When Justin Trudeau's government came to power, one of the first things it did was boost Canada's 2016 immigration target. It doubled the country's intake of refugees, while increasing by 18 per cent the number of overseas family members Canadians can sponsor. At the same time, however, Ottawa lowered the number of skilled immigrants – the so-called economic class – from 181,000 to 161,000.
But if the government follows the advice of its hand-picked Advisory Council on Economic Growth, in the years to come it will be doing the exact opposite.
The council's first three recommendations, released Thursday, call on Ottawa to begin making big changes to Canada's social and economic status quo. For example, a plan to aggressively court foreign investment calls into question foreign-ownership restrictions in areas from telecom to the oil sands. The Liberal Party of former prime minister Pierre Trudeau was deeply concerned about foreigners owning too much of our economy; his son's growth council is saying that one of the things holding this country back is that foreigners aren't taking a big enough stake in our economy.
And the council's call for the creation of an infrastructure bank, designed to lure hundreds of billions of dollars of private investment into what would otherwise be public-infrastructure projects means, by definition, privatization or partly privatization. It means private ownership of highways, ports, water systems, public transit. The government has already engaged Credit Suisse to study the benefits of privatizing airports; that would mean reversing the policy of former Liberal PM Jean Chrétien, who won political points by killing a privatization plan.
But the council's immigration recommendation may be the one that gets the most attention. The big number – a call for 450,000 immigrants a year – will get the headlines. More important are the types of newcomers, and the demographic arithmetic behind the numbers.
Since the time of Brian Mulroney, who significantly increased immigration (Canada was accepting fewer than 100,000 newcomers a year in the early 1980s), immigration numbers have been largely stable. During the Chrétien-Martin years, immigration averaged about 223,000 a year. During the Harper government, the annual average was slightly more than 250,000. The growth council wants to nearly double that.
But simply doubling immigration won't have an impact on the things the council is interested in: real, per-capita economic growth and increasing the standard of living for average Canadians.
The reason is the baby-boom generation, which is now moving into retirement and tipping Canada's demographics in an unprecedented direction. The country is aging, and the ratio of retirees to workers is inexorably increasing. That's not a disaster, but it is a recipe for slower economic growth.
Bringing in more immigrants can boost overall economic growth, simply by making the population larger. It will expand the pie – but it will also increase the number of forks in the pie, and at the same pace. The goal of economic policy is not about baking a bigger pie, by whatever means. It's about expanding the pie in a way that ups the size of each individual slice.
The problem with an aging baby-boomer generation is not that Canada needs more people. The number of people isn't the issue; the proportion in the workforce is. Immigration can only have the desired impact on economic growth if the majority of newcomers are young workers, rather than dependents or retirees. And because the baby-boomer generation is so massive, even if immigration rises to 450,000 a year, and even if all the extra newcomers are economic-class migrants, that will barely move the needle in terms of slowing the aging of the Canadian population.
In other words, the economic benefits of a jump in immigration shouldn't be overplayed. Still, every little bit helps. That's why the growth council wants Ottawa to ease the path to citizenship for Canada's more than 300,000 foreign students. They're younger than the average Canadian, they're more educated – and they're already here.
But the Trudeau government's 2016 immigration shift – more family reunification, more refugees, fewer economic immigrants – is marching in the opposite direction. There are humanitarian reasons to take in more refugees. There are social reasons to help new Canadians sponsor grandparents and relatives, not to mention powerful political incentives. But if it were looking at the problem solely through the lens of economic growth, as the council was asked to do, Ottawa would be charting a very different course.