Change the things you can
Published: Wednesday, January 14, 2009
Discussion about what should be in the upcoming federal budget has focused almost exclusively on how tax cuts, infrastructure spending and direct cash infusions for troubled industries can revive the country's sputtering economy. As such, it seems all but inevitable that billions of dollars will be showered on groups and regions to create jobs and revive consumer spending — all with the aim of getting Canada's GDP back in the black.
The prevailing view in Ottawa is that the economic forces that will determine Canada's near-term fiscal future are mostly outside of the country's control. There is nothing, for example, the federal government can do to revive global commodity prices or shake U. S. consumers out of their doldrums. Conventional wisdom therefore dictates a massive stimulus package and sky-high federal deficits which future generations will have to pay off.
But is it really the case that government is powerless to affect, in positive ways, the economic inputs that will determine the severity of the recession?
Canada's immigration targets are an interesting case in point. As recently as last autumn, the Conservatives reiterated their commitment to maintain immigration levels at historic highs and accept 250,000 new citizens in 2009.
We know, from a slew of studies, that newcomers are facing ever-greater challenges climbing Canada's economic ladder. Over the last decade and a half — the very period when our economy experienced one of its longest and strongest expansions — low income levels among recent immigrants rose from an already worrying 31% to 35% of all new arrivals.
These higher rates of poverty cannot be blamed on lower skills or levels of employability among new arrivals. The percentage of new immigrants with university degrees increased from 17% in 1992 to close to 50% in recent years. Yet despite almost two decades of Canada selecting immigrants with higher skill sets and greater levels of expert knowledge, native-born Canadians earn fully one-third more than newcomers who are the same age and have similar education levels and work experience.
With the current intake of newcomers set at a quarter of a million for 2009 it is unavoidable that the underemployment of recent immigrants will skyrocket as the recession
deepens. Then the very real danger will exist that the skilled immigrants that the Canadian economy urgently needs will vote with their feet and leave Canada permanently. A recent Statistics Canada study found, for instance, that a whopping 40% of highly valued skilled and professional male immigrants to Canada exited the country permanently within 10 years.
But this is only half of the problem. Immigrants living in poverty for extended periods of time are starting to realize that their diminished life prospects are likely to be passed on to their children. This is a profoundly disturbing trend that has the potential to undermine the universal immigrant credo that the sacrifices of the first generation are made bearable by the successes of the next. For each new wave of immigrants, the second generation is expected to reap greater economic rewards and social mobility — a process that has now all but stopped for some immigrant groups.
Given these realities, here is a modest policy proposal to complement any economic stimulus: Temporarily reduce the country's immigration targets to ensure that those newcomers who have uprooted their lives to settle in Canada do not experience even greater levels of economic hardship and privation.
A reduction in immigration levels would also take pressure off the various social services and associated government expenditures that every recession necessarily puts into overdrive. In addition, an easing off on record-high immigration would help ensure that the jobs that are in fact created by an economic stimulus help bring down unemployment as quickly as possible.
By taking a hard-headed look at the economic levers over which it has control, the federal government could help lessen the length and severity of the recession in ways that are not a burden on the public purse. More importantly, by temporarily reducing the country's intake of immigrants, the government could help ensure that we retain the skills, industry and ambition of the millions of newcomers who chose to settle in Canada over the course of the last decade — the very people the country will rely on to rejuvenate our economy when the global economic tide begins to turn.
-Rudyard Griffiths is the co-founder of the Dominion Institute. His forthcoming book, Who We Are: A Citizen's Manifesto, will be published this March by Douglas & Macintyre.
Recessions and Depressions