Carney needs to completely overhaul the Trudeau-era immigration system, report says

OTTAWA — Canada needs to overhaul the Trudeau-era immigration system so that applicants are selected largely on their ability to boost the economy, a new think tank report suggests, part of a wide-ranging set of policy suggestions for governments at all levels.

The C.D. Howe Institute report, to be released Thursday, argues that Canada should go back to assessing skilled immigrant applicants based on a points system designed to evaluate their likelihood to succeed economically. That system, which was quietly dropped by former prime minister Justin Trudeau’s government in 2023, ran for two decades by rating applicants on key metrics such as education, work experience, language skills and a demonstrated ability to earn a living.

But that changed about three years ago, the report says, when Ottawa started focusing on other metrics, such as preferences for certain professions and applicants who could speak French.

The think tank’s report, a wide-ranging set of policy recommendations to boost Canada’s lagging productivity and economic growth, said the old system worked better because it focused on applicants who were most likely to do well and meant fewer new Canadians doing work that didn’t match their skills.

“The highest scores got in,” the report says.

If adopted, the change would mark another key policy from the Trudeau era to be cancelled or sharply curtailed by Prime Minister Mark Carney. The current Liberal government has already changed direction on such Trudeau-era policies as the consumer carbon tax, a proposed capital gains tax increase and higher immigration levels.

The recommendations on immigration form a key part of the report’s focus on human capital, one of eight policy areas that it addresses. It also calls for governments to do more to verify foreign credentials used in immigration applications, raise admission standards for international students, link immigration levels to economic growth and select more immigrants who are likely to be entrepreneurs.

The report, called The Productivity Blueprint: An Agenda for Higher Living Standards in Canada, calls for more than 100 policy changes that would help close the gap between the country’s lagging productivity and that of other industrialized countries. Between 2014 and 2024, real gross domestic product per capita, one of the most common measures of living standards, grew just 3.5 per cent in Canada, the worst performance among nine peer countries. In the U.S., by comparison, the economy grew 20.2 percent during that same period based on the same metric.

Productivity, which measures how much is produced per hour worked, is considered the primary lever behind rising incomes and living standards.

Jeremy Kronick, the institute’s chief executive officer, was quoted in a release saluting some of the Carney government’s steps to boost the economy, such as its new Major Projects Office and the accounting changes for business investment, but said long-term improvement will take a commitment to change. “There’s no quick fix for productivity,” he said. “If Canadians want stronger wages and living standards over the long term, raising productivity needs to be Canada’s number one priority.”

The Carney government is also trying to inoculate the Canadian economy as much as possible from the trade war started by U.S. President Donald Trump’s tariff policies.

The federal government’s initial response was to offer short-term support payments for companies and workers hit by the disruption from the south, but has in recent months been focusing more on structural factors such as pipelines, transportation infrastructure, faster approval times for major projects and making Canada a more competitive place to invest.

The C.D. Howe report also calls for sweeping changes to the country’s tax policy regime, including a reduction in the general corporate income tax rate to 10 per cent from 15. Ottawa has already cut corporate income taxes almost in half since 2000-01, when the rate stood at 28 per cent. Yet during that time, the federal government’s revenue from that stream has climbed in the last fiscal year to $97.1 billion from $28.3 billion.

The report, which draws on decades of research, also calls on Ottawa to reduce the number of personal income tax brackets to three from five and to replace most existing tax credits with a $10,000 basic allowance. To help spur business, the report also calls on the federal government to rein in business subsidies, which have grown 125 per cent since 2015, consuming $37.4 billion of taxpayer dollars.

It also calls on governments to improve the country’s transportation networks, boost competition, make regulations smarter, and cut spending to reduce debt.

While many of the proposed changes carry hefty price tags, a more productive, competitive economy means higher wages and profits that lead to healthier government coffers. The C.D. Howe report says the suggested changes would unlock $140 billion in new business investment and would add 2.5 per cent to the overall economy.

National Post

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