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Poverty in Canada Hits Record Low

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Release Date: November 9, 2006
The proportion of Canadians living in poverty fell to 4.9 per cent in 2004, the lowest level in history, according to a new report published by The Fraser Institute, Poverty in Canada: 2006 Update.

"Poverty rates have decreased substantially, falling to 4.9 per cent in 2004 from 7.8 per cent in 1996," said report author Chris Sarlo, a senior fellow with the Fraser Institute and Nipissing University economics professor. "This fall in poverty rates is especially encouraging following a lengthy period of stagnation throughout the 1980s and early to mid-1990s."

Dramatic improvements were also recorded in the proportion of children living in poverty. Child poverty rates nearly halved between 1996 and 2004, falling to 5.8 per cent from 10.9 per cent.

Sarlo uses the "basic needs" approach to measure poverty by determining the level of income individuals or families need to buy the basic necessities of life, such as food, clothing, shelter, and other household essentials. Canadians are considered to be in a state of poverty when they lack the income necessary to buy these basic needs.

"All too often, claims about the number of poor in Canada are based on Statistics Canada's low income cutoff lines (LICO). However, Statistics Canada repeatedly warns that it is not a poverty measure but rather a 'relative' measure of how well off some Canadians are compared to others," Sarlo said.

"Poverty is fundamentally a problem of insufficiency, not inequality. If we want to understand how Canadians are doing, we need to know how many of our fellow citizens cannot afford the basic necessities of life."