Canadian taxpayers carry the burden for unlimited family immigration

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Appeared in the National Post

There has been much huffing and puffing by politicians, the media and immigrant lobbyists about the government’s plan to reduce the number of parents and grandparents joining their immigrant offspring in Canada next year.  

Yes, the policy change is unfair. Many immigrants have come to Canada having been promised that their parents and grandparents could join them so that they can continue the cultural traditions of their homelands and receive help with family chores and child care. 

But, as is the case with all government policies, benefits to one group of citizens imposes costs on another. In this case, the benefits to immigrants come at the expense of Canadian taxpayers.  Unfortunately, these costs do not show up in government budgets but are hidden behind the provisions of the welfare state and driven by low average incomes of recent immigrants. 

New data and studies show the extent of this fiscal burden; recent immigrants have lower average incomes and tax payments than other Canadians, even 10 years after their arrival. At the same time, these immigrants on average absorb at least the same amount of social benefits as other Canadians. 

As a result, $6,000 is annually transferred to the average immigrant at the expense of Canadian taxpayers.  In 2006, the value of these transfers to all 2.7 million immigrants who arrived between 1987 and 2004 and still live in Canada came to $16.3 billion.  Taking account of the 1.5 million immigrants who arrived since 2004, the fiscal burden comes to $25 billion in 2010. These costs represent a significant portion of the federal government’s $55 billion deficit projected for the fiscal year 2011.

Important here is the fact that parents and grandparents lower the observed average incomes of all immigrants. The reasons are obvious: parents and grandparents tend to be elderly, have poor language skills, and possess few marketable skills. At the same time, the number of parents and grandparents arriving as immigrants are high: 84,917 or 6.7 per cent of the 1.3 million immigrants admitted to Canada during 2006-2010.

The fiscal transfers to parents and grandparents are much higher than those of the average immigrant, not only because of their low incomes but also because they tend to be of an age where their demand for costly medical services is at its highest level.

For example, in 2009, family-class immigrants made up 22.1 per cent of all immigrants who entered Canada that year. Those who were selected by the federal government on the basis of their occupational skills and other characteristics contributing to their economic success accounted for only 16.2 per cent.

To alleviate this fiscal strain on taxpayers, Canada’s immigration selection process should be reformed to replace the existing, failed system of using points to select immigrants, with a system that emphasize a reliance on market forces. This would result in giving preference to immigrants with job offers in Canada and skills needed by Canadian employers.

In our recent paper, Immigration and the Canadian Welfare State 2011, Patrick Grady and I outlined our proposals for reforming the Canadian immigration system to one that places a premium on employable skills.

We envisioned a system where would-be immigrants with job offers are provided with temporary work visas, valid for two years and renewable for an additional two years upon the presentation of evidence of continued employment. After four years and continued employment in Canada, the holders of work visas would be eligible for landed immigrant status and for citizenship two years later. Spouses and dependents of the holders of work visas would be allowed to enter Canada under a program of family work visas, which would allow them to accept employment. Finally, immigrants would be able to have their parents and grandparents join them as landed immigrants in Canada after posting a bond that is used to pay for their health care and other social benefits.

Since holders of work visas pay the same personal income, GST, and sales taxes, and social insurance premiums as Canadian citizens do, the holders of these visas would rightfully and automatically be entitled to receive the same public benefits that are available to Canadian taxpayers, including employment insurance, provincial welfare, health care, and public pensions.

Over time, the immigration issue has attained a kind of religious mystique, so much that any debate over the costs of immigration will immediately be dismissed as racist, or anti-Canadian. But with Canada now facing the prospect of large, cyclical deficits, it’s time for a no-holds-barred examination of current immigration policy.

An examination of the true costs of immigration on Canadian taxpayers would be a good place to start.

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