RECENTLY ARRIVED MIGRANTS AND SOCIAL WELFARE
Bob Birrell and Samantha Evans
RECENTLY ARRIVED MIGRANTS AND SOCIAL WELFARE
Bob Birrell and Samantha Evans
This article explores the impact of the Coalition Government's proposals to limit recently-arrived migrants' access to social welfare benefits. It concludes that while the short-term consequences for these migrants will be severe, the proposals do not address the more significant long term welfare costs of family migration
The Australian Government, like other Governments with relatively liberal immigration programs (notably the USA and Canada), is struggling with the issue of appropriate levels of welfare payments to recently-arrived migrants. What obligation does society owe to such migrants, given that they have not yet contributed to the wealth which makes the payments possible? If the answer is that obligations to new arrivals are not the same as those owed to longstanding residents, will this create undesirable divisions within the national community? Meanwhile, as we make up our minds, the gulf in welfare entitlements and economic opportunity between migrant receiving and migrant sending societies generates an enormous incentive to seek out migration opportunities whether through claims for asylum, family re- union or skilled-based entry.
The problem is acute in Australia because the migrant inflow is increasingly low-skilled and of non-English-speaking background (NESB) and thus likely to need welfare assistance on arrival. This is mainly because of the increasing dominance of the family reunion category in Australia's migrant inflow (see Table 1). All the family categories, including the points tested Concessional category, are drawn mainly from NESB countries.
The dramatic increase in family migration (especially spouses and parents) in 1995-96 sharpens the point. Much of this increase reflects a surge in sponsorships from the former People's Republic of China (PRC) students' and their relatives who have recently gained permanent residence status in Australia. But the flow of relatives from other NESB countries is also growing steadily, including that from Vietnam. In 1995-96 the PRC will constitute the largest source of spouses and fiances, followed probably by Vietnam, thus relegating the once dominant U.K. source of marriage partners to third place.
[Table 1]
In Australia, the question of welfare payments to migrants has come to a head with the Coalition Government's proposals for a two-year waiting period on the payment of almost all social security benefit payments to most recent arrivals. The work reported in this paper and the following articles by Murphy and Williams and by Healy indicates that around one third of recently-arrived adult migrants depend on welfare payments soon after arrival and that at least 25 per cent are still dependent in their second year here.
The purpose of this paper is to explore the likely impact of Coalition's proposals. Unfortunately the detail of the proposals can be tedious. But there is no readily available alternative account and without the detail it is not possible to appreciate their implications. After spelling out the content, we then ask whether the proposals are !Unexpected End of Formula the best way of dealing with the migrant welfare problem. If implemented, they will undoubtedly cause considerable hardship amongst the many migrants currently arriving with minimal financial resources and job prospects. But it may be that the Coalition's solution' for the short-term welfare costs resulting from recently-arrived migration merely converts a short-term welfare problem into a long-term welfare problem. That may well be the case if its proposals do nothing to change the overall pattern of migration to Australia.
AUSTRALIAN WELFARE ARRANGEMENTS FOR RECENTLY-ARRIVED MIGRANTS
Australia's pre-Coalition Government welfare arrangements were relatively generous, with the partial exception of persons sponsored as parents. In their case of parents the sponsor has clearly specified obligations. He or she must have resided in Australia for two years, must provide an Assurance of Support (AOS) which legally obliges the assuror to repay any welfare benefit assistance the parent receives during the first two years in Australia and must provide a $3,500 bond for the Principal Applicant and $1,500 for each accompanying person over the age of 18. In addition, each applicant covered by a parent visa must prepay a non-repayable $858 Health Service Charge. The bond is returned to the sponsor if the parent does not receive welfare benefit assistance during the two years covered by the AOS. Similar arrangements apply to visa category 104 which includes special need' and last remaining relatives'.
No such strict arrangements apply to the large spouse and fiancee category or to the smaller dependent-child category. Any permanent resident, even if recently granted this status (as with the PRC students') or just arrived in Australia, can sponsor a spouse (from a new or longstanding relationship) or fiancee. Sponsors are obliged to sign the following undertaking:
I agree to provide financial assistance as required to meet their [the persons sponsored] reasonable living needs for up to twelve months from arrival in Australia, if necessary.
But this undertaking has no teeth since, should the sponsored person access any welfare benefit during the 12 month period, there is no legal basis for any action to recover the money from the sponsor. Department of Immigration and Multicultural Affairs (DIMA) officers hold the discretionary power to require an Assurance of Support (AOS) covering the first two years residence in Australia, if it is felt that the sponsor does not have the resources to provide for the sponsored person. But this AOS is rarely demanded. In 1994-95 only 6.7 per cent of spouse sponsors were required to provide an AOS.
If a migrant covered by an AOS receives Unemployment Benefits, Special Benefits, Partner or Parenting Allowances during the two year coverage of the AOS, the person signing the AOS incurs a debt to the Commonwealth. However, no bond is involved and in practice the Department of Social Security (DSS), which is responsible for collecting these debts recovers only a small fraction. Statistics on this issue are limited, but one recent report indicates that just $1.2 million was recovered by November 1995 from $4.9 million of AOS debts identified by DSS between October 1993 and October 1995.[1] DSS finds it difficult to recover money from sponsors who lack (or claim to lack) the necessary resources.
Once in Australia, the only constraints a spouse or fiance(e)‚ faces on access to Australian welfare entitlements are a ten year residence criterion before the old age or disability pensions can be accessed (unless, in the latter case, the disabling condition occurred in Australia), five years residence in the case of the sole parent pension (unless the marriage break-up or birth causing the situation occurred in Australia), and six months residence before access to unemployment benefits, parenting, sickness or widow allowances. These constraints apply to all newly-arrived migrants except those entering under the Humanitarian category or those arriving as spouses of persons who, as the Social Security Act (Section 541B.(3)) puts it, were members of a couple immediately before entering Australia' and the partner had been an Australian resident for at least 26 weeks when the person entered Australia. However, for each of the situations where residency criteria restrict access to mainstream benefits, the Government provides a Special Benefit, payable at the same rate, (though with tougher income offsetting rules) if the migrant affected can prove hardship'. This benefit is also available to parents and the other relatives covered by the pre-paid bond referred to above. As indicated below, many migrants do access the hardship' Special Benefit.
In addition, all migrants gain immediate access to Medicare benefits, family payments, Austudy and to all levels of the state education system on the same terms as locals (that is, they do not have to pay the overseas student fee). Preferential family and Humanitarian migrants with poor English also have the right to at least 510 hours of free English-language tuition under the Adult Migrant Education Program (AMEP). All migrant children have access to the English as a Second Language (ESL) programs provided for new arrivals in the schools. Under the 1994 Working Nation package, migrants who have not worked at all in Australia can, after a year or more on unemployment benefits, enter a labour-market program (with its associated training wage) such as the Special Intervention Program which caters for those needing further English tuition.
THE NORTH AMERICAN SITUATION
The United States is much tougher in its welfare provisions for recently arrived migrants. Simcox details the current situation for the U.S. in the accompanying article. Permanent residents can immediately access means-tested sole parent payments (called Aid for Families with Dependent Children AFDC), foodstamps, Medicaid, Unemployment Insurance and Supplementary Security Income (SSI). SSI provides cash assistance to disabled persons and persons over 65 in need who have not contributed to, and thus do not qualify for, Social Security retirement payments. However, the U.S. Social Security Act provides that, for the first three years of residence in the U.S., the income and resources of the migrant sponsor are to be imputed or deemed against any claim for the benefits listed above. In the case of SSI, in 1994 the deeming provision was extended to the first five years of residence in the USA.
These U.S. entitlements are niggardly by our standards. As Simcox shows, recently-arrived migrants cannot immediately access the social security or medical benefits accorded to the bulk of the population covered by Social Security. Nor is there any parallel to our family payments system. Yet the migrant welfare issue in the U.S. has become a controversial topic. Both politicians and the public are becoming restive about the increased public costs associated with recent migrant flows.
This is partly because the nature of immigration to the U.S. has changed. In 1970 immigrants were better educated than natives and less dependent on welfare. By 1990 the situation had reversed.[2] The SSI program has proved especially costly, with immigrants making up 28 per cent of aged recipients, even though they constitute just nine percent of the elderly population in the US.[3] According to Borjas, by 1990, 8.3 per cent of immigrant households resident in the U.S.A less than five years were receiving public assistance.[4] The equivalent Australian figure would be some four times higher. Yet in the U.S., with its land of opportunity and enterprising migrant' mythology, any dependence on welfare (not financed by the contributory social security system) is seen as problematic.
In 1995 the Republican dominated House of Representatives passed new welfare reform legislation (the Personal Responsibility Act) which would bar most non-refugee immigrants (regardless of the time spent in the U.S.A.) from access to virtually all non-emergency federal benefits until the migrant becomes a citizen. President Clinton, however, vetoed this legislation. The issue of immigrant eligibility for welfare benefits was addressed in the immigration reform bills recently passed by both the House (March 1996) and Senate (May 1996). These bills would require the migrant sponsor to sign a legally binding affidavit of financial support, extend the deeming provision to most non-emergency federal benefits until the migrant becomes a U.S. citizen, and give states the authority to deny state-funded assistance to non-citizens. The House and Senate must still resolve differences between their respective Bills, but it is likely that the welfare provisions will become law before the end of 1996.
Congress has been hesitant about tightening the eligibility rules covering family reunion and humanitarian migrant entry to the U.S. But, as the preceding draconian legislation indicates, it is not willing to assist new residents to gain the language, skill training, or welfare assistance needed to become productive members of U.S. society.
THE COST TO THE COMMONWEALTH OF WELFARE BENEFITS FOR RECENTLY- MIGRANTS IN AUSTRALIA
The only officially available costing of the social security benefits paid to recently-arrived migrants is that completed by the Department of Finance in 1991. Finance assessed the recurrent Commonwealth costs incurred in the first twelve months after arrival of the 1991-92 migration program (then anticipated to be 111,000) at $377 million. The costs included all social security and labour market payments ($251 million), health benefits ($68 million) and English language training ($59 million). These estimates were the basis of the Coalition's claim, just prior to the March 1996 election, that its proposed two year waiting period would save $280 million on the social security component in 1998-99 and $616 million over the three year period 1996-97 to 1989-99.
Circumstances have changed significantly since 1991. For a more contemporary assessment we drew (as did Finance in 1991) from DSS data on the numbers of recently-arrived migrants who were social security beneficiaries. The results, detailed in Table 2, cover beneficiaries as of mid-1995 who arrived in Australia in 1994 (or as close to that time as could be obtained). With the exception of the Age Pension numbers (which include couples where relevant) most of the cases listed refer to single adult individuals. The table does not include data on Parenting Allowances or Family Payments, because DSS does not keep records on the time of arrival of such recipients. Their numbers may be significant, given the growth in the spouse/fiance(e)‚ inflow. We may also not included labour-market payments like Austudy, again because data on time of arrival of recipients could not be obtained. Otherwise the listing in Table 2 provides a basis for a more current estimate of the social security component of the Finance costing.
[Table 2]
It is difficult to put a precise figure on the actual money payments made because of the differing rates for those who are single, partnered and with children and because of means test reductions. Assuming that most receive the full rate (almost all Job Search and Newstart recipients listed above reported no extra income) the average payment would be about $8,000 for each beneficiary over a full year, or around $133 million. But much of this expenditure will not be affected by the waiting period because of the various exemptions discussed below.
The $133 million figure is far lower than the $251 million estimated in 1991 by Finance. A minor part of the difference is our non-inclusion of Parenting Allowances and Family Allowances (or their equivalents in 1991) and labour market payments. Another factor is the lower migration intake in 1994 (compared with 1991). But the main difference is the much lower take-up rates for unemployment benefits by 1995 (compared with 1991). The Job Search and Newstart figures in Table 2 refer to persons in their second year of residence in Australia. It is to be expected that there would be lower unemployment benefit rates by the second year, but the major factor is the overall improvement in the employment situation since 1991. On the other hand, if the Coalition's proposals are not implemented the numbers accessing unemployment benefits will increase significantly over the next two years because of the overall growth in the immigration program since 1994 (noted in Table 1).
Nevertheless, the welfare costs of accommodating recently arrived migrants remain very high. Apart from the $133 million identified, the Commonwealth also finances Medicare and English language training costs. Indeed, English training costs are now considerably higher than they were in 1991. In 1994-95 the Commonwealth allocated $139 million for adult English training. This covered the AMEP program plus some 32,000 English-language places under the Special Intervention Program noted earlier. Many of these latter places would have gone to migrants here one to two years, but unemployed throughout their stay. Another $35 million was allocated to schools to provide English training for recently-arrived children.
THE COALITION'S 1996 PROPOSALS
Temporary Visas for spouses
As well as the proposed two year waiting period for the receipt of social security benefits, the Coalition Government also proposes to legislate a two year temporary entry visa for spouses and fiances sponsored off-shore. Permanent visas will be granted after two years if the couple can prove that their relationship is genuine and continuing'. This measure is likely to be introduced towards the end of 1996. Currently the two-year temporary entry provision only applies to the small minority of spouses sponsored while already in Australia on some temporary basis. The proposal to introduce the two year waiting period for benefits and the proposal to restrict all spouses and fiancees to two year temporary visas, in the first instance, are complementary. This is because spouses on temporary visas cannot access the great majority of benefits which require permanent residence. Only Medicare and a hardship' Special Benefit are currently available
Two year waiting period for benefits
The proposed amendments to the Social Security Act which seek to extend the waiting period from 26 weeks to two years were introduced to the Parliament on 23 May 1996. The amendments cover all recently-arrived migrants arriving on or after 1 April 1996, except New Zealand citizens, Humanitarian category migrants and their immediate families and the Temporary Entry spouses just discussed. The latters' two year waiting period is effectively served while they establish the bone fides of their relationship.
The benefits affected are extended beyond those covered under the previous six months waiting period to include partners' allowance and almost all other benefits. Family Payments, too, are to be restricted to the $23 per fortnight per child basic allowance. The effect (if legislated) will be is to exclude access to the more substantial additional family payment granted to those families with children who are dependent on social security benefits or whose income is very low. The amendments will also bar access to Rent Assistance, since it is paid as part of the additional family payment.
In effect, all significant social welfare benefits are to be excluded to most migrants in the first two years residence here. In addition, the previous exemption from the waiting period granted to spouses joining partners who had served the waiting period is to be repealed. However the children and spouses of Humanitarian migrants are exempted, where the relationship existed at the time of the migrant's arrival in Australia. Medicare and educational benefits, including Austudy, are not affected by the proposed legislation, nor have the rules affecting parents been changed (except for the tightening of the regulations affecting the hardship' Special Benefit discussed below).
The new arrangements seem water-tight. All migrants, including dependent spouses, must apply for welfare assistance in their own right whether it be for parenting, partner allowances or unemployment benefits. They cannot simply attach them- selves to their partners' claim. When applying for such benefits they must indicate their time of arrival in Australia to DSS and if resident less than two years will be refused. Significantly, most PRC spouses will be affected too, because the visa categories under which their ex-student sponsors gained permanent residence in Australia are not defined by DSS as within the Humanitarian category.
New hardship' regulations
The Coalition Government has also tightened the rules on access to the hardship' Special Benefit or safety net available to those excluded by a waiting period from a welfare benefits. This change has already been implemented for benefits subject to a waiting period and will automatically be extended to the two year waiting period if the above legislation is passed. New legislation is not required because the rules governing the hardship' Special Benefit are at the discretion of the Minister.
The hardship' Special Benefit is now only available to those experiencing an unanticipated event'. Such events are basically limited to occurrences related to the sponsor: for example, where the sponsor's business collapses or job is lost, or where the sponsor rejects the marriage and absconds. But events' such as the newly arrived migrant's inability to find employment or simply having empty pockets', which previously would have been grounds for the migrant to access the Special Benefit, no longer qualify. Such problems are now the responsibility of the sponsor. Even pregnancy or the birth of child will not suffice because, for spouses, these are not unanticipated events'.
In addition the means test on the hardship' benefit has been drastically tightened. Previously, migrants seeking assistance on account of being residentially ineligible for a benefit were assessed under DSS's long term' criteria, which allowed an applicant to possess up to $5,000 in available funds. Under the new rules, all migrants covered by the waiting period, (including parents during the two year bonding period) are assessed according to DSS's short term' criteria, which bars payment of the Special Benefit unless the applicant's financial resources have shrunk to less than the equivalent of two weeks Unemployment Benefits. In other words they have to be broke. This rule is being applied to all those within the existing six month waiting period regardless of whether they arrived in Australia before or after 1 April 1996.
These changes completely overturn the formerly relatively welcoming stance taken by the Australian Government towards the welfare needs of recent-arrivals. But their focus is on the newly resident migrant rather than the sponsors responsible for the movement here. As the matter now stands, an irresponsible sponsor can still walk away from his or her promises to support the spouse or other immediate relative sponsored without financial penalty.
POTENTIAL COMMONWEALTH BUDGETARY SAVINGS
The 23 May legislative package included an estimate of the savings to the government of $29 million in 1996-97, $132 million in 1997-98 and $171 million in 1998-99. No details of the components of these savings are provided. These numbers, which are half the original Coalition costings, are roughly in accord with our estimates. There is not much point in detailing these estimates expect to point out why the Coalition's original costings were so remote from reality.
The answer to this puzzle lies in the large number of exemptions to the waiting period proposals. These include most of the age pensioners listed in Table 2 (whose payments are preserved on account of various international Social Security Agreements), most of the Sole Parent recipients (because the event causing the sole parent status occurred after residence in Australia) plus all those classified as Humanitarian and New Zealand category migrants. As noted, Humanitarian category migrants are exempt from all waiting-period rules, while for New Zealand citizens the waiting-period stays at six months for unemployment benefits because of the Social Security Agreement with New Zealand (see the article by Rapson below on this agreement).
The main budgetary implications stem from exemptions affecting unemployment benefit payments. According to our calculations, around 3,000-4,000 of the 11,548 Job Search and Newstart recipients identified in Table 2, were Humanitarian category migrants and another 1,588 were New Zealand born. In addition DSS has assumed that about one third of those who are not exempted from the two year waiting period rule will qualify for the hardship' Special Benefit'.[5] The net effect of these exemptions is that the cost savings will not be much more than half the $131 million identified earlier. When these savings plus additional savings from restrictions on family payments are extended over a two year period we approach the $171 million estimated by Finance.
POLICY IMPLICATIONS
The savings are substantial even if far less than originally anticipated - and will affect at least 8,000 migrants from each annual arrival cohort. But whether these savings are worth the social divisiveness and financial hardship they will cause in certain migrant communities is another matter.
Of course, it may be that the legislation will not be implemented. The Labor opposition spokesperson for Immigration and Multicultural Affairs, Duncan Kerr, stated in the Parliament on 29 May 1996 that Labor would seek to limit the ambit of the two year waiting period to the benefits applicable under the existing six months waiting period. Labor also opposed the abolition of exemptions for spouses sponsored by long term residents. Should the latter position prevail, the largest single source of beneficiaries would be PRC spouses and fiancees.
If the Coalition's proposals are implemented the effect will be to allow the continued inflow of many migrants who demonstrably (given their current need for welfare assistance) cannot provide for themselves when they arrive in Australia. As Murphy and Williams show below, significant proportions of all migration categories (including spouses) are receiving some form of welfare benefit soon after arrival. The Coalition Government is in effect saying that it washes its hands of responsibility for their welfare, unless they fall in the Humanitarian category. This is to advance down the American road, that is, to allow continued migration but without a commitment to help the migrants in question become secure and productive citizens.
The Coalition can legitimately argue that many of the migrants affected have been sponsored by relatives who have not lived up to their agreement to provide for them on arrival. The problem is especially acute amongst communities like the Vietnamese. Many of the sponsors either do not have the resources needed to provide for their relatives or are not prepared to honour their original promises.
This argument has merit, but it does not resolve the short term migrant welfare problem likely to result, nor more importantly, the inevitable longer term problems. People needing assistance on arrival because of age, limited English language, lack of occupational skills, and/or limited financial resources (especially if their sponsors are also poor) are likely to need help over the long term as Healy shows in his article below. The best situation from the Australian community's point of view would be to curtail the flow of migrants in such circumstances.
The Government's proposals do not address this issue. There is some talk in Government circles that the introduction of the two year waiting period will itself reduce the migrant intake. This is unlikely. Such is the push pressure from many of our important immigrant source countries that few would-be migrants will be put off by a short term reduction in welfare benefit prospects. It is only when the Australian sponsor has to dig deep into his or her own pockets to provide for the sponsored migrant that there is likely to be any diminution in the flow of sponsored migrants. As noted, the Coalition's proposals do not add require sponsors to accept any more of the public costs of providing for their relatives.
Lessons from the parent welfare experience
Australia's experience with parent migration illustrates both the long term welfare problems referred to and some of the positives and negatives of the strategies chosen to deal with the problem. During the 1980s the parent inflow accelerated to over 12,000 per year. Government concern about the associated welfare costs prompted the introduction of a Balance of Family' ruling in 1989 (limiting entry to those with half or more of their children in Australia). Subsequently, the pre-paid bond discussed earlier was introduced in 1992 to ensure that Australian sponsors provided for their parents, at least in the first two years of residence here. There was a sharp drop in parent migration, from 10,667 in 1990-91 to 3,860 in 1993-94. It appears that the main determinant of the drop was the Balance of Family ruling, because almost all of the fall in applications for parent visas occurred in 1989-90 and 1990-91, before the introduction of the bond system in 1993. As Table 1 shows there has recently been an upsurge in the number of parent visas. The main growth point is the PRC. Clearly their Australian resident sponsors are not put off by the current bond system.
After several years experience we can now assess how effective the bond system was in curtailing access to the welfare system for those parents who did migrate. It appears from the data in Table 3 that it has been effective at least in the first two years residence here. Only a few hundred persons who arrived in Australia in 1993 and 1994, the two years prior to May 1995, accessed the Special Benefit available to persons not residentially eligible for the old age pension. But the story changes over the longer term. Once the two year bond period elapses, the number of Special Benefit recipients jumps. As of May 1995, 9,270 persons not residentially qualified for the old age pension were in receipt of a Special Benefit. (Those here more than two years are assessed under the old hardship' rules which involve the softer long term' financial resources test noted earlier and do not require the applicant to prove that unanticipated' events caused the need for help).
[Table 3]
The annual cost for this Special Benefit (taking into account recipients receiving the higher rate for couples) is over $100 million per year. But this is not all. About half those entering as parents are aged below the pension age. Many of these parents are likely to access other benefits (such as unemployment benefits) while they accumulate the ten year residential qualification for the old age pension. They then add directly to the pension bill. For example, as of May 1995, there were 3,449 persons born in China who were receiving the old age pension and whose period of residence in Australia was 10 to 20 years. All these costs are set to escalate with the jump in parent visas anticipated for 1995-96 (see Table 1). A major reason for this escalation is that a high proportion of PRC parents pass the Balance of Family test on account of the relatively small size of PRC families.
CONCLUSION
The two year waiting period plus bond does not seem to deter parent migration and has done little to curb the long term welfare problems associated with older migrants. The procedures allow many sponsors to bring parents here who the sponsors cannot provide for, or for various reasons are unwilling to accept responsibility for. Therefore, any long term solution to the migrant welfare problem (whether for parents or other categories like spouses) must involve something other than a two year waiting period and bonding system covering these two years.
A satisfactory solution must involve more examination of the capacity of the sponsor to provide for all the various relatives in question. As noted earlier, persons who are unemployed or on welfare themselves can sponsor a spouse or fiance to Australia. As far as parents are concerned, as long as the sponsor can find someone to put up the $3500 bond that is the end of the matter.
The capacity of the sponsor to meet the obligations of sponsorship should be taken into account in the migration decision-making process. Such matters as the financial and employment situation of the sponsor should be evaluated. In addition, to cope with sponsors who may be financially secure but do not accept the responsibility to look after the sponsored person, we should consider moving to the deeming' option adopted in the USA. That is, any claims to the hardship' benefit certainly in the first two years residence, but perhaps longer in the case of parents should be evaluated against the sponsor's assets, regardless of whether he or she accepts responsibility for the sponsored migrant.
The Coalition's propsals deny any state assistance to most recently-arrived migrants. It is therefore a matter of urgency that the government does not simultaneously permit sponsors to bring in relatives they cannot support during the waiting period.
Acknowledgment
We are indebted to Rosemary Jenks of the Centre for Migration Studies in Washington DC for advice on the U.S. situation.
References
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