International students and rental demand

Alex Usher argues they're being exploited by Ontario colleges

In yesterday’s federal cabinet shuffle, Sean Fraser (previously immigration minister) is now the minister responsible for housing and infrastructure, replacing Ahmed Hussen (who’s moved to international development).

Judging from Twitter, people are cautiously optimistic about Fraser’s appointment. I think the fact that he's younger is good - older people tend to be more insulated from what's going on in the housing market.

At the Liberal convention in Ottawa a couple months back, there was a panel on housing, and I thought Fraser did the best job of talking about what the brutal rental market is really like for younger people. So I’m hopeful that he’ll be effective in persuading municipalities that the problem is housing scarcity, and that we need more housing.

In a post on Ontario colleges and international students, Alex Usher describes Fraser as being more thoughtful than the typical cabinet minister, and links to a Toronto Star podcast on housing where he was the only minister who would talk to the interviewer.

International students and rental demand

Immigration targets are about half a million (465,000 in 2023, 485,000 in 2024, 500,000 in 2025). Annual housing starts are about 235,000, and average household size is 2.5 people per household.

But temporary residents ("non-permanent residents"), especially international students, also need a place to live.

Growth in international student numbers is something that Mike Moffatt frequently comments on. The Globe and Mail, May 2023:

In a Twitter thread Friday, Dr. Moffatt argues that foreign students – which have become a critical source of tuition revenue to many cash-strapped schools – are contributing in a big way to population growth and rental demand, and their impact on prices is apparent in the rental statistics.

To be clear, Dr. Moffatt has no problem with the students. He blames the universities and colleges. They have embraced a cash cow, without spending the necessary money to put a roof over its head.

“We have seen enrolment go up substantially since about 2015 … but colleges and universities have barely built any student residences in the last 10 to 15 years,” Dr. Moffatt said in an interview Friday.

“The students are the biggest victims,” he said. “They’re having to move to college and university towns with chronic housing shortages.”

Policy changes in 2008 and 2013

To deal with the long-standing challenge of recognizing foreign credentials, there were policy changes going back to Harper that made it more attractive for younger people to study in Canada as temporary residents, get their credentials here, and then apply to immigrate. And the numbers, especially for colleges in Ontario, are really high. A quote from Hemson 2020: "Prior to 2013, the NPR population in Ontario had never exceeded 300,000; it is currently about 580,000."

A January 2022 report by Moffatt and Mohsina Atiq describes the policy changes making Canada more attractive for international students, as a path to permanent residency. Crucially, these changes were not incorporated into Ontario’s population forecasts, which are used to set municipal housing targets. Forecast for Failure: How a broken forecasting system is at the root of the GTHA’s housing shortage and how it can be fixed.

In 2008, then Minister of Citizenship and Immigration, Diane Finley indicated that the federal reforms “will help create a pool of individuals who, with work experience, will find it easier to apply to immigrate to Canada… our ability to retain international graduates with Canadian qualifications, work experience and familiarity with Canadian society, will help increase our competitiveness and benefit Canada as a whole.”

Ontario colleges and branch campuses

Usher argues that Ontario colleges are being too greedy, bringing in too many international students without thinking about local housing capacity, resulting in higher rents (like a tax on renters). I thought this was especially interesting:

While various colleges in the GTHA have some responsibility here, I would argue that the main responsibility here lies with institutions from outside the GTHA which have set up branch campuses in the area. If a college like Centennial or Conestoga or Fanshawe adds international students, there is a feedback loop. People complain to the mayor, who comes down on the college, or people make angry remarks to members of the Board, who live and work in the community. But branch campuses? No such feedback loop. When a college in Northern Ontario signs a deal with a private college to deliver its programs at an “international campus” in Scarborough or North York or Mississauga, they face no such blow back – the local community has no real way to influence the decisions of institutions in Timmins or Sault Ste Marie or Sudbury or wherever.

Someone commented on Reddit:

That whole system with public colleges partnering with private colleges in Toronto to essentially sell their public college status was always a huge scam, and I remember even back in 2018 (when I was a bit closer to people working in the OPS) there was talk about the ministry coming down hard on them. I’m honestly surprised it’s still a thing, and absolutely agree that the entire thing should be shut down.

Edit: actually I remember what happened now! There was actually a decision that came from one of the ADMs that put a stop to the whole shitshow, in 2018. The entire thing was based on the fact that getting the public degree was better than the private one for the post grad work permit, but nobody wants to come to a college outside of Toronto. So the private ones would partner with them, they were pretty terrible with some being literally run out of a strip mall.

… and then Doug Ford won the election and reversed the decision.

Alex Usher has more details in a November 2019 post, including the report which recommended shutting down these partnerships. Ontario doubles down on dodgy colleges.

Someone has kindly given me a copy of the 2017 report which led to the previous government banning these kinds of partnerships (technically, they called for a moratorium for 2018 and a wind-down starting in 2019).

… The Ontario government is explicitly selling out international students and creating systemic reputational risks for all Ontario colleges, just to paper over problems created by its own funding policies.    This is a terrible idea.  Just as it was two and a half years ago.  

Not just the branch campuses

In a January 2020 followup, Alex Usher notes that it’s not just the colleges with branch campuses - all Ontario colleges saw a huge surge in revenues.

This is not what I was expecting.  Turns out that, at least in 2018-19, all these schools also made out like bandits on international student tuition, even without dodgy arrangements with private vocational colleges.  In fact, across these control-group schools, the average one-year increase in revenues was 22%, compared to just 18% for the dodgy colleges group (the first group still did better over three years, 44% to 35%, and the control group’s “net revenues” averaged just 10% in 2019, compared to 15% for the satellite campus group).

… My jaw is still on the floor.  This can’t possibly end well. 

Essentially Canada is exporting post-secondary education, especially to India, at very high prices ($30,000/year) - but it turns out that in many cases, the quality is just terrible.

From a video by CBC’s Fifth Estate:

Q. We're hearing reports of high numbers of suicides among international students in Brampton who are coming over here.

A. There are multiple reasons for the deaths. We have a connection with one funeral home, that is Lotus Funeral Home. On average, they are sending 4 to 5 dead bodies, only international students, each month.

Q. What?! Each month?

A. Each month. 4 to 5 dead bodies of international students, sending back to India.

What happens next?

Usher notes that in the Toronto Star interview, Sean Fraser says that immigration is actually part of the solution to the housing shortage, that we need more people to work on construction. (This part seems true: according to Benjamin Tal of CIBC, over the next 10 years, 300,000 construction workers will retire.) But he’s also willing to consider limiting international student admissions:

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 govts 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.

So, if you are asking me do immigration levels give me consternation about housing challenges? No, in fact I think it’s a big part of solving our housing challenges. But is welcoming temporary residents in uncapped ways give me some concerns? Some concerns, yes. And I think we need to manage them properly in partnership with other levels of government who have some say in this conversation as well.

Usher’s comment:

Y’all, if the federal Liberals are getting queasy about international student numbers, the game is nearly up. The federal government can and very well may simply start to cut back on visa approvals. They can and very well may simply stop (or at least limit) visa approvals for satellite campuses. Or place limits on institutions in particular postal codes. Or even – I don’t think it will get this far under a Liberal government but might under a future government – simply start reducing visa numbers on a national basis.