Canada is caught in a "population trap" and needs to limit immigration to escape it, say National Bank economists. Read more
Canada is caught in a “population trap” for the first time in modern history and needs to limit immigration to escape it, say economists with the National Bank of Canada.
A population trap, according to Oxford dictionary, is when the population is growing so fast that all available savings are needed to maintain the existing capital–labour ratio, making any increase in living standards impossible.
Article content
It’s historically been seen in emerging economies, and escape requires either an increase in savings, a cut in population growth, or both.
National Bank’s report joins the growing chorus of concern that the influx of newcomers over the past two years, many of whom are temporary workers or students, is too much for the economy to handle. Others caution there could be economic repercussions if Ottawa cuts off the flow too quickly.
Canada’s population grew by 1.2 million in 2023, a “staggering” amount when you consider that the next biggest surge was when Newfoundland joined the nation in 1949, says the report by National Bank economists Stéfane Marion and Alexandra Ducharme.
From a global perspective Canada’s population growth of 3.2 per cent last year was five times higher than the average of Organisation for Economic Co-operation and Development nations.
“We currently lack the infrastructure and capital stock in this country to adequately absorb current population growth and improve our standard of living,” said the economists.
No where is this strain more evident than in housing, they say.
National says the shortfall has reached a record of only one housing start for every 4.2 people entering the working-age population. The historical average is 1.8.
Government programs are underway to address this, but to meet demand and reduce housing inflation, Canada would need to double its housing construction capacity to about 700,000 starts a year, “an unattainable goal,” according to the economists.
“More worrisome is the fact that the decline is not simply due to a lack of housing infrastructure,” they said.
Excessive population growth is also impeding economic well-being, they argue. A fact they say is underscored by real gross domestic product growth per capita stagnating for six years in a row.
Capital stock, the physical and financial resources used to create value in an economy, has failed to keep up with population growth. Private non-residential capital stock has been falling for seven years, National says, and is now is at the same level as in 2012, while it is at a record high in the United States.
According to National calculations, capital stock per capita plummeted to about 1.5 per cent in 2023, compared with a high of almost 4.5 per cent in the 1960s.
Article content
“This means that our population is growing so fast that we do not have enough savings to stabilize our capital-labour ratio and achieve an increase in GDP per capita,” the economists said. “Simply put, Canada is in a population trap for the first time in modern history.”
If Canada is to improve its productivity, policy makers must set population targets against the constraint of our capital stock, they argue.
“At this point, we believe that our country’s annual total population growth should not exceed 300,000 to 500,000 if we are to escape the population trap.”
Average asking rents in Canada hit a record high of $2,178 in December 2023, up 8.6 per cent from the year before. Over the past two years, rents have increased by 22 per cent or an average of $390 a month, said Urbanation in its January Rentals.ca report.
One-bedroom apartment rents increased the most, rising 12.7 per cent over the past year to reach an average of $1,932.
Article content
Alberta saw the biggest hikes with rents shooting up 15.6 per cent to reach an average of $1,691. In 2022, rents in this western city rose almost 17 per cent.
But British Columbia kept the distinction of Canada’s most expensive market for apartments. The average rent here was $2,500 in December, even after slipping 1.4 per cent lower in 2023. The year before B.C. apartment rents soared 18.5 per cent.
Unfortunately, the solutions are fairly easy but it would be political suicide for anyone who would even dare to actually propose anything that would ruffle the feathers of the vested interests, the powerful or (God forbid /s) the wealthiest 10%, or the “untouchable” 0.1%.
On one side Simplify/Regularize the tax code by eliminating all ambiguity :
by removing exceptions and loopholes for corporation and individuals (it only helps the wealthy with “top gun” accountants to “legally” avoid/reduce taxes).
pre-filled tax declaration should be expanded or made automatic for every individuals with simple tax situations (they should not be worrying about taxes and tax credits when their income in lower than a inflation indexed preset treshold)
make everyone’s tax information public or accessible for every citizens similar to Tax transparency in Finland (PDF) it helps prevent/detect/reduce social inequalities and keep every one accountable toward each others
exclude tax filling softwares and companies whom have vested interest in making tax declarations as complex and as unintelligible as possible by lobbying government
increase financing and auditing of Canada Revenue Agency to help better pursue, prosecute and recover wealth hidden in tax Havens, or create a new separate branch of the CRA tasked exclusively to handle corporate tax shenanigans/evasion and deep pocketed individuals
On the other side, beyond the well meaning but hastily half-baked (I am unqualified to properly evaluate such plan) Canada’s Housing Action Plan, we should create a long term Strategic Urbanization and Cooperative Housing Fund somewhat akin to the Strategic Innovation Fund whereas :
local-first sustainability, durability, climate change mitigation/adaptation and energy efficiency are prioritized and audited/inspected for renovations and all new future developments
refrain housing from switching owners too frequently (control exaggerated speculation) or make public a historical record of all inspections reports, renovations, purchase price, owners and in case of an auction make the bidding process, name and amount of bidder transparent to all participants (better overall)
limit to let’s say 3 to 6 (anything beyond 10 becomes onerous) the numbers of residential building/house/condominium/apartment complex/senior housing/long-term care home a corporation, partnership or a individual can own/manage. 67000 homes owned and managed by a single entity is far beyond reasonable.
favor and help fund Mass Timber projects instead of concrete construction, by using prefab Cross-Laminated Timber (CLT) and Laminated Strand Lumber (LSL) for multistory residential habitation. By increasing Mass Timber adoption we help sequester more and more carbon into inert materials (although technically still combustible on the outermost layer).
(not a immediate priority, but crucial for the future of Canada) help set up a publicly accessible, interoperable, provincially and municipally controlled and constantly evolving : 5 years/10 years/25 years/50 years/100 years/200 years development roadmaps of natural, public, private and industrial lands/sectors/infrastructures/housing. Doing so will ensure everyone is on the same page with what is happening and what are proposed to happen in their neighborhood within their and their childrens lifetime. Everyone, from scientists to farmers, from residents to international students, from local business owners to local homeless, should be able to submit justified concerns/updates/changes/refusals to any future proposals/projects. Likewise, project proponents should be able to convince, demonstrate, allay, include, update, justifiably dismiss or preallocate equitable compensation publicly. By the time the yearly roadmap is on its way, anything without consensus or majority approval should be reported into the future or rejected, thus no surprise should remain (excepting a archeological/historical discovery or unforeseen dangers/accidents during excavation/construction/renovation).
Well that became more of a long winded exasperation on my part…
You are not logged in. However you can subscribe from another Fediverse account, for example Lemmy or Mastodon. To do this, paste the following into the search field of your instance: !canada@lemmy.ca
Unfortunately, the solutions are fairly easy but it would be political suicide for anyone who would even dare to actually propose anything that would ruffle the feathers of the vested interests, the powerful or (God forbid /s) the wealthiest 10%, or the “untouchable” 0.1%.
On one side Simplify/Regularize the tax code by eliminating all ambiguity :
On the other side, beyond the well meaning but hastily half-baked (I am unqualified to properly evaluate such plan) Canada’s Housing Action Plan, we should create a long term Strategic Urbanization and Cooperative Housing Fund somewhat akin to the Strategic Innovation Fund whereas :
Well that became more of a long winded exasperation on my part…
But thank you for reading my probably pointless TedTalk®©™ 🤣