Canada’s Immigration-Fuelled Ponzi Scheme Economy

Port Coquitlam Mayor Brad West speaks at the Vancouver International Security Summit on Nov. 26, 2024. Vivian Yu/NTD

Commentary

Brad West, mayor of Port Coquitlam in British Columbia, made waves on Aug. 15 with a viral post on X in which he called his province’s addiction to high immigration “a Ponzi scheme.”

A Ponzi scheme is when a fraudster promises investors that a fictitious enterprise will yield lucrative returns, and must constantly find new investors to pay the promised returns to the old investors. It inevitably collapses.

This concept does not just apply to B.C.’s economy—it aptly describes the immigration policy of Canada as a whole.

In his post, West argues that B.C.’s economy “has been re-geared to run on relentless mass immigration,” where the main driver of growth has become “building and selling homes to the next wave of newcomers” rather than “value-added manufacturing, technology, innovation, or unshackling our resources.”

B.C. has been experiencing breakneck population growth, adding 166,877 people from July 1, 2023, to June 30, 2024. The population is projected to reach 7.9 million by 2046, from roughly 5.7 million in 2025.

At the same time, B.C. has the lowest fertility rate in Canada and has seen a net outflow of interprovincial migrants for no fewer than seven consecutive quarters. This means that the province’s recent stratospheric population growth has been exclusively derived from immigration.

Concurrently, B.C. has become overleveraged on real estate, which is now its biggest industry by far. According to July 2024 data from BC Stats, the real estate, rental, and leasing industry is valued at a jaw-dropping $56.1 billion. The next highest industry, at $29.3 billion, is construction, which is of course intimately tied to real estate.

The same data paints a dismal picture of the rest of B.C.’s economy, with manufacturing valued at just $17.3 billion, and agriculture, forestry, fishing, and hunting accounting for a paltry $5.7 billion.

The industries that laid the foundations of Canada’s westernmost province in the 19th century are now out of vogue. They have been totally eclipsed by real estate and housing construction—what Mayor West bluntly calls “building and selling homes to the next wave of newcomers.”

While the extent to which B.C. has become hooked on an immigration-fuelled real estate sector is particularly extreme, the same general pattern is being replicated in much of Canada.

Canada saw its population grow by nearly 1.3 million in 2023, and over 744,000 in 2024—driven almost exclusively by immigration. Statistics Canada projects that the national population could reach 80.8 million by 2074.

Just as in B.C., this has created a distorted economy in which real estate takes centre stage.

In a blog post published in June titled “We can’t just sell each other condos forever,” the Business Council of Alberta sounded the alarm bells over this issue, pointing out that real estate is now “the largest industry in six of ten provinces and the second largest in the remaining four.”

Canada has long been criticized for an overreliance on primary industries—those sectors of the economy that by the sweat of their brow extract raw materials from the earth. Our heavy focus on forestry, mining, fishing, and agriculture earned us the moniker “hewers of wood, drawers of water” from the brilliant Canadian economist and thinker Harold Innis (1894–1952).

A healthy national response to an overreliance on primary industries would be to supplement our natural resource and agriculture sectors by boosting secondary industries such as value-added manufacturing.

Instead, we have allowed ourselves to become hooked on immigration-fuelled real estate, a sector that is highly lucrative for the small number of people who profit from development or speculation, but also highly unstable.

Primary and secondary industries have a degree of stability because they fulfill basic human needs that are unlikely to change over time.

The forestry sector experiences ups and downs, but consumer demand for wood products is unlikely to disappear. Auto manufacturers must change their products based on shifts in style and technology, but it is difficult to imagine a future without automobiles of any kind.

Immigration-fuelled real estate does not have this built-in stability, because it depends on the permanent continuation of a federal immigration strategy of high population growth—a policy which the Canadian public is now soundly rejecting.

Spurred by a seismic shift in public opinion against high immigration, the Trudeau government slashed admissions of permanent residents, temporary foreign workers, and international students in October 2024.

In June, Statistics Canada reported that Canada’s population growth rate had plunged to 0 percent as a massive outflow of temporary residents combined with reduced inflows of immigrants of all kinds.

We are already seeing the effects of immigration restriction on Canada’s real estate industry, with the foreign buyer ban imposed in January 2023 playing a key role in the collapse of the micro condo market.

If the Canadian public continues to successfully push for further immigration cuts and foreign buyer restrictions, a general collapse in the property market writ large may follow.

In preparation for such an eventuality, we should start building a more solid foundation for the Canadian economy than immigration-fuelled real estate.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.