Thank you. I was hoping that Professor Worswick would go first.
I'm Herb Emery. I hold the Vaughan chair in regional economics at the University of New Brunswick. My research is focused on policy options for growing the regional economy and understanding labour market adjustment in a subnational context. I benefited from working with the UNB-based New Brunswick Institute for Research, Data and Training, led by Dr. Ted McDonald, which allows for access to de-identified, linked administrative data, which provides new perspectives on subjects like immigrant retention in the region and post-secondary graduate outcomes in New Brunswick.
Recent changes to the cap in numbers of international students and to raise financial barriers for international students seeking to attend Canadian post-secondary education institutions, which include limits on work hours off-campus, will have important impacts for our PSE institutions, post-secondary education institutions, in the Atlantic region. They may have important impacts on regional labour supply, population growth and productivity growth but, given the economics of our labour markets in this subnational setting, I expect the main impacts of the region will be for the post-secondary education institutions and their finances, and a large number of small employers relying on labour-intensive production and service provision.
Since 2016, when I moved to the Atlantic region, I've encountered five major reasons that stakeholders and governments provide for growing numbers of international students enrolled in colleges and universities in the region.
The first one is a population growth goal. The four provinces that make up the Atlantic region all face challenges of population aging and out-migration of their own residents. Immigration was identified as an effective way to backfill for interprovincial out-migration and eventually grow the size of the region's population. International students were just one more provincially targeted entry program to increase immigrant numbers in the region.
Second, with the population aging and a declining demographic of the usual ages that attend post-secondary education, it was seen that international students would provide revenue for post-secondary education and also boost enrolment numbers, which was going to be a problem when you have stagnant provincial grants to the institutions along with caps on increases in fees for domestic students. Immigration was going to solve a revenue problem for post-secondary education institutions.
Third, the goal was to create a pool of labour for low-wage jobs for students who need to work while they are pursuing their studies. This was coming on the heels of the region losing its traditional glut of low-skilled, low-wage labour, which had been a source of competitive advantage in many of its industries, like manufacturing. With that glut gone, it was ideal to find a source of labour that would take jobs that a lot of Canadians, particularly younger ones, weren't keen to take. That was the second avenue, and it's what led to some of the lobbying for very long work hours for full-time students.
Fourth, economic growth and innovation objectives were to be met by international students graduating from programs in the region and being retained, who would become entrepreneurs, innovators and skilled workers to raise regional productivity.
Last, it was also identified that, with the out-migration of highly qualified personnel, having regionally educated international students could backfill in strategic sectors, like IT and ICT, to keep some kind of strategic advantage for the regions seeking to grow some of these new industries.
It should be immediately apparent that higher numbers of international students in the region were to address a number of diverse goals and challenges—population growth, growth of university and college resources—provide a pool of low-cost labour and, over the long run, increase productivity in the region. The goals may have differed across interests and stakeholders in the region, but the interest in higher numbers of students did not. Consequently, support for higher numbers of international students has generally been high, and it was seen as having a number of diverse benefits for the near term and over the long term for the region.
Research that I and colleagues at NB-IRDT have carried out suggest that the main impacts of all this increase in international students would have been for post-secondary education finances and for providing a transitory supply of low-cost labour for the region's employers. There hasn't been an increase in retention rates of immigrants over the long run in the region. There isn't a large supply of transitions of students into permanent residency in the region. It is higher when they have work permits, but it's still, I would say, a minority share of the total immigration increase that has been coming in.
In evaluating the impacts of the recent steps, more discussion needs to be focused on what goals are trying to be achieved with the international student program and how the powers and responsibilities of the provinces and their post-secondary education institutions, which are are recruiting the students, align with those interests for meeting the stated program goals versus meeting their own needs and goals that they're setting on their own.
I think a big problem for the region has been this misalignment of the agency of the institutions and recruiting with what was trying to be achieved with some of the larger goals of that program related to growth of the region in terms of its economy and population.
It's also important to recognize that high numbers of immigrants and international students are not the only ways to address labour supply concerns in the region or university finances. It may have been an expedient solution in the short run, as it's been very difficult to deal with some of these other longer-term challenges with the labour market, like EI reform and what is a sustainable size of a post-secondary education sector. As a consequence, we've now run into the problem where the region has gone out on a limb, relying on international students to solve a number of different problems. That's now going to potentially be capped—