Prince Edward Island (PEI) faces a significant poverty issue: over 7% of its population lives below the poverty line and the food insecurity rate is 24% (nearly one-quarter of the province and the highest rate in the country). With a rapidly aging population, many residents of PEI live on fixed incomes and struggle to cover their basic expenses. Moreover, Indigenous peoples, newcomers, and single-parent families are among those who are disproportionately affected by poverty in the province.

PEI’s high cost of living, increased housing costs, and stagnant wages are major contributing factors to the island’s poverty issue. The average income is lower than the national average, and low wages make it challenging for individuals to meet their basic needs. With people earning an average of $7,000 less each year than the rest of the country, households with low incomes are spending large portions (up to 60%) of their income on fixed costs like utilities and transportation. This has resulted in 31% of food bank clients reporting their main income source to be employment income (highest in the country) – a clear sign that wages are not providing enough to bring food to the table.

With 60% of incomes going to fixed costs, there is little left to meet the costs of inflationary housing prices. As such, 1 in 3 individuals are receiving a housing benefit in PEI.

Exacerbating the issue, PEI remains one of only two provinces that do not index their tax brackets to inflation and does not ensure social assistance payments reflect changes in prices. Over time, this erodes the real value of assistance and leads residents to pay more in taxes without seeing any increases in their real income and having less money to pay for basic necessities like food and shelter.

Additionally, PEI’s economy relies heavily on seasonal industries such as agriculture and tourism, which can lead to unemployment or underemployment during off-seasons. Unsurprisingly, the percentage of people in PEI claiming Employment Insurance is higher than in any other province: 26% of the population.

The PEI Progressive Conservative (PC) government was re-elected in April 2023. As a renewed government in a province that is struggling profoundly, this government should use this term to act decisively on the cost of living crisis.

PEI, like its Atlantic Canada counterparts, is currently grappling with a housing affordability crisis. To address this, the province has recently instituted a rent increase freeze until the end of 2023. That will be followed by a rent increase cap of 3%.

In 2018, the provincial government created a Poverty Reduction Advisory Council to offer advice and input into the development of an action plan to address poverty on PEI over a five-year period. While the process seemed to be moving well through 2019, little headway has been made since.

The Prince Edward Island 2023 budget includes some modest commitments for the health sector, including increased access to pharmaceuticals and mental health supports. The budget also made small commitments to a rent-to-own program, funds to expedite childcare and affordable housing initiatives, and investment in public transit. While all of these commitments are strong signals, larger investments towards these areas will be needed for significant change to occur.

Unfortunately, smaller piecemeal policies will not be enough to help lift people out of poverty. Developing a strategy to do so will be crucial if PEI hopes to find a direction to better social and economic outcomes for its citizens.

Local experts suggest that the government should focus on providing support for key groups, including seniors, single parents, Indigenous peoples, and people living with addictions and mental illnesses. They also recommend introducing a basic income, negotiated with the Government of Canada, which could benefit up to 40% of the province.

Inflation Protection

1. Index income in all tax brackets and social payments to inflation

The provincial government has recently committed to both increasing the generosity of a number of tax credits and conducting a review of provincial rates and brackets to make the tax system more competitive and less costly for Islanders. As part of this review, the government should prioritize the introduction of comprehensive indexation, both for brackets and for all credits and payments, including social assistance. Until comprehensive indexation is adopted, any efforts to improve the generosity of programs, particularly in light of recent inflationary pressures, will only constitute temporary, short-term responses.

Child and Family Benefits

2. Introduce a child benefit program

Unlike other provinces, PEI does not currently have a child benefit program to help families. And yet, it is very close to eradicating child poverty entirely. In 2021, approximately 4.4% of people under the age of 18 lived in households considered to be below the MBM poverty line. While PEI provides significant support for older adults given its disproportionately high number of residents over the age of 65, there is both a social and an economic imperative to help families succeed.

The province should consider introducing a supplemental family benefit, on top of the CCB, which could be used to end child poverty entirely. In the absence of federal cooperation to establish a provincial basic income pilot, this would be a worthwhile interim step to continue to advance the goals of that initiative, while encouraging population and economic growth.

Inflation Protection Income Support

3. Increase the earnings exemptions for single people

Single people who are considered to be employable receive the lowest amount of provincial assistance, which puts them approximately $3,690 below the deep income poverty threshold. The government should increase the amount of earnings exemptions, allowing for a minimum of $350 exempt per month plus 40%, instead of the current $250 per month and 30%, with plans for further increases in the coming years.

4. Adapt 2022’s one-time $100 grocery card for seniors living on low incomes into a recurring grocery allowance

PEI is the only province with explicit targets for food insecurity, going so far as to aim to eliminate food insecurity by 2030. To meet its goals, it should consider adapting the one-time payment provided in 2022 to help offset rising grocery costs to become a recurring form of support for seniors and other groups living on low incomes. We recommend creating a low-income grocery allowance benefit that would pay $300 annually to people whose incomes are below the MBM cut-off. This would cost approximately $3.6 million per year, and it could be phased in, beginning with seniors.