GRAFTON: The great Canadian Ponzi-scheme of immigration-driven real estate development

How to reconcile the news headlines detailing our failing health-care system and lack of affordable housing with the Liberal government’s immigration targets?To many thinking Canadians, explosive population growth without the requisite infrastructure to support it, is unsustainable.The solid causal line linking immigration numbers to the shortage of hospital beds and housing seems like...well, a “no-brainer.”Global News reported recently, “Immigration is almost solely responsible for the largest annual population boom Canada has seen since 1957. The population is now estimated to be well over 40 million.”The Immigration, Refugees and Citizenship Canada Departmental Plan 2023-2024 reads, “...Canada aims to welcome from 410,000 to 505,000 new permanent residents in 2023, from 430,000 to 542,500 in 2024 and from 442,500 to 550,000 in 2025. These targets are incremental record highs for Canada and reflect the government’s belief that newcomers are instrumental in driving economic growth and building our communities.”Therein lies the rub. “Building our communities” takes time, and money.A new hospital, for example, takes years to complete and they are expensive. The new Civic Campus of the Ottawa Hospital, scheduled to open in 2028, was announced in 2014 — so, 14 years in total, assuming it completes on time — and has a current price tag of $2.8 billion.When the new Civic Campus opens with 641 beds (up from 460 beds at present), we will have imported between 2.5 and 3 million new Canadians. Of them, an expected 4.4% will settle in Ottawa.Thus, 201 additional beds for a population increase of 132,000.This falls far short of the 585 new beds over four years recommended in the 2023 report “The Hospital Crisis: No Capacity, No Plan, No End: Ottawa.”Logically, population growth, unsupported by commensurate infrastructure growth, must necessarily lead to a reduction in the standard of living.It’s happening now.According to a 2023 study, “The Leaky Bucket — A Study of Immigrant Retention Trends in Canada,” immigrant onward migration has surged 31% higher than historical averages — suggesting that “immigrants may not be seeing the benefits of moving to Canada.”The proportion of permanent residents taking up citizenship within 10 years plummeted 40% between 2001 and 2021.The study warns, “If onward migration remains high, it could undermine Canada’s strategy to use immigration to drive population and economic growth.”Home-ownership is highlighted as a factor in onward migration and recent reporting suggests that the high cost of living, competition for jobs, and the lack of affordable housing are driving immigrants to better opportunities abroad.With an average 2023 home price of $1.13 million in the GTA, where almost 30% of new immigrants settle, ownership will remain only a dream for many.The current shortage of housing is wholly the product of federal immigration policy. With insufficient skilled labour resources to meet new-build targets, demand-based pricing raises housing costs as a function of population growth.Enter Carlo Ponzi.Since real estate is now Canada’s largest industry, at over $264 billion worth of gross domestic product in 2020 — more than manufacturing or oil and gas — the health of the sector has enormous impact upon our economy.A failure of the immigrant pipeline could bring disastrous consequences.With the real estate sector largely driven by sales volume and the number of new-builds largely driven by new-immigrant demand, an expanding Canadian economy is dependent upon immigration numbers. It is a cornerstone of federal economic policy.The fragility inherent in this Catch-22 fiscal strategy, wherein growth in real estate development underpins GDP, immigration fuels real estate development and we fail to provide the necessary infrastructure to retain immigrants, is inescapable.Once population growth fails to meet target levels required to support economic policy, the Ponzi scheme collapses and so does our economy.Good policy, or bad policy? The inevitability of failure may be avoided by balancing population growth and infrastructure development, through effective management of immigration quotas.

GRAFTON: The great Canadian Ponzi-scheme of immigration-driven real estate development

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