Faced With Crisis, Trudeau Forced to Shift on Immigration

(Bloomberg) -- In the early days of Canada’s response to the coronavirus, before the crisis captured the full attention of Prime Minister Justin Trudeau’s government, it was still business as usual on at least one front: immigration.

On March 12, the day before the Canadian parliament was suspended on concern about the spread of Covid-19, Trudeau’s immigration minister, Marco Mendicino, unveiled plans to hike immigration levels over the next three years. He cited a growing labor shortage.

But as the nation’s economy plunges into recession, millions are being cast into unemployment. In the oil heartland of Alberta, a province that once had a voracious demand for skilled newcomers, Premier Jason Kenney now warns of a 25% jobless rate. Immigration targets will almost certainly be scaled back as the crisis forces a radical shift in Trudeau’s priorities.

Attracting more migrants, foreign workers and students has been a pillar of Trudeau’s political agenda since he became prime minister in 2015, making his government an outlier at a time when openness to foreigners is waning in Europe and U.S. immigration has fallen to a decade low.

Yet, history shows economic downturns almost always lead to less migration into Canada, even without the unprecedented travel restrictions associated with the pandemic.

“We may be left with a legacy of higher unemployment through 2021 that could cause governments to rethink the near term immigration targets,” said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce in Toronto.

Strike Three

Lower immigration may represent a third strike against Canada’s economy, on top of the widespread business shutdown due to the virus and collapsing prices for crude oil, a major export.

Newcomers have powered the country’s growth in recent years, providing a major source of new demand in cities like Toronto and Vancouver, where new arrivals tend to congregate. The surge has spurred a housing boom, driving up prices and fueling construction.

If social distancing measures and business closures last for a year, the reduced flow of foreigners will not only hit the real estate market. It could also have lingering impacts on demand for education and other industries that rely on population growth, Shenfeld said.

Last year, Canada added a net 437,000 people from abroad -- including close to 200,000 non-permanent residents like students, temporary workers and asylum seekers -- helping to drive the fastest increase in population among Group of Seven countries. At 1.4%, Canada’s population growth was double that of the U.S.

Mendicino’s plan was to increase immigration through 2022 -- targeting 341,000 immigrants in 2020, 351,000 in 2021, and 361,000 in 2022. Those targets are now looking optimistic.

For the moment, Canada’s borders are closed to most non-residents. The government is still accepting applications, but new immigrants and students are barred for now, except for seasonal agriculture workers.

Temporary Measures

“The department continues to accept and process applications throughout the period of these temporary measures,” Kevin Lemkay, a spokesperson for Mendicino, said by email. “Immigration has, and will continue to be critical to Canada’s long term success as we work to recover from the economic headwinds we are facing due to the coronavirus.”

Following past downturns, international migration levels have tended to rebound quickly, aided by a broad political consensus the inflows are good for the country. Populist rhetoric against foreigners is largely absent from Canadian political debates.

Yet, the sheer depth of this crisis could undermine public support. For example, analysts say Trudeau’s recent decision to turn back refugees coming from the U.S. may be more indicative of the mood.

“We take pride in being an open society and by and large supporting immigration, but that support is not quite as deep as we’d want to believe,” said Patrick MacKenzie, chief executive officer of the Immigrant Employment Council of British Columbia, an advocacy group. “If we don’t tread carefully, we do run the potential of tipping the scales where people don’t understand what’s going on with immigration.”

Immigration isn’t the only agenda item Trudeau may be forced to put on pause. Everything from green technology to a national drug plan and indigenous initiatives will be more difficult to finance as pandemic-related spending surges and debt mounts.

Much will depend on how quickly Canada’s economy recovers, pollsters say.

A few weeks ago, nothing on the political horizon suggested the government might be forced to back away from its policy on immigration, said Shachi Kurl, executive director at polling firm Angus Reid Institute. “Now it’s very different and we are into a time of the unknown.”

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