—Canada has to divert capital, and some of the 1.6 million workers engaged in construction, into the non-residential business investment that’s the lifeblood of a healthy and sustainable economy
Immigration Minister Marc Miller embraces the mantra that Canada needs immigration to keep the economy going. That’s how experts say we’re supposed to get economic growth along with improvements in productivity and higher per capita GDP. But is that true?
There are 2.5 million temporary residents in Canada, comprising 6.2 percent of the population, or barely fewer than the population of Toronto. Minister Miller’s claimed objective is to bring that percentage down to 5 percent.
But that doesn’t mean stemming the flow of immigrants so as to lessen demand for housing and services. He wants “robust pathways” to permanent residency. In an interview on March 27 with U.S. National Public Radio, he said there’s apparently no limit to Canada’s open-door policy: “There is no doubt that we have made a conscious decision to be an open country and a country that needs to grow.
The first problem is that GDP as a measure of economic activity and national prosperity has limitations. Adjusted for inflation and also the increase in population, Canada’s per capita GDP was in free fall in 2022 and 2023—at minus 2.6 and minus 3.9 respectively.
GDP says nothing about its distribution among the population. Substantially fuelled by bloated government spending and immigration, inflation enriches those who own housing and other hard assets, but it leaves behind those who do not own them. Notably, with demand overwhelming supply, immigrants’ housing needs and other requirements generate inflation and widen the gap between rich and poor.
It’s also necessary to consider what GDP comprises. There’s a rough and ready distinction between investment and consumption although the distinction is fuzzy. Broadly speaking, new and more efficient machinery improve productivity, enabling workers to deliver more value for the time they spend working. The consumption part of GDP includes a long list of necessary activities—everything from buying groceries to fixing broken windows, retailing goods made in China, and maintaining the superstructure of government.
Conventional wisdom is that immigration is necessary to make up for the decline in the home-grown population resulting from the birth rate far below replacement. But two vicious circles follow. Much of Canada’s GDP involves building housing and infrastructure, and supporting immigrants—all consumption components. Newly arriving immigrants require housing, infrastructure and services right away. The first vicious circle then is that even counting other construction workers with the mere 2.4 percent who are qualified artisans, immigrants don’t come close to building the housing they occupy. The second vicious circle is that along with paying onerous taxes, oppressive housing and living costs deter procreation for would-be parents in the existing population.
Many employers promote immigration. That’s because immigrants tend to be more industrious and reliable than young home-grown Canadians. Immigrants and their children are generally prepared to work at current pay rates without clock-watching. A separate unasked question then is why we fail to equip so many able-bodied Canadians of employable age with marketable skills, motivation and work ethic.
It’s also necessary to consider that for decades, technology, robots, and more efficient use of labour have been eliminating jobs. Some estimates have it that up to a third of all current jobs will disappear over the next 10 to 15 years. All this said, I look to history and other countries for how changes in population impact productivity and community well-being. In recorded history, the biggest advances in real per capita income occurred in Europe after the bubonic plague killed about half the population between 1347 and 1352. Feudalism ended and there was a huge surge in wages rates, women’s rights and productivity.
In recent times, the population of Japan has been expanding only slowly, and is currently declining. In 2023, business capital investments hit a record high at US $223 billion, up 17 percent from the previous year. It may be reasonable to expect that productivity gains across the economy will make it possible to sustain its ageing and shrinking population. For Canada, in contrast, per capita business investment, adjusted for inflation and population, has been declining and was sharply lower in 2022-23.
There’s another problem. Too many immigrants take advantage of our generous welfare. When you include housing, education, health care and the necessities of life, it can cost taxpayers well over $2,000 each month to support an immigrant who doesn’t immediately get a job. That’s many times more than it costs to support someone in a refugee camp.
The Fraser Institute has been saying for years that newly arriving immigrants cost taxpayers tens of billions of dollars more each year than they pay in taxes. According to Canada’s parliamentary budget officer, the federal government’s cost just for processing an irregular immigrant’s claim, over an average of 50 months, can be tens of thousands of dollars. Then add several times that much in provincial and municipal costs for sustenance in the meantime. So how much of this load can taxpayers go on carrying? There’s no limit apparently, according to Minister Miller.
Of course, Canada has the duty to take in refugees at risk of persecution—actually a small proportion of all immigrants. And employers must be able to hire immigrants for specific top-end jobs where Canada does not have the home-grown expertise.
It’s no long-term answer to support people in camps. Therefore, troubled countries—Haiti, for example—need security and business investment to enable peace and self-reliance. Countries like Canada need to generate their own wealth to make that possible and not just for the good of their own citizens. Over time—it can’t happen all at once—Canada has to divert capital, and some of the 1.6 million workers engaged in construction, into the non-residential business investment that’s the lifeblood of a healthy and sustainable economy.
Colin Alexander’s degrees include PPE (Politics, Philosophy, and Economics) from Oxford. His latest book is Justice on Trial: Jordan Peterson’s case shows we need to fix the broken system.
Reference Links
Read next: Canada's Immigration Policies: Are We Truly Honouring Indigenous Rights?
Email Us | Reader Friendly | Comments
