Aug 25, 2024
How Inefficient Immigration has Caused Canada’s Devastating Quality-of-Life Crisis
Inefficient immigration has made Canadians experience one of the worst quality-of-life reductions in the developed world. This is due to Canada’s immigration policies, which have failed to align with market demands and infrastructure capabilities and have had disastrous side effects. Today, young Canadians struggle to find full-time jobs—never mind summer jobs (True North, 2024), despite the nation having reached a “soft landing.” This has led to concerning amounts of bankruptcies overtaking the nation (Insolvency, 2024), which a reduction in consumer spending can partly explain. Costs have also increased drastically over time: rent has been rising by around 10% each year, as well as food and gas prices. Even in July of 2024, with extreme tightening of monetary policy, rent is up almost 7% compared to June of last year (Average Asking Rent, 2024). In 2000, the average salary-to-house ratio was 5.8x, but over the years, it has climbed to a staggering 10.8x today (Jarvis, 2024). Canadians have been growing poorer year-on-year. While Gross GDP increased, GDP per capita has decreased significantly (Gonzales, 2024), meaning Canadians can purchase less this year than last year. On top of that, one in four Canadians is now considered to be in poverty (Gonzales, 2024), a big difference from just a decade ago.
Our wages have not kept up with U.S. salaries in sectors such as technology and finance (Previl, 2024), causing imports to be more expensive and, therefore, higher relative prices to consumer goods. Additionally, business investments from the U.S. in crucial industries such as energy and technology have plunged since 2015. Energy specifically has seen a massive decrease in investment (World Economic Outlook, 2024), especially mining, leading to fewer jobs. The Fraser Institute also calculated that Canadians pay 46% of their income into taxes, which has been steadily increasing. And like a final nail in the coffin, our healthcare system has also struggled with record wait times. It is ranked second last, only ahead of the United States (Neustaeter, 2021) among developed countries, even with all of the healthcare investment that is taking place. In the last ten years, our bureaucracy has increased by 44%, and government spending on salaries has increased by 68% (Public Service, 2023), but government services seem strained.
None of this makes sense because Canada has some of the youngest workers in the G7 and the most open immigration system in the world to skilled professionals meant to fix the above-mentioned problems. So why is Canada going through these problems above? In this article, I'll write about how our quality of life is being destroyed by what was promised to fix it because of the government's ineffective understanding of supply & demand. The immigration system, which we tout as the solution to all of our problems, is fundamentally the broken piece in Canada's public policy. It is completely broken because it does not work as intended. As a nation, we are fundamentally bringing immigrants into markets that do not need more people for optimal growth into infrastructure that has not been designed to hold them. To understand what changed in Canada, we must know what Canada was like before the 2016 immigration reforms. The Canadian Century by the Macdonald-Laurier Institute, written during the end of Canada’s big economic boom in the first decade of the 21st century, gives us many good answers to how Canada’s economic boom took place and what changed from then to now.
Rediscovering Prosperous Canada
The book was written in 2009 and detailed the vast potential Canada had in front of it. The book is based on how Wilfred Laurier, one of Canada’s great prime ministers respected by both ends of the political spectrum, predicted how Canada could efficiently and effectively grow in competition with the United States. To summarize, Canada, after a problematic era of depression during the lost decades throughout the '60s to early ‘90s, critical reform in 1995 made Canada emerge as the fastest-growing G7 economy (World Economic Outlook, 2005.) The 90s for Canada were a very defining decade - a decade where we balanced our government budget for the first time in a quarter century and finally began to realize our spot in the sun after decades of stagnation. Canada’s growth, even inflation-adjusted, was the highest of any G7 Country. Canada ranked sixth out of thirty OECD nations, with an average employment growth totalling 2.1%, doubling the OECD average of 1.1%. This employment growth exceeded that of the United States, which was 1%. During this time, FDI in Canada averaged 5.4% yearly, while FDI in other OECD countries hovered at around 3.2%. Percentages add up, and Canada’s growth in such investment was the highest in any other G7 nation, including the U.S. (Crowley, 66). Many new jobs were being created, and Canadians became some of the wealthiest consumers in the world.
Interestingly, in 1997, 15.3% of all Canadians were considered low-income. By 2007, that proportion had dropped to 9.2% (Income in Canada, 2007), a nearly one-third reduction —very impressive in 10 years. The Canadian dollar was also traded at parity with the U.S. dollar (The Globe and Mail, 2024), and sometimes, the U.S. dollar was valued less than the Canadian dollar. This means that Canadians had favourable purchasing power abroad and cheaper imports. The average Canadian family income could afford to pay off a house in 3 years. Rents were drastically lower, and Canadian cities regularly topped quality of life charts. To many Canadians, the time between 1997 and 2007, and to an extent until 2016, were the golden years for the country.
In international ratings, Vancouver was rated as the most liveable city in the world in 2005 (SWI swissinfo.ch, 2005.) Toronto, Montreal and Calgary came 9th, 10th, and 11th respectively. And the quality of life kept on getting better. In 2012, Vancouver, Toronto, and Calgary were rated consecutively as the world's 4th, 5th, and 6th most liveable cities. In 2015, Vancouver and Toronto were rated 3rd and 4th most liveable, while Calgary was rated 6th. Canada was one of the best places in the Entire World. It is essential to consider that the average immigration rate per year from 1997 to 2015 was 1.03%, significantly lower than today. Despite that, the country experienced higher growth than we see today with our mass immigration system. Even at those times, however, analysts predicted that the housing market could begin to heat up because Canada was still growing too fast. Either way, everything changed in 2016 with the reforms of the Canadian immigration system and the unsustainable growth which came with it.
2016 and the beginning of Unsustainable Growth
While the turn of the century marked a period of prosperity, this trend reversed drastically following immigration reforms in 2016 by the incumbent government. From 2016 to 2023, it was 1.28%, with 2023 specifically having a population growth of 2.9%. Keep in mind this data includes COVID-19, which takes a few years off of the population growth rate. Despite economists predicting that even a growth of 1.03% is unsustainable, the government managed to push it up to three times that amount. It is not wrong to say that in the last 20 years, Canada’s demographic makeup of immigrant and Canadian-born residents has drastically changed. According to Statistics Canada, immigrants now make up Canada’s population more than the confederation in 1867. In 2021, more than 8.3 million people were immigrants in Canada, with a total population of 38.2 million. As of April 2024, Canada’s population has reached 41.1 million (Gonzales, 2024), a staggering growth rate of 7.59% in only two and a half years. International migration was almost all the growth in Canada’s population, with around 99.3% of the population growth in the first quarter being immigrants. Canada’s population grew faster in 2023 than Afghanistan's. Canada grew at a rate of 2.9% in 2023, as stated before (Stat. Canada, 2023), while Afghanistan, one of the most fertile countries in the world, grew at a rate of 2.67% in 2023 (Statista, 2023). Even compared to one of the most fertile countries in the world, our growth rate is unnatural, even considering the nature of exponential human population growth. No wonder housing, public infrastructure, healthcare and wages are under strain. This is inefficient immigration and has led to the housing hyperinflation we experience today, which is a core factor contributing to the decrease in the quality of life of Canadians.
Unsustainable Growth is Solely Responsible for Housing Hyperinflation
In 2023, we received more permanent residents than in the last five years combined. Social services & infrastructure were strained before, and with the substantial increase in new residents who are now entitled to government services which have not developed fast enough, Canada deeply struggled with this growth. The most significant factor contributing to the rise of housing prices is demand. In a 2022 Scotiabank report on housing, Canada was reported to have the lowest housing supply per 1000 people in the G7, with Ontario having the weakest dwellings per 100 people in Canada. This is despite having the highest immigration rate in the G7 (Thevenot, 2023). This will undoubtedly increase housing prices —higher demand for homes will lead to builders bidding more on resources & land to become more expensive, too. According to this video by the CBC citing RBC Economists, industry costs in construction are up more than 50% (CBC, 2024).
Bidding wars on resources led to these costs in the first place—so much construction needs to be finished. As a result, many builders cannot even build at full potential without exorbitant prices. A common misconception is that there are not enough construction workers. However, looking at Canadian job bank data, around 10% of Canadians are employed in construction work —about 2 million Canadians. Germany has around 2 million people employed in construction, so per capita, Canada has twice and a bit more as many construction workers. Therefore, the underlying issue is not a labour shortage but unsustainable growth. We are building, but it is not fast enough due to the amount of immigration, not the lack of it. What is easier? Training more construction workers at a rate significantly above the world average or slowing down immigration to deal with the massive backlog of construction that needs to be finished? We are already short a couple of million housing units—it is clear that the solution to this issue is not by bringing in more people who themselves need housing but by slowing down growth to accommodate the backlog. These issues lead to unhoused or inefficiently housed Canadians—lowering productivity and economic output. The home is a fundamental human right, yet we cannot even provide it to some of our most productive knowledge workers who have educations from Canadian universities.
The Horrible Side-Effects of Hyperinflated Housing
When housing is expensive, those who need it will work to extraordinary lengths to afford it. It is the core of Maslow’s hierarchy of needs, so every person in an economy will work for it. We are now seeing massive amounts of new Canadians, permanent residents, temporary workers, and international students fighting for housing. To afford these huge mortgages & rents, you need to work more. For rents and international students specifically, we see many entry-level jobs filled with them who, instead of studying, decide to work to at least have somewhere to live. Their education quality is suffering, and recently, the U.N. described these living arrangements as modern-day slavery. Instead of this money being circulated back into the greater economy due to consumer spending, many entry-level job workers spend most of their paycheck on housing. This money is not recirculated and leads to a downward spiral. Less consumer spending leads to less business growth, which leads to less business investment and lower salaries, inevitably leading to business cycle failure and economic depression. Our government seems keenly aware of this —so they are beginning to pump money into the economy by lowering interest rates and providing subsidies. However, then the government starts to attain a debt burden, which in itself is not sustainable in the long term. Wouldn’t it be better to temporarily stop immigration to let our new arrivals settle and make a life for themselves, decreasing the need for subsidization? This is the significant downward spiral of our terrible, inefficient immigration system. The vast majority of Canadians do not win, and the long-term international impact of the many newcomers in Canada being forced into slavery-like conditions will be a very dark stain on our reputation. We need change.
Closing Thoughts
To conclude, it is a well-established fact that Canada today is less prosperous than in the previous decade. The most pressing issue affecting Canada has been identified as the government's failure to allow inefficient immigration to continue, which is responsible for housing hyperinflation, which then causes many other indirect stresses on the Canadian economy. We need to fix Canada, and the solution is to initiate a more sustainable immigration policy. Suppose we want our nation to survive the next one hundred years and be a core part of the international community. In that case, we need to ensure that sustainability is every government's number one goal. When the government does not care for its citizens, how do we expect the long-term survival of Canada, which tens of millions of Canadians have sacrificed for? We need to care for one another, especially newcomers who have decided to make Canada their new home. We need reform.
References (Ordered in the article above)
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