The Productivity Commission’s (PC) Migrant Intake Australia report, released last year, recommended significantly tightening parental visas and raising their price, given they are costing taxpayers an estimated $335 000 to $410 000 per adult, or between $2.6 and $3.2 billion per annual intake in present value terms (and growing):
There is a strong case for a substantial increase in visa pricing in relation to some elements of the family reunion stream. This would provide scope to recoup at least a portion of the high fiscal costs typically associated with immigrants in this category. In the medium term, the allocation of parent visas should be revised…
The contributory visa charge of just under $50 000 meets only a fraction of the fiscal costs for the annual intake of roughly 7200 contributory parents. And an additional 1500 parents make a minimal contribution. Overall, the cumulated lifetime fiscal costs (in net present value terms) of a parent visa holder in 2015-16 is estimated to be between $335 000 and $410 000 per adult, which ultimately must be met by the Australian community. On this basis, the net liability to the Australian community of providing assistance to these 8700 parents over their lifetime ranges between $2.6 and $3.2 billion in present value terms. Given that there is a new inflow each year, the accumulated taxpayer liabilities become very large over time. This is a high cost for a relatively small group.
Ultimately, every dollar spent on one social program must require either additional taxes or forgone government expenditure in other areas. It seems unlikely that parent visas meet the usual standards of proven need, in contrast to areas such as mental health, homelessness or, in the context of immigration, the support of immigrants through the humanitarian stream, and foreign aid.
Given the balance of the costs and benefits, the case for retaining parent visas in their current form is weak.
The PC’s latest report, entitled Shifting the Dial: 5 year productivity review, has doubled-down against parental visas, claiming that their long-term costs to the Budget are immense:
… parent visas, which provide a short-term benefit to the budget via visa charge income, but impose very large costs in the longer term through their impacts on expenditure on health and aged care, and social transfers. In previous work, the Commission estimated the budgetary costs associated with the 2015-16 parent visa intake alone to be $2.88 billion in present value terms over the lifetimes of the visa holders. By comparison, the revenue collected from these visa holders was only $345 million. Ten year estimates of the fiscal effects of the current parent visas would show a similarly stark disjuncture between revenue and costs, and would therefore provide the insights for a more informed policy decision on the pricing or desirability of these visa types than the current decision-making framework.
As we know, rather than heed the PC’s advice, and reduce the burden on taxpayers, the Turnbull Government (with the support of Labor and The Greens) instead chose to increase the quantity of elderly migrants flowing into Australia. Here’s The Guardian’s report in May:
Aged parents of migrants will get access to 15,000 five-year temporary visas at $10,000 each under changes expected to be announced in next week’s budget.
Parents will need to hold private health insurance and have financial support through a bond from their children before the visa would be approved…
Peter Dutton, said the government wanted to help families reunite without adding extra cost to the health system.
“The Coalition recognises that many Australians, including our growing south Asian and Chinese communities, face particular pressures through the separation of children from parents and grandchildren from grandparents,” Dutton said. “We want to help families reunite and spend time together, while ensuring that we do so in a way that does not burden Australia’s healthcare system.”
I noted at the time that this was an utterly stupid proposal that would be detrimental to existing residents. This is because these migrants would add pressure to already strained economic and social infrastructure and would not work, pay taxes, or contribute in a meaningful way to the economy. Moreover, existing residents would be required to foot the bill for the additional federal government investment in hospitals and infrastructure required to keep up with the expected migrant influx.
Moreover, because these migrants would be old, and likely be heavy users of health services, they would place upward pressure on private health insurance premiums for everyone else. They would also place greater pressure on health care professionals – both private and public – whose training is paid for, to a large extent, by the taxpayer.
Stupidly, our federal politicians chose to increase the quantity of elderly migrants flowing into Australia, thus adding to strains on infrastructure, housing, the Budget, as well as exacerbating the aging of the population.
Rather than trying to ‘fix’ the Budget deficit by cutting back spending on welfare ad other important community programs, they should first tackle wasteful and illogical programs like parental visas.
