The real, big brain drain: the U.S. is about to adopt our successful immigration point system. And that could be bad news for Canada.

Sean Fitzpatrick is very worried. He sees, just over the proverbial horizon, a big "brain drain" coming to Canada. The last time the brain drain captured the Canadian public's attention was just before the turn of the millennium, at the height of the Internet investment bubble. Canadians, caught up in the explosion of tech stocks, were treated daily to media discussions of how we were losing skilled workers to the United States. When the tech bubble burst in 2000, most of the brain drain discussion disappeared along with it. But with the U.S. playing by new rules, the drain Fitzpatrick foresees now is a little more real.

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Fitzpatrick, president and founder of Talentmap, an Ottawa-based employee research and survey company, knows the Americans are on the verge of changing their immigration system from family-based to merit-based, and that the effect on Canada could be profound. Specifically, they are debating whether they should adopt the points system, by which a prospective immigrant is awarded points for education and experience and qualified on that basis. Not only would the change make it easier for Canada's best and brightest to live and work in the gigantic American marketplace, it would make it easier for anyone in the world to work there. And the change will make it that much harder for Canada to attract talented immigrants to solve its own labour shortages. "I say this is a really big concern, one that we are underestimating," Fitzpatrick says.

Canada has always had to compete hard for talent with the U.S., and has always lost a certain amount to its southern neighbour. However, even during the last big brain drain debate, much of what Canada lost to the U.S. was regained through immigration because of the points system that Canada already utilized. "All of a sudden, people who don't have family links but who have very strong technical skills or very high-demand skills in the global economy will have a very strong advantage in that they can go to the U.S. and get in. For anyone who's mobile and interested in developing their career, the U.S. offers so many attractive advantages--the size of the organizations, the money that's available there for development if you're into technology--whereas in Canada, we're just not on the same playing field," says Fitzpatrick.

The irony here is that Canada stands to become a victim of its own success. The points system was developed here and implemented in 1967. Prior to that, prospective immigrants were chosen more on the basis of country of origin; people from England, Australia and even the U.S. were all given priority. At the time it was thought the system carried a whiff of racism, and was too arbitrary. Valerie Knowles, an Ottawa-based writer and author of Strangers at Our Gates: Canadian Immigration and Immigration Policy, 1540-2006, says for at least the first 20 years of the points-based system, it was very highly thought of and there was a great deal of confidence in it on the part of the administrators. "It did allow for some individual judgment, but it did do away with a lot of capriciousness and a certain degree of prejudice. That's why other countries have wanted to emulate it," says Knowles. However, it certainly isn't perfect. Knowles says in the last 20 years, the Canadian system has become somewhat complicated. Overall, though, Canada's immigration process is recognized internationally as a success. In 1989, Australia implemented a points system, and two years later New Zealand followed suit. Six years ago the United Kingdom did the same. Now many European countries are considering following Canada's lead.

The result, however, is that the Canadian advantage--through the innovation of its immigration system--has been slowly dwindling. Finn Poschmann, senior policy analyst for the C.D. Howe Institute in Toronto, calls the threat very real. "Canada has been a beneficiary--for decades now--of brain-dead U.S. immigration policy; their mechanism was tilted towards bringing [in] low-wage, low-skilled workers, and making it more difficult for economic migrants with skills to enter the U.S.," Poschmann says. Switching to the points system, he adds, is a big leap forward for them.

Canada, Poschmann points out, is short of workers as it is, and that situation is only going to become more acute over the next few decades. At the beginning of June, Statistics Canada issued its "Labour Force Projections for Canada, 2006-2031" study, predicting in its best-case scenario that the "overall participation rate [in the workforce] inevitably declines" due primarily to the aging population and low birth rate, a trend mirrored in other First World countries such as the U.S. and Germany. This means competition for skilled labour will be even tougher if global economic prosperity is maintained.

So, is there anything Canada can do to compete? According to Poschmann, we cannot open the floodgates to new immigrants to offset demographic change, because that would give us more newcomers than we could possibly deal with. "So it's very important to be as good as we can putting a good package in front of immigrants, and not put [up] barriers," he says.

One solution for Canada is to adjust the points system to make sure it has its priorities straight, ensuring the skills needed here are given top spot. Talentmap's Fitzpatrick sees a real opportunity for innovation in this country, if our system can adjust faster than in the U.S. "Because we're a smaller market, and because we're not as a diverse an economy, we could link immigration not just to education, but to labour demands," Fitzpatrick says. "In the U.S., it would take them a lot longer to adjust because they are just dealing on a bigger scale." This would require a nimble bureaucracy, he adds, which might be a bit of an oxymoron.

There are also improvements that could be made in the recognition of professional credentials. There's been some progress at the federal and provincial levels--particularly in Ontario and B.C.--but there is still a long way to go before all the doctors and engineers driving taxi cabs find suitable employment.

But it was taxation that was actually at the centre of the last brain drain debate, and critics say there hasn't been a great deal of progress on that front. "Canada has done a reasonably good job of attracting high-end wage earners, but if we have to compete with the U.S., our high tax rate will definitely be another barrier," says Adam Taylor, research director of the Canadian Taxpayers Federation. There's not only the U.S., however, to worry about. "Across the globe we see countries flattening their tax or simplifying their tax systems in the name of competitiveness," says Taylor.

While the brain drain debate is nothing new, the difference is that the Americans weren't trying that hard to lure highly skilled workers in the past. Now as they get set to try, Canada better get serious about competing, or watch their best and brightest flow south of the border.