PEI’s new demographic dilemma

More Islanders are starting to pick Alberta over Alberton.

Welcome sign to Alberta (From the Edmonton Journal). A net 400 Islanders moved to Alberta — the biggest outflow in a decade.

Last week, Statistics Canada put out its latest population estimates, tracking growth in all provinces up to January 1st of this year. As was the case with the previous updates for Prince Edward Island’s population numbers, Canada’s smallest province is continuing to see some of its fastest growth.

Between January 2023 and January 2024, PEI’s population grew by 6,227, or 3.7% — historic among annual growth numbers between first quarters. This was driven mostly by permanent immigration and temporary resident arrivals, which collectively accounted for more than 90% of the net new Islanders. Much like the year prior, natural population increase was negative as the Island’s deaths continued to outpace births.

From Statistics Canada (Tables 17–10–0059–01, 17–10–0040–01, and 17–10–0020–01).

But the biggest change from the year prior is that interprovincial migration to PEI appears to be falling. PEI welcomed 800 net new residents from other provinces in 2023, around half the total that was tracked in 2022. In the second half of 2023, net interprovincial migration was negative, meaning more people moved out rather than in from other provinces. The majority of the outflow during this period was to Alberta and the rest of Atlantic Canada.

From Statistics Canada (Table: 17–10–0045–01)

Alberta is calling, and Canada is answering.

There are a couple of reasons why Alberta has become a rallying point for residents of basically every province in Canada. For starters, the Alberta Government has been aggressive in its recruitment of residents from both high-cost urban centres and rural communities alike. The province added 55k residents through interprovincial migration in the past year, virtually erasing the net outflow that occurred following the 2014 oil glut.

But a rebounding oil price is at best a partial explanation of why Canadians are answering Alberta’s call. The province has routinely built more housing relative to its size and maintained noticeably higher vacancy rates. It is no surprise that Alberta’s greater housing abundance and lower cost of living provide a compelling alternative to the unaffordability and scarcity of housing in areas where homebuilding has slumped.

This is a vulnerability for PEI. In 2023, PEI added the equivalent of 2,400 new households and less than half that number in terms of housing starts. Depending on how you measure it, PEI’s structural housing shortage effectively doubled in 2023 because of how little housing got built.

The Island’s homebuilding has stagnated due to a combination of interest rates, material costs, and stringent land use rules. I still remain optimistic about the impact that recent provincial policy shifts and federal-municipal agreements will have on homebuilding for 2024. These measures will be needed to help meet the target for the PEI government’s new housing strategy, which aims to see 2,000 housing starts per year. By looking at what we know from the Charlottetown Area housing starts for the year thus far, things are looking promising. But ultimately, the province-wide quarterly housing data in mid-April will provide a true indication of how PEI is doing so far. If housing supply continues to not keep up with demand, PEI may end up fixing its housing crisis in the worst way possible: by sending families with young kids packing for places like Edmonton and Calgary.

Immigration policy pivot

If interprovincial outflows continue, PEI will become even more reliant on permanent and temporary immigration to fill vacancies and support the Island’s economy. To make things more complicated, a few provincial and federal policy changes could be heavy-handed when not accounting for interprovincial migration flows.

On the same day that the new population growth framework was released, the province also announced it would “reduce its use of the allotted annual federal immigration nominations by 25% for 2024” and reallocate its remaining allotment to workers in areas with acute shortages like health, trades, and childcare.

Healthcare, construction, and ECE will see an increase in immigration allotments in 2024, while retail will see a decrease. From the Government of Prince Edward Island.

Generally speaking, the province is taking the right approach by a) using levers within its control to manage population growth and b) prioritizing the sectors with the biggest demand for labour. However, this announcement was made before the emergence of recent interprovincial outflows. Additionally, it does not fully account for the federal announcements to cap international student enrollment and further limit temporary resident numbers to 5% of Canada’s population by 2027.

These measures could impact PEI more than most provinces, as the Island has one of the highest non-permanent resident population shares in the country — especially among temporary work permit holders.

From Statistics Canada (Tables 17–10–0009–01 and 17–10–0121–01).

The federal government has stressed that the 5% targets will be implemented in consultation with provincial governments and that interim measures will not impact health and construction sector recruitment. However, agriculture and retail are likely to see their labour pools decline as a result of both provincial allotment reductions and federal temporary permit caps.

PEI’s population could be around 188,000 in 2027 (a crude estimate — the midpoint between the Q1 2024 population and the 200,000 target in the population framework). To be within the federal target of 5% by 2027, PEI will need to see a reduction of over 1,700 permit holders based on current levels. And if population growth is further stymied by provincial allotment reductions and provincial out-migration, the Island will need to see even more permit holders leave to meet the federal target.

Resolution through retention

Fortunately, the federal announcement hints at relying on domestic draws, meaning PR for some non-permanent residents, to reach this 5% cap. This means that, rather than being sent back to their country of origin, permit holders will be provided with a more viable pathway to permanent residency through Provincial Nomination Programs (PNP) or (in the eastern provinces) the Atlantic Immigration Program.

In 2021, 90% of all new immigrants to PEI had some sort of pre-admission experience in Canada as a worker, student, asylum claimant, or relative/spouse. This share has grown significantly since immigrant taxfiler data began being tracked.

From Statistics Canada (Table 43–10–0018–01).

This could be a big opportunity for the Island’s economy, as PEI’s immigrant retention rates tend to be higher among arrivals with pre-admission experience. Improvements to PNP and the implementation of AIP have also helped in this regard. These pathways may become even more crucial if PEI ends up having to reckon with sustained interprovincial outmigration.

A growing population poses some planning challenges, but it is far better from a social or economic policy standpoint to see people come rather than go. Like most wicked problems in Canada, there is no solution to PEI’s demographic dilemma that does not involve building more housing. To avoid brain drain, the Island needs some cranes!