Sharp cuts to immigration targets
Sharp cuts to immigration targets
Includes temporary residents for the first time
In the short term, cutting population growth is the biggest lever that the federal government has to reduce housing scarcity.
Last Thursday, Trudeau and Marc Miller announced that they’re cutting targets for new permanent residents, and also setting targets and levels for temporary residents for the first time. I think it’s fair to say that we’ve got consensus now that post-Covid immigration levels have been too high.
Ben Rabidoux posted a graph showing what the targets looks like. Growth in 2022 was catching up from 2020. But then growth in 2023 and 2024 were really high. Planning for less-than-zero population growth in 2025 and 2026 is basically saying that we had about four years of growth in 2023 and 2024.
Mike Moffatt’s sketch, based on initial reports, looked like this:
After the actual announcement came out:
I thought it would show population growth of 50,000 a year. Instead, it's showing population DECLINE of 80,000 a year in 2025 and 2026.
If I understand correctly, the numbers look like this:
In other words, total inflows are lower by about 35,000 compared to Moffatt’s initial sketch, and total outflows are about 100,000 higher.
Where the numbers come from:
Immigration, 395,000: “Overall Planned Permanent Resident Admissions.” Supplementary Information for the 2025-2027 Immigration Levels Plan.
Temporary resident inflows, 670,000: “Overall Arrivals.” Supplementary Information.
Net temporary resident inflows minus outflows, -445,000: “We will see Canada’s temporary population decline by 445,901 in 2025.” 2025–2027 Immigration Levels Plan.
Is this a realistic plan?
Controlling the number of new permanent residents and the temporary resident inflows seems reasonable. A big part of the really high population growth in 2023 and 2024 has been from international students, especially at Ontario colleges. The federal government has now imposed province-wide caps on international student numbers.
I think the big question mark is the target of 1,115,000 for temporary resident outflows. Statistics Canada’s estimate is that in 2023/2024, it was about 540,000.
Are we willing to be the bad cop? The Immigration Levels Plan says: “More than 40% of anticipated permanent resident admissions in 2025 will be from those who are already in Canada as temporary residents.” Even if it’s 50% (about 200,000 temporary residents becoming permanent residents), that means we’re expecting more than 900,000 temporary residents to leave.
What motivates people to leave? Immigration intake numbers only tell half the story. Op-ed by Sanyam Sethi (Ipsos) and Daniel Bernhard (Institute for Canadian Citizenship) in the Globe, summarizing a recent poll. About a quarter of new arrivals say that they are likely to leave Canada within two years.
The top three reasons driving the likelihood of leaving Canada are all economic: housing costs (79%), low salary/income (65%), and concerns about the economy generally (54%).
Press coverage
Big drop in immigration targets will cut population, reduce need to build more homes, Ottawa says. Marie Woolf, Globe and Mail.
Marc Miller acknowledged that high immigration levels have put pressure on housing. He said that since announcing a reduction in study permits for international students just under a year ago, there had been a drop in rents in Vancouver, Surrey and Toronto.
Mr. Miller said the government had consulted widely and heard that, while Canadians support the country remaining open to immigrants, they have “legitimate questions about the volume.”
He cautioned against blaming immigrants, but said “it is also undeniable the volume of migration has contributed to affordability.”
Mr. Miller also confirmed he was not proceeding with a program to allow migrants without valid papers, including people whose visas have expired, to apply to become permanent residents. He has previously estimated that they could number up to 600,000 people. Instead he is pursuing a scaled-down program, such as for health care and construction workers.
Canada will slash 2025 target for permanent residents by 21 per cent. Nicholas Keung, Toronto Star.
Canada’s job vacancies peaked in 2022 as some domestic workers left low-paying, precarious jobs while others returned to school. Employers were desperate to fill front-line jobs. Ottawa quickly relaxed work permit rules, contributing to the influx of work permit holders.
“We are stuck in a low-wage immigration conundrum,” said Robert Asselin, senior vice-president in policy with the Business Council of Canada.
“Our immigration policy has shifted to patch these short-term needs as opposed to what we’ve been doing very well over the last decades, which is to plan economic immigration, to really help nurture our economy with talent and high-skilled workers.”
Asselin said the government must not just reduce the number of low-skilled, low-wage immigrants but attract the most talented, who can help Canada’s economy innovate.
Canada will reduce immigration targets as Trudeau acknowledges his policy failed. Rob Gillies, Associated Press.
“In the tumultuous times as we emerged from the pandemic, between addressing labor needs and maintaining population growth, we didn’t get the balance right,” Trudeau said.
“Immigration is essential for Canada’s future, but it must be controlled and it must be sustainable.”
The big picture
The overall timeline looks something like this:
(1) Covid and remote work
In March 2020, travel comes to a halt. But there’s a sudden massive surge in people working from home, needing more space, and willing to move. Total demand for residential space goes way up (while demand for office space goes way down), and the housing shortage spills over from the GTA and Metro Vancouver to the rest of the country. Something similar was happening in other countries.
(2) Post-Covid international student boom
There was a massive post-Covid boom in international students, especially at Ontario colleges. As Alex Usher describes it, they were simply too greedy: The Eighth Wonder of the World.
(3) Post-Covid inflation.
A recent article in the Economist:
Until recently, prices in America and Europe had moved in lockstep. Recent analysis by the IMF makes clear the extraordinary nature of the inflationary wave. In the view of the IMF, it came in stages. First, during covid-19 lockdowns, demand for goods surged as supply chains strained. Then, as economies re-opened, pent-up demand for services raised price pressures. Russia’s invasion of Ukraine exacerbated problems. By mid-2022 global inflation was triple its pre-pandemic average, and many of its causes applied to countries everywhere.
Beneath the surface, however, there were differences. American inflation was at first driven by the same shocks as elsewhere, but from late 2021 a tight labour market contributed. The IMF’s research suggests a lack of slack in America’s job market has added two to three percentage points to annual inflation rates. In Europe, which was more exposed to high energy prices after Russia’s invasion of Ukraine, the labour market has been looser. The result—high inflation—was the same, but the two regions got there differently.
Matthew Yglesias on labour shortages as the ultimate leaky bucket: Curtailing labor supply is a terrible way to boost wages.
Before Covid, we hadn’t seen high inflation since the 1970s. In Canada, the Bank of Canada tightened monetary policy, raising interest rates sharply. In addition, in April 2022, the federal government loosened restrictions on temporary foreign workers, and in October 2022, temporarily removed the 20 hours/week cap on the number of hours international students could work off-campus.
The picture in the US and Europe:
In Canada:
(4) Hitting the brakes on population growth
As Alex Usher notes, Sean Fraser (then minister for immigration) was saying in April 2023 that he was concerned about the lack of caps at the provincial level on international student numbers. The Bailiffs Are at the Door:
There is an issue, however which has me somewhat concerned in certain pockets across Canada. There has been an explosion in certain temporary programs including the international student program in very specific communities in Canada that’s putting unique pressures. I do think we need to work very closely with provincial governments which have jurisdiction over which institutions can select international students to come and take part in their programs of study and I do want to make sure that we continue to have a robust and successful international student program, but we do have to continue to watch the currently uncapped version of temporary streams that allow people to come in unpredictable numbers to communities that may not be ready for that influx.
In July 2023, Marc Miller took over as minister for immigration. By December 2023, he was expressing frustration with the unwillingness of the provinces (presumably Ontario) to limit their international student numbers:
“Ahead of September 2024, we are prepared to take necessary measures, including significantly limiting visas, to ensure that designated learning institutions provide adequate and sufficient student supports,” Marc Miller said on Thursday.
“It is imperative that we work together with provincial and territorial governments, learning institutions and other education stakeholders so we can ensure international students are set up for success in Canada,” Miller told reporters in Ottawa.
He added, “Enough is enough. If provinces and territories cannot do this, we will do it for them and they will not like the bluntness of the instruments that we use.”
Miller’s comments show a marked shift in tone on the matter, even as he noted, “It would be a mistake to blame international students for the housing crisis. But it also be a mistake to invite them to come to Canada with no support, including how to put a roof over their heads. That’s why we expect learning institutions to only accept numbers of students that they’re able to provide for, able to house or assist in finding off campus housing.”
There’s been a series of policies since then, hitting the brakes:
Raising financial requirements for first-year international students, December 2023
Province-wide caps on international students, January 2024. Ontario’s numbers drop by about 50%.
Limit on off-campus work hours for international students, 24 hours/week. May 2024.
Reversal of the April 2022 changes to the low-wage Temporary Foreign Workers program, August 2024.
Cuts to immigration targets, including targets for both new permanent residents and for temporary residents. October 2024.
More
C. D. Howe has set up an advisory group on immigration targets, including Pierre Fortin, Mikal Skuterud, and Christopher Worswick. Summary of their first meeting, on October 21.
As Canada cuts immigration numbers, we must also better select immigrants. Op-ed in the Globe by Christopher Worswick, with some specific policy recommendations.
I think this whole fiasco just underlines that many of our leading politicians are as dumb as fence-posts. They don't look at evidence and they don't listen to experts---they make decisions simply based on ideology. And if they can shove their fingers in the eyes of another party---well, who cares if it screws up life for ordinary people!
The piece highlights something I'd never really thought about until recently: all those housing costs are going up because SOMEBODY is willing to pay them. The other side of income inequality - the upside, not the .1% but the whole 10%, really are living lives that Boomers never saw, for the middle class of their youth. (The 1960s had approximately zero "Destination Weddings" for people on wage cheques.)
Russil, maybe you can locate a chart I saw going by on social media a month or two back. It charts the $ contribution that parents make to a first-home purchase, by income decile. The ten bars barely go up from a few hundred to a few thousand, maybe $10-20K for the next-to-top income decile..and then explodes, the top 10% are contributing over $100K on average.
And every person-under-40 I know who is well-housed at present, got that kind of help from the Bank of Mom and Dad. But my comment is about the top 10%, maybe top 20%, in general: they are not just rich enough to be housed, they can get an urge for a home office and basically put a million North Americans out of homes because they can afford to just move up any time they get a yen for more space.
Those who like to go on about things being "broken" are not talking about the class buying all those $70K pickups with hoods the height of my shoulder, nor filling up those jets off to Africa and Asia every year. And they can make housing more expensive any time they please by just getting interested in it, instead of Africa or the E-F150.