Immigration a la carte

The national discussion around immigration these days feels to me like a runaway freight train. There is no nuance. Almost no discussion of underlying demographic forces, rural workforce demand, nothing. Just a panic that our ‘GDP per capita’ is falling behind and an assumption among many economists and thinkers that a dramatic cut in inward migration from other countries will magically lead to highly efficient industries paying high wages and generating good profits.

I’m not so sure.

I have said before that my view is that we need a more expansive view of immigration focused on ensuring we can meet labour market demand across the country including smaller communities and rural areas. I also think we should lead the world in the provision of post secondary education to the world. My only caveat there is that we a) need to be honest that not all students will become permanent residents and b) that we must have proper housing and services to support the students without hurting the rest of the population.

Obviously, we need aggressive tax policies and other programs to encourage productivity gains through automation and other tools and technologies. I am just not in the camp that says cutting labour supply will solve productivity issues.

I think you risk ending up with more imports as manufacturers reduce capacity as a result of labour shortages. If government responds with more tariffs on imports, it could just push up inflation. I also think you end up with less exports as exporters reduce activity as a result of labour shortages and move investment to areas with a better environment.

I also believe that over time you end up with less services in local communities. A permanent tightening of labour supply could lead to less services – health care, personal services, retail stores, etc. starting in rural areas and smaller urban areas but eventually across the country. That could lead to less choice and innovation and, ultimately, higher prices. As I have said before, the risk here is that northern New Brunswick, as an example, starts to look like northern Canada.

And as for those cheap delivery services, kiss those goodbye. The CBC Frontburner podcast today had a long discussion about the future of Canada Post. The central theme is that CP has a cost of $65/hour, the courier industry $45/hour and the freelancers (e.g. Amazon drivers) $25/hour. There wasn’t even a hint about what the changes to immigration could mean to this industry. IMO, this industry, including UBEReats, etc. will face significant labour shortages in an era of substantially reduced immigration and international students. If you want to save Canada Post, kill its competition.

Of course, the tech companies could respond by rolling out drones even faster and then the Chipman-ese and Minto-nians will be grumbling about all the whizzing and lights in the sky all day and night.

Immigration a la carte

If we get a new PM next year, I am told immigration will be cut even further than the Libs. One Tory with some knowledge told me there is the goal of getting back to the Harper levels of immigration. When Harper came into office there were 140,000+ more births than deaths each year. Now, even with the recent boost in migration, there are basically as many deaths as births. When Harper took office in 2006 there were 2.5 million aged 55 and older in the workforce (i.e. heading towards retirement). Now there are 4.6 million (as of 2023). Again, not to be too specific with math here but 2.1 million more closing in on retirement.

During the Harper years, there were around 250,000 permanent resident admissions per year. In the 2023/2024 year (i.e. as of July 1, 2024), there were 464,000 permanent resident admissions. The Libs have announced this will be reduced in the coming years.

Let’s assume a Tory government would go back to 250,000 PRs, 50k temporary population and they cut international students by 60% to get that number back to the Glory Days of Harper and Co. What happens then?

If this happens, it will be critical to focus immigration and temporary population inflows on exporters (including services such as IT) and critical industries like health care and construction. Current food services, trucking, and other services industries take up a lot of the work permits and represent the occupations associated with new PRs.

We will need truckers (good luck Amazon), we will need manufacturing workers, agricultural workers, IT workers, construction workers, etc. I guess the rest of the economy will have adjust but if we hurt our export industries - we will be in a world of hurt.