Immigration Policies Need Public, Not Political Debate

Immigration policies need public, not political debate

Herbert Grubel
Canwest News Service
Thursday, November 26th, 2009 | 7:20 am

Canadians need a public debate on the merit of their government's existing immigration policies since a new set of studies has shown that under present conditions, immigrants no longer bring the benefits that had been brought by immigrants before the 1970s.

The most fundamental reason is that present immigrant selection procedures have made their average incomes after 10 years equal to only 80 per cent of the income of comparable Canadian workers (Statistics Canada). Before the 1970s, immigrants after 10 years on average earned the same as Canadians.

These low earnings of recent immigrants are important because of the Canadian welfare state. On the one hand, its highly progressive personal income tax rates (the top 10 per cent of all filers pay about 50 per cent of all taxes while the bottom half pays about five per cent) result in average immigrants' tax payments below those of the average Canadian.

On the other hand, the welfare state provides immigrants with access to all of the major social programs like health care, education and pensions and provides several costly services for them specifically. As a result, the costs of social benefits used by immigrants on average are at least the same as those of Canadians.

The difference between average payments and benefit costs results in a transfer of money from Canadian taxpayers to the immigrants estimated to be at least $18 billion annually. Each immigrant absorbs $280,000 over their lifetime in Canada.

In the past, immigrants provided Canadians with benefits through lowering the average cost of railroads, bridges, municipal services and capital-intensive private production. In recent times, these lower costs have been replaced by increasing costs of building in densely populated areas. Private investments no longer need local markets to operate at optimum scale since free trade and low transportation costs allow world-wide marketing.

The large numbers of immigrants (about 36,000 new immigrants from abroad settle in the Vancouver region every year) require the construction of about 250 new dwellings every week, which causes real estate prices to be high and adds to urban sprawl, traffic congestion and pollution. The immigrants add to the demand for already overcrowded schools, health care facilities and urban transit. They add to global greenhouse gases since they would have produced much less in their native countries.

It is often argued that immigrants are needed to fill jobs Canadians do not want. This benefits employers but lowers the wages of low skilled Canadian workers. It also reduces incentives for employers to invest in labour saving and productivity-raising machines that would allow them to offer profitably wages high enough to attract Canadians to do the work they previously did not want.

Before the 1970s, the number of immigrants fluctuated with labour market conditions. Under present policies, the same number of immigrants settles in the Lower Mainland every year, even if they add to cyclically high unemployment.

Immigration is seen by some as a saviour of Canada's financially troubled health care and pension systems. Simulations using government forecasts of births and deaths show that Canada's population in 2050 would have to be 135 million to maintain the current ratio of 20 pensioners supported by 80 workers. Immigration rates required to reach this figure are not feasible.

Immigrants have greatly enriched Canada's quality of life by bringing a multitude of ethnic restaurants, stores and cultural events. But the benefits of further contributions of this sort have become increasingly smaller.

The experience during the recent civil war in Lebanon shows that large numbers of immigrants have become Canadian citizens but live, work and pay taxes in their countries of origin. They keep their citizenship rights to return for medical care, pensions and personal security, all at the expense of Canadian taxpayers that is in addition to those mentioned above.

The screening of refugees and immigrants used by Canada is considered by the United States to be inadequate to keep out potential security risks. As a result, the U.S. has tightened border security, which has imposed great costs on trade and travel on all Canadians.

Many Canadians welcome immigrants in order to help them to a better life and to increase Canada's reputation as a global model of peaceful multiculturalism and a caring society. What is the value of this benefit of immigration? Does it exceed the costs? Let the public decide, not politicians seeking immigrant votes.

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Herbert Grubel is Professor of Economics (Emeritus), Simon Fraser University and Senior Fellow, The Fraser Institute.