December 13, 2005: Does Canada\'s Immigration Model Work? Two Opposing Views (Part of An Immigration Series In The Globe and Mail)
Globe and Mail
VoteSmart: The Debate
Does Canadas immigration model work?
It needs fine tuning but it strikes a good balance, says economist Don DeVoretz
One of the central tenets of Canadas century old historical paradigm for economic and social development is to pursue a robust immigration program. Our modern immigration program, like our hockey prowess, is more admired outside of Canada than inside. When Australia, and later Germany, sought modern and rational immigration policies they chose the Canadian model proving again that imitation is the highest form of flattery.
What is this Canadian model and can it still be used to make a strong argument circa 2005 to maintain a robust and balanced immigration program regardless of ones political persuasion? I think it can; however, as with any tried and proven model, some revisions are in order.
The 1978 Immigration Act explicitly identified and allowed the admission of economic, family class and refugee arrivals; it was the base on which, in the early 1990s, a Conservative government and later a Liberal one, built an immigration program predicated on the 1978 Immigration Act, that argued that, if 50 per cent of our immigrant arrivals were in the economic class then immigrants could foster economic development and support the family class and refugee arrivals. When this balance occurs all the scientific evidence indicates that immigrants on average make a net contribution to Canadas treasury.
Based on this principle of cinquante-cinquante, both ministers expanded Canadas immigration intake to admit over 200,000 annual arrivals in the early 1990s. The question we face in 2005 is: can an imaginative immigration minister modernize Canadas immigration policy to realize both its economic and humanitarian objectives and admit at least 300,000 arrivals to further Canadas economic and social development in the 21st century?
These goals can be accomplished if we introduce some innovative policies and follow the scientific evidence produced by academic scholars in the Metropolis project. First, I would dispel the myth that we are currently screening 50% of our immigrant arrivals for their economic prowess when in fact we only screen about 25% of our arrivals with our world-renowned points system. How would I realize this 50 per cent screening goal? I would more fully evaluate the spouses of any economic or independent class arrival. Fulfilling this goal would insure that immigrants would continue to be net contributors to the Canadian treasury and undermine misinformed critics.
Next, I would recruit foreign graduate students to expand our yearly total of immigrant arrivals. With a stock of over 100,000 foreign students in Canada, this group of highly trained foreigners could easily form the sole source of any further planned increase in immigrant numbers. In fact, these foreign graduate students would also eliminate in the future the existing credentials crisis. Upon graduation these future Canadians would already know one or both of Canadas official languages, have recognized credentials and could be compelled to initially move to cities that desire larger immigrant intakes, such as Halifax, Calgary, Edmonton or Winnipeg, without confronting Charter issues.
While recruiting new arrivals I would be more geographically selective and recognize that some foreign- sourced immigrant groups are overachievers. In other words, some immigrants economically outperform both other immigrants and Canadians after shortly obtaining Canadian citizenship. These groups include western and eastern European immigrants. I would begin to recruit heavily from these areas by opening or expanding Canadian consulates in these countries.
Finally, I would greatly expand and revise the provincial nominee programme to allow semi-skilled immigrants to fill particular labour niches in cities and regions. As Canadas population ages, the demand for semi-skilled health care workers will grow, especially in the demographically challenged provinces such as Saskatchewan and British Columbia. In addition, the explosive growth in the building trades requires selective admissions of skilled construction workers in British Columbia and Ontario. All these local needs could be met with an expanded provincial nominee program.
Once the number of economic immigrants is increased, I would expand the family class and refugee intake keeping in mind my original premise of a balanced immigration program. In particular, I would next expand private refugee sponsorships by providing tax incentives to those who would privately sponsor immigrants from designated refugee- producing areas.
In sum, I could easily add 100,000 new immigrants to Canada yearly if I were to: a) increase foreign student enrollment and recruitment: b) increase immigrant recruitment from new source countries and greatly expand semi-skilled immigrant flows under the provincial nominee program. These efforts would in turn allow me to expand the family class and refugee numbers. This robust immigration program with its economic and humanitarian components would be uniquely Canadian and could be supported by the New Democrats, Conservatives or Liberals.
Does Canadas immigration model work?
Our policy must make more financial sense, says economist Herbert Grubel
One of the important reasons why Canadas immigration system needs fixing are facts revealed by Statistics Canada in reports on the 2001 census. The cohort of immigrants that arrived in 1990 in the year 1991 on average earned 47 percent less than Canadians of comparable education, age and the same gender. In later years this earnings gap narrowed to a low 20 percent in 2000, without further narrowing expected thereafter.
Behind these statistics lies much human misery and disappointment, which can readily discovered by visiting the website . It has been created and is financed by Canadian immigrants who have returned to their native countries for reasons given on the site. Prominent among these is the inability to find a job in the immigrants profession and high taxes.
The policies that produce these unfortunate outcomes for immigrants also have serious fiscal implications for Canadian taxpayers. These immigrants and their families (including parents and grandparents) are entitled automatically to all of Canadas government spending benefits including those on education, health, welfare, unemployment insurance, child support payments, tax credits for low income earners and public pensions, except for CPP payments that are based on past contributions.
At the same time, the immigrants with lower average incomes pay much fewer sales, property, health and other types of taxes than Canadians pay on average. Most important, immigrants on average pay a considerably lower rate of income taxes because in Canada the top 10 percent of all income tax filers pay 50 percent of all taxes while the bottom half pays only about 5 percent. Few, if any of the 1990 immigrant cohort are in the top decile and more than half are in the bottom half in 2000.
I have estimated that in 2000 Canadians paid an average of $4,543 dollars income taxes to all levels of government while the 1990 immigrant cohort paid only $968. The net burden on Canadian taxpayers resulting from the difference between the value of governments services consumed and all taxes paid was $6,294 per immigrant. For the 1990 cohort of 216 thousand immigrants this means $1.4 billion in the single year 2000.
Similar calculations made for the 2.9 million immigrants who arrived between 1990 and 2002 show that the value of the transfers from other Canadians to them was $18.3 billion in the one year 2002 when federal program spending was $116 billion in total.
Herb, I think there are too many statistics and calculations in the last two paragraphs for most readers. I recommend you concentrate on the conclusions in the second of the two and, perhaps provide the website for you paper at this point (rather than at the end of your article) for those who would like more details on how you arrived at these figures.
Incidentally, I think we concluded that the figure of $116 involved a typo. In your e-mail to me of Oct 31 you said you thought that total government expenditures in 2002 were $193 billion and that, if we are only talking about program expenditures and not debt repayment, it was about $161 billion, i.e. the figures 6 and 1 got transposed in your paper – $161 billion became $116 billion.
A planned government program will be aimed at raising the incomes of recent immigrants through more skills and language training, reforms of professional licensing processes and others. I welcome such programs and hope that they will be successful since it is in our interests as well as those of the newcomers themselves to try to ensure they do well. Herb, I prefer not to say that we owe something to recent immigrants because this smacks too much of entitlement.
However, it should be noted that even if they eventually have the same incomes as other Canadians, the transfers that have taken place in the early years after their arrival will never be repaid because once they reach this income equality they just pay for the government services they consume.
It really is not in the interest of Canadians to continue with the present immigration system, which may be expected to bring more misery to disappointed immigrants and large fiscal burdens for taxpayers.
Of course, immigration may be worth the fiscal costs just discussed if Canada enjoys corresponding benefits. There are alleged to be economies of scale, but they are offset by costs of congestion and pollution. Cultural diversity has reached a point of saturation. Immigrants are unwilling to settle permanently in sparsely populated areas of Canada.
Skills shortages exist in Canada in spite of the massive rates of immigration in recent years. The problems caused by the aging of the population cannot be solved by immigration. There are not enough young people with the right skills willing to come to Canada to meet Canadas needs. Their historic propensity to have small families once settled in Canada at any rate results in only a postponement of the population aging.
Some Canadians see immigration as an act of charity aimed at relieving poverty in developing countries. This motive is tarnished by the selection of doctors and other professionals whose loss hurts the most vulnerable in these countries. Herb, while this paragraph does make a point, I am not sure I would include it here since some would argue that, if doctors from developing countries are going to look for greener pastures abroad in any event, why should Canada preclude itself from being the beneficiary if we need their skills.
To the extent that immigration might provide a practical solution to some of our skill shortages, policies to date have been largely ineffectual because of their failure to take account of market forces and to involve the private sector more directly in the selection process.. A radically new approach is, therefore, required.
The present NAFTA system shows the way. It allows citizens of the United States and Mexico to enter Canada with a temporary work visa if they have a job waiting in specified industries and occupations. If visa holders become unemployed, they have to leave Canada. The work visa is renewable and after some time leads to permanent immigrant status.
A suitably modified system using private sector information and a larger role for private enterprise in administering it is feasible. I wished that the problems of the present system and alternative reform proposals would be discussed during the current election campaign.
Herbert Grubel is a Senior Fellow at the Fraser Institute and a Professor of Economic Emeritus at Simon Fraser University. The study containing details of the estimates of fiscal costs and of the proposal for policy reform are found at http://www.fraserinstitute.ca/shared/readmore.asp?sNav=pb&id=797.