Federal public servants warned the government two years ago that large increases to immigration could affect housing affordability and services, internal documents show.

Documents obtained by The Canadian Press through an access-to-information request show Immigration, Refugees and Citizenship Canada analyzed the potential effects immigration would have on the economy, housing and services, as it prepared its immigration targets for 2023-2025.

The deputy minister, among others, was warned in 2022 that housing construction had not kept up with the pace of population growth.

"In Canada, population growth has exceeded the growth in available housing units," one slide deck reads.

"As the federal authority charged with managing immigration, IRCC policy-makers must understand the misalignment between population growth and housing supply, and how permanent and temporary immigration shapes population growth."

Immigration accounts for nearly all population growth in Canada, given the country's aging demographics.

The federal government ultimately decided to increase the number of permanent residents Canada welcomes each year to 500,000 in 2025, a decision that drew considerable attention and scrutiny. That means that in 2025, Canada will welcome nearly twice as many permanent residents as it did in 2015.

The document reveals federal public servants were well aware of the pressures high population growth would have on housing and services.

"Rapid increases put pressure on health care and affordable housing," public servants warned. "Settlement and resettlement service providers are expressing short-term strain due to labour market conditions, increased levels and the Afghanistan and Ukraine initiatives."

Demand outpacing supply

Housing affordability has now become a political liability for the Liberal government. The Conservatives have gained considerable momentum over the last year as the party pounces on affordability issues, while avoiding the issue of immigration in particular. These pressures have forced the Liberal government to refocus its efforts on housing policy and begin to address the spike in international students with new rules.

Recent data shows Canada's pace of population growth continues to set records as the country brings in a historic number of temporary residents as well, largely through international student and temporary foreign worker programs.

 

Canada moving in the 'right direction' on solving housing crisis, minister says

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The country's population grew by more than 430,000 during the third quarter of 2023, marking the fastest pace of population growth in any quarter since 1957.

Experts spanning from Bay Street to academic institutions have warned that Canada's strong population growth is eroding housing affordability, as demand outpaces supply.

Increasing concern

The Bank of Canada has offered similar analysis. Deputy governor Toni Gravelle delivered a speech in December warning that strong population growth is pushing rents and home prices upward.

Public opinion polls also show Canadians are increasingly concerned about the pressure immigration is putting on services, infrastructure and housing, leading to waning support for high immigration.

The Liberal government has defended its immigration policy decisions, arguing that immigrants help bring about economic prosperity and help with the country's demographics as the population ages.

Amid the heightened scrutiny of the Liberal government's immigration policy, Immigration Minister Marc Miller levelled out the annual target at 500,000 permanent residents for 2026.

Immigration, Refugees and Citizenship Minister Marc Miller holds a press conference on Parliament Hill in Ottawa on Thursday, Dec. 7, 2023. (Sean Kilpatrick/The Canadian Press)

The documents from 2022 note that Canada's immigration targets have exceeded the recommendations of some experts, including the Century Initiative, an organization that advocates for growing the country's population to 100 million by the end of the century.

However, attention is now shifting from these targets to the steep rise in non-permanent residents. Between July and October, about three-quarters of Canada's population growth came from temporary residents, including international students and temporary foreign workers.

That trend is raising alarms about the increase in businesses' reliance on low-wage migrant workers and the luring of international student by shady post-secondary institutions.

Mikal Skuterud, an economics professor at the University of Waterloo who specializes in immigration policy, says the federal government appears to have "lost control" of temporary migration flows.

Unlike the annual targets for permanent residents, the number of temporary residents is dictated by demand for migrant workers and international students.

Immigration and GDP

He also notes there is a link between the targets for permanent residents and the flow of temporary residents.

"To the extent that you increase permanent numbers, and migrants realize the way you get a PR is to come here as a temporary resident ... then migrants are incentivized to kind of come and try their luck," he said.

Skuterud, who has been a vocal critic of the federal government's immigration policy, says the benefits of high immigration have been exaggerated by the Liberals.

He said that starting around 2015, when the Liberal government was first elected, a narrative developed in Canada that "immigration was kind of a solution to Canada's economic growth problems."

While the professor says that narrative is one that people like to believe, he notes higher immigration does little when it comes to increasing living standards, as measured by real GDP per capita.

Public servants at IRCC are in agreement, the released documents suggest.

"Increasing the working age population can have a positive impact on gross domestic product, but little effect on GDP per capita," public servants noted.

Canada's Housing Minister is warning that municipalities won't succeed with applications for federal housing accelerator funding unless they are flexible on zoning rules.

Speaking Wednesday at an Empire Club of Canada luncheon in Toronto, Sean Fraser said a willingness to adopt zoning reforms has been key for the communities that have signed deals with Ottawa.

Fraser said the federal government has seen "a change in approach overnight" on the part of cities that were initially resistant to such changes, as competition for the money has prompted some jurisdictions to become more open to reform.

"If you want to tap into the fund, be more ambitious than your neighbours," Fraser said.

"There are cities who won't receive funding because they don't want to end exclusionary zoning in Canada. I know who some of them are and maybe they'll change their ways."

The Housing Accelerator Fund, which is meant to spur the creation of housing supply, includes $4 billion in federal funding for Canadian municipalities and Indigenous governments. The program is set to run until 2026-27.

The cities of St. Catharines, Ont. and Saint John, N.B., became the latest to sign deals with the federal government to receive accelerator funding on Wednesday, bringing the total to 22 agreements under the program.

Fund administrator Canada Mortgage and Housing Corp. has said an end to exclusionary zoning is among the best practices used in successful applications.

That includes getting rid of low-density zoning and regulations that exclude affordable and social housing in residential areas, and instead allowing mixed-use development and high-density residential within proximity to urban cores and transit corridors.

Fraser said the federal government received around 540 applications for the fund, but only about 150 may end up being successful.

"The reality is there's not a city who signed a deal with us who hasn't more or less ended exclusionary zoning in Canada," Fraser told the Toronto audience.

"Cities should know that if you're not willing to be amongst the most ambitious cities in the country when it comes to zoning reform permitting processes, you won't be successful."

— Donna Reardon, mayor

"It brings transformational and most importantly, systemic change at the municipal level that will continue to move us forward in creating a community that is conducive to housing and focuses on addressing the housing challenges faced both here in Saint John and throughout Canada," said Reardon.

"As a small city with a big heart, we have to be bold and we want to grow. And I'm going to use your father [former prime minister Pierre Trudeau's] line and I'm going to say, 'Just watch us.'"

This marks the 22nd Housing Accelerator Fund announcement the federal government has made across the country.

In November, Moncton received $15.5 million to help accelerate about 490 units over three years.

Saint John had applied for about $15 million to help build 1,200 over three years.

Asked how the federal government decided how much to give each municipality, Trudeau replied: "There is a lot of hard work and a lot of partnership going into looking at what could actually be done, what is the right level.

"We came down with an agreement around $9.18 million for the Housing Accelerator Fund, which we feel is the right level to really enable Saint John to accelerate to get more homes built faster, to get people into those homes in an affordable way, and we're really pleased with that announcement."

The $4 billion Housing Accelerator Fund, which continues until 2026-27, is expected to fast-track at least 100,000 new homes for people in towns, cities, and Indigenous communities across Canada over the first three years. It's part of the national housing strategy.

The federal government is also working to help developers,Trudeau noted. It has increased the loan programs to $60 billion from $40 billion to help with financing of rental constructions, is taking the GST off new apartment building construction, and working on bringing inflation down.