Should Australian residence visas be for sale? That is the question the Productivity Commission has to investigate now as outlined in a paper it released last week. The Commission’s inquiry follows a deal with Liberal Democratic Senator David Leyonhjelm in exchange for his support for the reintroduction of temporary protection visas.
The idea of selling entry rights is not new. An ‘immigration tariff’ was first proposed by the late Nobel Prize-winning economist Gary Becker. In a lecture to the London-based think tank the Institute of Economic Affairs in 2010, Becker argued that markets could replace immigration policy. Would-be migrants could better their circumstances by buying their way into their preferred countries. The receiving countries, meanwhile, could effectively bribe their migration-sceptic population by collecting entrance fees from migrants.
For a free-market economist, such reasoning has immediate appeal, which is probably why many of my liberal friends support the idea. I can certainly see where they are coming from. They prefer a market-based solution over politicians and bureaucrats setting immigration rules. Fair enough.
However, I am afraid my free-market friends are still misguided on this occasion. They only need to have a look at Portugal’s experiment with so-called ‘golden visas’ or similar schemes in other European countries to see why they are not a good substitute for immigration policy.
In November 2012, Portugal’s conservative-liberal coalition government passed an immigration law that had little to do with managing migration. It was always meant to be a money-making scheme for the Portuguese government and appropriately called the ‘golden visa’ scheme.
The rules for gaining a Portuguese residence permit are simple as there are three options: A migrant can invest €1 million in a Portuguese company, buy Portuguese property worth at least €500,000 or create 10 jobs.
Having done that gives you the right to reside in Portugal for one year, or indeed anywhere else in Europe. As Portugal belongs to the Schengen Agreement, a Portuguese visa allows its holder to travel freely around most European countries. To maintain the visa, meanwhile, one week in Portugal per year is enough.
Portugal’s golden visa can be extended after the initial period with minimal actual residency requirements. After five years, migrants can then receive an indefinite right to remain. Another year later, migrants receive Portuguese citizenship.
On one level, Portugal’s ‘visas for sale’ program has been a great success. More than €1bn have flowed into Portugal to pay for visas. Unfortunately, the vast majority of ‘golden visas’ did not create jobs, but only helped to push up real estate prices.
Interestingly, more than 80 per cent of visa applicants are Chinese, for whom it is otherwise difficult to get unrestricted access to the Schengen area. More interestingly still, out of 1,775 ‘golden visas’, 1,681 were gained through property transactions, 91 through investments in Portuguese companies — and only three by creating jobs in Portugal. This makes it clear that Portugal’s golden visa is different from, say, Australia’s investor visas, which are much more closely linked to actual business activity. Merely buying an inner-city apartment in a major Australian city does not give you a right to become Australian.
Critics of the golden visa scheme complain that it has attracted migrants to the country that are unlikely to develop any bonds with their new home. Worse, it could be abused by money launderers and lead to corruption in Portugal’s migration authorities. In fact, the head of Portugal’s immigration and border service was arrested late last year on suspicion of fast-tracking visa applications in return for bribes.
Portugal is not the only EU country offering residency and a pathway to citizenship for cash. Malta is selling its passports for a price of €1.15m. Applicants have to live on the Mediterranean island for a year until they are granted Maltese citizenship. For about the same amount of money, you can buy a Romanian passport. Cyprus, meanwhile, charges €3m for its passports. In Austria, citizenship agents can help wealthy applicants who are prepared to donate at least €2m to charity or invest at least $US10m in an Austrian company.
If you are prepared to settle for a resident’s visa without citizenship, there are real bargains around the Schengen area, not just in Portugal. In Latvia, an investment of €80,000 can buy you a residence permit. Perhaps the best offer comes from Hungary. There you can get a visa by investing a minimum of €300,000 in government bonds that are fully redeemable after five years. Provided that Hungary has not defaulted by then, the visa would have been free.
What all of these schemes have in common is this: They are revenue raisers for governments or meant to bring cash into the country. Beyond that, they have little to do with what we would usually describe as migration policy. But they do open the doors for corruption and illegal activities.
Migration policy should be about something different from making money. It should attempt to attract the best and brightest to the country.
Countries have a lot to gain by attracting well-qualified migrants. They bring skills, experiences and qualifications that the receiving country does not have to pay for. Yes, migrants benefit from moving to another country — this is why they move. But their new countries also benefit from receiving qualified and hard-working migrants, which is why they should accept such newcomers with open arms.
By putting a price on visas, countries are doing themselves a disservice. The most desirable migrants, those people whose qualifications are highly desirable in the global market, will be less likely to move to countries charging them an entry fee. Instead, they will take and employ their talents elsewhere. An Indian or Chinese software engineer faced with the choice of paying $50,000 to gain access to the Australian labour market might conclude that the US, Canada or Britain are nice countries as well.
But it is not just by charging an entry fee that Australia would miss out on gaining desirable migrants. If a visa fee became the dominant factor in migration decisions, it might also attract people who do not have the slightest interest in integrating into their new countries. These people might just seek a convenient passport that makes travel easier, as is the case in Europe’s golden visa schemes. However, such migrants would not be likely to make a contribution to their new countries — and perhaps not even bother to learn the language.
Being a serial migrant myself, I am all in favour of migration: the freer the better. But I also believe that migrants should be expected to integrate into their new countries — and that requires more than just paying a fee or buying property.
An Australian visa is a desirable good, which makes it tempting to charge a price for it. But such a purist economic perspective is too narrow. Visas are not ordinary products that you should be able to buy like your weekly groceries.
Ideally, a visa granted should benefit both the migrant and the recipient country — and neither party should have to pay for this win-win situation.