Are we paying too much to stop the boats?

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This is a longer version of an article published in the Australian Financial Review

One of the claims that some commentators like to make about Australia’s asylum seeker policy is that it saves money. It’s got to be cheaper to stop the boats than to have people coming to our shores that way to seek refuge. Right?

Wrong. It is not easy to find the actual total costs of Australia’s policy of mandatory detention and offshore processing across all agencies because no government has ever provided a total figure. But the National Commission of Audit recently released data which shines a light on the huge and rapidly increasing costs of our policies.

By the Audit Commission’s reckoning, Australia now spends the same as the United Nations High Commission for Refugees (UNHCR) spends on its entire global refugee and displaced persons operations.

The UNHCR is responsible for helping and protecting some 50 million displaced persons around the world, including 11.6 million refugees. It expects to spend about $3.5 billion (US$3.3bn) in 2014. To cover 10,000 staff and all relief for the emergencies in Syria and Iraq, and Africa, as well as the protracted situations worldwide.

Compare that with the $3.3 billion Australia spent in 2013-14 on the detention and processing of boat arrivals. It has been the fastest growing Government programme over recent years, increasing from $118 million in 2010 at the average annual growth rate of a staggering 129 per cent.

Next year, the Department of Immigration’s budget is about $2.9 billion for that operation. But this number probably understates the total costs. It appears to ignore the extra aid to Papua New Guinea for signing the Manus Island deal, $420m over four years. It also ignores the costs of the AFP, ASIO, and State judicial system. Moreover, the value of current contracts issued by the Immigration Department, just for offshore detention for the 2014-15 fiscal year, has been estimated to be $2.7 billion [Source: data compiled by Nick Evershed, The Guardian, 25 August 2014].

The most expensive and least efficient part of Australia’s policy is offshore detention. The Commission of Audit estimated that the cost of offshore The commission calculated that offshore processing costs Australian taxpayers is 10 times more than letting asylum seekers live in the community while their refugee claims are processed. The cost for detaining one asylum seeker offshore for one year is over $400,000, compared with $239,000 for onshore detention and under $100,000 for community detention. The cheapest option is a bridging visa which costs $40,000 a year. Moving all the asylum seekers to bridging visas, which are no guarantee of permanent settlement, would save the Federal Budget around $2 billion.

As a businessman, I agree there needs to be Budget restraint, so seeking to find cost efficiencies in our spending on asylum seekers must be part of this process. An assessment should include a comparison of our expenditure with other countries, other government programmes, and particularly to the UNHCR.

Given that Australia currently has about 34,000 people at various stages of the asylum process, expenditure of $3.5bn is extraordinarily expensive and wasteful.

Sweden, which received around 54,000 asylum seekers in 2013 and expects more than 60,000 this year, spends some $1bn (7B kroner ) - a third of our costs - to manage almost double the number of asylum seekers.

The UK will spend $3.13 billion (1.8bn pounds) on its entire immigration and border operations in 2014-15. Compare this with the Immigration Department’s total budget for 2015 of $4.8 billion.

Compare this also with our spending priorities domestically. Proposed higher education cuts will save a total $3.1 billion over the next four years, equal to the costs of deterring the boats for one year.

Using the data made publicly available, the savings from placing all asylum seekers on bridging visas for one year would equal, for example, the revenue gained from the unpopular fuel excise indexation over the next four years.

Australia spends more on managing maritime asylum seekers than the total government funding for R & D. Total budgeted funding for research in 2014-15 is $2.55 billion.

The $7 Medicare co-payment, designed to build a $20 billion research fund, is forecast to raise about $2.7 billion next year – still less than our cost of deterring asylum seekers.

And to put these costs into a cultural perspective, stopping the boats costs about as much as funding the ABC, SBS, Arts Council, Australian Institute of Sport and National Parks put together.

The “Winning Edge” plan by the Australian Institute of Sport to move our performance from world class to world best, receives an appropriation of $180 million. That is equivalent to holding about 450 asylum seekers in offshore detention for one year.

In a new book Refugees: Why Seeking Asylum Is Legal And Australia’s Policies Are Not, authors Jane McAdam and Fiona Chong argue that the extraordinary expense of our deterrence measure is not justified by empirical evidence about the behaviour, threat or legitimacy of asylum seekers. We have better, cheaper options.

The economic burden of stopping the boats is massive and unnecessary. Politicians on all sides of the debate should take the cost of our current approach into account.

The question we should all be asking is this: is stopping the boats as important as our spending on research, or the entire budget of recreation, sport and culture?

Published in the Australian Financial Review, 'Visas will cut refugee costs', 15 September 2014.