Commentary
By Jock Finlayson and Steven Globerman
If there was any doubt that the immigration issue has jumped to the top of the in-trays of many Canadian politicians, the Carney government’s 2025 budget should lay that doubt to rest.
For the first time ever, this federal budget devotes a separate section to immigration. In it, Finance Minister François-Philippe Champagne summarizes the government’s updated three-year immigration plan, with more details to be released shortly. The minister also pledges to address the serious problems that bedevilled Canada’s immigration system “under the former government.” Many of these problems stemmed from a dramatic surge of newcomers over the 2021-24 period, which—according to the budget—exceeded Canada’s absorptive capacity.
In the frank words of the finance minister: “We are taking back control over the immigration system and putting Canada on a trajectory to bring immigration back to sustainable levels.” To say the least, this characterization of previous immigration policy does not flatter the “former government,” which, awkwardly, was of the same political party as the Carney government.
According to the government’s plan, from 2026 to 2028, it will reduce both permanent immigration and the number of “temporary” migrants admitted under various time-limited visa programs. The new targets for permanent immigrants broadly align with those first announced late last year, but the commitment to a lower annual intake has been extended to 2028. Overall, the government proposes to admit 380,000 new permanent immigrants annually over the three years, down from 395,000 in 2025 and almost 500,000 in 2024.
As for temporary immigration, the proposed changes are dramatic. The Carney government plans to significantly scale back the issuance of new student visas and admit fewer temporary foreign workers (TFWs). All told, the government promises to slash the intake of new temporary residents from 674,000 this year to 385,000 in 2026 and 370,000 in 2027.
Most of this decline will fall on international students. The ultimate goal is to shrink the share of “non-permanent” residents in Canada’s population from 7.5 per cent in 2024 to less than 5 per cent by the end of 2027.
Recent Canadian debates over immigration have centred on the total number of immigrants and the rapidly growing inflows since the mid-2010s. We believe this focus is mistaken. Which immigrants are admitted is a more important consideration than how many. Assuming the principal goal of immigration policy is to build a more prosperous and productive economy, Canadian policymakers should direct their attention primarily to the attributes of newcomers and worry less about the aggregate count.
As discussed in a recent study, attracting high-skilled well-educated immigrants can play an important role in improving Canada’s lacklustre performance on key metrics such as productivity growth, business innovation and the growth of household incomes. Once they have settled in Canada, high-ability immigrants are more likely than lower-ability immigrants to make positive contributions to economic output, productivity growth and the long-term fiscal balance of governments. There’s a sizable body of empirical economic research confirming this insight for both Canada and the United States.
There are signs the Carney government understands the benefits of an immigration policy that’s geared to attract the “best and brightest.” Encouragingly, the new immigration plan will expand the intake of “economic immigrants” while slightly reducing the numbers admitted under the family and refugee/asylum claimant categories. The budget also promises a new “International Talent Attraction Strategy and Action Plan,” with additional measures and funding to lure more high-skilled foreign workers including holders of American H-1B visas who may soon face a steep annual fee to work in the U.S.
The Carney government also plans to recruit at least 1,000 top international researchers to Canada and to attract more international doctoral students and postdoctoral fellows in the sciences, engineering, health care, and computer-related fields. With the U.S. becoming less open to immigration under President Trump, the time is opportune for Canada to return to a more rigorous immigrant selection system that prioritizes education, in-demand skills, and the ability to drive innovation and productivity.
Jock Finlayson is a senior fellow of the Fraser Institute. Steven Globerman is a Senior Fellow and Addington Chair in Measurement at the Fraser Institute.
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