Canada underestimated non-permanent resident count by about 1 million

Canada has underestimated non-permanent resident count by almost one million

Canada Arrivals sign at an airport. (Shutterstock)

A gross underestimating of Canada’s population growth, specifically the number of non-permanent residents in the country, is having immense ramifications on the housing affordability and supply crisis.

A bombshell report released on Wednesday by the economists with CIBC Capital Markets asserts Statistics Canada has missed the count of nearly one million permanent residents.

This has major implications for how governments plan for meeting the needs of a growing population when it comes to providing services and planning for housing market demand.

“Forecasting is tough but necessary. Provinces and municipalities all over the country rely heavily on Statistics Canada and CMHC’s population and household formation forecasts to allocate resources and establish zoning and budgets for new housing in order to accommodate the projected increase in demand,” reads the report.

“What if 10 years ago we had known that Canada’s population would reach 40.2 million in 2023? We probably would have been better prepared, and the size of the housing shortage would have been smaller. But we didn’t know.”

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The crux of the issue is that the federal government’s statistics agency assumes temporary resident visa holders leave the country 30 days after the expiration of their visa. But the unaccounted reality is most of the temporary residents do not leave after their visas expire, with 60% planning to apply for permanent residency, according to other estimates.

The undercount particularly snowballed during the pandemic, when expired temporary resident visa holders were unable to return to their home country in 2020 and 2021 when international transportation options were highly limited. Most of these residents who saw their temporary resident visas expire remained working or resumed their education in Canada.

CIBC economists “conservatively” estimate the number of temporary visa overstayers between 2017 and 2022 is in excess of 750,000. This does not include expired visa holders who have not yet applied for a new visa, either temporary or permanent.

This undercounting snowball first began to roll in the 2011 census, which is estimated to have undercounted the number of non-permanent residents by over 40%. But because the real number of non-permanent residents was relatively small, the undercounting at the time did not have major implications on population growth and housing market demand planning, unlike the situation the country faces today.

Beyond the pandemic-related factors that led to the undercounting, there are also some fundamentals that lead to ongoing undercounting, according to the bank. They assert many international students arrive from countries in which talking to the Government of Canada is unadvisable, and temporary foreign workers and student visa holders are included in the census sample only if they can correctly interpret the census form instructions, as they may fall into multiple categories when it comes to their place of residence.

Also, with an immense labour shortage in Canada, the federal government continues to encourage individuals to remain in the country, and there is no known action by the government to remove expired temporary visa holders from the country or even withdraw their employment or tax slip issuances by the Canada Revenue Agency.

“Accordingly, Statistics Canada’s practice of assuming an exit a month after the visa expiry has resulted in materially understating population, housing, and service demand forecasts (especially in university cities and towns) well before COVID began,” reads the report.

“The practical implication of that undercounting is that the housing affordability crisis Canada is facing is actually worse than perceived, and calls for even more urgent and aggressive policy action, including ways to better link the increase in the number of non-permanent residents to the ability to house them.”

Canada’s number of international students reached 800,000 in 2022 — far higher than the federal government’s original target of 450,000 by 2022, which was a target achieved by 2017/2018. Federal Minister of Housing Sean Fraser made comments earlier this month suggesting the federal government is considering enacting a cap on the number of international students to help quell the resulting heightened housing demand.

Post-secondary institutions across the country have increased their international student counts due to their structural financial issues, as international students pay an exponentially higher rate of tuition.

Following the major increases of 2021 and 2022, the federal government is targeting nearly 1.5 million additional immigrants between 2023 and 2025, with an annual high of 500,000 by 2025 alone.

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