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Benjamin Tal, deputy chief economist of CIBC Capital Markets, told the Liberal government gathering in Charlottetown that the undercounting in the official statistics means Canada is underestimating the number of new homes required to meet the country’s increasing housing needs.Tijana Martin/The Globe and Mail

A leading economist warned federal ministers at their cabinet retreat last week that there are around one million more non-permanent residents living in Canada, including foreign students, than government estimates suggest.

The warning came in a briefing from Benjamin Tal, deputy chief economist at CIBC Capital Markets. He told the Liberal government gathering in Charlottetown that the undercounting in the official statistics means Canada is underestimating the number of new homes required to meet the country’s increasing housing needs.

Mr. Tal said in an interview that the government estimate of the number of non-permanent residents in the country in 2021 was around one million. But his analysis found there were closer to two million. The main reason for the discrepancy, he said, is that the government is not counting people who remain in the country after their visas expire.

Mr. Tal said Statistics Canada assumes that temporary resident visa holders, including international students, leave the country 30 days after the expiries of their visas. “Their software, their coding, makes the assumption that 30 days after your visa expired you left the country, despite the fact you have not left the country,” he said.

He said a majority of temporary residents don’t leave in this timeframe, and many apply to extend their stays in Canada.

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In a report on his findings, published Wednesday, Mr. Tal says “the practical implication of that undercounting is that the housing affordability crisis Canada is facing is actually worse than perceived, and calls for an even more urgent and aggressive policy action.”

The federal government has increased its immigration targets to historically high levels. It is now aiming to admit about 500,000 new permanent residents this year, and in each of the following two years. But those numbers don’t include foreign students on visas or people on temporary work permits.

There is currently no federal limit on the number of student visas issued each year. At last week’s cabinet retreat, Housing Minister Sean Fraser told reporters the government should consider a cap on the program, which he said has seen “explosive growth” and placed pressure on housing markets.

The high cost of renting and buying housing has become a fraught political issue. The federal Conservatives have argued that Prime Minister Justin Trudeau’s Liberals need to do more to address housing shortages.

Mr. Tal told The Globe and Mail that Statistics Canada’s practice of assuming holders of expired visas leave the country after 30 days accounts for only about 750,000 of the million or so non-permanent residents he estimates are absent from official numbers.

Another 250,000 – mostly international students – are missing from census data, he said. The most recent census forms said students should submit their information if they were living in their main residences. But they were told not to fill out the census if they return home to live with their parents during the year.

Mr. Tal said the system was confusing for students, and that not all of them filled in the census, in some cases because they believed their main residences were abroad.

“This is why even Statistics Canada believes that the census continues to undercount NPRs with valid visas in Canada,” he said, using an abbreviation for non-permanent residents.

He said the shortfall in the census has implications for housing policy, because the Canada Mortgage and Housing Corporation, the federal Crown corporation responsible for housing, uses census data to make its forecasts, which are widely relied upon by planners throughout Canada.

“If your starting point is too low, your forecast will be far too low, resulting in a suboptimal planning process,” Mr. Tal said.

His report on the findings says its figures are conservative.

A briefing paper by Henry Lotin, the founder of Integrative Trade and Economics and a former federal economist, agrees with Mr. Tal’s findings. It says “upwards of one million persons are missing in the official population, largely due to expired visa holders remaining in Canada awaiting new visas.”

Statistics Canada should change its counting methodologies to include holders of expired visas, Mr. Lotin’s paper says.

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