The federal government’s annual cabinet retreat is taking place this week, with Liberal ministers on hand in Halifax to discuss the most pressing issues facing the country ahead of the fall legislative session. Immigration and housing are two of the biggest items on the agenda, in particular the drastic rise in the number of temporary foreign workers being employed in Canada over the past two years. Economist and Hub contributor Mike Moffatt was invited to Halifax to present on these issues. His remarks to cabinet are reproduced below.

In the next 54 minutes, Canada’s population will grow by 100 people.

In the next 54 minutes, Canada will start building 24 homes. Two-thirds of these will be apartments, and the majority of those will be one-bedroom or studio units.

Collectively, those 24 homes will house between 50-60 people. Let’s be generous and call it 65.

In the next 54 minutes, we will add 100 people, but only enough housing for 65 people, leaving the remainder, 35, effectively homeless. That’s 35 people, a group the size of the federal cabinet, with nowhere to call home. Every 54 minutes.

In the past three-and-a-half years, Canada’s population has grown by three million people, a few thousand people more than in the entire 1990s. The good news is that we’ve built as many apartment units as we did back then. The bad news is that we’ve built 900,000 fewer single-detached, semi-detached, and row homes. And the 1990s were arguably the worst post-war decade for homebuilding.

That’s the hole Canada has dug for itself: nearly one million family-sized homes in three-and-a-half years.

Like in other Anglosphere countries, Canada’s housing crisis was caused by disconnected housing and population growth policies. Let’s start with housing. In the past twenty years, development charges have risen by over 2000 percent in some Ontario cities. Land transfer taxes and other charges were introduced, which substantially raised the cost of housing and shifted the tax base from the old to the young. Land use policies became exceptionally restrictive, and the building code and other regulations made it all but impossible to make affordable family-sized apartment units. All orders of government treated a unit as a unit as a unit, under the erroneous belief that a 450 square-foot studio apartment is an adequate substitute for a child-friendly three-bedroom home.

Our population growth policies have been equally problematic. Our immigration system has shifted away from adding to the skills and cultural vibrancy of Canada to creating an underclass of guest workers. It has become a tool to allow provinces to cut funding to higher education. Once again, a transfer of wealth to the old from the young.

Fortunately, these are solvable problems, and I am encouraged that the federal government has taken substantial steps on both housing and population growth. More can be done—there is still a suite of unimplemented housing policy ideas in the National Housing Accord, the Blueprint for More and Better Housing, and from the Affordability Action Council. I would particularly encourage governments to focus on creating the conditions for family-friendly density—that is, units with three or more bedrooms. At a minimum, that will require building code changes, scaling back development charges to the levels of a decade ago, and increasing the GST rebate on new homes.

On population growth, yesterday’s temporary foreign worker reforms are welcome news, but Canada must go much further. The TFW program, particularly the low-wage non-agricultural stream, suppresses wage growth, increases youth unemployment, creates the conditions for the exploitation of foreign workers, and reduces productivity, as it disincentivizes companies from investing in productivity-enhancing equipment. The low-wage stream should be entirely abolished, and the other streams should be substantially reformed, including creating a system of open permits.

Population growth targets, including both permanent and non-permanent residents, and housing growth targets, should all be incorporated into the annual release of the Immigration Levels Plan. The targets must be aligned, to ensure population growth does not outpace homebuilding, which will require substantial reductions in the permanent resident target over the next few years.

Like most economists, I support a robust immigration system and believe the current targets are achievable in the long run. In the meantime, however, we need to give ourselves time to allow homebuilding to catch up to past population growth, requiring a substantial reduction in the permanent resident target back to the levels of a decade ago.

We should be clear that this is not about blaming immigrants for Canada’s issues. Rather we must recognize that when we invite people to our country, we need to ensure that we have in place the conditions for them to succeed. We do them no favours, and us no favours, by setting them up to fail.

And we should be clear that we are setting people up to fail, particularly Millennials and Gen Z. Rents on new leases in Halifax are up 75 percent in the past five years. It should come as no surprise that the 2024 World Happiness Report found that Canadians under the age of 30 are the 58th happiest in the world. They are being denied a path to middle-class prosperity.

We can and must do better. Thank you for having me here today.

A majority of Canadians think that Canada is broken after years of stagnant incomes, affordability challenges, rising crime, government failures on basic functions like healthcare and immigration, and a deepening cultural malaise. But decline is a choice, and better public policies are needed to overcome Canada’s many challenges. Kickstart Canada brings together leading voices in academia, think tanks, and business to lay out an optimistic vision for Canada’s future, providing the policy ideas that governments need to ensure a bright future for all Canadians.

This summer, many families across the country have gotten together for multigenerational family reunions at cottages, in parks, on camping trips, or just in someone’s backyard. While we can despair about the state of our economy or politics, there’s really no greater sign of health in a society than to see families gather.

These summer-time expressions of families together ought to be the idealistic image of the Canadian dream. We shouldn’t be afraid to think or say that a key policymaking goal—perhaps the key one—ought to be to increase the number of families and children.

Increasingly, however, this dream seems to be fading across the country. Fewer families are having kids, and those who are are having fewer of them; more young Canadians are leaving for opportunity elsewhere; and many of our younger immigrants here as non-permanent residents may ultimately need to go back to their country of origin when a visa expires.

By 2030, Canada’s population of people aged 65 years and older will reach an all-time high of more than 9 million people, or nearly 22 percent of the population. That’s up from just 11.3 percent in 1990.

From 1990 until 2023, children aged 0-14 decreased as a percentage of the population from 20.7 percent to 15.4 percent. And StatsCan projects that that number will go down as low as 13 percent in the decades to come.

When grandparents outnumber grandchildren, there is much to be concerned about as a country.

In the context of today’s housing, a lot of ink has been spilled talking about generational unfairness. Baby Boomers owning homes they could afford to buy in their early 20s are housing their Millennial children, who are often into their 30s—and most of whom don’t believe they will ever own a home in their lives. Although the zero-sum generational narrative is tempting, framing these issues as a fight between Millennials and Gen Zers on one side and Baby Boomers on the other is a recipe for transforming a housing crisis into a political crisis.

Instead, we should advance policies with the stated purpose of reversing Canada’s underlying demographic trendlines for the benefit of every Canadian of every age. More specifically, Canada should become a country where more than 25 percent of its population is 0-14 years old, and less than 15 percent of its population is 65-plus years old. And we should do this before 2050.

It’s an audacious idea. But every grandparent or future grandparent in the country can get behind a policy agenda that reinforces the Canadian Dream of that happy multigenerational family reunion in the summer.

So how do we get there?

 1. Permit 10 times more housing—I know, I know. We talk about this a lot. But it really is a key issue at the heart of many of our economic and social ills. Why 10 times? Frankly, every one of our politicians looking at the housing issue is missing the forest for the trees. The goal is not to build 3.5 million homes by some arbitrary date. The goal is to right-size an imbalanced housing market in a way that protects it from ever being so skewed again in the future. Housing permissions need to dramatically exceed housing requirements, permanently. That would allow for the market to decide when we’ve built enough housing, rather than some inept policymaker—or gatekeeper, as Pierre Poilievre puts it.

Getting there will require various changes to zoning, development fees, and so forth. The outcome of these policies will definitely result in visible and permanent change in our country. Cities will get denser, neighbourhoods will pop up where they didn’t previously exist, and the types of housing we build will evolve. That is not a bad thing. This would look very similar to what happened during the Greatest Generation (my grandparents’ generation, born 1901 to 1927) after the Second World War. Much of our housing stock in the older parts of our big cities was newly built for them, in what previously would have been farm fields and forests, but ultimately was replaced with homes, parks, playgrounds, and large families. We did it then. We should do it again.

2. Kill as much as 75 percent of subsidies for post-secondary education—Hear me out on this one. Post-secondary education is failing to meaningfully deliver on its intended purpose. If we think of postsecondary education as training for the job market, we are sending too many students into fields of study that will not lead to productive employment. That needs to change.

This is not simply a question of how our tax dollars are being used and wasted on unproductive education, it’s more so a question of how we can create a sense of purpose for young Canadians looking to become contributing adults, and ultimately start families. There is no feeling more defeating than graduating with a four-year university degree to simply find yourself a barista at Starbucks 10 years after graduation—a reality we’re seeing far too commonly these days.

One of the reasons is because students don’t pay anything like the full cost of their education. They’re subsidized by as much as $8,000-$17,000 per year and sometimes more. Requiring students to bear a greater share of their educational costs would presumably focus their attention more on the return on their individual investments.

Educational subsidies should therefore be highly and disproportionately targeted to fields of study in highest demand. Today, that would likely mean a huge focus on skilled trades and STEM education, while degrees in sociology, human sexuality, and art history should effectively receive approximately zero dollars in public subsidies.

A successful post-secondary education system will see a significant acceleration of young adults landing in careers that pay good wages and provide a sense of purpose. From there, with a stable career starting earlier in adulthood, we would expect to see a shift down in the average age of people starting families.

3. Redesign our tax system to reward families—Some of these ideas are not new in Canada, but we need bold reform in tax policy to meaningfully change incentives for fertility and family formation.

A pro-family tax policy should start with the reintroduction of income splitting for couples with kids and should extend to providing significant financial support and additional tax relief.

At a high level, we should reform the Canada Child Benefit program, cancel the recent $10/day daycare program, and introduce a significant tax reduction for families with kids.

To start, the Canada Child Benefit (CCB) should be reformed to only apply to kids six years and under and should range from $12,000 to $24,000 per year per child, based on an income test (higher amount to lower-income families). This adjusted policy should completely replace the failed $10/day daycare policy. This CCB reform would effectively increase the amount every Canadian family receives (CCB currently maxes out at $7,787 per child), leaving low-income families receiving approximately the same amount of total benefit (CCB plus daycare subsidy) but as a direct payment that leaves more choice in the hands of parents. Higher-income families would also see an increase in their CCB, but with the combined elimination of the childcare subsidy, the federal budget impact would be reduced.

In parallel, we should introduce a single reduction in income taxes for families with children during the years that their children are dependents (0-18). This should come in the form of a tax deduction of up to 25 percent of your annual income tax per child, up to a maximum offset of $25,000 per child per year.

4. Significantly improve financial support and access to fertility, surrogacy, and adoption—This one mostly speaks for itself, and I’ll admit that I’m a bit out of my depth. But nonetheless, we should create a highly generous system of funding programs that allows couples with fertility issues to have more options available to them.

This should include, but not be limited to:

• Egg retrieval funding for women, with a strong emphasis on women under 30 years old
• IVF funding for couples having difficulty conceiving
• Surrogacy funding to supplement the financial support allowed to be paid by a family to a surrogate
• Streamlined and funded adoption programs for domestic and international children

These specific policies (which would be mostly at the provincial level) would help to reduce the persistent gap between the number of children that Canadian women tell pollsters that they want and the number that they actually have.

Overall, these four policy areas are by no means a panacea to the challenges facing our country, but they go a long way in signalling a reprioritization of children and families in Canadian public policy.

As I set out at the outset, this is key to Canada’s economic growth and long-term prosperity because our economic foundation ultimately rests on children. Not only are children a prerequisite to a future labour force that will build and fund our country, but they also have a powerful way of instilling long-term thinking and optimism in parents, families, and communities.

The best way to kickstart Canada therefore is to put children at the centre of our policymaking.