Labor’s elderly parent visas open $100b+ budget black hole

By Leith van Onselen

Earlier this week, I provided a back-of-the-envelope estimate of the astronomical cost associated with Labor’s reckless uncapped plan to allow migrants to bring two elderly parents into Australia for a continuous period of up to ten years.

In a nutshell, I argued that since there were already more than 7.3 million overseas-born migrants living in Australia (see below table), there is a good chance that Australia could see up to 1.5 million elderly migrants inundate the country, assuming just 10% of migrants take Labor up on its generous offer:

Moreover, with Australia’s permanent migrant program running at around 180,000 annually (including the humanitarian intake), elderly migrant numbers would grow rapidly over time under Labor’s policy.

There is also a strog likelihood that many of these migrants would transition to permanent residency once their ‘temporary’ 10 year period is up, since they will be too old to return home, thus making Labor’s policy a de-facto permanent migration scheme.

My estimates were subsequently endorsed by Melbourne University Professor Peter McDonald, who also warned that 1.5 million to 2 million elderly migrants might come to Australia under Labor’s policy, and that they would effectively become permanent residents:

McDonald said there might be 1.5 million to two million offshore parents eligible to come…

McDonald agree Labor’s temporary visa could lead to a de facto permanent intake, with ministers facing heart-rending pleas not to send back aged parents after a 10-year stay, especially if their health has deteriorated.

In its 2016 Migrant Intake into Australia report, the Productivity Commission (PC) estimated that the cost of the 7,000 to 9,000 parental visas issued each year are between $335 000 and $410 000 per adult in net present value terms, and warned of these visas divert scarce taxpayer funding from other government programs:

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…

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.

The PC also presented the below chart showing that the estimated lifetime fiscal cost of migrants grows rapidly with age:

While the above chart cuts off at 60, given the steepness of the curve, it is fair to draw the conclusion that each elderly arrival under Labor’s policy could have a negative fiscal impact of at least $300,000 if they stay permanently.

The PC also notes that these costs are likely to be underestimated, since “immigrants can also affect government budgets in ways that are more difficult to directly attribute. For instance, immigration can affect congestible public infrastructure which requires further government spending”.

Regardless, having potentially millions of elderly migrants inundate Australia, with most settling in Sydney and Melbourne, is a disaster in the making.

Even if we conservatively assume that the cost per visa under Labor’s policy is one quarter the figure estimated by the Productivity Commission above (i.e. around $75,000 per adult), then the cost to existing residents could easily top $100 billion in net present value terms, with a much larger number possible. The cost would also grow rapidly over time as Australia’s stock of permanent migrants increases.

In short, Labor’s policy will impose a massive burden on incumbent Australians and must be unwound.

See yesterday’s post for a more detailed qualitative assessment of these costs.

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  1. ErmingtonPlumbingMEMBER

    I was thinking that although the ALP was/is likely to win the house of reps they probably won’t get a majority in the Senate.
    But with the recent passing of the only Prime minister to ever hold the prestigious title of world record holder for the downing of a full yard glass of Beer,…Im now thinking Labor Can not lose! and will rule outright.

    This means that if you want to fight against this proposed piece of legislation,….you’ll have to do so from within.

      • ErmingtonPlumbingMEMBER

        There are Democratic Structures within all the major parties Mr Walker.
        This is why you never see serious recruitment campaigns by the leadership’s of our main Political Parties.
        They don’t want you to join if your not going to just be a submissive “team player”.
        This is why concerned and dissolutioned citizens like yourself must join and Speak up!

      • Sorry Ermo, but all the major parties have proven themselves to be at best rotten to the core, and at worst willing to act against the best interests of the Australian people. You don’t beat a corrupt system from within.

      • Ermo.
        It is a very good observation you make about political parties not wanting new members. Some of my crazy neighbours went along to a LNP function and then decided they may join the party. However, they did a quick backtrack when they were informed that would have no say over who the local member would be or any of the policies. The party was very keen on getting them to hand out how to vote cards and flyers in the letterboxes.

    • Does this new policy have to go through the Senate, or can it be done by Executive Order?
      Undoubtedly, once all these elderly migrants have arrived, they will be used as an argument for why we need to bring in a fresh batch of young immigrants.

    • Professor DemographyMEMBER

      I am increasingly inclined to agree with you about this. Also, if true, think who else might adopt this strategy?

      • ErmingtonPlumbingMEMBER

        No doubt ScoMo is Praying that his God will take Howard up into heaven today and save the liberal party and His Prime Ministership.

  2. Relevant StakeholderMEMBER

    I imagined Bill Shorten dressed as Dr Evil for the thumbnail.

    I then chuckled to myself.

  3. So what does a $100Billion cost even mean these days? Who cares? Everyone is watching some reality show so they don’t even know what you’re talking about. It’s easy to cover the costs, just tax the big end of town, they’re obviously all tax cheats. They’ve all got those “tax haven” Trusts & claim huge accounting fees to get a “miraculous” tax deduction to eliminate all their accessible income. Go Bill. BS has a plan.

    • fitzroyMEMBER

      He has given away the accumulated wealth of generations of Australians if this policy goes ahead. You can’t tax yourself to prosperity. As for there being lots to tax, that is true, but if the taxes go too high, there is no point in working and the money evaporates, and the capital shifts off shore.

      • There are plenty of MB commenters who will tell you an individual’s behaviour never changes no matter what the tax rate.
        That no matter how much the government takes (or actually leaves you as a “tax break”) you will work on.

      • fitzroyMEMBER

        Not this little brown duck. If you have been working in a business for a long time, with long hours and high pressure, forget it. Ones health is too valuable. The social contract is broken by behavior from political traitors like this.

  4. I honestly think this is purely a vote buying ploy that will be quietly dropped after the election (due to costings etc etc .. the usual crap we get dealt every cycle). Though it wouldn’t surprise me if they do it either. But it really stinks of pre-election bullsh1t non-core promises to pick up those migrant seats.

    • I am not so sure that it will be dropped quietly after the election. When the Coalition brought out their version, the migrant communities were very vocal about how unfair it was. Most likely it will be re-engineered to be something between the Coalition’s version and the current version.
      When the Coalition’s version came out, this site was very critical of it and for good reason. Even 15,000 visas a year is going to put a massive hole in the budget. Given both sides support it, I guess it is as good as legislated come 2019-2020. Given the welfare system is going to break within the decade, the only options will be:
      a) emigrate
      b) get rich as quick as possible so you don’t need welfare (you will still need hospitals, so no 100% escaping)
      c) just grin and bear it

    • fitzroyMEMBER

      A political fraud involving massive amounts of migrants who could be future ALP voters. Who forms the basis of branch stacks anyway? Just like the Democrats in the U.S. And Labour in the UK. This is one promise that will be called upon..

  5. sydboy007MEMBER

    I’ve been speaking about this to a few immigrant friends and they’re not so sure there will be a great influx of long staying parents. They know of parents who came to Australia and left earlier than planned because of the lack of community. For many immigrant communities there’s not a lot of 65+ around, so any parents coming over find it hard to socialise.

    • You’re too generous. My pendulum has swung to negative immigration. I want to stop the inflow and then start deporting all the masses of illegals and so-called “students” and the criminals. Kick ’em out.

  6. Michael Daly makes a slur against Chinese immigrants; Labor spends 100 billion of our money to get them back. Good job Bill.

  7. Even StevenMEMBER

    This policy is frightening. Breathtaking in its stupidity. Well done Labor… despite your other decent policies you will now be placed behind the Libs.

    Because all your other policies are just fiddling at the edges compared to blowing $100bn.

    • Probably a bit more than fiddling at the edges still I have changed also as for me this shatters the image I had of them being drive by sensible economics rather than some ideological crap from their left wing.