Two years ago, federal public servants cautioned the government that significant increases in immigration could impact housing affordability and services, as revealed by internal documents.
These documents, obtained by The Canadian Press show that Immigration, Refugees and Citizenship Canada conducted an analysis of the potential impacts of immigration on the economy, housing, and services while setting its immigration targets for 2023 to 2025.
In 2022, warnings were issued to the deputy minister and others that the rate of housing construction was not keeping pace with population growth. “In Canada, population growth has exceeded the growth in available housing units,” a slide deck states.
The document emphasizes that “As the federal authority charged with managing immigration, IRCC policy-makers must understand the misalignment between population growth and housing supply, and how permanent and temporary immigration shapes population growth.”
Given Canada’s aging demographics, immigration is responsible for nearly all of the country’s population growth.
The federal government ultimately made the decision to increase the number of permanent residents welcomed each year to 500,000 by 2025. This decision attracted significant attention and scrutiny, as it means that Canada will welcome almost double the number of permanent residents in 2025 compared to 2015.
The document reveals that federal public servants were acutely aware of the pressures that high population growth would place on housing and services. They warned that “Rapid increases put pressure on health care and affordable housing. Settlement and resettlement service providers are expressing short-term strain due to labour market conditions, increased levels and the Afghanistan and Ukraine initiatives.”
Housing affordability has now become a political issue for the Liberal government. Over the past year, the Conservatives have gained significant momentum by focusing on affordability issues while deliberately avoiding the topic of immigration. These pressures have compelled the Liberal government to shift its focus to housing policy and to address the surge in international students with new regulations.
Recent data indicates that Canada’s population growth rate continues to break records as the country admits a historic number of temporary residents, primarily through international student and temporary foreign worker programs.
In the third quarter of 2023, Canada’s population increased by more than 430,000, marking the fastest rate of population growth in any quarter since 1957.
Experts from Bay Street to academia have issued warnings that the robust population growth in Canada is undermining housing affordability as the supply fails to meet the demand.
The Bank of Canada has echoed this sentiment. In a speech delivered in December, Deputy Governor Toni Gravelle cautioned that the surge in population growth is driving up rents and home prices.
Public opinion surveys also indicate a growing concern among Canadians about the strain immigration is placing on services, infrastructure, and housing, resulting in diminishing support for high levels of immigration.
The Liberal government has defended its decisions regarding immigration policy, arguing that immigrants contribute to economic prosperity and assist with the country’s demographic challenges as the population ages.
However, in the face of increased scrutiny of the Liberal government’s immigration policy, Immigration Minister Marc Miller has set the annual target at 500,000 permanent residents for 2026.
Documents from 2022 indicate that Canada’s immigration targets have surpassed the recommendations of some experts, including the Century Initiative, an organization that advocates for increasing the country’s population to 100 million by the end of the century.
However, the focus is now shifting from these targets to the sharp increase in non-permanent residents. Between July and October, approximately three-quarters of Canada’s population growth was attributed to temporary residents, including international students and temporary foreign workers.
This trend is sounding alarm bells about the growing reliance of businesses on low-wage migrant workers and the attraction of international students by dubious post-secondary institutions.
At a press conference on Thursday, Finance Minister Chrystia Freeland stated that immigration is an economic and social asset for the country but acknowledged the need for housing to keep pace.
Freeland said, “For immigration to work as a Canadian economic strategy, we have to make sure housing supply keeps up. And I do think we have to be sure that our immigration system is working as intended.”
Freeland acknowledged that there is work to be done, particularly with regard to the international student program, and referred to some of the policy changes introduced by the immigration minister to tighten the program’s rules.
Mikal Skuterud, an economics professor at the University of Waterloo who specializes in immigration policy, suggests that the federal government appears to have “lost control” of temporary migration flows.
Unlike the annual targets for permanent residents, the number of temporary residents is determined by the demand for migrant workers and international students.
He also points out a connection between the targets for permanent residents and the influx of temporary residents.
Skuterud, a vocal critic of the federal government’s immigration policy, argues that the Liberals have overstated the benefits of high immigration.
He noted that around 2015, when the Liberal government was first elected, a narrative emerged in Canada that “immigration was kind of a solution to Canada’s economic growth problems.”
While the professor acknowledges that this is a narrative that people like to believe, he points out that higher immigration has little impact on improving living standards, as measured by real GDP per capita.
Public servants at IRCC concur, as suggested by the released documents.
They noted, “Increasing the working age population can have a positive impact on gross domestic product, but little effect on GDP per capita.”
