Canada will start limiting temporary immigration from September and gradually work on reducing it over the coming three years, says Immigration Minister Marc Miller.

In an announcement on March 21, the immigration minister said he would be meeting with provincial and territorial immigration ministers in May to determine the specifics of these temporary immigration levels.

“Provinces and territories know their unique labour needs and capacity and need to assume responsibility for the people that they bring in as well,” said Miller.

The move comes in the wake of Immigration, Refugees and Citizenship Canada’s (IRCC) cap of 606,250 new study permit applications this year for international students which was announced in January.

“The intent of these Instructions is to ensure the number of study permit applications accepted into processing by the Department of Citizenship and Immigration … within the scope of the instructions does not exceed 606,250 study permit applications for one year beginning on the date of signature,” the Canada Gazette reported on Feb. 3.

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That cap on study permit applications is expected to reduce the number of new study permits this year by roughly 40 per cent.

The sharp increase in the number of temporary residents in Canada has been blamed in part for the housing crisis in Canada, with rents and house prices soaring in the past few years and housing becoming increasingly unaffordable.

“Changes are needed to make the system more efficient and more sustainable,” said Miller.

“There should be an honest conversation about what the rise in international migration means for Canada as we plan ahead.”

But others warn that limiting temporary residents to Canada may lead to an economic downturn.

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In Temporary Workers, Temporary Growth? How a Slowdown in the Recent Migration Surge Could Exacerbate Canada’s Downturn, Desjardins principal economist Marc Desormeaux warns that the record numbers of temporary residents could soon ease off.

Since temporary residents are the primary drivers of population growth in Canada, a significant drop in their numbers could lead to a stalling of the Canadian economy.

“History suggests the recent surge (in the number of temporary residents in Canada) could ease significantly, exacerbating a nascent economic slowdown,” cautions Desormeaux.

“That could have significant consequences nationwide, most notably in the largest provinces.”

British Columbia, Ontario Planning For Less Temporary Immigration

In their most recent fiscal plans, British Columbia and Ontario have already included contingencies for the possibility of a downturn in temporary residents in an attempt to create buffers to the accompanying downturn in tax revenues to provincial coffers and a more sluggish economy should there be a drop in temporary residents.

“We must nonetheless consider downside demographic scenarios, particularly when potentially higher for longer interest rates pose risks for economic growth, borrowing costs and debt sustainability over time,” wrote Desormeaux.

In British Columbia and Ontario, he predicted a downturn in temporary residents could create a 0.8 to 1.9 percentage point drag on economic growth next year.

He recommends Canada beef up its data collection on the number of temporary residents in the country.

“We also reiterate our call for more and better data on temporary migration. For the foreseeable future, Canada and all its provinces will continue to grapple with the immense challenges of a rapidly aging population and a lack of affordable housing supply. To meet these challenges, we’ll need clear information about the individuals who can help address them.”

Canada already sets levels for permanent immigration and is set to welcome 485,000 new permanent residents this year under the Immigration Levels Plan for 2023 – 2025.

The country is planning to welcome an additional 500,000 new permanent residents in each of the subsequent years.