Opinion | Canada’s working-age population is shrinking. Should we keep immigration near zero or rethink the plan?
2026/02/16 2 Comments
Good discussion (I lean towards the BMO assessment):
In this Bridging the Divide conversation, Robert Kavcic, senior economist and director of economics at BMO Capital Markets, argues the slowdown is a responsible course correction. Lisa Lalande, CEO of the Century Initiative, warns that pulling back from population growth without a strategy risks weakening Canada’s long-term prosperity and global standing.
Robert Kavcic: We are in a period of adjustment. Population growth accelerated to three per cent in 2022 and 2023, placing a strain on housing, rental affordability, health care, public services and youth employment. I believe the government’s short-term immigration targets, which will keep population growth just above zero through 2028, are a reasonable and necessary correction.
Lisa Lalande: Population growth itself isn’t the problem. Growth without a plan is. Canada’s working-age population is shrinking, a shift that poses long-term risks to economic growth and public services. The pullback in immigration is too severe and has not been replaced with a national plan.
Kavcic: Immigration levels need to align with Canada’s capacity to provide housing, health care and essential services. If there is one thing that the last couple of years have taught us, it’s that population can grow very quickly. Every person who comes to Canada needs a place to live immediately. They need a doctor. They need services.
But it takes years to build adequate housing and services. So, maintaining a steady and predictable pace of immigration is very important.
Lalande: I don’t disagree, but zero population growth is bad for the economy. While urban centres such as Toronto, Vancouver and Calgary continue to attract newcomers, many small towns and rural areas are experiencing sustained population decline. Provinces such as Newfoundland and Labrador are projected to lose up to 10 per cent of their population by 2043.
Municipalities have fixed costs, such as water treatment plants, but those costs are spread among fewer people as residents retire or pass away. Affordability will worsen without a national population plan that considers aging and health care.
Kavcic: Another concern is the quality of immigration. We cannot bring in people simply to meet numerical targets if they are not improving per capita economic growth. We need to recruit workers in industries where shortages exist.
But even when we recruit needed workers, such as plumbers, electricians and carpenters for residential construction, they still need a place to live. In that sense, adding workers to build homes can increase pressure on the housing market in the short term because they need housing before they can add to overall output.
Lalande: I agree that we need to have more housing. But the debate of the past two years oversimplified the issue by blaming immigration for the housing crisis. We know from Statistics Canada research that immigration accounted for only about 11 per cent of the rise in median house values and rents across municipalities.
We need to recognize that we need population growth. We have shortages in many areas. In health care, we need to double the number of personal support workers by 2032 to accommodate our aging population. Without population growth, ER wait times will grow and smaller communities will lose access to care.
Kavcic: I don’t think we’re far apart on this. The market speaks pretty clearly about where the balance is. For most of the period after the 2008 financial crisis through the pandemic, housing affordability was not a major issue in Canada. Prices were rising, incomes were rising and interest rates were falling. The market was mostly balanced. The rental market was relatively stable, and population growth averaged about one per cent.
What changed between 2021 and 2023 when population growth tripled was extreme stress in the rental market. Once population caps were introduced in 2024, the rental market peaked and began to cool. As population growth slowed, rents started falling in most major Canadian cities and vacancy rates rose.
This is a strong indication that Canada cannot sustain three per cent population growth. A rate closer to one per cent appears to be what the country can manage — and likely what it needs.
Lalande: I agree there was pressure on the rental market. But we need to address the housing crisis with greater urgency. Housing should not prevent us from bringing a doctor or nurse into a community that needs one.
Population growth also needs to be part of our national security conversation. For the country to remain strong, independent and sovereign, we need a growth-oriented mindset, with smart policy choices, innovation and responsible population planning. If Canada wants to rebuild its defence capacity, secure the Arctic, strengthen domestic supply chains and reduce reliance on allies, that will require people, talent and a healthy tax base to fund major investments.
Kavcic: I agree there is an important role for a well-managed and robust immigration program in Canada. I worry public sentiment is turning against immigration, even though the country will need strong immigration over the long term. That concern may be one reason policymakers moved quickly to reduce immigration levels, to prevent opposition from becoming entrenched.
Lalande: It was a drastic pullback, a political decision rather than a smart policy one, and the consequences are now being felt. Consider the revenue impact on our post-secondary education system, which has fewer foreign students. We are also losing our competitiveness against other countries for the world’s best and brightest.
When you dig into national polling, most Canadians still see the value of immigration. Environics Institute research shows three-quarters say immigrants make their communities better or have no net effect, while only 15 per cent believe newcomers make them worse.
We are facing a looming population cliff. Canada’s demographic outlook is shaped by three forces: an aging population; declining fertility rate; and immigration. Research shows there is only one way to meaningfully influence this trajectory: immigration. Policy should focus on whether immigration serves Canada’s interests within a coherent national strategy.
Kavcic: I think the population targets the federal government is using now are about right. Imposing temporary limits on growth for two or three years is reasonable, given how much population growth was compressed into a short period.
It will likely take two or three years of near-zero growth to bring the long-term trend back to the pace seen before inflows of non-permanent residents such as temporary foreign workers and international students surged. The projected changes from 2026 to 2028 are driven by scaling back flows of these non-permanent-residents to previous. The targets for permanent residents (people granted the right to live, work and study in Canada indefinitely) remain about 380,000 annually
Lalande: We need to look beyond the next year or two and assess the impact over four, 10, even 30 years. Countries with long-term plans are more likely to succeed and safeguard their independence.
Kavcic: I agree that, over the long term, Canada faces a serious demographic challenge. The baby boom generation is aging into retirement, and the country is nearing a period of negative natural population growth. By 2028, for the first time, more people are expected to die than be born in Canada.
I do not dispute that we need a strong immigration program. We do. The issue is the numbers and the quality of immigration.
Lalande: I see more urgency around the need to plan with a long-term perspective, not anchor the conversation only in numbers and quality.
The focus should be on understanding what communities need. It should be on responding to those needs and supporting people once they are here. Only then can the country grow in a sustainable way into the future.
