Costs, benefits, rugby and refugees

Murdoch Stephens – Doing Our Bit (www.doingourbit.co.nz)

Amongst all of the last day’s reports – ChangeMakers releasing their criticism of the lack of support for asylum seekers[1]; Peter Dunne suggesting an increase in the quota to 1000 places[2]; my analysis of New Zealand and asylum seekers for Glasgow’s GRAMnet[3] – some numbers on the costs of refugees have been haphazardly flying around in the mainstream media.

How do we measure the cost or benefit of something?

Today the Manawatu Standard, part of Fairfax’s network, reported that refugees cost New Zealand $50m per year[4]. It is a curious number, likely plucked from an analysis of the costs of refugees over a three-year period. However, it ignores one basic element of an economic cost-benefit analysis: the benefit.

The figure can be sub-divided into five departments: $5.7 m on Immigration, $5.3m on Social Development, $8.2m on Health, $18.5m on Education, $12m on Housing[5].

So the cost is $50m over three years.

Lets compare that to the cost of hosting the Rugby World Cup. Fairfax reports a cost of $66m for the event.[6] But the idea that we spend money on sport is not the point. The point is what comes next.

Murray McCully, Minister of Foreign Affairs and Trade, states that the tournament was “absolutely” worth it financially, with a kickback for the economy that would be felt for years to come.

He reaches this conclusion by referencing a study by Coventry University's centre for the international business of sport, commissioned by MasterCard, to show a long-term net benefit to the country of $1.44b.

This is the crux of the matter. Costs or benefits are determined by comparing long term costs and long term benefits.

Consider a 2009 Department of Labour analysis of the cost of immigration to New Zealand[7]. There they show that 18% of our GDP is spent on immigrants to New Zealand. They go on to show that 24.7% of our GDP is accrued from immigrants. In short, immigrants add more to the economy than they cost.

Refugees have greater needs than immigrants and overall they are likely to be a short-term cost. But the problem with the government’s analysis is that they refuse to calculate the monetary benefits of refugees. Refugee’s tax payments (income tax, GST, and the rest) are unlikely to be more than $50 over three years, but the tax intake will be in the tens of millions.

If Murray McCully displayed the same loyalty to refugees as he did to rugby, he might come up with some similar sentiments.

For example, do we usually consider education to be such a dead cost? Roughly forty percent of refugees coming into New Zealand on our quota are under 18. These are the people costing the taxpayer $18.5m over three years in education.
And what does the taxpayer get back? They get the one thing they need to survive: more taxpayers, more skilled workers, more New Zealanders.

The government does not begrudge young New Zealanders their education and they don’t harangue the NZRU about the World Cup. Instead they take a long term look at education and indulge in the most highly inflated statistics about flow on effects for a sports tournament.

There is no reason that New Zealand’s young refugees should not be accorded the same dignity as our young people. There is no reason why New Zealand’s refugees should not be accorded the same optimism to their economic benefits as our elite sportsmen.

This is, of course, only the economic argument. There are other hard to quantify benefits, such as an increase in our international standing, that will come to mean a lot when the Universal Periodic Review is undertaken in February and New Zealand is assessed for our readiness for a place on the UN Security Council.

ends

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