By Robert Vineberg, Special to the Province | Link to Article
The Fraser Institute recently released a report entitled, Immigration and the Canadian Welfare State 2011 that claims that the annual cost of immigration to Canada is $16.3 billion. The institute’s analysis zooms in on one small aspect of the economics of immigration and ignores the larger picture entirely.
The authors of the Fraser Institute report note that in 2006, Canadians earned an average of $35,057, whereas immigrants arriving during the 15 years between 1987 and 2004 earned an average of only $26,253. The authors calculate that while all Canadians paid an average of $16,501 in taxes, immigrants paid an average of $10,340. They go on to assume that immigrants consume roughly $15,900 in benefits from all levels of government and, in turn, that each immigrant is costing Canada about $6,000 per year. Given that Canada admitted some 2.7 million immigrants between 1987 and 2004, they conclude that the annual cost of immigration to Canada is $16.3 billion.
The authors state that it would be “quite defensible to use the number of immigrants who arrived over a longer period of time,” and add that it “is our hope that this will be sufficient to encourage public discussion about the affordability of existing immigration policies.” In this spirit, I am pleased to offer the following critique of the Fraser Institute analysis.
It is important to note that the average income of immigrants who had been in Canada more than 15 years prior to the 2006 census was, in fact, higher than the average income of persons born in Canada. These immigrants would, therefore, be paying more taxes than the average Canadian-born person. This turns the Fraser Institute’s analysis on its head and suggests that immigrants are net contributors to government revenues if their entire working life is considered.
Having established that the data can lead to two completely different conclusions, I would suggest that the whole principle of such analysis is faulty because it is uni-dimensional. There are more aspects of immigrant contributions to Canada.
In the first place, every working person in Canada contributes more to the common good than just their taxes. Often, an immigrant brings skills to a workplace allowing his or her employer to keep others employed. Immigrant entrepreneurs employ hundreds of thousands of people born in Canada. Poorly paid immigrant domestics free up Canadian-born parents to earn often extremely high salaries.
Additionally, a vast relatively under-populated country like Canada has enormous “fixed costs,” including national defence, running diplomatic missions abroad, maintaining inter city transportation infrastructure and so on. All of this can be made less expensive for every Canadian resident if there are more taxpayers to share the burden. The Fraser Institute also ignores the fact that Canada’s commitment to international humanitarianism includes welcoming some 20,000 refugees each year. These persons, who may have suffered horribly both physically and mentally, are often unable to earn a decent salary for many years and they depress the average immigrant income calculations.
A narrow cost-benefit analysis is not the only criterion that should be applied to assess the effectiveness of an immigration program. Let us try applying the Fraser Institute’s analysis to primary and secondary education. Statistics Canada’s Summary Public School Indicators for Canada, the Provinces and Territories states that the total cost per primary or secondary student in Canada in 2006 was $10,740. Therefore parents of two school-age children in Canada were receiving a government benefit of $21,480 above and beyond any other government benefits received. Should we outlaw families of two or more children so that Canadian parents do not receive more in benefits than they pay in taxes? Of course not! Education of our children is an investment in Canada’s future. And, equally so, immigration is an investment in Canada’s future.
The Fraser Institute’s report addresses the issue of immigrant selection and makes suggestions that, in their view, would improve the current system. I would welcome constructive debate on how Canada chooses its immigrants and what selection criteria might be most effective to select immigrants who could rapidly contribute to Canada’s economy, culture and society. However, by zooming in on one small part of a complex phenomenon, the Fraser Institute has used uni-dimensional statistical data to analyze a multi-dimensional issue, and has come to conclusions that may appear correct but, if the assumptions involved are examined closely, are unfounded. This does not make a constructive contribution to the needed debate.
Instead, let’s “zoom out” and base any analysis of the costs and benefits of immigration on the complete picture.
Robert Vineberg is senior fellow at the Canada West Foundation, a think tank dedicated to being an objective, non-partisan voice for issues of concern to Western Canadians.
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