Canada bet big on immigration. Now it’s hitting the brakes.

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KITCHENER, Ontario — Canada’s broad support for immigration, which Prime Minister Justin Trudeau has said is necessary to counter an aging labor force and low fertility rates, has set the country apart.

The United States’ closest neighbor is growing faster than its Group of Seven peers, as well as developing and more fertile countries such as India. In 2023, the population here grew by more than 1.2 million people, up 3.2 percent from the year before — the highest annual increase since 1957. About 98 percent came from immigration.

But now, amid a housing affordability crisis and strain on social services, Trudeau’s government is rolling up the welcome mat for some immigrants.

It has capped the number of permanent residents it will welcome, announced a temporary limit on international student visas and pledged to shrink the proportion of the population made up of temporary immigrants such as foreign workers.

A “massive spike” in temporary immigrants has exceeded “what Canada has been able to absorb,” Trudeau told reporters this month. “That’s something we need to get back under control.”

Immigration has long drawn high levels of support here, a consensus that cuts across much of the political spectrum. Canada has been largely immune from the anti-immigrant backlash that’s been a driving force in the politics of the United States and Europe. But there are signs that’s shifting.

In September, an Environics Institute poll found that 44 percent of people here agreed “there is too much immigration to Canada” — up 17 points from 2022, the largest year-over-year change since it first asked the question in 1977. Many expressed concern that immigration was driving up housing costs.

“The shift has been in the public’s confidence about how immigration is being managed,” said Keith Neuman, a senior associate at the institute. “It’s not a shift in how people feel about immigrants. … It’s not about the type of people coming or their impact on the culture.”

Failure to restore that confidence, analysts say, could jeopardize the immigration consensus.

“I think we need to address these issues,” said Mike Moffatt, an associate professor at Western University’s Ivey Business School in London, Ontario, “because if we don’t, we are absolutely putting that consensus at risk — and that consensus has served Canada really well.”

‘All good things have their limits’

The plan was bold: By 2025, Canadian officials announced, the country would take in nearly 1.5 million new permanent residents. For the most part, they would be economic immigrants, selected through a points system that values skilled work, education and youth.

But behind the scenes of that 2022 announcement, the Canadian Press reported, federal public servants had warned that rapid population growth could strain the health-care system and housing affordability. Housing stock, they said, had not kept pace with the population.

Housing prices here are the highest in the G-7, according to data from the Federal Reserve Bank of St. Louis. For many millennials, once a key demographic for Trudeau, homeownership feels increasingly out of reach.

Much of Canada’s population growth is tied not to the number of permanent residents, but to the skyrocketing number of temporary immigrants such as international students, adding to the pressures.

There were more than 1 million international students here in 2023, up 245 percent from a decade earlier and 60 percent since 2019. Canada, a country of 40 million, had roughly the same number of international students last year as the United States, a country more than eight times its size.

Governments of all kinds have encouraged their arrival, said Lisa Brunner, a postdoctoral research fellow at the University of British Columbia, which “had a ripple effect because higher education and immigration got so intertwined.”

Everyone gets something from the arrangement. International students pay several times more in tuition than domestic students, a critical revenue source for colleges and universities whose funding has been slashed by provincial governments.

International students, meanwhile, may apply for post-graduation work permits and eventually permanent resident status, a process called two-step immigration.

Analysts say that while population growth has played a role, the roots of Canada’s housing affordability crisis are complex and fall under the jurisdiction of all levels of government, encompassing issues such as zoning restrictions and shortages of skilled construction workers.

In recent months, critics have called on the government to align immigration numbers with the country’s infrastructure. Immigration has benefits, economists at the National Bank of Canada wrote in January, “but all good things have their limits.”

Immigration Minister Marc Miller said last month that Canada would for the first time set targets for the number of temporary immigrants. He had already announced a temporary cap on undergraduate study permits and increased the amount of money that international students must have to study here.

The ministry also barred students in programs run by public-private college partnerships from applying for postgraduate work permits. Some, Miller said, run “the diploma equivalent of puppy mills,” offering poor curriculums in exchange for the prospect of permanent status.

In the federal budget plan introduced this month, the government said the number of temporary residents is expected to fall by about 600,000, “which will result in a significant easing in demand across the housing market.”

The proposal also includes measures to boost housing construction, some of which will require support from the provinces.

Limiting temporary immigration “will help to alleviate some of the upward pressure on rent,” said Avery Shenfeld, a chief economist at the Canadian Imperial Bank of Commerce. “The steps to accelerate home building will help in the long run, but they’ll take some time to kick in.”

Moffatt, who has advised the Trudeau government on housing, said it was caught “flat-footed.”

“I think they should have put these changes in place about five years ago,” he said.

Immigration, Refugees and Citizenship Canada said in a statement that it will “continue to align immigration with housing capacity and labor market needs.”

“At the same time, we must ensure robust pathways to permanent residence for those who wish to make Canada their home in the long term, and avoid the pitfalls of an economy built solely on temporary workers,” said Jessica Kingsbury, a department spokeswoman. “Immigration is critical to Canada’s long-term success.”

‘I don’t see my future here anymore’

Students at Conestoga College sipped on Tim Hortons and hung out in common areas at a campus in Kitchener, a city of 257,000 people an hour west of Toronto. The halls were filled with the sounds of chit chat in Hindi, Punjabi and Mandarin.

In 2017, international students represented 20 percent of the public college’s 11,860 full-time students. “Increased international student tuition revenue positively impacted net financial results,” the school said in an annual report.

Full-time enrollment has since quadrupled to 45,000 students, most of them from abroad. In 2023, Conestoga had more than 30,000 international study permits approved — more than any other college or university in Canada.

Under the new changes to international study permits, this number will be cut by more than half.

Simren Preetkaur started a two-year business diploma program here in September. The Indian student said she has been following Ottawa’s recent moves.

“To some extent, we agree with them,” said Preetkaur, 20, “because the citizens, those who were living here earlier, are not getting the benefits.”

Brunner, who works with international students, said the situation is difficult for many.

“There’s really a lot of uncertainty about your future,” she said. “This two-step migration really positions people to compete in the labor market with no guarantees of permanent residency at the end, and I think that’s been very stressful for individual students.”

Hardik Lathiya arrived in Canada from India’s Gujarat state last January to study web development. It was “totally white” with snow when he arrived, he said, and the wind was harsh.

Lathiya, 23, learned about Conestoga online. It had positive reviews, he said, and he was eager to gain some independence abroad.

His experience has been mixed. He has learned much but misses friends and family. He works part time at a restaurant but struggles to manage expenses. Finding affordable housing has also been a headache.

At first, Lathiya lived with five roommates, who shared three bedrooms. Now, he lives with three roommates but still shares a bedroom. His monthly rent is roughly $430.

He plans to stay in Canada for a few years to work before returning to India.

“I don’t see my future here anymore,” Lathiya said. “Right now, [life] is full of struggle.”

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