Prime Minister Justin Trudeau responds to a question from the opposition during Question Period, in Ottawa, on May 22.Adrian Wyld/The Canadian Press
The Liberals whipped out a magic wand in the spring budget, waving away concerns about Canada’s surging population outstripping economic growth.
The arithmetic is clear enough: Canada’s population grew by 3.2 per cent in 2023, while real gross domestic product edged up just 1.1 per cent, weighed down by high interest rates. Statistics Canada said that was the slowest rate of economic growth since the oil-price collapse of 2016 (excluding the pandemic year of 2020).
The population surge was driven almost entirely by immigration, particularly an unprecedented spike in students and other temporary arrivals to fill low-wage jobs. The combination of sluggish economic growth and a population boom has resulted in a continuing decline in real per capita GDP, a trend that threatens to erode Canadians’ living standards.
Not to worry, the Trudeau government says … the economy will balance itself. The decline in real per capita GDP is “largely temporary, not systemic” and will rebound as immigrants’ earnings rise, as they have in the past.
But there is a hitch, a big one, in that argument. The most recent surge in immigration is different not just in scale but also in its composition compared to the recent history that the government leans on in making its prediction of a fleeting economic dip. Plus, Ottawa appears to be on the verge of taking steps that would make reversing that dip less likely.
Will an international student who came to Canada to study at a strip-mall college succeed in the way that an immigrant in the carefully vetted economic stream has? Perhaps, but a repeat of the historical success of immigrants in catching up to, and then exceeding, the earnings of native-born Canadians is far from guaranteed.
A carefully designed immigration policy could maximize the chances of such a happy outcome, but current trends are hardly encouraging.
In 2019, nearly all of the immigrants arriving under the express entry system for economic migrants were in the general pool, with a handful of spots – just over 1 per cent – set aside for skilled trades. So far in 2024, nearly two-thirds of express entry spots have been set aside for a slew of niche categories: French-language proficiency, transport occupations, health-care workers, STEM professions and agriculture and agri-food workers.
That change has important consequences. It is much easier to get accepted in one of the set-aside categories than in the general pool – the lowest score under the government’s points-based system is just 336. For the general pool, the lowest score is much higher, at 524.
It’s a complex set of numbers, but it boils down to this: Ottawa has made the choice to select lower-scoring immigrants who fit into specialized niches in the economy rather than those who, according to Canada’s own immigration system, have a better chance of long-term success.
That problem could be made worse, depending on how the Liberals choose to deal with the hundreds of thousands of temporary immigrants currently in Canada.
Immigration Minister Marc Miller has indicated that he wants to reduce the ranks of temporary migrants relative to the overall population. A necessary first step, ratcheting down the pace of new arrivals, has already been announced.
But there remains the question of what to do with temporary migrants already in Canada. Mr. Miller has talked about creating “a pathway for those who are in the country who wish to stay and contribute to the country and to the economy.”
That is a laudable sentiment: temporary migrants should be given that chance. Work experience in Canada will bolster their score under the existing system. But it would be a serious policy blunder to carve out even more exceptions and further squeeze the general pool of permanent resident spots. Such an action would cement the trend toward a low-wage economy largely populated by immigrants.
A better, if tougher, approach would be to allow temporary migrants to compete for a spot in the general pool. Some will undoubtedly qualify, and will help to build Canada in the coming decades. Others won’t and will have to leave.
The Liberals need to keep in mind two imperatives in sorting out economic migration policy: the needs of Canadians come first – and magical thinking won’t get the country’s economy back on track.