May, 2025 – Canada cannot rely on immigration alone to address the challenges posed by its ageing population and relentless decline in fertility rates [ see Canada’s Soaring Housing and Living Costs Stop Baby Making CP], according to a new report from our friends at the C.D. Howe Institute. Without a broader population strategy, rising immigration could fuel rapid growth while straining housing, healthcare, and infrastructure – without fully resolving rising old-age dependency ratios or labour force pressures. In this post, Daniel Hiebert confronts an important policy dilemma: although immigration increases overall population and helps address short-term labour gaps, the long-term trade-offs are significant. Without corresponding investment and planning, rising immigration risks compounding the very pressures it aims to alleviate.

“This is a particularly opportune moment to reflect on how immigration fits into Canada’s long-term demographic strategy, especially as both permanent and temporary immigration surged between 2015 and 2024, and are now being scaled back,” says Hiebert. “We need to think ahead about what kind of future we are building — and how we get there.”

Based on current patterns, it takes five new immigrants to add just one net new worker, once dependents and added consumer demand are factored in — a reality that undermines assumptions about immigration as a direct fix for labour shortages.

Hiebert argues that Canada must move beyond short-term immigration planning and adopt a long-range population strategy — one that combines immigration with other tools like delayed retirement, increased workforce participation, and stronger productivity growth. The alternative, he warns, is a “population trap”: a scenario where growth outpaces the country’s capacity to support it, undercutting prosperity in the process.

The report also calls on governments to coordinate immigration levels with long-term planning in housing, healthcare, education, and infrastructure.

“There’s no question that immigration is integral to Canada’s future,” says Hiebert. “But assuming it can carry the load alone ignores the structural pressures we’re facing — and the investments we need to make today to ensure future stability.”

Balancing Canada’s Population Growth and Ageing Through Immigration Policy

• Canada faces twin demographic pressures: an ageing population and rapid population growth driven by immigration. The report argues that immigration levels must strike a careful balance – sufficient to offset some effects of low fertility and an ageing workforce, but not so high as to outpace infrastructure and economic capacity.
• A sustainable population strategy requires coordinated planning across immigration, infrastructure, workforce participation, and capital investment. The report calls for long-term planning that aligns immigration policy with economic and social goals and emphasizes the need to manage absorptive capacity to avoid overburdening housing, healthcare, and public services.

Introduction

Declining fertility is a global trend and is especially pronounced in countries with high levels of economic development. These countries share the common challenge of ageing populations, with rising old-age dependency ratios (OADRs)¹ and a shrinking portion of the population in prime working age. Several policy responses have been established to deal with this emerging reality, including pronatalist and other family-based social programs, efforts to enhance automation and productivity, incentivization of a larger proportion of the population to enter the formal labour force, delaying retirement benefits, and increasing the rate of immigration. The success of these approaches has varied, raising critical questions for policymakers: which strategies are the most efficient? What are their costs? And which policies offer the best balance between risk and reward?

This Commentary explores the potential role and limitations of immigration in alleviating Canada’s challenges of low fertility and ageing. This is a particularly opportune moment to consider such an issue given that both permanent and temporary immigration strongly increased between 2015 and 2024 and will be reduced for the 2025 to 2027 period.

Using custom demographic projections, this paper examines how various immigration scenarios – ranging from historical rates to the peak of 2024 – will affect Canada’s demographic outlook over the next 50 years. The analysis investigates the role immigration could play in mitigating the effects of an ageing population, while also acknowledging the associated trade-offs, including pressures on infrastructure and rapid population growth. The findings highlight that Canada’s immigration policy, while important, should be framed within a long-term population strategy that aligns immigration policy with broader economic and social goals – including capital investment, productivity, delayed retirement, and expanded social infrastructure – to ensure sustainable growth and enhanced prosperity for all Canadians.

Canada’s Demographic Challenge and Recent Immigration Policy Responses

Canada’s current demographic challenge is the product of two primary factors: low fertility and the ageing and retirement of the Baby Boom generation. Canada’s fertility rate first rapidly declined from the peak of the Baby Boom (1950s) to the early 1970s, when it first fell below the replacement level. Since then, it has continued with a slower, though persistent decline, interrupted by occasional slight recoveries. Most recent calculations reveal that Canada’s fertility rate is now at 1.26 – a level unprecedented in Canadian history and among the lowest globally. The consequences of low fertility are particularly pronounced today due to the ageing of the Baby Boom generation. In 2025, this cohort ranges in age from 59 to 79 years old, while the average age of retirement in Canada was 65.1 in 2023. Around two-thirds of boomers have already reached the age of 65, with the remaining third expected to follow in the coming years. The impact of this demographic shift is therefore ongoing and continues to affect the labour market and economy at large.

Throughout its history, Canada has turned to immigration to resolve demographic challenges (Hiebert 2016). From the late 1940s to the mid-1980s, Canada admitted an average of 150,000 permanent residents annually, though numbers fluctuated. By the end of that period, concerns over low fertility began to be articulated. This prompted the government to increase annual immigration levels to 250,000, a figure that was quite consistent over the following 30 years, with annual rates ranging from the low to high 200,000s. By the end of the 20th century, immigration accounted for over half of Canada’s population growth and labour force expansion.

The most recent shift in immigration policy began in late 2015 under the Liberal government, which pursued an expansionary strategy. Annual immigration targets and admission levels increased – save for the 2020 pandemic year – leading to a target of 500,000 for 2025. However, this target will no longer be realized following the revised plan announced at the end of 2024. Along with increased permanent immigration, the government had adopted a more facilitative approach to temporary migration, leading to rapid growth in the number of international students, temporary foreign workers, and other non-permanent residents. In 2023, the Canadian population expanded by 1.27 million, representing an annual growth rate of 3.2 percent, which is highly unusual among advanced economies. For example, the average population growth rate of the other G7 countries in 2023 was less than 0.5 percent (Scotiabank 2023).²

Given Canada’s low fertility, 98 percent of this growth stemmed from net immigration, both temporary and permanent (Statistics Canada 2024a). Today, Canada is approaching a point where all population growth and most of the impetus for population renewal (Dion et al. 2015) will come from immigration. However, the “big migration” trajectory of 2015 to 2024 has shifted. While public opinion historically supported ambitious immigration targets, this sentiment changed sharply in 2024. Concerns about housing shortages, infrastructure strain, and what has been termed a “population trap” – where population growth outpaces capital investment capacity – have fueled resistance to current immigration levels. These pressures clearly influenced the 2025 to 2027 plan, which curtails permanent immigration targets by approximately 20 percent and tightens restrictions on temporary migration programs.

Short- and Long-Term Immigration Policy

Before focusing on the relationship between immigration and demography, it is instructive to explore a fundamental tension in immigration policy: should the Government of Canada prioritize the “maximum social, cultural and economic benefits of immigration”³ for today or for the future? These goals may not always align: satisfying the needs of today may have long-term consequences – a trade-off familiar to anyone who has managed a budget.

It has been long underappreciated that Canada’s immigration policy is built around a combination of short- and long-term goals. Economic selection practices provide a helpful example. Since the introduction of the points system nearly 60 years ago, selection priorities have oscillated between addressing short-term labour market needs (e.g., incorporating and/or prioritizing job offers in selection criteria) and building the human capital of the future workforce, under the assumption that highly skilled individuals can adapt and drive productivity, and therefore prosperity. Striking the right balance between these priorities is challenging and requires careful planning.

The balance between short- and long-term immigration perspectives is reflected in the combination of the economic selection system and levels planning. The former – which includes permanent skilled immigration – involves trade-offs between filling immediate labour shortages and building future human capital.⁴ The latter determines the scale and composition of Canada’s permanent immigration system. In contrast, temporary migration programs are almost entirely shaped by short-term planning horizons – with the partial exception of the International Student Program, which operates in accordance with a medium-term planning horizon in five-year increments.⁵

These issues are pivotal to considerations of the relationship between immigration and demography. The impact of immigration extends beyond the number of admissions. If immigrants are selected to enhance the human capital of Canada’s workforce and integrate productively, they can potentially raise per capita GDP and mitigate the challenges of an ageing population (Erkisi 2023; Montcho et al. 2021). Conversely, if the system prioritizes lower-skilled individuals, fails to utilize the skills of highly educated immigrants, or admits newcomers at a scale that exceeds the economy’s capacity to absorb them, it risks lowering per capita GDP and compounding demographic challenges (Smith 2024).

Immigration, therefore, has both scale and compositional effects. Scale impacts include changes to population size, age structure, and regional distribution, which directly affect housing demand and social services. Compositional impacts include broader socioeconomic outcomes such as income inequality, productivity, and trade relationships. While this paper focuses on scale impacts, readers should bear these compositional effects in mind.

Another critical consideration is the relationship between admission levels and the expected economic outcome of admitted immigrants. In Canada’s Express Entry system, admission thresholds are adjusted based on the number of entries. Larger admission cohorts tend to lower the points threshold, potentially reducing the overall human capital of entrants (Mahboubi 2024).

Immigration and Canada’s Demographic Challenge

This paper argues that long-term considerations should play a larger role in immigration levels planning. Immigration decisions made today shape Canada’s demographic structure for decades, as immigrants become part of the population, contribute to fertility, enter the workforce, and eventually retire. These stages must be incorporated into demographic projections and policy planning, yet they are often overlooked due to the focus on immediate needs and political cycles.

To illustrate the long-term demographic impact of immigration, consider two extreme scenarios. In the first, Canada’s fertility rate declines to 1.0 (the 2023 rate in British Columbia) and net migration falls to zero, implying no population growth from migration. Under these conditions, Canada’s population would shrink from 40 million in 2023 to 12.3 million by 2100. In the second scenario, the extraordinary 2023 growth rate of 3.2 percent continues indefinitely, with rising migration levels. By 2100, Canada’s population would reach 452 million.

While neither of these scenarios is realistic, they illustrate the decisive influence that fertility and migration have in shaping the future scale of Canada’s population. Despite their seemingly preposterous nature, the key point remains: with fertility rates remaining low,⁶ the state is entirely responsible for determining the scale of the Canadian population. Decisions about temporary visas and permanent residence serve as the primary levers of control. Policymakers must recognize that the choices made today will have profound and lasting effects on Canada’s demographic and economic future.

Population Projections and Their Implications

Statistics Canada produced a recent population projection for various scenarios in January 2025, covering the period of 2024 to 2074.⁷ Across the scenarios, total fertility rates range from 1.13 to 1.66, permanent immigration rates vary from 0.70 to 1.2 percent per year, and net temporary migration figures are assumed to decline in the short term before stabilizing. The selected scenarios suggest that the projected population of Canada would range from 45.2 to 80.8 million in 2074 – a difference of over 35 million people, roughly equivalent to Canada’s current population. The scale of infrastructure and social investments needed to accommodate such growth would be enormous.

Beyond sheer numbers, government policy also affects the age structure of Canada’s future population. The OADR is expected to rise, and increased immigration is often proposed as a solution. However, the retirement age is, to an important extent, a social construct and this paper explores the efficiency of changing Canada’s retirement age compared with adjusting immigration levels to address the issue.

While migration can temporarily mitigate low fertility effects by maintaining a larger workforce, it cannot fully offset population ageing (Robson and Mahboubi 2018). Even doubling Canada’s population through immigration would only reduce the average age by five years, as immigrants’ average age is close to that of the receiving population (around 30 versus 40).⁸ Doyle et al. (2023) argue that increasing immigration could delay ageing impacts but would require continuously higher volumes, becoming unsustainable.⁹ Immigrants are typically concentrated in the labour force ages (25-40) but, in 30-35 years, this group will be approaching retirement, creating an economic challenge similar to the Baby Boom generation’s retirement. Unless increasing rates of immigration are in place continuously (an unrealistic scenario), at some point society must adjust to a smaller, older population.

Moreover, there appear to be additional costs to rapid population growth that are driven by high immigration. Doyle et al. (2023 and 2024) contend that when the labour force expands faster than investment in capital and infrastructure, the result is a dilution of capital per worker, reducing Canada’s productivity and living standards. This concern highlights not only the pace of immigration-driven growth but also Canada’s historically low levels of business and infrastructure investment, suggesting a need to boost investment alongside population growth.¹⁰

Research shows that while larger immigration targets increase real GDP through a larger labour supply, they could also reduce GDP per capita (El-Assal and Fields 2018).¹¹ Indeed, in recent years of very high population growth through net international migration (2022-2023), Canada’s level of real GDP per capita has been stagnant.¹²

Furthermore, house price escalation associated with a surge in demand may negatively affect fertility decisions, particularly for families renting homes (Dettling and Kearney 2014; Fazio et al. 2024). In other words, compensating for low fertility through high rates of immigration may indirectly contribute to additional fertility decline.

Studies show that immigration alone has a limited impact on altering age composition (Robson and Mahboubi 2018). Even doubling immigration rates would only slightly improve the OADR (Beaujot 2001). All of the immigrants admitted by Canada between 1951 and 2001, for example, are believed to have reduced the median age of Canadians in 2001 by only 0.8 years.

The effect of younger immigrants, as seen in Australia’s approach, would improve outcomes,¹³ but Guillemette and Robson (2006) found that this impact would still be modest. An unintended consequence of focusing on younger immigrants is that it contrasts with Canada’s economic selection system, which rewards human capital development. Half of the 2022 Express Entry applicants were 30 or older (IRCC 2022), challenging the idea that immigration could rapidly reduce the average age of the population.¹⁴

A Custom Glimpse of the Future

To update our understanding of the role immigration could play in Canada’s demography, this section explores the results of a special population projection, using Statistics Canada’s microsimulation model called Demosim, to assess the impact of varying immigration rates on the Canadian population in the future. Two demographic outcomes are highlighted in this analysis: population size and the OADR.

While population size is a straightforward measure, the exclusive focus on the OADR – without also considering the youth dependency ratio (YDR) – may raise questions about the completeness of the analysis. After all, both young and older people place disproportionate demands on social services. One could also argue that increasing the rate of immigration (depending on the age profile of newcomers, other things being equal) could reduce the OADR while increasing the YDR. There are two major reasons for focusing on the OADR in this analysis. First, it is the most widely used indicator of the ageing population and has particularly profound impacts on the cost of healthcare, Canada’s most expensive social program.¹⁵ Second, while the YDR and OADR reflect dependency burdens, they have very different long-term implications: a high YDR represents a short-term fiscal cost but also an investment in the future workforce. In contrast, a rising OADR signals a more permanent shift in the age structure of the population, with fewer economic offsets. For these reasons, and to maintain analytical clarity and focus, the YDR has been omitted from this analysis.

Demographic variables used in the projection, except for the immigration rate, were either held constant (e.g., fertility rate at the 2023 level of 1.33 and the temporary resident population assumed to remain constant at around two million after 2021) or based on assumptions from recent Statistics Canada projections (e.g., emigration rate, life expectancy).¹⁶ Using the 2021 base population,¹⁷ projections were provided for 50 years. Six scenarios were created based on annual permanent immigration rates ranging from 0.3 percent to 1.8 percent. These correspond to immigration levels in 2025 between around 125,000 and 750,000, based on the 2024 Q4 population estimate of 41.5 million. From 2000 to 2015, the immigration rate averaged 0.6 percent per year (Scenario 2), rising to nearly 1.2 percent per year by 2024 (Scenario 4). The 2025-2027 immigration plan aligns with Scenario 3, at a rate of around 0.9 percent. In essence, the scenarios reflect both current and recent immigration rates, allowing for expansion or contraction, as shown in Table 1.

Population projections vary significantly across the scenarios (Figure 1). As Canada’s natural population growth is rapidly approaching zero and is expected to turn negative in the coming years – and with emigration remaining steady – an immigration rate of 0.3 percent of the population would result in virtually no net international migration. Under this scenario, the population would begin to decline slightly. At the same time, Canada’s OADR would more than double, rising from 29.5 retirees (65 and older) per 100 working-age individuals (18-64) to 48.2 in 2046 and 61.6 in 2071 (Figure 2).¹⁸ Such a demographic structure would be unprecedented and pose a significant challenge to economic prosperity. For context, Japan currently has the highest OADR globally, at approximately 48 per 100.¹⁹

The second scenario, reflecting Canada’s immigration levels from 2000 to 2015, would add 4.6 million to the population by 2046 and another two million by 2071. The OADR would rise to 44.5 by 2046 and 55.8 in 2071. The third scenario most closely aligns with the 2025 to 2027 immigration plan (though it excludes the projected reduction in temporary residents). If immigration remains at 0.9 percent of the population for the next 50 years, the national population would reach 55.6 million in 2071, and the OADR would be 50.8. The fourth scenario extends the higher 1.2 percent immigration rate from 2024, projecting a population of 67.2 million by 2071. Despite this growth, the OADR would still rise to 46.5 by 2071 – similar to Japan’s current level. Reducing the immigration target from 1.2 percent to 0.9 percent in the 2025-27 plan would result in 11.6 million fewer people by 2071, assuming a stable rate. The sixth scenario, though ambitious, is instructive. If IRCC raised the permanent immigration target to 1.8 percent annually and maintained it for 50 years, Canada’s population would increase to nearly 62 million by 2046 and exceed 91 million by 2071. Even with this growth, the OADR would still rise to 39.5 by 2071. A visual scan of the relevant figure suggests that it would take an immigration rate of around 2.7 percent per year to hold the dependency ratio constant. Moreover, it would be challenging to sustain Canada’s high-human-capital selection threshold in the Express Entry system under this scenario.

Note another important trend. Figure 1 shows that the population diverges across the six scenarios over time, demonstrating the growing efficiency of immigration rates in changing Canada’s population growth over time. In contrast, the OADRs across the scenarios in Figure 2 remain roughly parallel after 2046 and begin to converge a little in the later years, illustrating that immigration ultimately becomes less efficient at altering the age structure of the population over time. Why? A population with low fertility receiving a steady flow of younger immigrants will, in the short term, have a younger average age due to the immigrants’ youth. However, as the immigrant population ages, its average age eventually surpasses that of the receiving population, making the overall population older in the long term.²⁰ Therefore, the effect of steady immigration on the age structure diminishes over time, and only a continuous increase in immigration would prevent this.

Further, it is also important to acknowledge that once there is a sustained period of high immigration (i.e., the case of Canada between 2015 and 2024), a dramatic reduction in the rate of immigration will result in a demographic “bulge” with a large cohort followed immediately by a smaller one – akin to the relationship between the Baby Boom and Generation X. This would ultimately set in motion the same demographic dynamic that Canada faces today, with the larger generation eventually retiring and the OADR increasing. The demographic lesson is clear: shocks in the age structure of a population – whether through dramatic increases or declines in fertility or through major changes in the rate of net migration – place stress on infrastructure and, if they are large, may challenge the long-term stability of the welfare state.

Before reflecting further on these findings, consider the impact of varied immigration rates on the cultural composition of the Canadian population (Vézina et al. 2024). In 2021, approximately 44 percent of the Canadian population had an immigrant background – either as non-permanent residents, immigrants, or individuals with at least one immigrant parent (see Table 2). Under the third scenario, which aligns with the 2025 to 2027 immigration plan, this proportion would nearly reverse by 2046 and change even more dramatically by 2071, with nearly two-thirds of all Canadians being persons with an immigrant background.²¹

Such a shift would redefine immigrant integration and public perceptions of multiculturalism. Whether this level of cultural change would be widely accepted remains uncertain. If the high 2024 immigration rate was sustained, nearly three-quarters of Canadians in 2071 would be either immigrants or children of immigrants.

Immigration and Other Policy Levers in Addressing Population Ageing

This section assesses how immigration compares to other policy tools in addressing the demographic challenges of an ageing population. Governments have several policy tools to either shape demography directly or mitigate societal consequences. The key concern in an ageing society is the impact of a shrinking labour force on the ability to sustain social services such as healthcare, education, and pensions. The principal direct policies are encouraging fertility and increasing immigration (Lee 2014). Governments can also address the fiscal impact of ageing by: boosting workforce participation among working-age adults; delaying retirement and enlarging the working-age population; raising tax rates; reducing expenditures – especially those related to the elderly population; and increasing the productivity of labour (Lee et al. 2014; Beaujot 2017). Some of these choices are more efficient than others. Pronatalist policies have been established in some 60 countries, yet none have been successful in restoring fertility to a replacement level (UNFPA 2019). Moreover, their effects tend to be short-lived.²²

How efficient is immigration in mitigating population ageing and its effects? The data explored so far indicate that while increasing the rate of immigration is highly effective at generating population growth, it is less effective at significantly changing the age composition of the population. A recent analysis by British Columbia Ministry of Advanced Education and Skills Training provides additional depth on this issue.²³ Their study presents a simple but informative labour force participation ratio: for every 10 permanent immigrants admitted to the province, six will find work relatively quickly, while the remaining four will be too young or old, pursuing education, or not immediately ready to join the labour market. This reflects the broader reality that approximately half of all economic-class immigrants are spouses and dependents and that only around 60 percent of immigrants are admitted through the economic class to begin with.

It would be tempting, but also simplistic, to see this as the direct impact of immigration on the labour force (i.e., 10 newcomers equate to six net new workers), but there is an important additional dimension that must be considered. Adding 10 people to the population generates consumer demand for goods and services including shelter, food, transportation, and many other things. Meeting this demand requires four additional workers. These four additional workers expand the scale of the economy but do not create net new workers (Fortin 2025).

When 10 newcomers are admitted, given that four will not immediately enter the labour force and another four workers will be required to satisfy extra consumer demand, only two net new workers are added. That is, to add one net new worker to the labour force requires five new permanent immigrants (and therefore approximately two additional dwellings). This is nicely summarized in a ratio: 10-6-4-2. There is no reason to expect that this ratio would be appreciably different in other provinces or Canada as a whole. Just as immigration is more efficient at increasing the size of the population than it is at changing the age structure, the same holds true for the relationship between immigration and net workers added to the labour force.

An example can help illustrate this point. Imagine an ageing society with a population of one million and 1,000 doctors. As more doctors retire than can be replaced through domestic training, the government looks to immigration to fill the gap. It estimates that 100,000 newcomers must be admitted, since only a small fraction of new immigrants will be doctors. This produces the desired effect, and the number of doctors remains stable. However, the population has grown to 1.1 million, and to preserve the same level of access to care, 1,100 doctors are now required. Simply stabilizing the labour force while adding population is an insufficient way to resolve emerging labour shortages because it ignores the additional demand created by population growth (Fortin 2025). This mirrors the earlier point: immigration adds workers, but it also adds consumers. As a result, the net gain to the labour force is much smaller than the headline number of newcomers might suggest.

It is beyond the scope of this paper to investigate the efficiency of all the other measures in mitigating the effects of ageing or increasing the size of the labour force. However, Figure 3 illustrates the demographic impact of one such lever – delaying the average retirement age to 70, compared to maintaining it at 65 – as an example to demonstrate how different policies vary in their ability to influence the OADR.

Figure 3 shows that, under this policy shift, maintaining immigration at the rate of the 2025 to 2027 plan (Scenario 3) would be sufficient to stabilize the OADR to 2046 – keeping it just below 30, similar to its level in 2021. None of the immigration scenarios alone achieve this outcome if the retirement age stays at 65. While the OADR increases over time in all scenarios, delaying retirement significantly slows both the pace and magnitude of this rise.²⁴ However, the purpose of this example is not to propose a specific change. Instead, it highlights the relative effectiveness of this particular lever and emphasizes the need for a multifaceted strategy to address demographic challenges.

In summary, Canada’s demographic challenges stem from low fertility and the retirement of the Baby Boom generation. Immigration can delay and mitigate the effects of ageing but cannot fully counteract them without immediate and dramatic increases. As long as immigration remains within historical levels, ensuring a sufficient workforce will require a combination of immigration and complementary policies.²⁵

Demography and Levels Planning

The policy dilemma implied by demographic realities is both straightforward and immensely complex: it is now impossible to maintain the age composition of the Canadian population while also maintaining its size without turning back the clock more than 50 years in terms of fertility. At the extremes, there are two stark policy choices: maintain the current size of the Canadian population but adjust expectations to accommodate a vastly higher OADR (approximately that of Scenario 1); or maintain the age structure of the Canadian population and plan for a vastly larger population (larger than any projected in the scenarios used in this study). The real policy choice will lie somewhere between these extremes and will require a combination of accommodations.

Table 3 summarizes more realistic options by showing the level of population increase and the different OADRs projected for 25 and 50 years forward. It compares the scenarios that most closely approximate Canada’s permanent immigration targets for the recent past – Scenario 2 (pre-2015 consensus), Scenario 4 (2024 rate), and Scenario 3 (2025 to 2027 plan). Had the Liberal government maintained the earlier rate of immigration after 2015 (that is, maintaining the 0.6 percent rate of immigration), Canada’s population would have grown by around 7.5 million by 2071, but with an OADR higher than any country today (55.8 senior citizens per 100 working-age people). By shifting to, and maintaining, a 1.2 percent annual immigration rate between 2015 and 2024, the population would grow much faster – by 29 million more people over half a century – while the OADR would be lower, at 46.5 per 100. Notice that the change in policy would lead to nearly four times the population growth compared to the reduction in the OADR, which improves by only 17 percent. Scaling back the rate of permanent immigration in 2025 to 2027 moderates both the population increase and the OADR improvement. Nevertheless, it would still yield a population growth of over 17 million in the next 50 years, with Canada’s OADR surpassing that of contemporary Japan.

Regardless of the choice being made, Canada will be both larger and older in the coming decades. This shift has significant implications and calls for strategic long-term planning. For example, the country will need to invest simultaneously in child benefits and new schools, as well as in elder care facilities. Housing demand will continue to mount unless significant changes occur in housing investment policies and outcomes. It also means investing in infrastructure to sustain key public services – such as increasing hospital capacity and expanding public transit. Without these adjustments, the quality of life for Canadians would decline. Crucially, this must occur while public finances are adjusted in light of a rising OADR (or the retirement age is raised).²⁶ It also necessitates a continuing cultural diversification of the population through immigration and temporary migration. Ongoing and growing investments in social inclusion will be required.

The greatest challenge for government is to decide on the optimum balance between ageing and growth while securing public buy-in for immigration policies.²⁷ All of this must occur against the backdrop of other pressing issues such as global climate change, geopolitical instability, technological change, and political polarization – not to mention the need to be mindful of the relationship between immigration, ethnocultural diversity, linguistic and religious groups, Indigenous Peoples, and other equity-seeking groups. Assiduous attention must be paid to Canada’s demographic challenge, despite these powerful intersecting concerns.

Consider financial investment, where growth is based on compounded rates of interest. One of the most common recommendations made by financial advisors is to harness the power of compounded growth by starting to invest early in one’s life. Even small amounts invested in one’s twenties can pay remarkable dividends forty years later. The same logic applies to population management; demographic choices today will have far-reaching consequences in subsequent decades. Adding four to five million to Canada’s population over the next decade cannot simply be undone at the end of that period. The same ageing pressures will remain, but with a larger population that may require even higher immigration levels. As long as fertility remains well below replacement, this issue will persist – regardless of Canada’s population size. There will always be the looming threat of population decline and its consequences.

Short and Long Policy Horizons

Population change is cumulative and difficult to reverse, making it imperative to consider the long-term implications of both temporary and permanent immigration together. This requires viewing them as components of the same system – particularly given the many pathways that allow temporary residents to transition to permanent status, and the increasing reliance on temporary residents within Canada’s permanent immigration system (Crossman et al. 2020). In recent years, temporary migration has increasingly become a kind of “down payment” to Canada’s permanent immigration system, a shift that has transformed Canada’s immigration system into a more fluid, two-step process, although this flow-through process may be interrupted given the latest levels plan (i.e., there is a large gap between the number of temporary residents in Canada and the “room” accorded to that population in the new plan). A comprehensive approach also demands that levels plans, which currently establish expectations for a three-year period, be developed with longer time horizons in mind.²⁸ In other words, immigration levels should reflect Canada’s immediate priorities as well as its long-term goals, including the potential for future population renewal. The focus on present needs should not overshadow a forward-looking vision for the country, as current policies play a decisive role in shaping Canada’s future.²⁹

A common point made in public discussion of Canadian immigration policy is that levels planning should pay more attention to absorptive capacity. This means aligning the number of both temporary and permanent residents with the growth of social services – notably education and healthcare – as well as housing and other infrastructure. The concept of absorptive capacity can be interpreted in passive or active terms. Under a passive approach, levels planning would be guided by the current state of social services and infrastructure including housing, which would determine the appropriate level of immigration (e.g., based on an acceptable range of physicians, housing completions, etc., per 1,000 persons). Conversely, an active approach would flip the direction of causality and establish the parameters of social spending and infrastructural investment based on population growth which, in an era of low fertility, is essentially a function of the scale of temporary and permanent immigration. In this latter situation, IRCC would play a more central role in national planning, as immigration targets would shape the long-term scale of government spending across a wide range of responsibilities. This process would be greatly facilitated by a conscious, long-term population strategy at the heart of levels planning. In such a framework, all sectors of society – government, private business, and non-profit social services – could make informed decisions to guide their investments with far more assurance of long-term patterns of demand. This would be a potent indirect benefit of a population-based approach to migration and immigration management.

There are important tradeoffs between these approaches. A passive approach may be more cautious and politically feasible in the short term, but risks underestimating long-term needs and perpetuating reactive policymaking. An active approach, by contrast, allows for proactive investment and planning – but only if there is full follow-through. If governments commit to population growth targets without ensuring that social and physical infrastructure keep pace, the result could be increased strain on housing, healthcare, and public trust.

While this paper supports an active approach, its core aim is to push for long-term thinking and to encourage an informed public conversation about the choices ahead.

Regardless of which approach is chosen, the issue of social license is key. As noted earlier, a majority of Canadians have recently come to believe that population growth generated by immigration has outstripped the development of social and physical infrastructure. In 2023, this growing perception led to a substantial shift in public support for the number of newcomers that were being admitted. The government must ensure that population growth, infrastructure capacity, and capital investment are aligned – and clearly communicated to the public. This means developing a population strategy alongside an economic strategy. These are not competing priorities, but complementary and mutually reinforcing goals.

Conclusion

Given its low fertility, Canada’s demographic and economic future would be bleak in the absence of immigration. Even under low immigration scenarios (0.3 and 0.6 percent of the population per year), Canada would enter uncharted territory with respect to its OADR. At the same time, immigration is more efficient at increasing the population size than it is at either adding net new workers to the economy or fundamentally altering the age structure of the population. Higher rates of immigration may address short-term labour shortages, provide important skills, and stimulate economic activity (a higher GDP), but their effect on prosperity (GDP per capita) depends on whether they are accompanied by robust productivity growth, capital investment, and innovation. Moreover, they present challenges to Canada’s infrastructure, particularly in housing supply and healthcare availability. Without such complementary investments, rapid population growth could lead to a population trap – where population growth outpaces investment capacity – ultimately lowering prosperity, and potentially worsening fertility rates.

Canada’s demographic future depends on policy decisions made today, which carry long-term consequences that require careful planning and adaptation. While immigration level planning includes multi-year targets and considers a range of factors, in practice it often focuses on managing short-term pressures rather than shaping a long-term population vision. With fertility rates at historic lows, Canada’s reliance on immigration for population growth is intensifying. While immigration is a relevant tool for mitigating population ageing, it cannot prevent Canada from ageing on its own. This impasse highlights the need for a comprehensive population strategy that aligns with a long-term economic strategy – recognizing that growth and economic planning are complementary, not competing, goals. The strategy must also balance population growth with the challenges of an ageing society and address social priorities, including ethnocultural diversity and inclusion, Canada’s linguistic landscape, and Indigenous reconciliation.

A sustainable path forward must integrate immigration with policies to boost workforce participation, promote productivity, incentivize capital investment, and consider measures such as delayed retirement, all while recognizing the potential social and economic trade-offs involved. Without a clear and proactive strategy, Canada risks mounting economic and social pressures. A well-managed, long-term population plan, grounded in both economic realities and social capacity, will be essential to maintaining prosperity and ensuring that growth benefits all Canadians. For The Silo, Daniel Hiebert -Emeritus Professor of Geography at the University of British Columbia.

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