[Recorded by Electronic Apparatus]
Tuesday, May 16, 1995
.1139 
[English]
The Chairman: If we could get started, I would like to begin by welcoming Professor Akbari.
As you know, we are looking at the book Diminishing Returns: The Economics of Canada's Recent Immigration Policy, plus any other evidence we might find relevant in trying to determine the economic impact of our immigration policy.
I would invite you to make an opening statement and then I will pass it over to the committee to ask any questions.
.1140
Dr. Ather H. Akbari (Assistant Professor, Economics, St. Mary's University): Thank you for inviting me here to do this presentation. It's an honour to be here.
For this presentation I will address some of the important concerns that are raised in public circles for Canadian immigration programs. While going over those concerns, I will also be able to talk a little bit about my chapter in the book Diminishing Returns. Part of my presentation is also based upon ongoing research I'm conducting with one of my colleagues at St. Mary's University.
I have brought some overheads.
I will first list some concerns that are being raised in public circles over Canadian immigration programs. One such concern is that there are too many immigrants coming into Canada.
The second concern we hear about is that immigrants are a drain on the public purse. This is also an issue I have dealt with in more detail in my chapter in the book, where I have talked about the immigrants' contribution toward the financing of public services, in terms of their tax payments and the consumption of public services.
The third concern being raised is that recent immigrants into Canada are less educated and less experienced than those who came in the past.
I will go over the facts that either support or contradict each of these concerns.
Let's turn to the first issue, which is that too many immigrants are coming to Canada. In order to address this issue, people can look at it in many different ways. One can look at the annual immigrant inflow, the annual immigrant inflow per capita, and so on.
In order to address this issue, I looked at what the percentage of foreign-born population has been in total Canadian population over the past 120 years, from 1871 to 1991, what the percentage has been of foreign-born in total population, how that fluctuated, and what the trend indicates.
Starting in 1871, close to about 17% of total Canadian population was foreign-born; in 1991 that percentage had not changed very much. Over the entire 120 years, the only increase we observed was during the period 1901-31, when there was a sudden jump to about 22%.
This was the time when the Canadian government was trying to attract farmers in eastern Europe to come and settle in the prairie provinces. Many incentives were provided at that time for eastern European farmers to settle and develop land in prairie provinces.
From 1951 until now, the percentage of foreign-born in the Canadian population remains almost unchanged.
.1145
The second issue, as I had listed earlier, was whether immigrants are a drain on the Canadian public purse. To answer this question, one can look at the estimates of tax payments, which is the financing of public services, and use of public services by average immigrant and non-immigrant households.
The table I'm going to present now is based on my chapter in the textbook. In order to answer this question, I have looked at various public services consumption by immigrants. The list of those public services include family and youth allowance, child tax credits, old age security benefits, CPP, QPP, provincial government supplements, other government transfers, health care, and education costs.
In the first line here, I have presented the amounts for immigrant households. An average immigrant household in Canada in the year 1990 paid $22,528 in taxes. These taxes include not only income tax, but also property tax, sales tax, liquor tax, alcohol tax, and so on.
I have already provided to you the list of public services. The public services consumption was $10,558 in that year, so that overall the immigrant stock in Canada paid $11,970 more in taxes than their consumption of public services.
When we look at the comparable figures for non-immigrant households, the original residents in Canada, we find their tax payment is $20,259, while the public services consumption is about $10,157 less than that.
This figure is for the average immigrant stock in Canada in the year 1990. If you look at the difference between these two contributions, there's about $1,773. This means that if an immigrant household is different from an average Canadian household, as this indicates, then because of this difference an immigrant household pays $17,773 towards use by the native-born population, and transfers $1,773 for use by each native-born household. On aggregate terms, this number amounts to $2.6 billion for 1990.
In the book I have looked not only at the immigrant stock but also at the immigrants who arrived in Canada during different time periods. The main thesis of my article is that, given that immigrants are young and healthy at the time of arrival, one would expect them to benefit the native-born population through the net transfer of public funds for a substantial time period after their arrival.
This assertion has been proven true for many other countries, such as for the U.S. by Julian Simon, for Switzerland, Sweden, and also Germany very recently. When we apply the same logic to the Canadian data, which I have done in the textbook, we find that the same assertion proves true in the Canadian case as well.
Overall when we look at the lifetime performance of an immigrant household in Canada, there's the transfer of public funds to the native-born.
The third issue I had listed was whether recent immigrants into Canada are less educated and less skilled than those who came in the past. To answer this question, I tried to construct some trends and look at how the trend appears starting from 1961 until now. I could obtain data only from 1961.
To answer this question, the first education group I'm looking at here is both Canadian-born and new immigrants at lower education levels, which is secondary or less schooling. This data applies only for those who are 25 to 64 at the time of arrival into Canada.
.1150
What is important in this class is what the long-term trend looks like. Instead of looking at year-to-year fluctuation, we should analyse the long-term trend. This analysis suggests that, starting from 1961-65 until about the mid-1970s, there was a declining trend in the education group among immigrants. Starting from the mid-1970s until 1981, there was an increasing trend, and then again from about 1981 until 1994, the long-term trend was towards a decline.
The new Immigration Act was introduced in 1978; it liberalized immigration under the family reunification scheme. There have been concerns that since the family reunification scheme was liberalized, less educated and less skilled immigrants have been coming into the country.
The Chairman: The chart on the Canadian-borns indicates we're becoming less educated over time?
Dr. Akbari: No. This graph shows people in the lower-education group, or people with secondary or lower education.
The Chairman: All right.
Dr. Akbari: I will present another graph for the university degree-holders.
The Chairman: So the downward trend actually means we're becoming more educated.
Dr. Akbari: Yes.
You will also observe that the graph for Canadian-borns is smoother than the graph for immigrants. That is because I was able to obtain data only for every five years from the censuses, so I had to interpolate for the years in between. That is why the graph for native-borns looks so smooth.
Another important finding of this graph is that for most of the time period, the number of Canadian-borns in the lower education group is greater than the number of immigrants. However, that has changed over here. We don't know what the trend looks like after 1991, but certainly there has been a decline among immigrants since this time period. We don't have data beyond 1994.
Finally, I move to the last graph, which shows how proportions have changed among university degree-holders for Canadian-borns as well as for new immigrants entering Canada. Again, this is for those who were 25 to 64 at the time of arrival. These data were obtained from Citizenship and Immigration as well as from past censuses.
Again, we can break this graph into different time periods. If you go from 1961-65 to the mid-1970s, you will find there was an increasing trend of university degree-holders, after which there was a decline up to the early 1980s, and then again there was an increase. About 25% of the immigrants who came to Canada in 1994 were university degree-holders.
Other important information this graph provides to us is that throughout the time period, the proportion of the foreign-born population with university degrees was higher than that of Canadian-borns.
That's all I have to say. I thank you for inviting me here.
The Chairman: Madame Debien, would you like to start us off, then?
[Translation]
Mrs. Debien (Laval East): I would just like a small clarification, Mr. Chairman. First, I want to welcome the witness to this meeting.
.1155
You stated that, in 1984, 25% of the immigrants had a university degree, and that this percentage was higher than for Canadian borns. Did I understand correctly?
[English]
Dr. Akbari: Of all immigrants who arrived in Canada in 1994, 25% of them had university degrees. My data for Canadian-borns goes only up to 1991, when 13.5% of Canadian-borns had university degrees.
Mrs. Debien: Merci.
Mr. Assadourian (Don Valley North): Thank you very much for your presentation.
I want to ask a question about tax payments, public services used and net contribution to the treasury. I suppose that to come to the net contribution figure, you subtracted the $10,500 and change for public services used from the $22,000 and change for tax payments, right?
Dr. Akbari: Yes.
Mr. Assadourian: Do you include in this figure the education value that immigrants bring in? Say an immigrant comes in with a family and one of them has a high school degree and the other one has a university degree. It costs us money to have them here, but when they come, they come with that education. Do you add that value to the net contribution to the treasury? If not, why not?
Dr. Akbari: That is a very interesting point. I haven't added that value separately into my data.
However, higher education will also be reflected in higher income value. In all the studies I have seen, there's a high correlation between income and education. If people have a high education, there's more likelihood that they'll have a higher income.
But I haven't accounted for that separately. It's an interesting point, and there should be some way of accounting for that.
Mr. Assadourian: If you do that, the $11,000 for immigrants will be higher than what it is now, right?
It takes a student four years to go through university and costs $30,000 to $35,000. We're talking about 25% of immigrants coming in with a university degree, so $25,000 plus 25% of immigrants coming in is a lot of money.
Dr. Akbari: Yes. That has not been accounted for here. However, higher education does reflect in higher income.
Mr. Assadourian: I have one more question, if I may.
In the first point, you say people are concerned that we have too many immigrants coming into the country. Do they tell you how many they want? What's the figure they usually quote? How many is too many? Do you have any figures?
Dr. Akbari: I haven't seen any magic number on that. Nobody knows what that magic number will be.
An important point is this leads to the issue of whether or not population growth has a positive impact on economic growth. In addressing this issue, one should keep in mind that population growth has not only costs but also benefits. Both benefits and costs should be analysed to answer that question.
.1200
As long as an additional immigrant raises the per-capita income, admitting additional immigrants will be good. When that increase in per-capita income due to additional immigrants will stop, we don't know.
Mr. Assadourian: I have one final question. On the second chart, ``Foreign Born in Canada'', approximately 17% were foreign-born in 1871. In 1901 it goes down to about 13%. Is that right?
Dr. Akbari: Yes.
Mr. Assadourian: If you were to take the birth rate of Canadians at that time and the 13.5% rate of immigration or foreign-born immigrants coming in continued, by now would the population have been less than what it is now? How much less? Would we have gone to a deficit or minus population growth figure?
Dr. Akbari: At this moment the Canadian birth rate is such that by the year 2000 it is anticipated there will be negative population growth.
Mr. Assadourian: It would be a negative growth?
Dr. Akbari: Yes, if there were no immigration.
Mr. Assadourian: So if you go back to 1901 and ask the same question, there would have been significantly fewer Canadians then. You and I would not have been here, right?
Dr. Akbari: I'm not aware of the birth rate at that time, no. That didn't come to me.
Mr. Assadourian: So you can't project from 1901 to these days?
Dr. Akbari: No, I don't have that figure. That is an interesting issue I should look at.
Mr. Assadourian: Okay, thank you.
The Chairman: Can I take you through a number of points? Your first proposal on immigration policy in Canada is that our policy should be directed towards younger immigrants as this group will likely remain in the labour market for a relatively longer period of time, thus paying more taxes and consuming fewer public services.
Dr. Akbari: Yes.
The Chairman: As the current point system favours younger workers - individuals 21 to 44 years of age receive a maximum of 10 points for age - does your policy proposal suggest a further refinement in this area or additional points?
Dr. Akbari: I would suggest that we should also lower the age group to 15 years or over so that those young immigrants who will come will be educated here, and their educational qualifications will better meet the labour market requirements.
The Chairman: Fair enough.
Given your research findings and familiarity with the literature, do you recommend any other specific changes to the current point system in general? Do you want to make any comments?
Dr. Akbari: There should be more weight given to education acquired in the United States or in Canada.
The Chairman: What about Europe?
Dr. Akbari: The education acquired in North America better meets the labour market requirements. Generally it has been found that education acquired in North America is valued more in labour markets than education acquired in Europe or elsewhere.
The Chairman: Is that right?
Dr. Akbari: Yes. I think we should be marketing more in the United States and targeting foreign students, because there's a large population of foreign students in the United States.
The Chairman: We should be encouraging them to come to Canada?
Dr. Akbari: Yes.
The Chairman: That's interesting.
What about points for spouses? Your colleague, Professor DeVoretz, has recommended that depending, let's say, on the education level of spouses, we might give bonus points if your husband or wife is well educated.
Is that something you've thought about or on which you would like to make any comment?
Dr. Akbari: I haven't given any thought to that.
The Chairman: Okay.
The second policy proposal, interestingly, calls for a family reunification scheme that favours economic migrants with children. The family category is not currently assessed for its economic contribution.
Can you elaborate on this proposal?
Dr. Akbari: Would you say that again, please?
The Chairman: Sure. The second policy in your essay calls for a family reunification scheme that favours economic migrants with children.
.1205
Dr. Akbari: I don't think I said it exactly that way in the book. What I have said is that we should put more emphasis on families with children, so it's consistent with what you were saying earlier.
The Chairman: It's actually his question.
Dr. Akbari: Okay.
The Chairman: He gives me these little notes, and....
Dr. Akbari: I didn't catch the term ``economic migrants.'' Yes, I see it's there.
Basically it is consistent with what I was saying earlier. More weight should be given to younger immigrants with young children. They will be going to school here. They'll be trained according to the labour market and its specific skill requirements.
The Chairman: The researcher can correct me if I'm wrong, but my understanding is that a gentleman, say, with a university degree and a certain set of skills would be given the same number of points regardless of whether he had a spouse or kids. Is that right? Should we be giving people points if they're -
Dr. Akbari: If they have children. Children are future contributors.
The Chairman: Right. And we're not doing that now. Is that right?
Dr. Akbari: No, not now.
The Chairman: Just so I understand some of the details, take me as a typical Canadian. My understanding is that Statistics Canada.... I don't know of any surveyor that would measure my use of the health care system. How do you get the information that shows how much somebody or a group has cost us in terms of health care costs?
Dr. Akbari: First, I'll mention how I did it for my analysis, and then I will talk some more. In my analysis I estimated health care costs on the basis of the differences in age distribution.
Demographic studies that have been undertaken have suggested that health care costs vary by age. For instance, for people 65 years and over the health care cost per person is 2.5 times more than the cost for those who are between 15 and 64. It is higher for the younger age group.
So in my analysis what happens is that if immigrants and native-born were in the same age group, then there would be no difference in health care costs. So my differences arise more because immigrant have younger children and the costs of health care for younger children are higher.
Now, there should be another way of doing it. We can look at the exact consumption of health care by various groups. Perhaps looking at it can become very expensive. Perhaps we could look at the social insurance numbers, since our medical cards usually bear the same number as our social number. So from social insurance numbers health care officials can differentiate between those who were foreign-born and those who are native-born.
That information can be obtained, but I don't know how expensive that could be.
The Chairman: If the Minister of Immigration were sitting here and we just said ``Comment on anything you like'' in terms of our immigration policy, what proposals would you make to change the...? Would you propose any changes?
Dr. Akbari: The first thing I would emphasize would be more targeting of foreign students in Canada and the United States. We should do some sales jobs on foreign students in the United States, not only in the United States but also in Australia, since there are many foreign students in Australia. Their skills and education requirements may be more acceptable in the labour market.
Another recommendation I would make is that we should do something about the business class immigrants. I don't know whether someone has researched this or not, but through my own experience I have found that people are being admitted under the business class program, they are unable to do business, and then they leave.
There should be some sort of collaboration between immigrant businessmen and local businessmen. That should be facilitated.
.1210
The Chairman: Is there anything else? Do you want to comment on the $975, the levels or...?
Dr. Akbari: The argument that has been made for the $975 is that because it initially costs something to settle immigrants, we have to charge them $975 per head.
But my studies indicate that immigrants pay more in taxes than charge the economy for the services they consume. So there may be an initial cost, but over their lifetime they pay towards financing of those costs.
If the $975 is based on this argument, that there is a cost for settlement, then perhaps that argument doesn't hold water.
The Chairman: I think the argument is more that there's a range of immigrants, and some require language training, some don't. Refugees might come with very little knowledge of English or French and therefore have difficulty integrating into the labour market. We're better off if we invest some money up front to teach them English or French.
Unfortunately in an age of deficit reduction, and basically a bankrupt treasury, we have to look for those funds somewhere. So they charge $975 to everyone even though the settlement services would be targeted to a subgroup.
Dr. Akbari: But those are not the only subgroups. Another subgroup of people, those more educated, are contributing more.
The Chairman: Yes.
Dr. Akbari: So on a net basis, if you look at an average immigrant, considering him both at the lower and upper end, then the average contribution tells us there are more contributions that pay towards the financing of those scholarships.
The Chairman: I understand that. It's not a user-pay service. We're charging the whole group -
Dr. Akbari: The whole group.
The Chairman: - to generate the money to pay for a service that would go to a smaller part of the group.
Dr. Akbari: Yes.
The Chairman: When you talk about consumption of services, you don't mention things like defence or interest on the national debt. Is that just because we can assume they're applied evenly?
Dr. Akbari: Yes. I have one item there, contribution for public goods. For instance, defence, the use of public parks and so on are all public goods, the consumption of which does not vary with the increase in population.
So even if you admit more immigrants, the army we need to defend Canada is not going to increase. In in that case what happens is that when immigrants pay taxes, they are paying towards the contribution. They are contributing towards the provision of public goods, but they're not consuming that, they're not increasing its costs.
The Chairman: What about the argument that if we let an immigrant into Canada, they may take away a job? By filling a job they would increase the unemployment rate for native-born Canadians?
Dr. Akbari: I don't know if this issue has been addressed empirically in the recent past. But in the past there was one study by Employment and Immigration that suggested that every employed immigrant who comes into Canada creates three jobs for the native-born population. That job is created because immigrants are also demanders of goods and services.
For instance, let's consider the case of Nova Scotia, where there are less than 1 million people. If out of 250,000 immigrants who come every year, 50,000 were to settle in Nova Scotia, then we would see many more overhead bridges, more highways, a housing boom, and a boom in home appliance industries. That would happen simply because there would be more people here.
Immigrants are also demanders of goods and services, which create jobs for the local population. So there are both sides of the argument. Previous studies that have been done suggested that immigrants create jobs. In the U.S. similar findings have been made. I haven't seen what the trend is like very recently, though.
We should keep both sides in mind. While some people complain that immigrants take away jobs from local Canadians, we also have to see that immigrants create jobs for local Canadians through demand effects.
As well, if more immigrants are coming in, more educated people are coming in. That gives more ideas, more engineers, more scientists, more philosophers, who have new ideas to develop, new ideas to develop industry, which can again create employment.
.1215
The Chairman: Fair enough.
Professor DeVoretz has recommended that at a minimum we have 50% or 55% of our immigrants from the independent or economic class evaluated. Do you have any comments on the split between the economic class and the family class?
Dr. Akbari: I don't know what the basis of his argument is.
The Chairman: I'll tell you. He argues that when we allow in one economic immigrant, that one economic immigrant wants to sponsor on average one family class immigrant at a later time.
So he's saying you need to allow that economic immigrant to sponsor the family class so that Canada is attractive for that economic immigrant to come. That's where he got the 1:1 ratio. He says, if anything, err a little on the side of economic criteria.
Dr. Akbari: It is true that education is a predictor of the economic performance of individuals. If you look at education, then it is true that the education content of people who come in under the family class is less than the content of those who come in under the independent scheme.
That's how the system is designed. People who come under the independent scheme are assessed on the basis of their education. You should, however, look at the trend. As I was showing here, from 1978 to now all the trends indicate that the education level among immigrants has increased.
So if the purpose of immigration policy is to raise economic returns to immigrants, then yes, we need more independent immigrants.
But we should not advertise this policy on the basis that people who are coming in under the family unification scheme are less educated and less skilled. That's my whole point. That should not be advertised because it's not true.
The Chairman: Your point is that if an economic immigrant comes, say, with an engineering degree, then it's likely that the people he or she sponsors would also be university-educated or -
Dr. Akbari: Yes, exactly.
The Chairman: The department has made that point as well.
Dr. Akbari: It is more likely that the spouse and children of people who are more educated will also be more educated.
[Translation]
Mrs. Debien: At the beginning of your presentation, you said that the level of education must be evaluatied according to North American standards. Is that what you said?
[English]
Dr. Akbari: I was trying to say that people who acquired their education in North America are more likely to meet the specific skill requirements in the labour market.
So there is -
[Translation]
Mrs. Debien: I hope you were not making a value judgement on degrees obtained in other countries.
[English]
Dr. Akbari: No.
[Translation]
Mrs. Debien: I think that a doctor's degree from the Sorbonne or from King's College is just as good as a doctor's degree from a North American university.
[English]
Dr. Akbari: Yes.
The Chairman: Are you an alumnus there?
Some hon. members: Oh, oh.
.1220
[Translation]
Mrs. Debien: When Mr. Knutson asked you what advice you would give the Minister of Immigration concerning newcomers, you said that this policy should be oriented mainly on young immigrants based on stricly economic criteria.
You know that Canada's international reputation is based, among other things, on its great compassion and its openness toward refugees. Canada is considered as being very generous and compassionate toward its immigrants. When you make this recommendation to the minister, are you taking into acocunt this important aspect of Canada's immigration policy or are you looking only at the economic criteria?
[English]
Dr. Akbari: I was only speaking from the point of view of an economist. At the same time, there is nothing to suggest that people who are coming under refugee class or under humanitarian schemes are contributing less. In fact, a recent study from the University of Toronto, for instance, has suggested that even those who came on the refugee scheme were performing well.
I was only speaking from the economist's point of view. However, I'm not saying that people who come under different schemes do not contribute. All evidence suggests that their contribution is also positive.
[Translation]
Mrs. Debien: Very well. Thank you.
[English]
Dr. Akbari: So even if people criticize the humanitarian scheme on the basis that it's not economically viable, that criticism not correct.
The Chairman: Which study was that, at the University of Toronto?
Dr. Akbari: This was by someone from U of T and McMaster, Professor Beiser, and by one more gentleman whose name I don't remember.
The Chairman: Are we aware of that study?
Mr. Kevin Kerr (Committee Researcher): I think it's listed in the material that was recently distributed. It was sent from the department. I can't recall the name of the study now, but yes, I think we have reference to it.
The Chairman: Maybe we can take a look at it.
If there are no additional questions, we'll wrap it up. Thank you very much for coming. The presentation has been very informative.
Dr. Akbari: Thank you for inviting me here.
The Chairman: The meeting is adjourned.