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A population’s growth rate is impacted by three basic demographic components: births, deaths, and migration. With all three, Canadians are currently entering into unchartered waters.
The country’s birth rate (or total fertility rate) has fallen to an unprecedented low, of only 1.26 births per woman in 2023. Canadian life expectancy has plateaued over the last decade after more than a century and a half of sustained gains. Canada’s population growth through natural increase (births minus deaths) continues to decline, such that very soon the country will be witnessing more deaths than births. With a declining birth rate and population aging, Canada has become almost completely reliant on immigration to maintain population growth (97.6 percent in 2023). And it is in this context that Canada has recently been impacted by record-high international migration.
Given that these demographic processes are basic to the well-being of Canadians, we have a vested interest in ensuring that population dynamics operate to produce a maximum net benefit. It is argued here that any future Canadian government would be well served in carefully developing a “distinctly Canadian population policy.”
With this, perhaps the most fundamental issue to be addressed is: what pace do we want our population to grow into the future? Interrelated is the issue of whether we primarily prefer international migration or a natural increase in meeting these targets. While international migration is currently at record levels, many younger adults end up with fewer children than desired. Such policy considerations involve an informed study of both the positives and negatives of population growth, the causes and consequences of recent demographic trends, and how governments might impact them.
The positives and negatives of population growth
While population change can at times have negative consequences for a society’s well-being, fortunately, many demographic difficulties can be prevented as they are typically years in the making and relatively predictable. Below-replacement fertility over an extended period, in the absence of international migration, can lead to dramatic population aging and eventual demographic decline. One merely needs to consider the current situation in several of the ultra-low fertility countries of East Asia to recognize this basic fact. Japan, as an example, has experienced population decline since 2008 while also building up the highest national debt-to-GDP ratio of any developed nation. While demography is not destiny, it does have far-reaching consequences for a country’s workforce, economy, government services, and social fabric.
On the positive side, sustained population growth can promote economic growth as it acts as an economic stimulus, permitting a larger workforce, an increased demand for goods and services, a younger age distribution, and higher tax revenues. Yet the positives have their limit, as very rapid or unsustainable levels of population growth can introduce a whole range of economic and social challenges. This is something that Canadians have recently come to appreciate. Over recent years, we have seen rent inflation, health-care shortages, and increased congestion in our cities, all of which have been impacted by an unexpected yet dramatic surge in population. Homeless encampments are far more common today than merely a half-decade ago, as a direct result of population growth outpacing housing starts. While of course Canada has long had issues with access to health care and housing affordability, one would have to be blind not to see how very rapid growth has contributed in a major way to these sorts of problems.
“[The] system has gotten out of control”
A particularly salient issue in this context is where Canada should set its immigration targets. This is important since we have recently observed a major decline in the public trust in our immigration system. Both the federal and most provincial governments did not prioritize keeping track of international migration. It was like the federal government suddenly discovered in late 2023 that Canada’s population growth had spiraled out of control. This is all very regrettable since governments (and the federal government in particular) should theoretically be in a good position to properly manage growth through international migration. It is far more difficult to influence the pace of population growth through natural increase than it is by merely modifying immigration targets.
International in-migration includes both landed immigrants and net change in the number of NPRs. Source: Statistics Canada and author’s calculations. Graphic credit: Janice Nelson.
In early 2024, the current immigration minister, Marc Miller, stated that “the volume of migration is really disconcerting. It’s really a system that has gotten out of control.” While the most recent shift has been well documented elsewhere, the most dramatic growth occurred among the NPR population. While NPRs grew on average by 33,000 annually over the period 2001-2015, in 2022 Canada experienced an annual growth of 550,000 temporary migrants, only to increase by an astronomical 820,000 in 2023. When combined with an increase of over 470,000 permanent immigrants in 2023, total international in-migration as seen in Figure 1 was equivalent to more than 3 percent of Canada’s population. This compares to historical in-migration rates of between 0.5 and 1 percent per year. And before this recent surge in international migration, Canada already had a very high proportion of its population born abroad, with very high rates of immigration, by world standards.
How do we get out of this mess?
The question then becomes, how does Canada return immigration to more sustainable levels? In recognizing the need for reform, Miller has made a series of announcements beginning in early 2024.
Firstly, the federal government announced back in March 2024 that from this point onward Canada will be setting targets (or caps) on the number of NPRs. It is somewhat remarkable that up until then, Ottawa had no explicit cap on this category of migration. Secondly, this plan sets out to reduce the number of NPRs from 7.3 percent of the total population in July 2024 down to 5 percent by the end of 2026—a reduction that implies close to 900,000 fewer temporary residents over three years. Thirdly, in October 2024 Ottawa announced a cut of over 20 percent to permanent immigration targets—down from the previous target of 500,000 per year, to 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027.
To approximate the potential impact of these reforms, Figure 2 shows both the history of net international immigration (which also includes the impact of emigration), natural increase (births minus deaths), and total population growth over the last several decades. This figure also provides projections through to 2061 that reflect the current Liberal plan on international migration through to 2027. The projections also assume a very slight rebounding in our birth rate and very modest gains in terms of mortality. From 2028 onward (where no plans have been announced) this projection merely assumes that the 2027 rate of permanent immigration remains constant and that there is no growth or decline in the total number of NPRs (holding steady at 5 percent).
Source: Statistics Canada and author’s calculations. Graphic credit: Janice Nelson.
Canada’s population growth is projected to decline dramatically into negative territory in 2025-2026, almost entirely due to the announced plan on NPRs. Yet if our population were to stop growing, as projected here, this would be a first in Canadian history.
According to the current Liberal plan, over the two-year period 2025-2026, the number of landed immigrants is expected to be about 775,000, whereas the planned net reduction in NPRs is somewhat higher, at around 891,000. Yet it will likely be easier for the government to meet its target on landed immigrants than it will be with its substantial reduction in the number of NPRs.
Most certainly achieving the reductions will be a major challenge, as the post-secondary sector and the business lobby will continue to show opposition to reducing the number of work and student permits. In addition, the political environment south of the border suggests that the number of asylum claimants could potentially rise.
This is not to mention the many permits set to expire according to this plan, and very predictably some temporary migrants, in their desperation, will decide to remain in Canada as undocumented. Yet, Canada currently has no systematic information whatsoever on the number of NPRs who are actually leaving Canada after their permits expire. While this was a minor issue historically, given that NPRs hovered at about 1 percent of the population, it has now become a major issue as the percentage has risen to over 7 percent. Gaining information on the size of the undocumented population should be an absolute priority, as it is currently completely invisible in our official statistics, making it very difficult to plan for future population growth.
How quickly should Canada be growing?
Historically, annual immigration targets were set by cabinet based largely on a political judgment. After consulting with others, including the provinces, this was meant to be a sort of prudential assessment of what Canada can accommodate and what Canadians might accept. Up until recently, this assessment appears to have performed reasonably well. Yet in light of recent events, it might be prudent to return to my basic point—that the Canadian government should set out to establish a well-defined population policy—and perhaps in so doing, be somewhat more formulaic in its approach to immigration.
The first order of business would be to decide upon how quickly we want our population to grow, or whether or not we need an upper and lower limit. In reviewing our historical experience, it would be reasonable to propose a relatively wide range, of say, 0.5 to 1 percent annually. For comparative purposes, the average population growth rate across the current 38 members of the OECD in 2023 was 0.5 percent, whereas across G7 nations (excluding Canada) the corresponding average was 0.3 percent. An upper limit of 1 percent might seem somewhat high to some, but such a target is not far from the rate at which our population has grown over the last half-century. Over the extended period 1971-2015, Canada’s population grew at an average rate of about 1 percent annually.
The basic idea here is that our society works with a predictable rate of population growth, from year to year, that avoids all of the disruptions that could be associated with very rapid growth or for that matter, stagnation or population decline. In doing so, our economy and social institutions would have an easier time accommodating our rate of population growth—avoiding the disastrous situation observed over the last couple of years.
Success in reducing the NPR population translates into higher immigration targets
In setting future targets on permanent immigration, our success in reducing the number of NPRs, put simply, should be considered key in setting future targets on permanent immigration. The basic idea here is that to the extent that we reduce the number of NPRs, we can correspondingly increase the number of landed immigrants without having an impact on population size. In promoting permanent immigration, we can restore best practices in terms of carefully selecting immigrants based on economic immigration, family reunification, and humanitarian considerations. This involves returning to the Canadian tradition whereby newcomers are given the promise in settling in this country that they could eventually obtain the rights of full citizenship.
The earlier projection showed future growth with little change in the number of NPRs, remaining indefinitely at 5 percent of the population total from 2027 onward. In the projection, landed immigrant targets were set to gradually climb from about 365,000 to a figure approaching 400,000 over the next decade or so. Yet if the target on NPRs were reduced further, down for example to about 3.5 percent, this could allow for hundreds of thousands of additional landed immigrants without having an impact on our rate of population growth. Of course, many of the NPRs currently living in Canada will not be leaving the country, but alternatively could be selected for landed immigrant status through our normal immigration streams.
A man wears patriotic stickers on his turban as he participates in the annual Canada Day parade in Montreal, Friday, July 1, 2016. Graham Hughes/The Canadian Press.
On this front, in planning future immigration targets, it makes sense to further reduce the NPR share of Canada’s population well below the 2027 target of 5 percent. Considerable caution would be advised as to how to achieve this target, with the difficult balance here in meeting shorter-term labour force needs, promoting the best in our international student programs while continuing with our long history of meeting humanitarian commitments with asylum seekers.
Flexibility in our targeted growth
It is very difficult to come up with a simple formula for setting immigration targets—such that a well-informed population policy would continue to closely monitor the impact of population growth and the successful integration of newcomers. A targeted range of 0.5 to 1 percent annual population growth is meant to allow for some flexibility in responding to many of the pressing economic and social challenges that we currently face. In recently announcing its revised immigration plan, the federal government indicated that its new plan would allow for “[c]ontinued GDP growth, enable GDP per capita growth to accelerate throughout 2025 to 2027, as well as improve housing affordability and lower the unemployment rate.” As GDP per capita has been stagnant for several years now, this might be considered a tall order. On this front, there are obviously many factors beyond demography that will impact their relative success. Yet this announcement is consistent with the idea that if our unemployment rate rises or if Canada fails with its current housing plan, it is reasonable to reduce immigration targets accordingly.
In light of the many problems in Canada that were aggravated by the most recent surge in population (six years of growth in two), from housing affordability to access to health care, it would seem justifiable to set a population growth rate closer to the lower part of this range. And in light of the projections shared previously, this would imply lower immigration targets than in the current Liberal plan—unless the federal government has more success than expected in reducing the number of NPRs.
Time for a broader population policy
One of the most widely misunderstood impressions with regard to immigration is that it serves as a panacea to population aging. Yet one of the lessons that we can gain from this most recent surge in immigration is that Canada’s population will continue to age for some time regardless of immigration targets. In July of 2020, the median age in Canada was 40.8. By July of 2024, this median had fallen slightly to 40.3. This is after a population surge of over 3.3 million in merely four years. While international migrants are younger than the average Canadian, an unsustainable number would be required over the longer term to meaningfully slow and reverse this aging trend. Canada’s population will inevitably age over the next several decades, and a well-thought-out population policy should certainly prepare for this basic fact.
Although our population is younger today than it would be without international migration, the primary factor responsible for population aging has been the continued decline in our birth rate. Statistics Canada has in fact projected the impact of a continued decline, such that we could experience a negative natural increase within only a few years. With this in mind, the instinct to further reduce immigration over the longer term without a rebounding of our birth rate might be somewhat shortsighted. Canada seems set to become even more reliant on international migration in maintaining population and labour force levels, such that we will eventually need to raise immigration targets substantially even to meet a lower limit of 0.5 percent annual growth.
A broader population policy could shift our attention to our birth rate, rather than merely a reflex action to increase immigration. The basic fact that birth outcomes in Canada continue to be lower than birth intentions, is in itself worthy of policy intervention. Without a rebounding in our birth rate, population aging in Canada will accelerate. Canada will become even more reliant on immigration in maintaining population and labour force—unless, of course, Canadians decide that slow growth and/or population decline is preferable. Yet while rapid population growth has its challenges, so too does a shrinking population. One merely needs to turn to the Japanese example to fully appreciate this fact. A well-informed population policy could attempt to avoid both scenarios.
