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A young new Canadian holds a flag as she takes part in a citizenship ceremony in Ottawa in 2019.Sean Kilpatrick/The Canadian Press

Temporary residents have largely driven the rapid growth of the Canadian population over the past year, a development that is raising fresh concerns over the country’s ability to absorb these newcomers as it struggles with high living costs.

The population stood at roughly 40.1 million on July 1, an increase of nearly 1.2 million people from a year earlier, according to Statistics Canada figures that were published on Wednesday. At 3 per cent, this increase was the largest over a 12-month period since 1957, which coincided with the baby boom and Hungarian refugee crisis.

Not only is Canada growing much faster than its Group of Seven peers, but it was likely among the world’s 20 fastest growing countries, the agency said in its report.

International migration accounted for almost the entirety of the increase. Over the previous year, the country welcomed around 469,000 permanent residents, part of Ottawa’s plan to raise immigration levels.

However, the main contributor to population growth was temporary residents, which include people with study or work permits, many of whom wish to stay in Canada permanently. As of July 1, there were 2.2 million temporary residents in Canada, and their ranks have risen by 46 per cent – or close to 700,000 people – in a single year.

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The federal government has long touted high immigration as an economic stimulant that would counter an aging society and fill jobs. But in recent months, many economists have said Ottawa is pushing too hard and contributing to a surge of demand for services, such as housing, that were already in short supply.

“The system, in my view, is out of control,” said Mikal Skuterud, a professor of economics at the University of Waterloo who studies immigration. “It’s sort of a runaway train and there are no clear brakes.”

While the government sets targets for its intake of permanent residents, there are effectively no limits for temporary residents, otherwise referred to as non-permanent residents by Statscan.

In recent weeks, the postsecondary sector has drawn scrutiny for the meteoric growth of international students, who pay significantly more for tuition than their domestic peers. At the end of 2022, there were more than 800,000 people with study permits, according to figures published by the immigration department. The government has said those numbers could hit 900,000 this year.

However, Wednesday’s report showed that foreign workers were the main driver of the temporary resident population. Those with work permits now exceed 1.4 million, an increase of 64 per cent from last year. (Around 425,000 of those individuals were asylum claimants or concurrently held study permits.)

Henry Lotin, founder of consulting company Integrative Trade and Economics, characterized the increase in temporary residents over the past three months, and past year, as extraordinary.

“Neither increase was planned by government, and neither increase can be sustained by the available supply of affordable housing,” he said.

The federal government has loosened various labour rules for temporary residents over the past couple years. For example, in the spring of 2022, Ottawa allowed companies to hire a larger percentage of employees through the low-wage stream of the Temporary Foreign Worker Program, which it said was aimed at alleviating labour shortages. Ottawa has also temporarily scrapped a limit on work hours for international students.

Because Canadian work experience is valuable in the points-based system for skilled immigration, temporary visas offer a pathway to permanent residency. Indeed, a rising percentage of permanent residents began their journeys in Canada with study or work permits.

“It’s a market for PR status,” Prof. Skuterud said. “There’s a fixed number of slots, and people are doing what they can to get those.”

The number of temporary residents could be be even higher than estimated. Benjamin Tal, deputy chief economist at CIBC Capital Markets, recently told the Liberal Party at its summer cabinet retreat that temporary residents were being undercounted by as many as one million people.

Among other things, Mr. Tal said Statscan assumes that people in the process of permit renewal have left Canada 30 days after the expiry of their visa. However, he argued that many people stay far longer as they await the outcomes of their applications.

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Data gap casts doubt on how many temporary residents have jobs

While Statscan has pushed back on Mr. Tal’s estimate of undercounting, it has adjusted its methodology to assume that people in the processing queue have the left the country 120 days after their visas expired. The agency said this change resulted in fewer than 50,000 temporary residents being added to its total count.

Mr. Lotin suspects that Statscan is still undercounting non-permanent residents to a large degree. Extending the deadline for departure, he said, “is not an adequate measure of a larger population of active visa applicants with expired visas.”

Mr. Tal said the change in methodology is helpful, but that more is needed. “The majority, maybe the vast majority of non-permanent residents, are in Canada with the expectation of permanent residency, including those with long-expired visas waiting for an invitation” from the Express Entry system for skilled workers, he said.

Strong population growth is seen virtually everywhere in the country. Alberta paced the provinces by growing 4 per cent over the past year, followed by Prince Edward Island at 3.9 per cent and Nova Scotia at 3.2 per cent.

In Alberta, “this growth was not only due to international migration but was also the result of record net gains from migratory exchanges between provinces,” Statscan said in its report.

Alberta had a net interprovincial gain of more than 56,000 – meaning, 56,000 more people arrived in Alberta from other provinces than vice versa. It was the largest interprovincial gain ever recorded.

Historically, polls have shown that Canadians are broadly supportive of high immigration. But recent surveys suggest this support is fading as people draw a link between strong population growth and exorbitant housing costs.

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