Grubel: Curb immigration to let housing catch up to demand

Herbert Grubel takes the contrarian view regarding immigration levels, proposing an over 80 percent cut to some 50,000 annually. His characterization that Parliament could “easily” do this for a five-year period, as well as the political dynamics at play (no political party support for such a dramatic reduction), is naive at best.

As there is ongoing need to discuss what levels of immigration are  appropriate, it is useful to have contrarian views.

And it is also a useful reminder that quality of life issues in our largest cities need to be part of discussion.

But a more sensible contrarian view would be to propose a more modest reduction, rather than one that will understandably be dismissed out of hand:

Such unpleasant overcrowding of the Joffre Lakes Park is typical of all recreational facilities in the Lower Mainland. It also afflicts the region’s roads, bridges, public transit, hospitals, schools, universities and water supply, and, most importantly, Vancouver’s housing market.

What causes these problems? The simple answer is that for these facilities demand exceeds supply, but for the design of remedial policies, the fundamental, but also more difficult question, is why is there this excess demand?

Currently, the most popular answer is a shortage of investment in housing and infrastructure. Governments for some time have adopted policies to remedy this situation. The very existence and growth of the excess demand is clear evidence that these policies are inadequate and are likely to remain so. The relief from recently announced increases in publicly subsidized housing will quickly be overwhelmed by the torrent of additional demand for it.

Popular are also policies designed to reduce demand. They’re focused on the housing market and involve taxes on foreign buyers, raising the cost of mortgages and reducing regulation. These policies at best have had only transitory effects on demand for housing. More investment in infrastructure has been promised by all parties at every election, but obviously has failed to eliminate the problems.

However, there is one simple way to reduce demand. Lower immigration from the present rate, which sees about 250 new immigrant families settle every week of the year in Greater Vancouver. This rate of increase has brought the total population of B.C. from 2.2 million in 1972 to 4.8 million in 2017. The projection that it will reach six million in 2037 strongly suggests future worsening of excess demand.

Parliament could easily reduce the number of immigrants temporarily from the present, national 300,000 per year to 50,000. While in place for perhaps five years, the construction of housing and investment in infrastructure can catch up with demand. Thereafter, the number can be raised again to a level equal to the economy’s absorptive capacity marked by the sustainably matched demand and supply in housing and of infrastructure services.

Canadians really face no costs resulting from such a temporary reduction in the number of immigrants. Politicians proposing this policy run the risk of electoral losses from some powerful interest groups, but these could easily be exceeded by the gain in votes from suffering Canadians who benefit from it and who let the politicians know about their preferences.

Source: Opinion: Curb immigration to let housing catch up to demand | Vancouver Sun