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Doing our bit? The understudied economics of accepting refugees for resettlement

Nearly 11 million people, over half the Syrian population, have reportedly been displaced, 4 million of which have fled to refugee camps in neighbouring Turkey, Jordan and Lebanon, before some attempt to move further into Europe or the Middle East.

While this humanitarian crisis is not new – civil war has been raging in Syria since 2011 – it has escalated in the last few months, and calls for action have increased since the world was collectively shocked by images of a toddler washed up on a Turkish beach after drowning in an attempt to cross the Mediterranean Sea.

The image of a single dead child captured people’s attention in a way that images of the mass suffering of the civil war have not. The image doesn’t indict the Assad regime or ISIS – forces that most people understandably feel powerless to negate – so much as it indicts the rest of the world for not providing the help it could have (and many say should have) for the last few years.

Image: Syrian refugees at the Keleti Railway Station in Budapest

Murdoch Stephens, lead researcher for New Zealand refugee advocates Doing Our Bit who have been arguing that New Zealand should double its refugee quota since 2013, has been watching the crisis unfold and takes issue with how the economic costs of New Zealand taking refugees has been represented by the government.

“One of the big concerns is the inflation of costs by the government to make it look like they’re doing more than they are,” he says. “It’s not a cost/benefit analysis, it’s a cost analysis.”

“If you look at other areas that the government tries to cost, say the Rugby World Cup, they were able to frame the long term benefits to the country as hundreds of millions of dollars. Or the way John Key has said there’s potentially $1 billion worth of benefits out of a new flag. These are long term economic analyses of both tangible and intangible benefits to the country. And that simply isn’t present when it comes to refugees.”

Stephens says that basic data (for example a simple account of income tax paid by by refugees) is not released by the government. And there have been no comprehensive studies of the long-term economic effects of refugees in New Zealand.

Economist Shamubeel Eaqub says studies from Europe and Australia show that over time, refugees tend to be net contributors in terms of both taxes and the local economy, though it’s marginal because, relative to the general population, the number of refugees is small and unlikely to move the needle on regional or national GDP.

“What we tend to find, especially in the work in Europe, where they’ve had a much longer history of refugee crises and refugee resettlement, is that there is some variation of outcome ranging from slightly negative to slightly positive,” he says. “The big difference seems to be centred around whether refugees stay. Most of the costs are upfront and most of the benefits occur over time.”

Australia, which has an annual quota of 20,000 refugees (approximately 1.58 refugees per 1,000 people compared to New Zealand’s 0.31 per 1,000), has experimented with semi-rural and regional town resettlement in the last five years. A study by Deloitte of the settlement of 170 Karen refugees from Burma who, in 2010, were settled in Nhill, a small town of 2,300 between Melbourne and Adelaide. The study found that the 170 refugees added a $41 million benefit to the local economy.

Situations like Nhill depend on the right people being settled in the right place. You need people with certain skills going to economies where those skills are useful. “You can’t throw people at a place that doesn’t have skill shortages and a growing economy already,” Eaqub says. “Refugees, in and of themselves, are not going to be the answer in turning around a place that’s in decline. But in places where they are struggling to find workers and where the community is willing to integrate them into society, there is absolutely a positive impact. We know that smaller towns do have a lot of extra capacity, in terms of state housing, in terms of local schools, all of those kinds of things. But the critical thing is the opportunity for work.”

Eaqub uses the example of Filipino migrants in Southland who have filled a labour gap in the dairy industry, making a significant contribution to the local economy. He says that with some planning and work with the community, we could fill some of the labour shortages in places like Napier, Hawkes Bay, and Whakatane where there are declining populations and labour shortages.

Stephens agrees, saying that there’s potential to match refugees with smaller centres, build up a community of refugees within a community that wants them to be there, and have a support network of psychologists and translators to help people transition. But these things take time. Stephens cautions against thinking that such solutions would be useful in the current crisis, but should be considered when New Zealand’s 2016-2019 quotas are reconsidered next year.

What about some economists that question whether taking refugees is the best use of resources? Might it be better to send money to places closer to the refugees’ home to help them in a more familiar environment?

“Everybody thinks it’s this or that,” says Eaqub. “The reality is, it’s and. It’s both. The situation in places like Yemen and Jordan is really frightening. It is a desperate situation and refugee camps are terrible places where terrible things happen. What’s the price of a human life? To be about to save even 600 more people is actually worth quite a lot. We know that people are vulnerable. We know that people are in very difficult situations. We don’t have to take all of them, but to be able to give refuge, to save a few souls, I think that’s our moral responsibility.”

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