Canada's plan to reverse population growth sparks doubts from economists and raises policy challenges
Prime Minister Justin Trudeau’s strategy to address Canada’s immigration challenges relies on the largest exodus of people since the 1940s.
This plan, according to BNN Bloomberg, has drawn scepticism from economists who doubt its feasibility.
The government’s forecasts project a net loss of about 900,000 non-permanent residents over the next two years. This estimate involves 2.4 million non-permanent residents leaving or changing their status, alongside 1.5 million new temporary arrivals.
The anticipated decline equates to slightly more than 2 percent of Canada’s population, comparable to removing Indiana from the US.
The new plan, aiming for a slight population decline after considering all factors, marks a significant departure from the recent population boom. This boom has placed pressure on housing, employment, and public services.
Once an advocate for large-scale migration, Trudeau is now reversing course amid declining public opinion on immigration and weak polling for his Liberal Party.
To achieve this shift, a record 1.3 million non-permanent residents are expected to lose their status in 2024. The government has allocated 158,000 permanent-residency spots for non-permanent residents, and some may obtain new temporary visas.
However, most will be expected to leave Canada.
Unlike US President-elect Donald Trump, Trudeau’s administration has not announced mass deportation plans. Instead, it has focused on enhancing border security to address concerns about undocumented migration into the US.
Economists, including Henry Lotin, question whether the government’s targets are achievable.
Lotin, an advisor to Statistics Canada, noted that a significant portion of Canada’s 3 million temporary residents likely intends to stay permanently. Lotin estimates that about 2 million non-permanent residents aim to transition to permanent residency.
Bank of Canada Governor Tiff Macklem has expressed uncertainty over the timeline for these changes.
Parliamentary Budget Officer Yves Giroux highlighted risks in the government’s projections, particularly regarding outflows of non-permanent residents.
Public demonstrations reflect the challenges of the plan. In cities like Brampton, Ontario, foreign students, and workers have protested, demanding permanent residency pathways.
Slogans such as “good enough to work, good enough to stay” echo their frustrations.
Immigration, Refugees and Citizenship Canada acknowledges the difficulty of tracking undocumented migrants. Academic estimates of undocumented individuals range from 20,000 to 500,000.
Benjamin Tal of the Canadian Imperial Bank of Commerce warned in 2023 that Statistics Canada could be underestimating the population by up to 1 million.
The Canada Border Services Agency (CBSA) has issued fewer than 4,000 removal orders for visa non-compliance this year. It stated that overstaying carries “serious consequences,” including barring re-entry. However, detention is used only as a last resort.
Conservative Leader Pierre Poilievre has called for a clear strategy to ensure departures when visas expire. He has also raised concerns about potential impacts on US-Canada relations if undocumented migrants cross the border into the US.
Population growth estimates are critical for forecasting inflation, GDP, and demand for housing and services. The Bank of Canada has declined to fully incorporate Trudeau’s policies into its projections, citing doubts about their achievability.
If the population declines as planned, economists anticipate varying outcomes. Rebekah Young of the Bank of Nova Scotia suggested this could tighten the labour market, driving inflation higher.
In contrast, David Rosenberg of Rosenberg Research predicted reduced consumer demand would ease price pressures.
Henry Lotin concluded that while a population decline is unlikely, determining an optimal growth level is crucial for Canada’s macroeconomic stability.
