Trudeau's immigration plan may cause 'social crisis,' says CIBC CEO on housing, healthcare

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The CEO of a top Canadian bank expressed grave concerns with Prime Minister Justin Trudeau's record-breaking immigration quotas. According to Canadian Imperial Bank of Commerce (CIBC) CEO Victor Dodig, Canada could be on the precipice of an unprecedented "social crisis."

He said the country might face disastrous consequences if Ottawa fails to build more housing to accommodate new immigrants.

"New Canadians want to establish a life here and need a roof over their heads. We need to get that policy right and not wave the flag saying, isn't it great that everyone wants to come to Canada," said Dodig.

In June, the Canada Mortgage and Housing Corp. (CMHC) said the country would need 3.5 million more housing units by 2031 to improve affordability. That would require housing to double from an annual average of around 200,000 units to nearly 400,000.

The federal government wants to welcome upwards of 500,000 immigrants annually by 2025, per their immigration plan. It calls for the admission of 1.45 million more new permanent residents over the next three years, equivalent to 3.8% of the country's population.

BMO's chief economist Douglas Porter warned that increased competition among newcomers would push prices higher for affordable housing.

Ottawa launched its affordable housing strategy in 2017 to run a 10-year plan at $40 billion. However, their budget has more than doubled owing to an "accelerated" need for affordable housing — despite construction failing to keep up with the rising demand.

Canada's Parliamentary Budget Officer (PBO) said rising construction costs would increase the taxpayer bill in 2022/23 to $89 billion.

Growing costs for materials, loans and land have pushed up the price tag for new residential development. A shortage of construction workers has also added to overall building expenses, making it much more expensive for developers to build, especially apartment buildings and affordable units.

In its annual rental market report, the CMHC attributed "significantly higher net migration" to partly driving demand up for rental properties.

"Growth in demand outpaced strong supply growth, pushing the vacancy rate for purpose-built rental apartments down from 3.1% to 1.9%. This was the vacancy rate's lowest level since 2001," wrote economists for the crown corporation.

The Immigration, Refugees and Citizenship Canada (IRCC) said Canada added over 437,000 new permanent residents last year, accounting for three-quarters of the country's population growth. 

Ontario, BC, and Québec observed the highest flows of new immigrants, placing additional demand pressures on their local markets.

BC has among the costliest real estate markets to rent nationwide, with the arrival of immigrants to the province doubling in the first half of 2022. 

Most of these immigrants settled in Metro Vancouver, contributing to growth in rental demand. The typical cost to rent a two-bedroom unit is a whopping $2,002.

About a quarter of newcomers from January 2022 through October intend to settle in the Toronto region — the second most expensive city to rent, with similar units costing $1,779.

Dodig also cited concerns about the healthcare capacity, including an "unbelievably long line of people waiting for doctors, for procedures" that could worsen under current immigration projections.

"The whole ecosystem has to work. If they can't get a house, if they can't get a doctor, if they are struggling to get a job, that's not so good."

Roughly one-in-10 Canadians are still waiting for surgery, a diagnostic scan, or an appointment with a specialist.

According to the Fraser Institute and Secondstreet.org, Canadians waited an average of 27.4 weeks for medical treatment, including critical surgeries, treatments, and procedures.

At least 13,581 patients died waiting for medical treatment last year, compared to 11,581 the previous year.

Dodig called on governments to address the issue by recognizing certifications and skills gained abroad.

"We should just advance those folks and not meet them in an Uber and say, what do you do: I am a doctor from Iran and can't find a job here," he said. 

"That still holds for immigrants today. He was unskilled, and for those with skills, many of the skills aren't being recognized." 

However, a Leger survey revealed that nearly half (49%) of Canadians believe Ottawa's immigration plan is too ambitious. It found that excessive strain on Canada's housing availability and healthcare system is on top of mind for Canadians about high immigration numbers. 

According to the PBO report, the national housing strategy needs a standard definition of affordability, raising questions on whether constructing units presented as affordable are indeed affordable.

Policymakers are under increasing pressure to deal with the growing unaffordability problem, with 6.9% inflation and pricey accommodation leaving the pathway to prosperity uncertain.

The federal government has also faced complaints about its mishandling of the migrant crisis. 

Recently, Ottawa agreed to ship asylum seekers from Québec to Ontario and elsewhere as Quebec struggles with the intake, mainly coming from the controversial Roxham Road crossing point. 

Québec Premier Francois Legault called on Trudeau to announce that Canada was full, referencing a past tweet by the prime minister which welcomed refugees to the country. 

"It is time for Justin Trudeau to put out a new tweet to say not to come anymore because we have exceeded our reception capacity," said Legault. 

"So, Trudeau has a responsibility in this, listen, we have problems with housing, capacity in schools, staff in hospitals. At some point, Trudeau has to send a new message."