It’s just math. And the result of the equation is a negative number.
Thanks to the Trudeau government’s policy of offering an effectively unlimited number of student visas and temporary foreign work permits, Canada’s population grew at a record pace last year – five-and-a-half times faster than the average developed country. One well-known consequence has been upward pressure on housing costs, particularly at the bottom of the market, in rental housing. A less-noticed outcome has been declining gross domestic product per capita.
It has fallen for five quarters in a row. When the numbers for the fourth quarter of 2023 are released, it will almost certainly be six negative quarters.
Ottawa has put the country into a bind known as a “population trap.” That’s the conclusion of National Bank of Canada chief economist Stéfane Marion. A population trap is an unhappy state of affairs familiar to poor countries with very high birth rates. It’s unheard of in the developed world. Yet it’s what is happening in Canada today.
Canada’s population growth through immigration has been so high that it has outpaced the country’s savings, and its ability to invest in new capital stock. In plain English, the number of forks in the economic pie is growing faster than the pie, and faster than our capacity to invest in more ovens to bake more pie. The result is less pie per Canadian – declining GDP per capita, and declining living standards.
Canada’s falling standard of living
Real GDP per capita. Index (2016 Q1=100)
114
U.S.
112
110
108
106
Canada
104
102
100
98
96
94
92
90
88
86
84
2016
2017
2018
2019
2020
2021
2022
2023
the globe and mail, source: NBF Economics and Strategy
Canada’s falling standard of living
Real GDP per capita. Index (2016 Q1=100)
114
U.S.
112
110
108
106
Canada
104
102
100
98
96
94
92
90
88
86
84
2016
2017
2018
2019
2020
2021
2022
2023
the globe and mail, source: NBF Economics and Strategy
Canada’s falling standard of living
Real GDP per capita. Index (2016 Q1=100)
114
U.S.
112
110
108
106
Canada
104
102
100
98
96
94
92
90
88
86
84
2016
2017
2018
2019
2020
2021
2022
2023
the globe and mail, source: NBF Economics and Strategy
That’s not because immigration is a bad thing. Done right, it’s a good thing. And Canada used to do immigration mostly right. But the Trudeau government has been insistent on doing immigration very, very wrong. It’s making policy for a fantasy world where performative press releases matter, and economic performance does not. Enjoy the results.
It’s possible to design an immigration equation whose outcome is a significant plus sign. But that’s not what Canada has today.
In the four quarters to the fall of 2023, Canada added more than 1.2 million people. In the most recent of those quarters, the country added 430,000 people. The population boom is accelerating, not slowing. Most new arrivals are temporary workers. Some were recruited overseas, mostly for low-wage work. Others are coming under the exploding student visa program, which has become a path to citizenship for the price of a year or two of tuition, often at pseudo-schools that even federal Immigration Minister Marc Miller refers to as “puppy mills.”
Since coming to power, the Trudeau government has nearly doubled Canada’s intake of permanent residents, which was roughly a quarter of a million people a year at the end of the Harper government. But that’s not the number that matters most. There’s a parallel immigration stream that has grown far larger than the traditional system. By last fall, Canada had more than 2.5-million temporary residents – up more than 1,000 per cent since the start of the century.
Canadian immigration used to be a model for the world. It was built around the selectivity of the points system. Most immigrants were selected for above-average education and skills; the target was immigrants who were more educated and would earn higher wages than the average Canadian. That would tend to boost GDP per capita. Everyone wins.
What’s replaced it is a system dedicated to facilitating the arrival, through the temporary visa stream, of essentially unlimited numbers of low-skill workers, to fill low-wage jobs. Even now, when unemployment is rising.
If that’s what the Liberals really want, so be it. But choices have consequences. An immigration system aiming for high numbers of low-skill workers, rather than lower numbers of high-skill immigrants, may make it easy to get an Uber Eats meal at any hour of the day. But it’s not fostering a high-productivity, high-wage, low-inequality economy. It’s delivering the opposite.
And telling Canada’s universities and colleges (especially Ontario’s colleges, where between 2000 and 2022 the number of foreign students rose almost tenfold, to 412,000) to boost revenues by selling work permits and a shot at citizenship also has consequences.
It has allowed provinces such as Ontario to reduce taxpayer support for higher ed. But it has led to this unprecedented population boom, made up of people who are in many cases not getting much of an education, and whose enrolment is in any case merely a vehicle for a work permit and the hope of citizenship. It’s perverting parts of the education system, while lowering national wealth.
Another likely future outcome of current policy? Something that has long roiled the politics of the United States and Europe, but which Canada has never had to deal with: a big population of non-citizens who have no intention of leaving, regardless of their legal status.
The Trudeau government has the power to fix all of this, but as problems have grown and grown some more, it has chosen its usual course: inaction. It has run its mouth and its Twitter, while doing nothing. This past weekend, Mr. Miller did a round of TV interviews, threatening to do some undefined something, “in the first quarter or first half” of this year. Maybe.
Let’s get serious already. How do we get Canada back on track, with a pro-immigration, pro-economic-growth policy? That’s my next column.
Tony Keller