Ongoing Immigration Surge Could Widen Housing Shortfall & Lead To Higher Neutral Interest Rate: TD Economics

The taboo around discussing the impact of rapid immigration increases appears to be breaking down.

For some time now, discussion of the impact of surging immigration has been largely confined to the independent media.

The Liberals have had significant success in demonizing anyone who discusses the fact that immigration has both benefits and costs (outside Quebec of course where politicians can be far-right on immigration while getting a free pass from the federal Liberals and the establishment press). 

This has scared many people and organizations away from talking about the issue at all.

Unfortunately, when an issue is not discussed and debated in a democracy, policy begins to drift away from what the public desires. Yet, the strength of any relatively free democratic country is that democracy is largely a self-correcting mechanism. The more the gap between government policy and public sentiment widens, the more likely it becomes that people will speak out, and the gap will begin to narrow as the system responds.

And that appears to be exactly what is happening.

The taboo around discussing the pluses and minuses of increased immigration is starting to crumble.

For example, the Globe & Mail recently ran an opinion column titled “It’s time for Canada to take its foot off the immigration gas pedal.”

The column notes that Canada’s housing shortage has worsened due to surging population levels, and calls for a ‘scaling back,’ rather than ‘stopping’ of immigration while targeting it more towards skilled economic migrants.

After all, almost nobody in Canada is talking about ‘stopping’ immigration. Doing so would be irrational, especially given our rapidly-aging population. Support for well-managed and sustainable immigration is quite high across Canada, and those who support immigration – like myself – are simply talking about the need for a discussion on what level is best for the country.

This discussion could only be put off for so long before it became impossible to avoid amid the decision by the Liberals to massively expand Canada’s yearly intake of immigrants – something done with little public debate or consultation.

TD Economics report

In a sign of how the taboo around discussing immigration is further breaking down, consider this recent report by TD Economics, titled “Balancing Canada’s Pop in Population”.

The report asks whether Canada’s response to our aging population has “gone too far, too fast.”

As noted in the report, ongoing immigration increases could widen the housing shortfall, and lead to interest rates remaining higher than they otherwise would have been:

“Continuing with a high-growth immigration strategy could widen the housing shortfall by about a half-million units within just two years. Recent government policies to accelerate construction are unlikely to offer a stop-gap due to the short time period and the natural lags in adjusting supply.”

“In addition, we estimate that the neutral interest rate level would likely need to be lifted by an extra 50 basis points relative to prior assumptions on population growth.”

Social programs like healthcare are also being strained:

“And social pressures are not limited to housing. The OECD estimated that Canada ranked 31 of 34 countries in the number of acute care hospital beds on a per capita basis in 2019. That ranking is unlikely to have improved given the rapid expansion in population despite provincial and federal governments identifying and accelerating the recruitment of health care workers. Infrastructure too needs to expand. Canada’s starting position was already on the back foot in all of these areas.”

Government must also take a more holistic approach in assessing the impact of immigration increases:

“Greater thought and estimation needs to occur on what’s a true absorption rate for population growth. Policy cannot be singularly focused on the perceived demands of employers, and even educational institutions.”

Addressing immigration without demonizing immigrants

An important point is that a discussion of the challenges posed by surging immigration is not the same as demonizing any individual immigrant, or immigrants as a group. Once people are already in this country, they deserve all the legal protections and respect that Citizens, residents, and temporary workers in a democratic country deserve.

It’s the government – not individual immigrants – who should be criticized here.

In a sad irony, the Liberal attempt to create a taboo around discussing immigration risks damaging the consensus that existed around immigration in Canada.

That’s why we need to have an open, logical, and respectful discussion around immigration. And with more media outlets and organizations in this country showing a willingness to engage in that discussion, it’s time for the Liberal government to stop trying to demonize and polarize Canadians and start listening for once.

Spencer Fernando

Photo – YouTube


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