The Decibel - City Space: Will Canada be able to house all the immigrants it hopes to welcome by 2025?

Episode Date: July 7, 2023

Last year, the federal government set an ambitious new immigration target — to bring in half a million permanent residents a year by 2025. While the country is already dealing with a pretty profound housing crisis, it’s likely everyone will feel the housing crunch even more as a record number of immigrants move to Canadian cities in the near future. Where will all these newcomers live and whose job is it to make sure the country is prepared? In this episode, we hear from Mike Moffatt, the Senior Director of Policy and Innovation at the Smart Prosperity Institute at the University of Ottawa. We’re also joined by Gregg Lintern, the Chief Planner for the City of Toronto, who discusses how Toronto’s housing goals can be met in time.

Hi, it's Meenika here. Today, we're bringing you one of our favorite episodes of City Space, another podcast from The Globe and Mail. Hope you like it. Immigration makes Canada better. It's said so often it verges on being a cliche, but it also happens to be true. In a world where openness to immigration ebbs and flows, and sometimes with tragic consequences, it should be said that Canada finds itself in a pretty remarkable place. Broadly speaking, we have political consensus that welcoming immigrants is a good thing, if for no other reason than the cold, hard math of it all.

Canada's consistently low birth rates mean that we can't replace retiring workers at the pace that our economy needs. So we rely on these infusions of human talent to keep our country running. Look, folks, it's simple to me. Canada needs more people. Canadians understand the need to continue to grow our population if we're going to meet the needs of the labor force, if we're going to rebalance a worrying demographic trend, and if we're going to continue to reunite families and to do right by the world and make good on our commitments to support some of the world's most vulnerable.

That's Sean Fraser, Canada's immigration minister, when he announced last year that the federal government was setting an ambitious new target. By 2025, the aim is to bring in half a million permanent residents a year. That's an increase of 25% from 2022. And many of them will be headed for our cities, which tend to be nexuses for newcomers. The numbers for Canada in that regard are pretty incredible. In Vancouver, nearly three-quarters of the population is a first or second generation newcomer. And for the greater Toronto area, that number is nearly four of every five people. As they say, if we build it, they will come. We've built a country with a high quality of life,

and so people have come from all over the world. But here's something else to think about. If they come, have we built enough? After all, newcomers need, among other things, a roof over their heads. But as we know, Canada's dealing with a pretty profound housing crisis, where the competition is already so stiff. With little supply and high prices, resentment has been building among Canadians for years. So what's going to happen when a record number of people come to our cities looking for a place to live? This is an existential point, not just for the newcomers, who deserve a place to exist, of course, but for the bigger question of immigration in Canada. We can never take it for granted that Canadians will always be as welcoming as they have been.

And adding more competition to an overheated housing crisis risks throwing Tinder onto an active flame. Immigration is a broad and complicated issue that touches on so many other ones. It's about labor. It's about infrastructure. It's about social services. And all of those things are covered by different levels of government. It's a bit of a mess. And in that mess, immigrants can get scapegoated when the people who already live here experience problems with labor, infrastructure, social services. You get it. And politicians around the world prove time and time again that they're all

too happy to make hay of that. Welcome back to City Space. I'm Adrian Lee. In this episode, we're talking about what immigration means for our cities. How will they handle the huge surge of hundreds of thousands of new people over the next three years? What's the big plan for housing them? And could more immigration actually help relieve our housing crisis? That's coming up after the break. Mike Moffitt is the Senior Director of Policy and Innovation at the Smart Prosperity Institute, a policy think tank based out of the University of Ottawa. He's also an Assistant Professor of Economics at the Ivy School of Business. He spends a lot of time thinking about the benefits and complications that more immigration might bring

when it comes to the housing crisis in our cities. You know, it's a complicated topic, but I think overall, there are certainly challenges to integrating so many new people to the country, whether, again, they come through permanent residency or non-permanent residency. So I think it's a challenge that we need to take seriously that, you know, having these housing shortages is not good for sort of existing Canadians, but it's also not good for, you know, it's not good for the talent that we're trying to attract and retain to cities like Toronto. Like many economists, Mike thinks that higher immigration targets have the potential to help our country in a lot of different ways.

And the biggest reason? Canada is getting old and quickly. The baby boomers are retiring just as they are in other countries. And this presents a challenge when it comes to generational turnover. And we've seen, you know, countries like Japan and countries like Italy, you know, the challenges you have when you have a larger and larger population of seniors and a smaller and smaller working age population, you know, used to be about for every retired person, there'd be seven workers. Now it's getting closer to about two to one. So, you know, how do we finance our long term care of homes, CPP and all of these things that, you know, our seniors expect and deserve if we don't have that working age population? He also believes that increased immigration will help with our housing supply problem, which is part of the reason homes have gotten so expensive. So certainly I think the biggest issue that we have is just that that disconnect between how many homes that we're building and how fast the population is growing. You know, the vast majority, over 90 percent of the housing we build is market built housing. And that market needs workers of all kinds.

But our immigration system isn't so inclusive. Canada's immigration system works on a point system where you get a certain amount of points if you, depending on your fluency in one of our two official languages, your credentials, your level of education and so on. But I think where the challenge is, or what we need to do about it, is think about what those skills are, what those talents are. So for example, I'm a university professor, think tank guy, and my dad was a sheet metal worker, built a lot of heating and cooling in apartment buildings back in the 60s and 70s. Our immigration system is highly biased towards bringing in guys like me and highly biased against bringing in guys like my dad. And I think we need to balance that out a little bit. I think there

is a role to bring in more electricians and roofers and plumbers so that immigration can be the solution to our housing crisis and not one of the things accelerating it. And again, I think we should look to change that where, you know, sort of recognizing that, yeah, we need, you know, we need these sheet metal workers. And yeah, it will be a bit of a challenge integrating them if they only have remedial English and French, but that's something worth doing given the shortages that we see in the skilled trades. From Mike's perspective, the relationship between immigration and housing is strained because the different levels of government just can't seem to get on the same page. The federal government is setting immigration

targets, but the municipal and provincial governments are largely responsible for providing the housing, services, and infrastructure that allow new Canadians to settle and thrive. When these three levels of government fail to execute things together, urgent and major just say, OK, this is the immigration target for next year to better allow provinces and municipalities to plan. We need to coordinate better our housing plans, our transit plans with our population growth plans. And when it comes to housing, every level of government has different levers. The municipalities control a lot of the zonings and approvals process and some of the infrastructure. The provincial government plays a role on province-wide zoning and infrastructure rules. They play a big role on the number of skilled tradespeople, which can affect how many homes you can build. And then the federal government plays a big role on the housing side. They control the tax, most of the tax system. And whatever tax incentives you have in place can either encourage or discourage building. Obviously, they control the immigration side and not just the number of

newcomers, but also, you know, what skills do they have? How many of them are in the skilled trades and so on? You know, how much money are we going to spend towards social housing and co-op housing and, you know, non-market forms of housing? So all three levels of government have to work together along with the higher education sector, the builders and developers, and the skilled trade sector, or else we're going to continue to have these policy disconnects. When Canadians talk about the end of the housing crisis, we're usually hoping for a correction,

which is to say that the market comes back down to earth. And in some ways, immigration does work against that. More demand in our biggest and most desirable cities is going to keep prices high. There is a zero-sum element to the housing crisis, at least in part, where existing homeowners and existing owners of rental property want prices high, renters and those trying to buy into the market want prices low. I certainly believe that having higher rates of newcomers to the country, whether, again, they be permanent residents or non-permanent residents, does act as sort of a floor on how low rents and home prices can go.

I don't believe that that's necessarily the intent of policymakers. I think they're more worried about the labor market and worried about the ratio between the number of retired people versus the number of workers and having enough of a tax base to pay for the health care system and that kind of thing. But certainly having robust population growth does somewhat prevent how low house prices will get. If there's one thing we've learned about how cities work, it's that there are always unintended consequences. That's just how it goes, especially when you're dealing with this many people on this large a scale. The more important thing to think about is what we do about the consequences as they emerge. After the break, we'll speak to

Toronto's chief planner about how the city is preparing to adequately house and support the influx of new Canadians. Greg Lintern is the chief planner for the City of Toronto, a position he's held since 2018. Here's our conversation. Really appreciate you taking the time. Yeah, I'm looking forward to chatting about housing and growth and all that great stuff that's happening in the city of Toronto. Yeah, I mean, speaking of great stuff, I mean, these are heady times for cities in Canada.

Canada is hoping to welcome a record-breaking number of immigrants over the next three years, annual targets of no less than 465,000, a milestone goal of 500,000 new permanent residents in 2025. And, you know, Toronto has obviously seen immigration waves in the past, but this one seems to be particularly large that's forthcoming for Canada and certainly Canada's biggest city. So what is Toronto doing to prepare for this? You know, it's a big number. And that's something that we are constantly challenged with, even more so now because of housing afford Toronto. Over the last five years, we've approved 165,000 new residential units. The number of units that actually gets built in Toronto relates more to the capacity of our construction capacity, like our ability to actually build,

and all of those external market factors. So when we approve housing annually around 28,000 over the last five years, we actually complete about half of that. It's like a two to one ratio. So we're in a bit of a pickle around our capacity to actually build the amount of housing that's going to be needed to meet those immigration levels. Yeah.

Well, when you say we're in a pickle, I mean, is that just a matter of supply? Is that just a matter of we need to be building more and getting more residential units? Yeah, you know, it is part of it. I would not approach the whole supply and demand discussion by breaking it down a little bit. Because it is, yes, it's about supply, the actual amount that we approve, the actual amount, as I said, that gets constructed, the ability of the industry to actually increase their capacity to build. We need the houses built. You can't live in an approval. You need a house to be built. So part of that is supply. Absolutely. No question. But it also relates to need. And when you look at the need of our population groups, are we building enough seniors housing? Are we building enough family size housing? Are we building enough grade related housing? Not everybody wants to live in a tower. Not everybody wants to live in a mid-rise. Are we building a city of different scales?

Are we building affordable housing? Are we building rental housing? So you break down that big supply picture and we're probably doing very well, pretty well on a 600 square foot, one bedroom condo where we're pumping them out. No problem. But not everybody can afford that. So are we building enough rental? Probably not building enough rental. Are we building enough grade related housing to meet the needs of people who want to age in place in their community? Probably not. Are we building enough seniors housing in long-term care facilities. So you begin to break it all down and you have to develop kind of a

diversified strategy, a pretty sophisticated strategy. And we've got something called the housing action plan that gets at a couple of things. It, it, it gets at direct development of housing, subsidized and affordable housing, but it also gets at enabling housing because we want the private market to have as many opportunities as possible to build housing. Well, I want to focus a little bit here on that affordable piece, just because, you know, for folks, there are a lot of folks who agree that, and I think rightly so, that immigration is a positive force, a net good for a city, for a society. At the same time, we're seeing these newcomers enter a city where the housing market is already tight, where affordable housing is already quite scarce. I guess my question is, are the concerns fair? Are folks right to be worried that the more newcomers there are, the tougher it will

be to get a place in the city they live? I've heard a lot of discussion, almost in the way that you framed it, that the trick is, and there are lots of tricks with these propositions, is that we have the federal government, the federal government, the provincial government, the municipal government, we all have levers to pull. And if the federal government is setting that rate, immigration level that they're setting, that, you know, the need to attach that to levers that they can pull that help the financial side of housing, They could help us and help housing constructors with tax relief that they control, for example, that go right into whether or not a pro forma works for housing or not. So we make that case regularly to the federal government around the fact that they can make

building either more or less expensive through their tax system. And making that connection is important. And it's an important role that we play with advocacy, but certainly participation of the federal government, the participation of the provincial government directly, either the various ways that the city has attacked housing through its own land assets, for example. So there's a lot of work on the regulatory policy side of the local level. The province is changing quite regularly the planning policies

of the province. Maybe it would be good for them to take a bit of a pause and let us all catch up. Right. Well, that's a crucial point, right? That the federal government governs immigration, but a lot of those immigration targets really affect where people live the most, which really are our cities and the municipal governments that govern those. And then in the interim, there's provincial governments that provide many services that look at some of the things that you just mentioned around labor. But there's more to supporting new folks in a city than just building houses, right? I mean, there's thinking about labor, there's thinking about services and infrastructure. So can you

speak a little bit to what other services and infrastructure the city has to provide, and sort of how those things can be supported by a government that is a little bit tripartite. It's the other side of this discussion in a way, because we think of the place that you live, if you're privileged enough to have a warm place to lay your head at night, and you think about the parks that you go to, the public spaces that you go to. Literally, you don't even probably think about turning on the tap or flushing the toilet you you think about the transit system or the bike lanes or the roads that you use we we call that infrastructure social infrastructure as well whether or not you need social supports you need to go to the community center you need daycare uh public

schools um health care you name it it's a's a long list of hard and soft infrastructure, social infrastructure, and all of this has to be bought and paid for. So we talk about this concept of building complete communities where when we're conceiving of new areas of the city that are changing, I think about Downsview, for example,

probably in 30 years will be the size of the city of Peterborough, like over 100,000 people. You don't just build housing there. You build parks, you build sewers, you build water lines, you build schools. I think they're looking at probably five or 10 schools that need to be built. But some of it may require partnerships with other levels of government. Some of it may come through the taxation system in different levels. But we can't forget that we need a strategy to do that. And the provincial system that was introduced with Bill 23 last year, it actually changed some of the financing system for municipalities in Ontario.

And the amount of revenue that we have coming in to build that infrastructure is now less. Over 10 years, it's about a billion two less in affordable housing. For other kinds of infrastructure, it's a considerable reduction in the amount of money that we use to build parks and other facilities. But the clock is ticking because we plan and build on a cycle. We don't just pick up a pen and draw a sewer and build it the next week. And it does work on it like a one, two, three year cycle. So we've got to be resolving any dispute we have about funding infrastructure in order to keep that infrastructure going. Because, again, you can't just expect people to arrive in the city, whether they're from Manitoba or Mumbai, and not be able to turn on the water and flush their toilet.

That is not the standard of living that we expect and the quality of life that we have here in the city. Well, it's absolutely right, your point that the clock is ticking. And earlier, you mentioned that governments have changed plans, programs and policies so often that you're sort of are left hoping it'd be great to catch up. So my question to you is, you know, 2025, that's 18 months away, you know, your cycles of planning have been cycled through. Are our cities ready for this wave of newcomers? The problems and the solutions have been laid out. And it's a matter now of turning our attention to getting that construction industry capacity up to a level that can produce housing. We've set a

housing pledge goal that the province asked us to agree to 285,000 homes. So that's the amount that's been calibrated that we need by 2031. And as I pointed out, we're not building at that pace. We're probably approving at that pace, but we're not building at that pace. You know, one thing the city has to focus on for sure is when somebody is ready to build. I'm not just talking about the people that invest in real estate, try to make deals and flip land. I'm talking actually about the people that want to pull a permit. So when we've got builders who want to pull a permit and work with us to get those permits issued. We've really got to focus on that tail end of the approval process to put them in a position to build.

But we don't control all the levers, whether it's interest rates or everything else, the supply chain and labour shortages and everything else. I talked about that place I saw today and the story that the developer was telling us was all the challenges that they've had through the course of building through the pandemic. Probably, he said, a year and a half of delay on their side of the line, just dealing with labor, just dealing with supply, just dealing with economic factors that they don't control either. And frankly, sometimes the feds and the province don't control. So this is a very challenging question that you're asking. And I think, again, a lot of the remedies are there,

and it's going to take a combination of really hard work on the part of the public and private sector, but a lot of political will, and a lot of political diligence to see some of these ideas actually turned into into action. Right? Well, yeah, the remedies are there, the goals have been set, the targets have been laid out. But at the same time, you know, the federal immigration announcement, the plan, that plan has also been made, you know, the those immigrants, those newcomers are coming. So I guess what is the worst case scenario if these building goals, which it seems like we're maybe a little bit behind on what happens if

those things aren't met? I honestly don't know. I think people may, may choose to locate in other areas, certainly from an affordability point of view, there's been a lot written about drive until you qualify, I think is the slogan I've heard. But whether they choose to locate in other areas of the province of Ontario, or for that matter, in Canada, whether or not they begin to decide that they don't want to come here because of economic challenges. I think there are plenty of opportunities that people recognize that comes with Canada when they come here. But it has to be a complete suite for them of being able to find accommodation. But I do know what we have to do is pull the levers that we can, at least at the municipal level and continue to advocate provincially and federally about what they need

to do to, to make this whole system work. These things, remember, these things are imperfect as well. You're dealing with a lot of things that aren't as sometimes well connected as you would think they are. Oh, totally. I mean, I mean, certainly in Canada, we have, you know, try if not more jurisdictional, you know, situations and housing is really that that big nexus of it. And we talk about that, right? We talk about that here, that cities are these places where you have levers and one lever does one thing, and then a suite of other things happen as a result of that, and you have to pull another lever to deal with those.

Exactly. And you've talked about this a little bit earlier, but I sort of wanted to just go back to it, which is, you know, the city really does pull a lot of levers in housing to incentivize development, to incentivize private developers in the market to get involved. There are obvious reasons for that. They are the primary movers and primary folks who are able to make that stuff happen quickly. But are there alternative housing delivery models that can be more heavily invested in? You spoke a little bit about them before from Toronto's perspective, but is there something that we can do that goes beyond private sector engagement here? Well, the province had a pretty robust non-profit sector in the 90s. And before that,

people may be familiar with St. Lawrence in the city of Toronto downtown. St. Lawrence in the city of Toronto, downtown St. Lawrence neighborhood built in the 70s, comprised in part of market housing, but also co-op housing, where it's like a more of a nonprofit model that had cooperative ownership and cooperative operating of long-term housing. So there are definitely other models. There's probably a whole continuum of models around the world where you have direct state-built housing, you have a lot of tax-supported private housing. A long time ago in the 60s, there were programs from CMHC that supported a lot of rental housing construction in Toronto through mortgage support and other taxation relief. And they were highly productive, highly productive matching of

the private industry and the weight of government taxing authority and policy behind it. So there are lots of models and continued participation, cooperation in all the sectors. I would never think that it's an all public or an all private solution. And certainly back again, back in the 60s, there's something called limited dividend where people agreed to a limited return in exchange for favorable financing. So we accept to continue to get really creative. And sometimes the some of these old ideas are making a comeback. There's a lot to think about. And there's a lot for you to do. So I appreciate you taking the time with us. I really enjoyed it. It's, it's something that everybody's engaged with. And the more people

that become engaged in the conversation, I think the better off we'll be finding the solutions. On the next episode of City Space, it's summertime, and that means it's festival season. It's an integral part of city life, creating an urban space for immigrants to show off and celebrate where they're from, especially if they're new in town. We'll look at why cultural festivals are so important to cities and how they can help immigrants integrate on both a social and psychological level. City Space is produced by Julia DeLaurentis Johnston and Kyle Fulton. Our theme song is by Andrew Austin. Our executive producers are Kiran Rana and Alicia Sani.

Thanks to Mike Moffitt and Greg Lindern for joining us today. If you like what you heard, give us a rating and review on Apple Podcasts. And tell your favorite city dweller about City Space, too. I'm Adrian Lee. Thanks for listening, and talk to you soon.