Image via WikipediaBy Stephen Hume, Vancouver Sun
I’m an immigrant.
Let’s get that out of the way first in this reaction to the Fraser Institute’s disingenuous study asserting that immigration costs Canada as much as $23.6 billion a year.
Researchers Herb Grubel and Patrick Grady — both of whom are also immigrants and presumably don’t consider themselves a burden on the economy — conclude that in 2006, immigrants received on average $6,051 more in benefits than they paid in taxes.
On the basis of this snapshot, they advocate restrictions upon immigration. However, the narrowness of the data set suggests the broad conclusions don’t have sound foundations.
Indeed, the arguments sound suspiciously like those of the old Reform Party, which gave gloomy voice to utilitarian assumptions about acceptable skill sets and wealth required of prospective immigrants.
Of course, anxiety about the potential financial burden of newcomers is well established, if misplaced, in framing immigration policy for Canada.
Similar concerns were expressed about Irish immigrants in the mid-19th century. Central Europeans, Russian Jews, Scandinavians — even the English — have all been subjected to worries that they got more from their new country than they contributed.
So, here we are in 2011 faced with two successful immigrants, both indisputably valued and productive members of Canadian society — let’s leave aside the amusing irony of the Fraser Institute issuing tax-deductible receipts to wealthy contributors so they can pay less tax — fretting that new immigrants don’t pay enough tax to cover their cost to Canadian society.
This sounds like the venerable “I’m in the lifeboat, pull up the ladder” argument.
I say venerable because the notion that the most recent arrivals are paying insufficient tax and drawing excessive benefits remains one of the persistent memes in Canadian society.
And it is almost always based on selective statistical evidence while ignoring the unassailable fact that of the 34 million people in Canada, 33 million are either immigrants or the descendants of immigrants who helped to build a national economy which ranks in the top eight globally.
I’m not alone in my doubtful reaction to the Fraser Institute’s study.
Robert Vineberg, a senior fellow at the Calgary-based Canada West Foundation, notes that the average income of immigrants in Canada more than 15 years before the 2006 census was actually higher than for native-born Canadians.
On average, those immigrants paid more in taxes than they got in benefits, Vineberg observes.
“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,” he says. The data used can lead to diametrically opposed conclusions, he notes, and suggests “the whole principle of such analysis is faulty.”
Vineberg argues that immigrant contributions are much broader than their tax contribution. For example, an immigrant nanny earning less than average income often enables both native-born parents to earn higher salaries and therefore to pay higher taxes.
So it all depends where you take your snapshot.
When my father brought me to Canada as an infant 63 years ago, the only job he could find was on a garbage scow, although he was a qualified machinist. He worked filling paint cans and delivering bread at considerably less than the average income. He had five kids in school. That snapshot would show him – and me – as a social cost rather than a benefit.
Later he became an award-winning journalist, still writing at 87. And those five kids – two are newspaper columnists, one works for the navy, another provides research and management consulting to big health care organizations, one is a successful artist. By that snapshot, he’s a benefit rather than a social cost.
Vineberg concludes: “By zooming in on one small part of a complex phenomenon, the Fraser Institute ... 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.”
Indeed.
shume@islandnet.com
Pardon the pun in the title, simply could not resist.
Quite a fascinating article in Bloomberg, as it seems the recent clampdown on property in China has led many to head east (well …..to the “west”) spiking the already red hot Vancouver housing market. One that already had the warning flags last summer. One (of a myriad) of reasons you could see the U.S. housing market getting out of control was the complete disassociation between median incomes and housing prices. To say this has happened as well in Canada – and especially Vancouver – is an understatement. That said, they have the same very loose monetary policy, and an influx of buyers – many of them cash – from outside the country itself, so it is definitely setting up an interesting scenario. One wonders what happens when their central bank actually begins to raise rates in earnest.
At this point, using the measure above (median household income to median price), Vancouver is now more expensive than New York or London. And I am sure a lot less investment bankers work there, than in either of those 2 locales.
Some of the growth measures in this story seem nearly impossible – looks like some mass herding effect out of China and into Canada…
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- Vancouver’s Royal Pacific Realty had such a surge of business during the first two weeks of February that agents and assistants worked day and night shifts to find homes for Chinese buyers visiting during the Lunar New Year. “It was unprecedented,” said Royal Pacific Chief Executive Officer David Choi.
- Sales of detached homes, townhouses and condominiums in metropolitan Vancouver jumped 70 percent in February from January, to 3,097 units from 1,819, and were up 25 percent from a year earlier. In March, sales climbed 32 percent from February. Sales increased by 80 percent from two years ago.
- Buyers from mainland China are leading a wave of Asian investment in Vancouver real estate as China tries to damp property speculation at home. Good schools, a marine climate and the large, established Asian community as a result of Canada’s liberal immigration policy make Vancouver attractive, said Cathy Gong, who moved from Shanghai to the Shaughnessy neighborhood on Vancouver’s Westside about three years ago.
- China, where home prices rose 28 percent in Beijing and 26 percent in Shanghai last year, has taken steps to curb property speculation within its borders. Premier Wen Jiabao placed curbs on mortgage lending, boosted down-payment requirements and limited the number of purchases.
- In 2010, Vancouver had the third-highest housing costs among English-speaking cities worldwide. Only Hong Kong and Sydney, another magnet of Asian immigration, were more expensive.
- Vancouver’s median home price of C$602,000 ($618,000) was 9.5 times the annual median household income of C$63,100. Canada had a 4.6 national multiple, making it “seriously unaffordable,” while the U.S. at 3.3 was “moderately unaffordable,” the study showed. To be affordable, the multiple must be 3 or less.
- Vancouver was more expensive than San Francisco, London and New York by that measure.
- Unlike London or New York, “we don’t have enough jobs with high incomes to justify” the home prices, said Ladner. He noted Australia has placed restrictions on foreign home ownership.
- Holidays in China have been a popular time to look for houses in Vancouver. Sales picked up in October during China’s weeklong national holiday, said Winnie Chung, a Royal Pacific agent who represented buyers or sellers in C$285 million of home sales in 2009 and 2010 combined.
- Mainland Chinese are buying houses primarily in Vancouver’s Westside, boosting the median sales price to C$2 million in the district known for its wide boulevards, beaches, expansive parks and stucco Tudor mansions.
- “Our office has done 50 sales this year, which is pretty incredible,” said Vancouver realtor Tom Gradecak at his office in Point Grey, where he has one colleague who speaks Mandarin and Cantonese and is hiring a second. “Half of those sales are from mainland China.”
- Some buyers acquire multiple homes, one to live in and others for investment, said Chung, the broker. Her clients made their money in a variety of businesses, she said, including mining, stainless steel manufacturing and real estate. About 10 percent of them speak English, she said.
- Westside home prices rose 77 percent during the past five years through April amid the housing collapse in the U.S.
- In 2010, the average home price in greater Vancouver rose 14 percent from 2009.
- The current group of Chinese homebuyers in Vancouver is the third “wave” from Asia since 1990, following Taiwanese and Hong Kong immigration, said Manyee Lui, a veteran Vancouver realtor. “People from mainland China are the new immigrants,” Lui said.
- Chinese buyers frequently are absentee owners, wealthy businessmen who buy second or third houses for their wives and children while continuing to live in China for work. “You see a lot of these satellite families,” said Chow. He said it’s not unusual to see college-age kids of wealthy Chinese parents driving Bentleys, Maseratis and Porsches around the Westside.
- Low interest rates inflated home prices and created a bubble, said Lawrence Wong, an immigration lawyer with many Chinese clients. “There is this psychological fear that ‘Ok, if I don’t get into the market, I might not be able to get in later on,” said Wong.
Fun random fact….
- Starting about 18 months ago, so many homeowners applied to change the last two digits of their addresses to remove or shift the number 4, which in Chinese sounds like the word for death, or add the numeral 8, which is considered lucky, that Vancouver began turning down some requests, said Bonnie Lee, addressing coordinator for the city.