Posted on May 17, 2011

Immigrants Cost $23b a Year: Fraser Institute Report

Kathryn Blaze Carlson, National Post (Canada), May 17, 2011

Immigrants to Canada cost the federal government as much as $23-billion annually and “impose a huge fiscal burden on Canadian taxpayers,” according to a think-tank report released Tuesday that was immediately criticized as telling only part of the story.

The Fraser Institute report (download the PDF here or see it below) says newcomers pay about half as much in income taxes as other Canadians but absorb nearly the same value of government services, costing taxpayers roughly $6,051 per immigrant and amounting to a total annual cost of somewhere between $16.3-billion and $23.6-billion.

“It’s in the interest of Canada to examine what causes this and to fix it,” said Herbert Grubel, co-author of the report Immigration and the Canadian Welfare State. “We need a better selection process … We’re not here, as a country, to do charity for the rest of the world.”

The report acknowledges there are “popular propositions” about the benefits of immigration: Young immigrants pay taxes that support social services for Canada’s aging population; immigrants fill the low-paying jobs that others do not seem to want; Canadians are ennobled by allowing people to share in the country’s economic riches; immigration enriches the cultural life of Canadians, and future generations end up repaying their parents’ debt by earning an average or above-average living in the long run.

Mr. Grubel and economic consultant Patrick Grady argue, however, that these benefits either do not hold up to close scrutiny or that they are simply not worth the economic cost.

The 62-page report used a 2006 Census database to estimate the average incomes and taxes paid by immigrants who arrived in Canada over the period from 1987 to 2004. It found that immigrants paid an average of $10,340 in income tax and other taxes, compared with the $16,501 paid by all Canadians. While newcomers each received $110 less than the rest of Canadians, the “net fiscal transfer per immigrant” still amounted to $6,051 annually. The study examined the incomes of adults exclusively, and assumed the average immigrant pays taxes and receives benefits for 45 years.

“I’m sure the data behind the numbers is sound, but I think it only tells half the story,” said Rudyard Griffiths, co-founder of the Dominion Institute and author of Who We Are: A Citizen’s Manifesto. “The fact is that we’re doing immigration on the cheap … We don’t spend enough money on language services, and we don’t do enough skills accreditation and training.”

He said he is sympathetic to the argument that family reunification is likely burdensome on the tax purse, but said it’s just a “drop in the bucket” given that those visas account for only 11,000 of the 250,000 or so newcomers expected this year.

“The trickier issue is that of the quarter of a million, only about 60,000 are skilled or professional workers,” he said. “Everyone else is dependents.”

Mr. Grubel, himself an immigrant who first migrated to the U.S. from Germany in 1956 “with nothing,” maintains that he is not anti-immigration but rather that he believes immigrants should “pay their way in the welfare state.”

He and Mr. Grady argue that the selection process should be revamped to focus on admitting skilled workers who have job offers with Canadian employers. Recent newcomers should also have to post a bond to cover payments for health-care and social services before their parents and grandparents are admitted as landed immigrants.

Douglas Cannon, a prominent B.C.-based immigration lawyer, said he understands the benefit of the cost calculation, but said it is impossible to attach a price-tag to the benefits of welcoming newcomers.

“Immigration is, in the end, about people and their futures, their dreams, their hopes–how can you put a dollar amount on that?” he said. “It’s about continuing to make Canada a place of opportunity.”

This was not Mr. Grubel’s foray into calculating the cost of Canada’s immigration policies. In 2005, the Fraser Institute released his study that pegged the 2002 cost at $18-billion, but he said this latest report is more “scientifically rigorous and less liable to attack.”