June 7, 2011: How To Cut Canada’s Yearly Deficit And National Debt

How To Cut Canada’s Yearly Deficit and National Debt

If Canada’s Conservative government is serious about reducing the country’s deficit and its debt, it cannot continue to ignore mounting evidence that Canada could achieve that goal by significantly reducing immigration.

Before the May 2 election, the Conservatives and all other parties devoted a very large amount of time to courting the ethnic vote. Yet, for most parties,  a study of the search for the immigrant vote should be shocking and embarrassing in this post-election period. According to that analysis, the Liberals who suffered their worst defeat ever, are ironically the only ones who seem to have benefited substantially from courting the immigrant vote.  Although the Conservatives spent a very large amount of time with ethnic voters before the May 2 election, results obtained by political scientists involved in the prestigious Canadian Election Study indicate that Conservative efforts produced insignificant results. The  increase in the immigrant vote that Conservatives received since the last election in 2008 has been described as “tiny”.

If logic were to be applied, the Conservatives should feel liberated by this news. As a result of the May 2 vote, they do not have to feel obligated to reward recent immigrants. This is an incredible advantage, especially at a time when Conservatives have to make decisions about what programs they have to cut to balance the country’s books.

According to many news reports, Canada’s Finance Minister, Jim Flaherty, has said the newly-elected Conservatives will seek to bring the federal government back into surplus by 2014-2015. They will do that by implementing a review of government operating costs that will save up to $4 billion annually. However, Flaherty’s budget document does not identify any of the savings.

It would seem eminently sensible for Mr. Flaherty to “identify” immigration for cost savings. There are 2 good reasons. One is that the people affected are not Canadians. The second is that Canada needs very few immigrants.

So, why does Canada’s Conservative government not immediately consider cutting immigration as a way of saving billions of dollars? After all, government’s primary commitment should be to Canadians. If budgetary pain is to be administered, Canadians should not suffer the first blow.

If Mr. Flaherty wants concrete evidence of the negative economic impact of immigration on Canada, he will find it in the recent, very thorough work of two economists, Patrick Grady and Herbert Grubel.  Their study is one of many done on the economic performance of immigrants. A number of studies have noted that , compared to immigrants who arrived before 1980 and who performed well soon after arriving, immigrants since then have struggled economically.  Grady and Grubel state that “the main objective of their study was to improve on Grubel’s calculations (in his 2005 study) using previously unavailable official income and tax data referring to immigrants that arrived over a different and longer period”.

Grady and Grubel examined a sample of 844,476 individuals. Part of that sample represented the approximately 4.1 million immigrants who arrived between 1987 and 2004. The remainder represented other Canadians. The study looked at the fiscal year 2005–2006. It calculated that the difference between those immigrants’ tax payments and the value of government services those immigrants absorbed was about $6,051 per immigrant in that year. In other words, immigrants who arrived between 1987 and 2004 were each taking  $6051 more in services than they were paying in taxes. This represented a total cost to Canadian taxpayers of $16.3 billion to $23.6 billion annually.

Grady says, “This is a substantial amount and is expected to continue to grow for as long as the present immigration policies remain in place.” Grubel states, “With the aging of Canada’s population and the growing unfunded liabilities of social programs, Canada simply cannot afford to absorb the growing cost burdens.”

Grady and Grubel argue that government should be placing much less emphasis on Family Class immigration (about 22% of all immigrants admitted in 2009) and should be giving much more priority to skilled immigrants (about 16% of those admitted in 2009) who have legitimate job offers in Canada. In other words, by placing too much emphasis on Family Class, Canada was importing poverty, and expecting Canadians to pay for it in perpetuity.

Most Canadians will understand that Canada will continue to suffer for many years from the effect of bringing in several million people it never needed. Canada could relieve part of its current immigration burden by investigating and removing the hundreds of thousands of recent immigrants who have entered Canada by cheating. Most important, it could prevent growth in its future burden by dramatically reducing Canada’s yearly intake.

To put the issue into perspective, Canada’s Conservative government projected a deficit of $36.2 billion for the fiscal year that ended in March. According to the IMF, Canada’s national debt is over $522 Billion, not much of an improvement (relatively speaking) over what it was when Liberal Finance Minister Paul Martin started his slashing and burning in the mid-1990’s.

If Mr. Flaherty wants more evidence that he should target immigration numbers, this time from the left of the political spectrum, he should look at a 2009 report done by the Ontario Association of Food Banks. It confirmed that many recent immigrants were struggling. The report said that about 36% of the people using food banks in Canada’s most populous province of Ontario were recent immigrants. The report defined recent immigrants as those who had arrived in the past 5 years. For a long time, about half of Canada’s immigrants have settled in Ontario. In the years 2002 to 2006, the last year of the Food Bank study, well over 644,000 settled there. Ontario has about 13 million of Canada’s 34 million people.

The Ontario Association of Food Banks argued that government had to step in to curb poverty, including immigrant poverty. However, it accepts immigration industry arguments that recent immigrants are necessary for Canada’s aging population, etc. even though these arguments have been refuted by non-partisan studies.  It is puzzling that the writers of the Food Bank report did not draw the logical conclusion that cutting the number of immigrants would decrease the total of those wanting to receive the Food Banks’ food resources.

The 2009 Food Banks study claimed that poverty in Ontario’s entire population cost Ontario between $32 Billion and $38 Billion a year. According to one estimate, poverty in Ontario’s immigrants in the 2002 to 2006 period would have cost Ontario taxpayers between approximately $6 to $7 Billion a year.

Mr. Harper, Mr. Flaherty and other prominent MP’s in the Conservative government take pride in telling Canadians that they believe in wise fiscal stewardship for Canada.

If they do nothing to curb unnecessary immigration, they will be telling Canadians the opposite.

In fact, they will be telling Canadians that the new majority Conservative government really believes much the same thing as many of their Liberal predecessors : they exist primarily to  get elected.

Canadians deserve better and should receive better.


Sources :

1. Ontario Association Of Food Banks, “Running on Empty – A Decade of Hunger in Ontario”, March 22, 2011 http://www.oafb.ca/assets/pdfs/HungerReport2010.pdf

(In this 2011 report, the Ontario Food Banks shrouded their picture of immigrant use of food banks in a fog by re-defining the term “recent immigrants”, and by stating that “new Canadian” use of Ontario’s food banks had declined to 15% of all those using food banks. Meanwhile, use of Food Banks had significantly increased. The recent immigrant picture in Ontario remains unclear.)

Summary at http://ottawadtmc.posterous.com/running-on-empty-a-decade-of-hunger-in-ontario

2. Ontario Association Of Food Banks,  “Ontario Hunger Report : Living With Hunger”, November, 2009 http://www.oafb.ca/assets/pdfs/OHR2009Red.pdf

3. Immigration And The Canadian Welfare State, May 17, 2011 http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/immigration-and-the-canadian-welfare-state-2011.pdf