]

You told me about the consultation and who was consulted. Now my question is: Who will decide?

[Karen Hall]

The contents of the basket are a joint decision between Statistics Canada and ESDC depending on the nature of the item that's being determined.

[Pierre Poilievre, Conservative, Carleton, ON]

Is there a working group between them?

[Karen Hall]

There is very close consultation. I work very closely with my counterpart. We have an ADM data committee that meets.

[Pierre Poilievre, Conservative, Carleton, ON]

There is a reason that this is so important. As I said earlier, the other measurements are very mathematical. There's very little that humans can do to change that level. It's a formula; it's set. This is a measurement that allows for a lot more human discretion, and therefore, a lot more politics. It's very important for the purposes of transparency, given that you're asking us to pass a law making this the official measurement, that we know who makes the decision about what is included in the basket of goods that someone needs to be able to have to be considered above the poverty line. We're not hearing from you any answers about who is that decider. Is it a minister?

[The Chair, Liberal, Wayne Easter]

There would have to be ministerial sign-off on the basket that's proposed by this combination of Statistics Canada and ESDC.

[Karen Hall]

I will confirm this with the committee but my understanding is that it has been with officials to date. With the MBM becoming the official poverty line, it is an opportunity to reconsider the sign-off and the authority for the basket itself. Again, the statistical element remains within the purview of Statistics Canada.

For example, it's important that the basket include a measure of transportation. Previously, under the 2000 base, it included, I believe, a Chevrolet Cavalier. For the 2008 basket, that was updated to a more recent model of car. The question would now be, is it appropriate to have a car or a vehicle for transportation within the basket? If so, then Statistics Canada will determine how that should be measured.

[Pierre Poilievre, Conservative, Carleton, ON]

With new technology, are you going to add new things? For example, does someone need to be able to afford a wireless tablet to be considered to be above the poverty line?

[Karen Hall]

I think the basket evolves with time. For example, previously there was a measure in the basket related to videotape rentals. That is likely no longer a cost or an appropriate thing to include in the basket. It may be that a phone package with data and cellular is an appropriate thing to be included in the basket. That's something we will be looking at, modernizing and updating the basket to ensure that it remains relevant.

Take, for example, the measure of nutrition included in the basket. There was a measure used in the past. Statistics Canada is working with Health Canada to look at the basket for nutrition. For clothing, there's a very specific set of clothing. I believe it's two pairs of shoes per child per year. There's a question about whether that should be a bit more discretionary—different families will need different types of clothing—but still have an amount for clothing within the basket.

[Pierre Poilievre, Conservative, Carleton, ON]

I would just put it on the record that the challenge for people over time is that as you're adding these things into the basket, you're going to be changing the measures. You could have a vast improvement in the overall quality of life for lower-income people—a vast improvement—and yet still see the poverty rate go up. If you're adding things to the basket that literally didn't even exist 10 years earlier, then effectively what you could be doing is.... You have the same group of people who are earning more, living longer, are healthier, are more educated, are happier and more satisfied, and yet the poverty rate keeps rising because these unknown people in the bureaucracy or at the political level are putting more and more things into the basket. Or, theoretically, they could be taking things out of the basket, and therefore artificially lowering the poverty rate.

What assurance can you give us that this doesn't happen using this measure?

[The Chair, Liberal, Wayne Easter]

Mr. Vaillancourt, go ahead.

[Hugues Vaillancourt, Senior Director, Social Development Policy Division, Social Policy Directorate, Strategic and Service Policy Branch, Department of Employment and Social Development]

Perhaps I could just point to the draft legislation. There's a review provision in the legislation that speaks a little bit to what you mentioned. The legislation provides for StatsCan to determine when a review must be conducted. It's proposed subsection 7(2), if you're looking for it.

It's supposed to be reviewed on a regular basis, as determined by Statistics Canada, to ensure that the basket, as it exists, is allowing for people to have a reasonable basket of services and goods that allows them to meet a modest standard of living.

[Pierre Poilievre, Conservative, Carleton, ON]

I realize there will be a review conducted by people, but you can have 10 people review and 10 people come back with different answers as to what needs to be in the basket to have a modest standard of living. The average teenager would tell you it's absolutely unreasonable to be a 13-year-old without an iPhone. Their parents might have a different opinion. In fact, among parents themselves, there might be 10 different opinions in 10 different households.

The fact is that this is not a mathematically based definition. It is a definition based on a review by officials and by politicians, which means that the definition could be a moving target. Do you have anything to address that problem?

[Hugues Vaillancourt]

The objective of the review is to make sure that the basket gets updated on a regular basis to make sure that the basket of goods and services allows Canadian families to meet basic needs.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

I think we've probably exhausted that line, but in terms of the market basket, once decided, is that information made public?

[Karen Hall]

Yes, it is. Statistics Canada has robust publications on the contents of the basket. It is my understanding that there is an intention to release a “what we heard” report in the coming months that will summarize the consultation and provide additional information.

[The Chair, Liberal, Wayne Easter]

So if there's a dispute over the makeup of the basket, we can all raise questions in the House if we have a problem.

Mr. Dusseault and then Mr. Fragiskatos.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I'm going to continue on the same subject.

Would it be helpful or conceivable to leave this ultimate decision to the chief statistician, who isn't considered a politician and who is independent? Should it be expressly stated in the act that this decision should be made by an independent person like him?

[Hugues Vaillancourt]

The bill states that Statistics Canada is responsible for triggering a periodic review of the makeup of the consumer basket. That's all the bill prescribes for the moment.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I'm speaking to my colleagues around the table. We could consider clarifying who should make the final decision rather than remain vague about it.

My other question concerns the official poverty line and the other metric.

Subsection 8(1) of the new Poverty Reduction Act provides that other metrics will be set out in a schedule, which may be amended by the Governor in Council. That will pave the way to the use of other metrics that won't be set out in the proposed act. I checked and the schedule in question is empty for the moment.

Why provide for a mechanism enabling the minister to establish other metrics simply by order?