Canada doesn’t like immigration anymore. This is a problem

Kevin Yin is a contributing columnist for The Globe and Mail and an economics doctoral student at the University of California, Berkeley.

Support for immigration in Canada has cratered. Ottawa started polling Canadians in 1996 on their views on immigration. According to Immigration, Refugees and Citizenship Canada, last year was the first time that a majority of Canadians believed there were too many immigrants. A more recent Nanos poll finds that 71 per cent now favour reducing their number. If the government cannot win back support for one of Canada’s flagship policies, our long-term economic growth and geopolitical influence are at risk.

Let me begin by acknowledging that record levels of immigration after the pandemic did exacerbate an already-serious housing crisis and that Canadians are justifiably concerned about taking care of who is already here when poverty rates and the number of homeless have risen. Immigration policy was mismanaged post-pandemic, and Canadians were right to be concerned.

However, in the long run, our ability to grow our economy, provide social services, and raise our leverage on the world stage, all require more, not less, immigration. The Nanos poll was taken in September, and the number of new immigrants has already fallen precipitously this year. Average quarterly population growth is now the lowest it’s ever been (for the years we have data), including the pandemic years. This is all worth remembering as public opinion sours.

How Canada got immigration right for so long – and then got it very, very wrong

Economic growth, in the sense of rising living standards per person, depends on immigration. Japan’s lost decades, for example, are almost entirely due to the fact that the portion of non-working retirees increased rapidly and that the country refuses to offset this with new immigrants. Europe is now facing a similar challenge. As Canadians know, immigrants start more businesses, are more innovative, and their children better educated than their native born counterparts. Thus addressing Canada’s weak productivity, low rates of innovation and brain drain to the U.S. rely on our ability to attract foreign talent.

Our capacity to provide for low-income seniors also depends on bringing in people from abroad. The Old Age Security is funded through general tax revenues, which means today’s young pay for today’s elderly. To maintain funding, we need as many people paying into the system as there are people taking from it. Yet with a fertility rate of only 1.26 births per woman (much lower than the Group of Seven average and not much higher than Japan’s, the poster-child of demographic decline) the pool of young workers funding the system would shrink dramatically year after year without new immigrants.

In a world where Canada can no longer rely on others for its security, population size is also key for geopolitical power. Trade agreements are negotiated to gain access to large markets – which is partly why China and India wield so much influence, and why countries have rushed to accommodate Donald Trump’s tariffs, a country that is nearly ten times larger than us. Military strength, too, depends on demographic depth: Active forces can only ever be a small share of the population, and Canada’s military currently faces a shortfall of nearly 14,000 personnel. If we want Canada to carry more weight in the world, Canada must be bigger.

Where does Canada’s immigration system go from here?

Furthermore, not all the problems that we are worried about have as much to do with immigration as it appears at first glance.

Youth unemployment for example, is being driven Canada doesn’t like immigration anymore. This is a problem primarily by a weak economy (i.e. tariffs), not immigration, as Prof. Fabian Lange of McGill University recently pointed out. The timing doesn’t fit well with a labour supply explanation – youth unemployment recovered quickly after the easing of COVID-19 restrictions, even as immigration rates soared, and is only again faltering this year, as population growth has plummeted. Furthermore, the folk wisdom that says only highly-educated immigrants contribute positively and that “the country doesn’t need more Uber drivers” doesn’t make much sense. From both a growth and cost-of living standpoint, cheaper labour from abroad keeps our goods affordable and actually fills much needed gaps in the labour market.

One must admit that immigration clearly hasn’t helped the housing shortage. But the question we should be asking is why our housing markets respond so rigidly. Few other markets work so poorly.

Developers want to build more. So why can’t they? The housing shortage is not merely a result of the time it takes to build homes. Zoning restrictions, liquidity challenges for developers and rising construction costs have all prevented them from doing so.

The purpose here is not to fearmonger, or to dismiss the genuine concerns surrounding immigration. But it is important to keep our eye on long run objectives and to frame the current debate correctly. We should prioritize addressing housing for now, but large scale immigration will always be essential in growing Canada’s potential.