Published in the Financial Post.
Immigration targets slashed! Drastic reduction in temporary residents. Canada to reduce new immigration by 21 per cent.
Headlines like these dominated the news after Ottawa announced it was reducing Canada’s intake of permanent residents by 21 per cent over the next three years, alongside new measures to bring the population of temporary immigrants into line with goals for it.
But the story really depends on the angle.
Yes, Canada’s new targets are much lower than both recent inflows and the previous official targets of 500,000 new permanent residents in 2025 and 2026. And, yes, Ottawa also plans to reduce the population share of temporary residents to five per cent by early 2027, down from today’s historic high of more than seven per cent, a reduction that will cut their number by more than 30 per cent. But comparing these new targets to the recent exceptional influx produces a distorted picture.
As Minister of Immigration, Refugees and Citizenship Marc Miller recently acknowledged, the surge in non-residents had become “disconcerting,” leading to an immigration system that “got out of control.” There’s also broad consensus that recent high inflows have strained access to housing and health care, which has reduced support for immigration.
New immigrants are also encountering greater challenges in Canada’s job market. In September, the unemployment rate for immigrants who arrived within the past five years was 11.7 per cent, compared with 5.9 per cent for Canadian-born workers. In addition, 30.5 per cent of recent core-aged immigrants with postsecondary education reported being overqualified for their jobs, compared with just 19.7 per cent for Canadian-born workers, according to Statistics Canada’s Labour Force Survey.
A more meaningful comparison is with the two decades before the pandemic. Over that period, Canada’s immigration rate averaged 0.77 per cent of the population (around 262,000 permanent residents annually). By that standard, Canada’s new targets still demonstrate a commitment to high immigration even with the planned reductions. The new five per cent cap on temporary residents remains well above the pre-pandemic peak of just three per cent in 2019. And the new targets for permanent inflows for 2025, 2026, and 2027 — 395,000, 380,000, and 365,000, respectively — are also well above pre-pandemic levels (see chart). Even the 2027 target of 365,000 exceeds any pre-2020 figure. It represents 0.9 per cent of Canada’s population, which matches the highest pre-pandemic rate. It’s also high by global standards. The rate of immigration to the U.S. is just 0.3 per cent, to Australia 0.6 per cent and to the United Kingdom 0.8 per cent.
With this still relatively high intake rate, the emphasis should now be on ensuring that immigration benefits all Canadians, both existing and new. The economic objective should be to increase, not just population, but also GDP per capita. For that to happen, immigrants need to succeed. That requires selection to favour applicants with skills that align with Canada’s long-term needs, not just its low-skill openings. The Express Entry system could be improved by raising selection thresholds and requiring stronger language skills to attract people more likely to integrate successfully and contribute economically. A targeted approach that emphasizes applicants with high human capital and expected income would bolster productivity, increase GDP per capita and support Canada’s vision of a prosperous, high-skill economy.
Effective integration is also key to newcomers’ success. Streamlining credential recognition, expanding training programs and investing in targeted job placement would help smooth newcomers’ transition into roles matching their qualifications. High-skill immigrants who can quickly contribute expertise strengthen Canada’s labour market, foster innovation and support public finances. Focusing on high-skill international students in reputable programs could create a steady pipeline of future immigrants with strong economic potential. Combining skills-first selection with robust integration could ensure that immigration remains a driver of economic growth and improved quality of life for all Canadians.
Immigration has always been central to Canada’s identity and it will remain so under these new targets. But we need to look beyond the sheer numbers and ensure that immigration delivers the greatest possible benefits for everyone in Canada.
Don Drummond, a Stauffer-Dunning fellow at Queen’s University, is a fellow-in-residence at the C.D. Howe Institute, where Parisa Mahboubi is a senior policy analyst.
