Tuesday, May 17, 2011

Fraser Institute report questions Canada’s immigrant selection process

The Fraser Institute—a Canadian public policy think-tank—has released a new report that finds “Canada’s immigrant selection process needs to be revamped to focus on admitting people with Canadian job offers and skills needed by employers,” because current policies “impose a huge fiscal burden on Canadian taxpayers.”

The authors of the report, Immigration and the Canadian Welfare State 2011, are Herbert Grubel, a Senior Fellow at The Fraser Institute, and Patrick Grady, an economic consultant with Global Economics Ltd. The basic finding of the report is that immigrants paid (2005/06 fiscal year) less in taxes on average than the average of all Canadians. The net difference per immigrant was $6,051, “representing a total cost to Canadian taxpayers of $16.3 billion to $23.6 billion annually.” While, at the same time, immigrants absorbed nearly the same value of government services and transfers as other Canadians—immigrants received only $110 less in benefits than all Canadians.

The imbalance, according to the authors, stems from a combination of “immigrants’ low average incomes (72 per cent of other Canadians’ incomes) and the operation of the welfare state with its progressive income taxes and universal social benefits.”

The report refutes claims of social and economic benefits immigrants are said by some to bring to Canada, but are not included in the estimate of fiscal imbalance discussed above. For example:

  • Recent immigrants and their offspring are unlikely to repay the fiscal transfers they receive, except where they eventually earn significantly more than average incomes for long enough to repay the earlier costs incurred by them. (Statistics suggest this is not happening with the average recent immigrant.) And most offspring of immigrants are not likely to generate fiscal surpluses, for, as they integrate into Canadian society, they will become average Canadians and will generate about as much in taxes as they consume in benefits, with little or nothing left to cover their parents’ fiscal burden.
  • The report argues, as well, that the population increase needed to solve the problem of unfunded future liabilities of social programs would be more effective coming from an increase in Canadians’ fertility rate to the level of 2.1 children per woman, which is required for long-term stability of the population. Mass immigration may actually lower birth rates since it drives up the cost of housing, an important factor for consideration when families decide how many children they can afford to have.
  • On the issue that immigrants are need for jobs Canadians won’t do, or for which sufficient Canadians are not qualified, the reports makes some excellent points. In short, supply and demand of the market place for labour, goods and services together with Canadians’ ability to adapt would pretty much bring things into equilibrium, with some permanent targeted immigration and fluctuating numbers of temporary workers to accommodate business cycles.

    Interestingly, the report notes that family-class immigrants made up 22.1 per cent of all immigrants in 2009, while those selected on the basis of their job skills and other characteristics contributing to their economic success accounted for only 16.2 per cent. So, obviously, filling jobs Canadians won’t do is very much a secondary (or less) purpose of our current immigration policy.

  • The report questions the wisdom of immigration to increase economic growth. Essentially, the authors ask whether Canadians are better off in a country with high per-capita income and high living standards (Canada today) or should we focus on maximizing aggregate national income through ever larger population growth fueled by mass immigration. China, for example, has the second highest aggregate national income, but enjoys a living standard about a tenth of Canada’s, and few Canadians would prefer to live in China. The report notes that no conclusive evidence exists that a larger Canadian population would be better and would benefit existing Canadians.

Grubel and Grady conclude that, in order to alleviate the fiscal strain on taxpayers, Canada’s immigration selection process should be reformed to include the following recommendations:

  • Temporary work visas for applicants with a real job offer, paying at least the prevailing median wage;
  • Work visas, valid for two years and renewable for two years upon the presentation of evidence of continued employment;
  • Spouses and dependents of the holders of work visas may enter Canada under a program allowing them to accept employment;
  • Holders of work visas who lose their jobs must find new employment within three months or leave Canada, unless their spouse is employed under a family-work-visa provision;
  • After four years in Canada and continued employment, the holders of work visas can obtain permanent immigrant visas. Landed immigrants will be eligible to apply for citizenship two years later; and
  • Immigrants may have their parents and grandparents join them as landed immigrants in Canada after posting a bond to cover payments for health care and other social benefits.

Having read the 62-page paper, I find myself pretty much in agreement with its findings and conclusions. I am an immigrant and am basically in favour of an relatively open immigration policy, but only so long as that policy continues to provide a net benefit to Canadians already here. And, frankly, I’m unimpressed with the creep of multiculturalism—how many more ethnic restaurants and festivals do we need?

If a more focused process can improve the system, and our quality of life, then I’m all for trying it. Regardless of your stand on our immigration policies, this report is worth reading.


© 2011 Russell G. Campbell
All rights reserved.
The views I express on this blog are my own and do not necessarily represent the views or positions of political parties, institutions or organizations with which I am associated.

1 comment:

  1. Immigration should be tied to job creation and not used as the engine to fuel it. Why? because it isn't working. (real conservative)