Thank you, Mr. Chair.
Good morning, committee members.
I've covered Canadian housing and household credit trends on behalf of institutional investors for over a decade now. I previously testified before this committee in 2022 regarding housing's role in the cost-of-living crisis in Canada. If I could, I would just like to look back and quote from that testimony:
Part of the current housing crisis can be traced...to 2019. At that time, population growth in Canada hit nearly 600,000 in [one] year, due in part to [an]... increase of 200,000 non-permanent residents....
Allowing population growth at this level without consideration of the real world constraints is a policy failure that cannot be repeated.
Now let me fast-forward to today.
According to Statistics Canada, Canada's population has grown by 1.2 million in the past year, of which an unprecedented 730,000 consisted of non-permanent residents, such as international students and temporary workers. I've included charts in my submission, which I would encourage the members to review.
Importantly, the non-permanent resident cohort has no caps and no targets set in Ottawa and is separate from the federal permanent resident target of 465,000 for 2023. I want to be crystal clear that my comments to follow should not be construed as criticism of immigration policies broadly or of Canada's permanent resident target, which I fully support. We need to be careful not to position this issue as a binary all-or-nothing issue. There's plenty of area for thoughtful discussion between zero and the current levels of growth, which have clearly had unintended consequences that we cannot ignore.
Let's talk about those unintended consequences.
It's important to note that non-permanent residents are overwhelmingly made up of renters, so it should be no surprise that when we add nearly three-quarters of a million into the Canadian population in one year, we see an extremely disorderly rental market that has disproportionately hurt lower-income households.
We also need to be mindful that this growth has impacted the non-permanent resident cohort themselves, particularly international students, who often find themselves living in substandard housing if they can find housing at all. We have failed them too.
According to CMHC, rental apartment vacancies had already fallen to 20-year lows late last year, while average rents in 2022 posted the largest annual increase since at least 1998. It is certainly worse today, and your constituents who have tried to find rental accommodations recently can attest to that. This dynamic is also contributing to the cost-of-living issues as rents alone have added 0.4 percentage points to headline CPI as of last month.
I believe we have a misaligned incentive structure at play as post-secondary institutions and the for-profit partnerships they often work with have every incentive to increase international student enrolment due to the much higher tuition fees these students pay and without regard for the local rental market that doing so might impact.
Among the other unintended consequences is that this dynamic has contributed to housing speculation in recent years, as some landlords have discovered that while they cannot make a satisfactory return renting a single-family home to one family, the economics are very different if they can instead rent to a dozen or more international students. We are absolutely seeing this dynamic at play.
Finally, I believe this level of population growth risks stoking anti-immigration sentiment. Consider the results of a Nanos poll this month that found that the share of Canadians who want lower immigration targets has risen sharply from 34% in March to 55% today.
Our ability and willingness as a country to attract and welcome the best and brightest from around the world has been our superpower. It would be a shame if Canadians became disillusioned and lost that vision due to the disruptive trends we're seeing today.
I recognize that the provinces have a major role to play here, but the federal government still has some levers and some things that it can do, including establishing a provincial-level cap on international students and dissuading applications by raising student applicant visa fees or reducing the number of hours international students can work by issuing a fixed number of work permits for students each year.
Finally, there is incentivizing new construction, and on that point I would recognize that the elimination of the GST on new rentals is a welcome policy on that front.
Shifting gears for a moment, I'm going to leave that point there now, but I do also want to express my support for the submission from Mortgage Professionals Canada, which advocates for direct income verification between lenders and the Canada Revenue Agency as a means to dissuade mortgage document fraud, which has become a very real problem in recent years. This is a problem with a simple, elegant solution clearly articulated by Mortgage Professionals Canada, and there's absolutely no reason not to pursue this.
I will leave it there and I welcome your questions.