The price

Did the feds overdo it with immigrants?

One major bank suggests economic growth will be nipped by Ottawa’s panicky throttling of the number of newcomers. And, in fact, the population of Canada will stark shrinking:

The net impact of the plan would effectively stall population growth over the next two years. By the government’s own estimates, population would contract by -0.2% y/y growth over the next two years as net new permanent residents outflows modestly exceed permanent resident inflows (once those already in the country are excluded).

As we all should know, Canada avoided recession last year because of the taxation, spending and investment of new citizens and temporary residents.

“New immigration targets set by the federal government are set to slash Canadian population growth in 2025 and 2026, from 3.0% today to around zero,” says another bank report (this one from BMO Economics). “Annual permanent resident targets will be cut to 395k in 2025, slowing further to 365k by 2027. That’s down from an expected 485k this year, and a meaningful shift down from previously-planned levels of 500k per year going forward. For the first time, Ottawa is also putting temporary resident targets in the official Immigration Levels Plan. This plan aims to reduce the share to 5% of the population by 2026 from just over 7% today. This is where the really significant impact lands as it implies net outflows of roughly 445k per year over the next two years.”

Whazzit mean?

First, fewer people = lessened economic activity = lower demand = more easing of inflation. This is not what the Bank of Canada had in mind as it tightened the screws on interest rates, then rapidly released them. The rate of inflation last month was just 1.6%. Too low. The bank wants 2%. The danger now is we’re headed for below 1%. With the revised newcomer rules, we may taste deflation.

Business hates the emergency, politically-motivated Trudeau cuts, which have come on the crest of a new unCanadian, xenophobic, anti-immigrant, Trump-inspired wave sweeping our nation.

“The rush to make massive changes to Canada’s permanent immigration levels and the Temporary Foreign Worker Program have many small business owners’ heads spinning,” says the Canadian Federation of Independent Business (the country’s largest de facto employer). “And while it is entirely appropriate to turn the immigration dial up or down based on the needs in the labour market, any huge swings hold significant implications for employers, workers and the economy.

“CFIB is already receiving panicked calls from small business owners, including many who are heartbroken to have to say goodbye to their foreign workers who are already in Canada and whose visas are soon to expire. Others are telling us the new skilled temporary worker prevailing wage level requirements do not reflect the reality of a small business and will mean their firms will struggle to survive.”

There are currently 380,000 unfilled jobs in Canada. Small businesses have struggled to find Canadians to fill a lot of them. With the exodus of temp workers and students, along with a 20% hack to new immigrants, the fears are growing. Who will do this work? How do you run a restaurant, construction site or commercial orchard without hands and muscles?

Meanwhile major universities are suddenly facing a funding crisis as an arbitrary slashing of international student quotas means emptier classrooms and the need for more public funds to stave off disaster. The loss to Ontario schools alone will be $1 billion over just two years.

“We need the federal government to work with the provinces and higher education institutes to rebuild our brand,” says Steve Orsini, head of the Council of Ontario Universities, “to attract the best and brightest from around the world. That’s crucial to our economic growth and prosperity.”

The implications, then, may be a slower economy, higher unemployment, potential recession, impacted stock prices and interest rates dropping faster and further in order to stem negative inflation. “We suspect this will ease inflation pressure and give an even freer pass for the Bank of Canada to cut rates through the first half of 2025,” says BMO’s Robert Kavcic. “It will also dent some areas of consumer spending (e.g., telecom services, consumer staples) and put downward pressure on residential rent—these areas of the TSX all underperformed this week.”

The masses may cheer, of course. People think the temps earning minimum wages and sending money to families back home are forcing $1 million house prices higher. The two-uni-degree WFH laptop-gen folk don’t spend a lot of time thinking about who delivers building materials, drives the FedEx trucks, works in the Amazon warehouse or mans the line at the chicken processing plant. It won’t be them or their special kids, that’s for damn sure.

But they still get steamed when they see someone with a turban in the ER. We want their contribution. We just don’t want them.

In his NYC Madison Square Gardens campaign event yesterday Donald Trump announced his presidency would put to death any migrant committing a capital crime. The place went nuts with cheers. “Our country is occupied,” he said. “On Day One of my presidency it will be liberated… with mass deportations. The greatest in our nation’s history.”

This isn’t America, of course. But the rhetoric, extremism and intolerance are seeping north. Trump made disparaging brown people okay. It’s now mainstream. And shame on our own political class for feeding it.

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Source: https://www.greaterfool.ca/2024/10/28/the-price/