December 10, 2023

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Ottawa to revise how it counts non-permanent residents after economists warn of undercounting

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Statistics Canada said in a statement that next month it will revise its methodology for estimating the number of non-permanent residents in Canada, which includes international students on visas and temporary foreign workers, after warnings from economists that there are near one million more of them living in Canada than suggested in official data.Andrew Vaughan/The Canadian Press

The federal government is preparing to revise the way it counts non-permanent residents, after warnings from economists that there are around one million more of them living in Canada than official estimates suggest.

Statistics Canada said in a statement that next month it will introduce a “revised methodology” for estimating the population of the group, which includes international students on visas and temporary foreign workers.

The agency made the disclosure on Wednesday, the same day The Globe and Mail reported that Benjamin Tal, deputy chief economist at CIBC Capital Markets, had told federal ministers about the one million additional non-permanent residents during a briefing on housing affordability at last week’s cabinet retreat. He warned that the undercounting means Canada is underestimating the number of homes needed to meet the country’s increasing housing needs.

Mr. Tal published a report on his analysis on Wednesday. In it, he says the official number of non-permanent residents, or NPRs, that is “widely quoted and used for planning purposes undercounts the actual number of NPRs residing in Canada by close to one million.”

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The report says Statistics Canada’s system assumes that temporary resident visa holders leave the country 30 days after the expiries of their visas, even though many of them remain in the country for longer and apply to extend their stays. Mr. Tal estimates that about 750,000 of the non-permanent residents absent from the official numbers were missed this way. Another 250,000 are people – mostly international students – who were missed by the census, he says.

Housing Minister Sean Fraser, who was immigration minister before last month’s cabinet shuffle, said in an interview that it is “possible that there are more people, particularly temporary residents, who remain in Canada that might not officially fall within our numbers.

“But I don’t think that demonstrates that there’s a lack of preparation on the immigration versus housing conversation,” he said.

He said immigration is good for the economy and communities. “I do not believe that in order to meet our housing goals we need to decrease our immigration ambition,” he added.

The federal government has boosted its immigration targets in recent years, and is now aiming to admit about 500,000 new permanent residents a year by 2025. But that doesn’t include foreign students on visas or people on temporary work permits.

Melissa Gammage, a spokesperson for Statistics Canada, said in a statement that the agency’s statistics on non-permanent residents “are accurate, produced using robust mechanisms and in collaboration with many stakeholders.”

“The number of NPRs strongly increased in 2022. It was the first year where the number of NPRs increased faster than the number of permanent residents … and this new trend is holding true for 2023 so far,” she said, adding that Statistics Canada constantly reviews its methodology.

She said the agency, starting on Sept. 27, will publish new data tables on non-permanent residents “computed using a revised methodology and going back to 2021.”

“These new tables will also include more details on NPRs, such as their estimated numbers and permit types, as well as other methodological improvements,” Ms. Gammage said.

In addition, she said, Statistics Canada will publish new ways of estimating the number of non-permanent residents in the country, as well as monthly updates, including information on administrative delays related to visa applications.

Mr. Tal said in an interview that the government’s official estimate of the number of non-permanent residents in the country in 2021 was around one million, but that his analysis found there were actually closer to two million. His report says his estimates are conservative.

A former federal economist, Henry Lotin, who is the founder of the consulting firm Integrative Trade and Economics, said he began telling Statistics Canada six years ago that its population forecasts for non-permanent residents fall short.

“They were warned in 2017 this was a problem because I told them. I told them that this was a policy mistake. I drew their attention to it,” he said.

Like Mr. Tal, Mr. Lotin has calculated that at least one million more non-permanent residents are living in Canada than are captured in official numbers.

Mr. Lotin initially delved into the statistics while doing consulting work for the Canada Mortgage and Housing Corporation, the federal Crown corporation responsible for housing.

He said inaccurate statistics are partly to blame for housing shortages, and that forecasts dating back 10 years underestimated the number of non-permanent residents who would be in the country. He added that this has affected the country’s planning and led to fewer homes being built than are needed.

A 2013 forecast estimated that the Canadian population would reach 38.7 million in 2023. Canada’s population has now reached 40.29 million, according to Statistics Canada’s latest estimate.

In his report, Mr. Tal said “no less than 1.1 million of that 1.5 million forecast miss was due to a much larger than expected increase in the number of NPRs, and most of the remaining miss was due to stronger than expected immigration.”

“Translating that figure into housing demand, that miss is equivalent to more than two years of building capacity,” he said.

Mr. Fraser, the Housing Minister, said immigration “does create challenges around housing. It does put pressure on social services. It does put pressure on infrastructure.”

“But I can tell you I would rather have the conundrum of needing to build houses so quickly because everybody wants to move to my community instead of losing schools and hospitals because so many people are leaving,” he added.

Michael Wernick, who led the federal civil service as clerk of Privy Council until 2019, said accurate data is crucial for framing good policy.

“The ability for governments and businesses to craft evidence-based policy options and decisions requires constant investment and attention to data sources and methods,” he said. “I hope we won’t slide backward as operating budgets are squeezed.”

With a report from Kelly Cryderman


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