Population Control

Let’s talk a bit about the immigration announcements that the Government of Canada has proposed.

If in fact they are realized, they would have a profound effect on the economy, because new Canadian residents do spend money, and even if it takes a while for new Canadians to get a job, they do add to supply and add to demand.

Canada used to target 500,000 new immigrants every year, and that was supposed to continue for the next three years. However, 2025 planned permanent immigration is down to 395,000 and 2026 and 2027 are 380,000 and 360,000 respectively.

However, these numbers are dwarfed by the foreign students and temporary foreign workers that come to Canada (800,000 students and temporary compared to 500,000 permanent). Basically, we were letting in 1.3M new people per year, which is just huge, for a population of 40,000,000.

*It’s important to note that only 58,000 temporary Canadians will be turned into permanent residents.

New: The Government wants to cut the number of temporary residents (foreign students, temporary workers, and asylum claimants). 

Right now, temporary workers make up 7.2% of Canada’s population. The government wants to lower that number to 5.0% by 2026.

This means that 2,400,000 non permanent residents will have to leave Canada in the next two years if they aren’t granted permanent residency; of which, we already know only 58,000 will be granted permanent residency per year.

In addition, Ottawa has already capped student permits in 2025 to 364,000, down from 1,000,000 the year before.So do we really believe that 2,400,000 temporary foreign residents will leave in the next two years? It seems that this may be highly unlikely.

And, how is it all going to add up?

At the end of 2025, there will be 1,260,000 people who will have expired temporary residency permits. Are they all going to leave on their own? Will we have mass deportations in Canada? How would we track all of these people down? In 2024, there were only 3,650 removal orders given in all of Canada – there’s just no bandwidth to police this type of policy.

But even if a part, or most do leave, what will the unintended consequences be? 

Well, first off, all of those “universities” that depend on foreign students are going to be in real trouble.

And what about the labour shortages? Particularly in the trades and in healthcare? What about seasonal workers? Most of these will be temporary workers, hoping to become citizens.

This is a major uncertainty for the Canadian economy, and was stated as the number one issue by Tiff Macklem, facing Canada today.

I don’t have any answers here… nobody knows how this will shake out. For sure, though, the Bank of Canada will continue to assess how this deflationary policy will affect Canada and when and by how much to cut rates further.