The Fraser Institute Study on Immigration – Do Immigrants Impose a Fiscal Burden?

Photo by Caterina

On May 17, 2011 the Fraser Institute published a study titled “Immigration and the Canadian Welfare State”.  It was the first Fraser Institute study that I’ve read on a topic which I am very familiar with.  Unfortunately, by the time I had finished reading the report, I realized that I might have to approach their studies with a greater degree of skepticism.

The study found that immigrants on average paid $10,340 in income and other taxes while all Canadians on average paid $16,501.  Subtracting that amount from the amount of government benefits that immigrants receive on average, the study concluded that immigrants imposed an annual fiscal burden of between $16-billion and $23-billion on the Government of Canada.

Now, if you are an immigrant reading that statistic and feel guilty, don’t worry.

The study did not consider that if you were an international student you paid double what domestic students did.  It also did not factor in the $250,000 – $800,000 loan that you made to the Government of Canada if you were in the investor program.  If you were a professional overseas and could not get your foreign credentials recognized in Canada the study briefly mentioned the issue in a footnote, but assigned very little weight to it.

Incredibly, the study also did not distinguish between economic immigrants, family-class immigrants, business-immigrants, and refugees.  Presumably, the fiscal burden between these groups would vary dramatically.

The study glossed over or dismissed some of the other benefits of immigration.  Regarding the argument that second and third generation children of immigrants do exceptionally well in Canada, the study’s authors simply expressed doubt on this notion.  Perhaps the authors should have read the MacLeans feature on whether Canadian universities are too Asian before simply dismissing this argument.

The study also stated that immigration is unlikely to solve Canada’s aging population issue, and that a better solution is to increase fertility rates.  Well, until the Fraser Institute solves a demographic challenge that the entire western world cannot  seem to resolve, I’ll stick with policies that at least help.

Ironically, most temporary foreign workers, students, and prospective immigrants would probably jump for joy if the Canadian government actually implemented the study’s policy proposals.

Those unfamiliar with the specifics of Canada’s immigration laws, as I would suggest the authors of the Fraser Institute study appear to be, would summarize the proposals as restricting immigration so that only people with genuine offers of employment could become permanent residents.

Those familiar with Canadian immigration law would summarize the author’s proposals as removing the Labour Market Opinion requirement from the Temporary Foreign Worker Program, and expanding the Canada Experience Class to include all Temporary Foreign Workers who have worked in Canada for four years.  As a practicing lawyer who currently avoids having to submit an Application for a Labour Market Opinion whenever I can an alternative for my clients, I’d certainly be thrilled if the NAFTA rules applied to all immigrants.

(For those who may be unaware, most employers have to obtain a Labour Market Opinion before they can employ a Temporary Foreign Worker.  In order to receive a positive Labour Market Opinion, employers have to convince the Canadian government that the wage they will be paying the foreign worker is fair, and that the presence of the foreign worker in Canada would not have a negative impact on the Canadian labour market.  In today’s economic environment, it is very difficult to obtain.)

The study’s  proposals contain ideas that the authors present as being radical and possibly difficult to implement, but in fact already exist.  For example, the authors hypothesize about the possible problems of creating a list of minimum and average wages for occupations in Canada, without seeming to realize that such a list already exists, is available for free online on the Labour Market Information website, and is referred to hourly by immigration lawyers, consultants, and the Government of Canada.  The study’s authors also discuss the idea of sponsors posting bonds, without explaining why the current sponsorship undertaking is insufficient, or even mentioning it.

The Fraser Institute seems to have no idea how open its proposals would be to abuse.  They do propose to create a public-private partnership to monitor employer abuse, however, given how easy access to the Temporary Foreign Worker Program would be under their proposals, it is unlikely that any body could effectively regulate employers. (As an aside, public-private partnerships might be great to build a school or a highway, but do we really want the Canada Border Services Agency to become a P3?)

As someone who encounters the practicalities of Canadian immigration law on a daily basis, I can assure the authors that the current immigration system is generally fine.  Where there are gaps and holes, the Conservative government is taking mostly practical measures to plug them.

As for the supposed fiscal burden that immigrants impose on Canada, the study states on numerous occasions that as immigrants become more integrated in Canada, the fiscal disparity between them and native-born Canadians shrinks dramatically, and eventually disappears.  Given this, it seems clear to me that the solution to any fiscal imbalance is to expedite the rate at which new immigrants integrate.  Recognizing foreign credentials, increasing settlement programs, and promoting language training would be far more effective in reducing any fiscal imbalance, if there is indeed one, then the Fraser Institutes proposals.


4 thoughts on “The Fraser Institute Study on Immigration – Do Immigrants Impose a Fiscal Burden?

  1. First, you say the report fails to consider that international students pay double the tuition of domestic students. Okay, so domestic students are subsidized by Canadian taxpayers and international students aren’t. So what? Why should the Fraser report consider something that has no net effect on the cost of immigration? Particularly when international students aren’t really immigrants.

    Second, you say the report fails to consider the investor program in which immigrants loan $250,000 – $800,000 to the Government of Canada. Really? And just how many immigrants are in a position to loan Canada a quarter of a million dollars??? It can’t be many or they wouldn’t be costing Canada an average of $6,051 per year.

    Third, since “the study states on numerous occasions that as immigrants become more integrated in Canada, the fiscal disparity between them and native-born Canadians shrinks dramatically, and eventually disappears” you suggest the solution is to “expedite the rate at which new immigrants integrate.”

    Well, I have an even better solution. End immigration and there wouldn’t be any fiscal disparity in the first place.

    1. Fred,

      The amount that international students pay in tuition is relevant because many immigration programs are geared towards facilitating international students becoming immigrants. If the Fraser Institute is going to release a study that purports to have analyzed all the costs and benefits of immigration, then the increased tuition that these students paid prior to immigrating should be considered.

      To answer your second point, prior to 2010 thousands of immigrants every year loaned the government of Canada $400,000. Effective December 1, 2010, that amount increased to $800,000, and thousands of immigrants continue to do it.

  2. First, it makes no difference if international students eventually apply for citizenship because the money they pay as non-citizens isn’t a benefit to Canada. They’re merely paying the actual cost of tuition sans the subsidy from Canadian taxpayers.

    Second, citizens, foreigners, banks, mutual funds, governments, etc all buy Canadian bonds. They do it for one reason and one reason only — as an investment to make money. If it’s a good investment then they should be willing to buy Canadian bonds whether they’re immigrants or not. So why even have the investor program? Because Canada is selling visas. That’s not a benefit to Canada. It’s a disgrace.

    1. I should clarify that the loan that immigrant investors make to the Government of Canada is distinguishable from buying bonds because no interest is paid on the five year loan.

      Whether it is a benefit to Canada or not, and whether international tuition should be counted as a contribution of the foreign student or a cost of domestic people isn’t really the issue.. the point is that these are all factors that should have been considered in determining the net fiscal cost of immigration.

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