The Parent and Grandparent Immigration Program in Canada: Costs and Proposed Changes
Global Economics Ltd.
February 6, 2012
Global Economics Working Paper No. 2012-1
This paper examines the need for the parent and grandparent immigration program in Canada and provides critical observations on its objectives and operations and offers empirical estimates on its costs. And, as a contribution to the Government’s recently launched consultations on how to redesign the program to make it more fiscally sustainable, it offers a specific proposal.
First, the costs: taking into account a $1.3 billion per year increase in transfer payments to parents and grandparents (in 2005) estimated from the Census 2006 Public Use Microfile and the $4.6 billion extra healthcare spending estimated from Canadian Institute for Health Information data and allowing for growth in numbers and costs, the annual fiscal costs of the parent and grandparent program to all levels of government in Canada could easily exceed $6 billion per year at the present time. Bringing in the Government’s estimate 165,000 individuals in the backlog and its expected increase in numbers applying to 500,000 by 2020 (including the 165,000) would more than double the fiscal costs from the $6 billion estimated here. This would represent a significant increase in the claims on Canada’s income support programs, which are already under severe strain from the ageing of the Canadian population.
Many Canadians have trouble understanding the meaning of multi-billion dollar cost estimates. Some illustrative examples of the potential benefits to individual immigrant families can help to put the figures in the perspective of their own household budgets. For instance, an immigrant family that brings in one parent or grandparent might benefit from subsidized health care worth $9,600 per year during the parent’s senior years. The immigrant parent might also get income support worth on average $7,644 ($6,262.24 OAS/GIS plus $1,381.30 other government transfers). Together, this adds up to a total health and welfare benefit of $17,244 per year, which over a 20-year life time as a senior would equal a rather hefty $344,880. And if an immigrant family were able to bring in all four parents of both the husband and the wife, or perhaps a grandparent if one of the parents can’t come, the total fiscal benefit would equal $1,379,520 over the assumed 20-year post age 65 life of the parents.
The only way to make the parent and grandparent program “sustainable in the future” and to “avoid future large backlogs and be sensitive to fiscal constraints,” the objectives specified by the Government in its press release announcing the consultations, is to drastically pare the numbers of parents and grandparents admitted and/or to shift the costs of the income support of the parents and grandparents and their health care back on to the shoulders of their sponsors where it belongs. Specifically, the sponsors must be made personally responsible for the support and health care of their parents and grandparents by requiring them to purchase life annuities for their parents and grandparents that provide a minimum level of lifetime income support and also to buy health insurance, perhaps from a special risk pool established by the Government for that purpose to help ensure coverage. This will eliminate the large subsidy from Canadian taxpayers to the parents and grandparents of immigrants admitted to Canada.
Number of Pages in PDF File: 17
Keywords: recent immigrants to Canada, Canadian immigration policy, parent and grandparent program, old age pensions, healthcare costs
JEL Classification: J24, J61, H51, H55working papers series
Date posted: February 12, 2012
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