The cost of the immigration boom

According to a new TD Economics report, Canada's historic population growth risks exacerbating the country’s biggest problem areas.

What happened: With Canada on track to welcome over one million permanent and temporary residents in 2023—between immigrants, students, temporary workers, and refugees—economists from a Big Five bank are urging the feds to pump the brakes.

  • TD estimates the current population growth rate could spur a housing shortfall of 500,000 units by 2025, with efforts to boost construction unlikely to fill the gap.

  • Adding demand to the economy could also force the Bank of Canada to raise its equilibrium interest rate (which anchors the economy) by half a percentage point.

  • Immigration could add stress to services, including Canada’s ailing healthcare sector—we already rank 31 of 34 OECD countries for hospital bed availability. 

Why it matters: Immigration is vital for balancing an ageing population and boosting slowing productivity. But a growing chorus of economists fears that a hyper-focus on immigration could have unintended consequences and distract from other solid policy solutions.  

  • For example, another TD report pegged increased childcare availability as a pillar of boosting labour force participation, as it frees up caretakers (in Canada) to work. 

Bottom line: By welcoming two million people in two years, all levels of government now have a responsibility to make sure people can find the jobs they’re qualified for, and that the country’s housing markets, infrastructure, and services are ready to absorb the shock.—QH