The worldwide pupil cap is a in point of fact powerful fling in present history: Benjamin Tal

Canada is capping the number of international student permits that will be issued over the next two years the federal government says it will approve just 360,000 undergraduate study permits for 2024 that is 35% less than in 2023 it also announced changes to the postgraduation work permit program so how significant are these changes and.

What impact could they have on Canada's economy let's bring in Benjamin tal deputy chief Economist at CIBC Benjamin thanks so much for joining us this afternoon thank you it's a pleasure so how how significant is this cap I mean it the 35% de decrease from 2023 we're actually talking about 200,000 fewer.

International students coming yes it's a very significant you know until now we have been talking about Supply Supply Supply and that's the right direction because we have to increase Supply but it takes forever whatever you do you know remove HST do all kinds of other things it takes five six years to get that extra Supply at.

The same time demand is rising and rising and Rising so you have to do something about demand and we have been talking over the past few months about International students and the fact that we need to cut the number to make sure that we can house them and that's exactly what this policy is trying to do so to put it in simple terms today there.

Are roughly 1 million students in Canada foreign students if we didn't do anything within a year or two this number will have gone to 1.4 another 400,000 now this number will C the number this policy will cut the number to about 1 million in 2024 it will not really move from there and then it will start going down in 2025 it's a very.

Significant move a move that is in the right direction probably the most significant move in recent history there's also those changes to to the work permit so just for the the the details on that um there's two that I think might be uh significant here uh Benjamin uh the work permits after private college programs uh students.

Will no longer be eligible for a post-graduation work permit upon um upon completing their their uh study um so that's a study program that's part of a curric curriculum licensing agreement at a a private college and then when it comes to work permits for spouses uh work permits will only be available to spouses of international students in.

Master's and um doctoral programs so not in undergraduate or or College Programs um what do you make of those changes I think it's again the right direction for sure we have a situation in which first of all the government a few months ago decided that they're going to raise the amount of money that foreign students should arrive with to 20,000 that's the.

Right thing following the example of Australia that's the right thing to do so that's done now we have a situation in which many of them arrive with spouses that that can actually work and therefore they stay in Canada and apply for other things so I think that this move is in the right direction we have to realize one thing the government is.

Really after the bad players as they call it all kinds of colleges that are not really colleges they're basically selling Canadian citizens citizenship on a chip that's basically what happened here in many many cases and now the federal government cannot tell provin provincial governments what to do but those provincial governments.

Will have to impose those quotas on different institutions I suggest that probably will not touch the big universities but they will go after those bad players small colleges that were taking advantage of the situation and that's where you will see most of the change so each province will get a quot as you know Ontario will have to.

Cut by 50% a lot of it will be small colleges that most of the students there are foreign students and some in some of them all of them are foreign students and they are not really colleges but at the same time there are some uh provinces like saskachewan that will not reach the quot so overall I suggest that the number will go down over the next.

Few years and that's something that is healthy for affordability yeah so so the government is is um making it sort of um split up by by provinces based on on population sizes um that 300 uh or the decline uh to uh no rather the allowance the 360,000 will be split uh proportionately dependent on population but you're think that it's also going to.

Depend on the school itself like the province is going to perhaps decide which schools need to actually be making the the cuts yes exactly because the federal government cannot do that the provincial government has to do that so they will have to choose they can go after a big university or they can go after those bad players small colleges I.

Think the first line line of defense of course will be to go after those colleges and that's exactly what we are going to see we know that that 20% of H foreign students in those colleges are not really registered and are not really studying anything so we know that the system is being abused in a significant way and these measures are aimed to fix.

It and therefore you have to go after those colleges and fix the situation because this is not education this is something totally different so so what sort of an impact do you think that this could have beyond the the the colleges or or um you know the schools that uh you know would be hit by these cuts um and you know the financial impact to to.

Them to their their institutions but when you're thinking more broadly uh students tend to rent what do you think it could mean for for the rental market yeah it should ease the pressure on the rental market over the next few years it will not solve the affability crisis that we are in for sure we have many other dimensions to this crisis but this.

Is one Element an immediate element that can be removed from the equation so if you reduce the number of foreign students from 1 million to let's say three or 400,000 which is a reasonable number to have I think that's a step in the right direction it will take a while to get there it's not something that you will you can do overnight in 2024 the.

Impact will be very marginal 2025 you start see the impact and then go forward I think that it will be more than two years I think that although the cup is for two years it will be more than that because this is a major inflationary force in the rental market and our affordability crisis is not going to disappear in two years and Benjamin just.

Really quick um what about the labor market if if uh these graduates don't have work permits or the spouses don't have work permits will that register do you think is that going to be an impact on our labor market absolutely and maybe it's a good thing quite frankly because one of the reasons why productivity in Canada is.

Negative is because we have availability of cheap labor compared to the US where they don't have that so we have a situation in which companies don't invest in productivity enhancing methods they're not trying to improve their productivity and replace labor with capital they just go with a cheap labor that is available through the channel of.

Foreign students and their spouses if you don't have it guess what you have to do something else which is actually positive in terms of paying more to their uh employers and try to improve productivity what we need desperately to do that

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