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Immigration for sale

Patrick McCabe |  23 October 2012

Hand with barcodeAustralia's complex 'refugee issue' requires fresh thinking. In a recent article, Judith Sloan, contributing economics editor at The Australian, provided just that with her suggestion that 'free market economics' might offer an answer.

Free market economics embraces the market as a solution to humanity's ills. A central tenet is that governments are never as good at distributing resources as markets. Anything that can be left to the market should be. Sloan introduces us to fellow free market economist Gary Becker's idea to apply this logic to immigration.

Becker's idea goes something like this: Markets distribute resources better than governments. The right to migrate is a resource. So we should create an immigration market, by charging an 'immigration price' — Becker suggests US$50,000. Then we sit back and watch the market 'select' the best migrants.

Becker claims people most likely to pay to migrate are also most likely to possess desirable characteristics — to be skilled, young and committed to the country they are entering. Keen-eyed readers might notice Becker's omission of perhaps the most obvious group of people who would pay — those rich enough to afford it.

Becker accommodates poor migrants by allowing businesses to lend the immigration fee to prospective migrants in exchange for their labour upon arrival. Of course poor migrants tend to be unskilled, so one suspects this scheme would remain largely unutilised. Moreover, The Economist notes this arrangement would virtually amount to indentured servitude. Becker would allow 'some exceptions' for 'truly humanitarian' migrants — but only 'maybe ... a lower price' for those who 'maybe are too old to earn anything'.

Sloan goes on to present some 'ugly' statistics from a 2011 DIAC report: 'Refugees fare very badly in terms of employment and financial self-sufficiency,' she reports, 'for example, the employment rate of humanitarian migrants from Afghanistan was recorded at only 9 per cent — note this is not the unemployment rate — five years after settlement and nearly 94 per cent of households from Afghanistan received Centrelink payments.'

Sloan has a fuzzy definition of 'example'. Of thirteen nationalities or regions listed in the report, Afghans have the worst employment and welfare receipt rates. She also quotes these rates for Iraqis, who rank second-worst.

Moreover, Sloan's line about 9 per cent 'not being the unemployment rate' implies that the unemployment rate is much higher. In fact, it is 8 per cent. The other 80 per cent or so pursue 'other' activities — studying, caring for families, and so on. They are hardly dole-bludgers.

Overall, 39 per cent of humanitarian migrants are employed five years post-settlement (a far cry from Sloan's 'example'). While 84 per cent receive some welfare, this includes any welfare, not just unemployment benefits.

To solve this alleged problem, Sloan suggests a heavily modified version of Becker's idea: 'allocate a certain number of humanitarian places to proven refugees who are prepared to pay [a bond] and/or forgo welfare benefits for a period of time'.

This is problematic. It remains morally repugnant, at least for non-'free-market economists', to preference refugees with money over those without. It would breach Australia's obligations under the Refugee Convention. And it is also morally repugnant to let people starve to death — which is what happens when someone can't find a job and 'forgoes welfare benefits'. The fourth problem is that the plan won't achieve Sloan's aim.

Her aim is to attract more 'employable' refugees — Becker's skilled, young, 'committed' migrants — so refugees don't drain our welfare system. This argument relies on the assertion that refugees who pay to migrate are more likely to get a job, an assertion easily tested.

Presently, 'boat people' pay a hefty 'immigration price' — they pay people smugglers, and accept great risks to their safety (a non-monetary price). Conversely, 'queue-sitters' simply apply for a humanitarian visa and pray for an acceptance letter. They pay no price save the danger of staying where they are, or in a refugee camp.

If Sloan is correct, 'boat people' will find work more readily than 'queue-sitters'. They don't. As noted, the least-employed nationalities are Afghanis and Iraqis — two of the top four most likely nationalities to arrive by boat, and thus those who pay the highest price. The most-employed refugees, with employment rates as high as 56 per cent within five years of arrival, are central and west Africans — the most likely to come via the 'queue'.

So if any correlation exists between a refugee's 'immigration price' and 'employability', it seems those who pay less are more employable.

Thinking creatively about the refugee issue should be encouraged. But Sloan's unconvincing proposal shows our response to the issue must be grounded in something deeper than a brand of economics that comfortingly reduces the world's complexities to a set of soothing supply and demand curves. 

Patrick McCabe headshot, smilingPatrick McCabe works at an Adelaide law firm while completing a Graduate Diploma in Legal Practice. He is a former contributor to the Adelaide University magazine On Dit. Patrick won Eureka Street's 2011 Margaret Dooley Award for Young Writers with this essay




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Submitted comments

Thank you Patrick for commenting on Judith Sloan's article inviting more lateral thinking in dealing with the 'Refugee Problem'. There is no question in my mind that we must do what we can for people under extreme threat to life. That said, just locking them in detention for an inderteminate number of years under the 'care' of a commercial company, primarily responsible to their shareholders, is wrong and very expensive. It is without question that health and security checks on arrival must be undertaken within three months generally, and then refugees should be moved onto a time determined (3 or 5 years)scheme of useful participation in the community,whereby they may retain their dignity and mental health. A type of indentured employment rather than welfare,could be instituted,which would obviate extra targetted migrant intakes and distribute these 'stage 2' refugees around the country in much the same way as the migrant policy of the 1950's. Employers would pay basic wage (living allowance) and government, approved health and subsidised housing. Medicare, relative reunions and all such customary Australian benefits would be withheld until the end of the 'indenture' and be dependent on co-operative behaviour. Summary return to their nation, the price of failure.

Michelle 24 October 2012

It is not clear just what is ment by 'free market' but the difficult task here, as in so many matters, is to get the balance right and to have government power and action where needed. A dangerous example where this is not the case is the distribution of news and opinion. Here the super-rich (and advertisers) have excessive power in influencing or owning so much of the media.

Bob Corcoran 24 October 2012

And this proposal is different from advantaging asylum-seekers with the money to pay people-smugglers to bring them to Australia... how exactly?

Rod Blaine 25 October 2012

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