<P> Professor Chris Sarlo, an economist at Nipissing University in North Bay, Canada and a senior fellow of the Fraser Institute, uses Statistics Canada's socio - economic databases, particularly the Survey of Household Spending to determine the cost of a list of household necessities . This is calculated for various communities across Canada and adjusted for family size . Sarlo's basic needs measure is based on various data sources including Statistics Canada's databases (for example Survey of Household Spending) and CMHC housing information to determine the cost of a list of household necessities (food, shelter, clothing, health care, personal care, essential furnishings, transportation and communication, laundry, home insurance, and miscellaneous) for various communities across Canada and then, based on family size, determines how many households have insufficient income to afford those necessities . Before 2004, the determination of the poverty rate was based on pre-tax income inclusive of government social program income such as welfare, employment insurance, and old - age pensions . Taxes were not particularly relevant as households at or beneath the poverty rate would pay little or no income tax . More recently, the after - tax incomes have been used as the indicator of household well - being . Like most measures, it is based on reported income and is therefore subject to error related to unreported employment and the underground economy . With this information, he determines the proportion of Canadian households that have insufficient income to afford those necessities . Based on his basic needs poverty threshold, the poverty rate has declined from about 12% of Canadian households to about 5% since the 1970s . Based on Sarlo's basic needs, the poverty rate in Canada has fallen dramatically over the past 51 years . In 2004 it was 4.9%, representing 1.6 million Canadians . </P> <P> The Government of Canada's Department of Human Resources and Skills Development Canada constructed their own absolute measure through the creation the Market Basket Measure (MBM) in 2003 . The MBM costs a broader range of essential goods and services than the Fraser Institute measure . MBM thresholds take into account community size, location and household and composition, estimating the disposable income required to meet basic needs . Forty eight Canadian communities have been included in the measure . </P> <P> The government of Newfoundland and Labrador are now developing a market basket measure which is more granular, costing out a set of basic goods in over 400 communities in the province . </P> <P> Relative poverty measures, the most prominent being income distribution measures, also known as income inequality metrics, reveal information about disparities of income within a population . So, for instance, if a society becomes richer, even those in the bottom income bands may see their incomes rise as well . A measure which accounts for this rise, increasing with the average income of the society, is known as a "relative measure of poverty ." Relative poverty measures are considered by some to be the most useful for advanced industrial nations like Canada . According to a 2008 report by the Organisation for Economic Co-operation and Development (OECD), the rate of poverty in Canada, is among the highest of the OECD member nations, the world's wealthiest industrialized nations . There is no official government definition and therefore, measure, for poverty in Canada . However, Dennis Raphael, author of Poverty in Canada: Implications for Health and Quality of Life reported that the United Nations Development Program (UNDP), the United Nations Children's Fund (UNICEF), the Organisation for Economic Co-operation and Development (OECD) and Canadian poverty researchers find that relative poverty is the "most useful measure for ascertaining poverty rates in wealthy developed nations such as Canada ." </P>

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