As the newly-reshuffled federal cabinet meets in Prince Edward Island this week, Canada’s Liberal government has found itself caught in a wicked Catch-22: trying to reconcile its robust immigration targets with its efforts to tame the nationwide housing affordability crisis. Indeed, even the party’s most senior officials appear to be willfully blind to the clear correlation between Canada’s record-high immigration-fueled population growth and our acute shortage of affordable dwellings. They also refuse to acknowledge the plain mathematical fact that bringing upwards of half a million newcomers to our shores each year will only make this problem worse, at least in the near term. 

Take, for instance, the circular logic proposed by Immigration Minister Marc Miller last week. Responding to a question about housing affordability, Miller had the following to say:

The federal government is making housing more affordable and bringing in the skilled workers required to build more homes. Without those skilled workers coming from outside Canada, we absolutely cannot build the homes and meet the demand that exists currently today.

So, to unpack this baffling logic, the minister is saying that way out of the housing crisis is to further juice demand by bringing in more immigrants. (These skilled workers will, after all, need somewhere to stay themselves while they’re building homes for the rest of us). His government’s abject refusal to see immigration as anything other than a panacea calls to mind the old saying, “If the only tool you have is a hammer, everything looks like a nail.”

But even as our government remains deeply in denial, many across Canada (including those on the Left) are openly questioning the longstanding pro-immigration orthodoxy. Articles asking if we’re taking in “too many” immigrants—a question few outside of the right-wing blogosphere dared to ask until recently—are cropping up with increasing frequency, appearing regularly in even Left-leaning media outlets. It’s been nothing short of astounding to see mainstream pundits debating this once taboo topic so openly. 

This change in tone may also be a sign that the “progressive’s dilemma” that’s played out for decades across much of the West has finally arrived in Canada. 

Broadly speaking, the progressive’s dilemma posits an intractable tension between mass immigration and maintaining the bonds of social solidarity necessary to sustain redistributive social policies. This thesis is premised on the logic that individual citizens feel less obliged to contribute to the collective good as they see less of themselves in their fellow citizens (i.e., with respect to language, race, ethnicity, religion, and other markers of identity). 

It’s a compelling logic that explains why relatively homogenous countries like Sweden and Norway have larger welfare states than highly diverse ones like the United Kingdom and France. It also explains how some of Europe’s most successful political parties couple support for generous social policies with overt xenophobia and nativism. (Hungary’s Fidesz is perhaps the best example of this archetype).

Canada has long been thought to be immune to this dynamic, reconciling high levels of immigration with a relatively strong welfare state for decades. In fact, there’s a decent-sized literature in migration studies that ponders the underpinnings of “Canadian exceptionalism” in this respect. 

But the recent change in tone surrounding the Liberal government’s immigration policy, and in particular the growing narrative that it is exacerbating our housing crisis, suggests that we might be on the verge of our very own “made-in-Canada” progressive’s dilemma—a dilemma with pronounced Canadian characteristics that differentiate it from anti-immigrant backlashes seen in other Western countries. 

Pivotally, critics of the Liberals’ immigration policy have refrained from targeting new Canadians themselves. If anything, recent news stories have portrayed newcomers in a sympathetic light as being sold a bill of goods via an overzealous (and downright deceptive) national recruitment campaign. A recent series of stories have chronicled the struggles of dozens of asylum seekers who’ve been forced to live in street encampments for weeks due to a lack of vacancy in Toronto’s emergency shelters. Multiple outlets have also reported on the trend of new immigrants electing to leave Canada and return to their home countries.

The discourse also eschews the ubiquitous “immigrant freeloader” trope. To the contrary, it paints most new Canadians as eager would-be contributors to Canada’s economy who are all too often prevented from pursuing economic opportunities by political gatekeeping. To wit, political leaders from across the aisle have called for professional bodies to speed up the process of recognizing foreign credentials.

The good news is that Canadians still, by and large, appear to be content with the country’s multiethnic character—with many of us still holding multiculturalism as a point of national pride. In fact, one of Conservative party leader Pierre Poilievre’s go-to applause lines is “It doesn’t matter…if your name is Smith or Singh, Martin or Mohammed.”^{1Poilievre, of course, has recently been accused of “dog-whistling to the far right” by some in the media.} This, hopefully, is a sign that Canada remains inoculated from some of the uglier undercurrents of racial animus and ethnic nationalism that permeate anti-immigrant politics elsewhere. 

After decades of maintaining a relatively harmonious balance between high levels of immigration and social welfare, Canada finally appears to be at the precipice of the Sophie’s Choice-esque dilemma that has long plagued other Western societies. While Canada’s immigration skeptics have thus far abstained from the demagoguery of their counterparts elsewhere in the world, they nevertheless posit a zero-sum conflict between maintaining high levels of immigration and preserving social welfare for everyday Canadians.

Our pro-immigration, pro-welfare state Liberal government may soon discover that the centre cannot hold. 

A war-time-like effort is needed for Canada to build the 5.8 million homes the Canadian Mortgage and Housing Corporation (CMHC) estimates need to be built by the end of 2030 to restore affordability. This goal can only be achieved through a robust industrial strategy, as a “more of the same” strategy is doomed to fail in at least three different ways.

The first failure point is speed. The CMHC target requires Canada to triple homebuilding in a short period, and we cannot scale that construction sector that quickly without innovation. The second is labour shortages. Canada needs a robust housing workforce strategy to increase the talent pool from electricians to urban planners, but that will not be sufficient. Housing construction must experience rapid productivity increases. The third is climate change. Simply tripling what we are doing now will not be compatible with Canada’s climate targets due to emissions from construction and land-use changes. Furthermore, we must ensure that what gets built is resilient to a changing climate.

A federal industrial strategy can address all of these by changing what we build and how we build to make the process faster, less labour-intensive, and more climate-friendly. The government can begin by curating a list of climate-friendly, less-labour-intensive building methods that exist today in Canada but need support and expansion financing to grow, such as mass timber, modular homes, panelization, and 3D printed homes. 

Next, a strategy is needed to create a market for these technologies. The CMHC can facilitate this by creating a free catalogue of designs as they did in the 1940s. This catalogue would include designs for various housing types incorporating these technologies, from midrise apartment buildings to student residences, with diverse designs appropriate for different climate conditions. Builders using these designs could be fast-tracked for regulatory approvals, such as ones from the CMHC, since the building design had already been approved.

Government can act as the first customer for these projects, further accelerating uptake. It can build homes to address the estimated 4,500-unit shortage for Canadian Armed Forces families. Social housing can be built with the use of an acquisition fund. Colleges and universities should be given funding and instructed to build on-campus student housing to support a rapidly growing population of international students or risk losing their status as designated learning institutions, which would eliminate their ability to bring in those international students.

Tweaks to the tax system will be needed to help make these projects viable, from removing the HST on purpose-built rental construction to reintroducing accelerated capital cost provisions. The approvals process at all orders of government must be streamlined, and agencies must be staffed up to address backlogs, such as in the CMHC’s MLI Select program. Building codes will need to be amended to be compatible with these technologies, and zoning codes will need to be amended to allow for more as-of-right construction, such as in New Zealand, where six-story apartment buildings are permissible as-of-right within 800 metres of any transit station.

The federal government cannot alter municipal zoning codes, but it can offer incentives to do so. It could set up a set of minimum standards (call it a National Zoning Code), and any municipality that altered its zoning code to be compliant could be given one-time per-capita funding to spend on infrastructure construction and maintenance, no other strings attached. For example, a $200 per-capita fund would give the City of Toronto an additional $600 million to upgrade infrastructure and cost the federal government a maximum of $8 billion should every municipality in Canada sign-up. It could also follow Australia’s lead, which is giving states an extra $15,000 for every home built over a target. These incentives would not only cause provinces and municipalities to approve more homes, but they would also give them the infrastructure funding holding up current homebuilding. 

We should view this strategy as an investment, not a cost, as the economic opportunities are enormous. New housing will allow workers to live closer to opportunities, and scaling up these technologies creates manufacturing jobs across Canada and new products to export worldwide.

The key to this industrial strategy working is speed. The federal government must avoid setting up new approvals processes and micromanaging the system. Instead, it should set straightforward standards, and as long as those standards are met, approvals should be granted and payments made. New infrastructure funding to municipalities should not be on a project application basis, as it slows the process, and cities know best what they need.

We are in a crisis, and a war-time-like effort is needed. The federal government must prioritize speed and act now.