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Big Canada concept has some major drawbacks

Big Canada concept has some major drawbacks

http://www.theglobeandmail.com/news/politics/big-canada-concept-has-some-major-drawbacks/article32588068/

Big Canada. It’s a bold idea, especially the king-sized version called the Century Initiative – it would expand immigration so the population reaches 100 million by the year 2100.

This week, we should get a better sense of whether Justin Trudeau’s Liberals will embrace it.

Already, the government’s advisory council on economic growth – chaired by Dominic Barton, a proponent of the Century Initiative – has recommended a 50-per-cent increase in immigration, to 450,000 immigrants.

The Liberals won’t go that far, not yet. But on Monday, Immigration Minister John McCallum will table new immigration targets, indicating how far they will go in the short term. And on Tuesday, Finance Minister Bill Morneau will deliver a mini-budget that will respond to some of the recommendations from Mr. Barton’s council.

Big Canada ideas already have some Liberal backing. Mr. McCallum wants more immigration, even if he’s not ready for Mr. Barton’s numbers. Many Liberals like the idea of opening the door wider, and the contrast with Donald Trump’s anti-immigrant populism in the United States.

It is a big nation-building dream, and might shake up the way Canadians think about the future. But the Liberals really want to sell it as an economic growth plan. And as economic policy, its merits are far more murky.

It’s not clear it would raise the standard of living. It is not a dramatic fix for coming demographic challenges. And real-world politics mean Canada’s immigration program won’t ever really be what folks like Mr. Barton envision.

Century Initiative proponents argue that booming immigration has usually meant a booming economy. But University of Ottawa economist Serge Coulombe said that we know booming economies draw immigrants, but it’s not clear immigrants make economies boom. Obviously, more people usually means more overall growth, but what matters is per capita growth – that’s what makes Canadians’ standard of living rise. And Mr. Coulombe said studies have not found a discernible impact on per capita growth. Bringing in immigrants with higher human capital, factors like education that tend to increase productivity, theoretically leads to growth, but that has proven harder in practice, he said.

Immigration does have real benefits. Without it, Canada’s labour force would start shrinking, because of our aging population, and the population would start to shrink within 20 years.

But that doesn’t mean that a major expansion of immigration would solve the challenges of an aging population. Century Initiative literature warns that by 2035 the ratio of workers to retirees “could fall to just 2 to 1 from the current 4 to 1.” But the truth is their immigration plan would barely change those ratios.

The impact of immigration on the aging of the population is just too small to reverse the effect of fewer births and longer lives – unless the numbers are expanded massively. The average age of 36 million Canadians is around 40, but bringing in 450,000 30-year-old immigrants would only reduce the average age by seven weeks.

Mr. Barton, and others, argue Canada could do better by choosing younger immigrants. But the proposals don’t match political reality.

His advisory council called for Canada to increase immigration only from the economic class – rather than those who have family in Canada, or refugees. Canada now accepts about 150,000 economic immigrants each year, and 80,000 family class – spouses, children, parents and grandparents. But 150,000 more economic-class immigrants would eventually want relatives to come, too, and Canadian politicians would have to naturally respond.

Small shifts in demographics do matter. But they have to be weighed against costs – and not just the price of government settlement programs. Most immigrants go to big cities. Vancouver and Toronto residents might worry about the impact population growth will have on heated housing markets, or sprawl, or traffic. That’s true even if Canada remains immune to the kind of anti-immigrant wave Mr. Trump is exploiting.

But Big Canada advocates have another argument: nation-building. Without more immigration, Canada will be a country of 50 or 60 million in 2100, not even in the top 50. Century Initiative co-founder Goldy Hyder, president of Hill and Knowlton Canada, said that means less influence – the country would drop out of the G7 and G20 and be less important to allies and the world.

As a nation-building dream, Big Canada ideas have a lot of power. They remind us we need immigration. But as an economic-growth policy, it’s not a big, simple formula for making Canadians better off.