Australia’s refugee program sparks a lot of heated political debate. Even more controversial is the issue of asylum seekers who arrive in Australia by boat.
The enduring popularity of an email hoax claiming that refugees receive more social security payments than pensioners highlights a strong concern of critics, that refugees are a drain on the public purse, and good intentions aside, they are a net economic loss for Australia.
But is this true? Not according to recent research by Professor Graeme Hugo. Hugo’s report, Economic, Social and Civic Contributions of First and Second Generation Humanitarian Entrants, was commissioned by the Department of Immigration and Citizenship (my employer, see disclosure below).
The research found that in the long term refugees are a net positive for the Australian economy. Not to mention the other ways that cultural and ethnic diversity has enriched Australia over the last 65 years.
Among the most striking findings of Hugo’s report is the above average entrepreneurial talent of refugees. For example, in 2005 five of Australia’s eight billionaires were first or second generation post-war refugees. Refugees are also over represented in small business ownership compared to non-refugee Australians.
An example of this that comes to mind is Frank Lowy, the Czech refugee who migrated to Australia via Israel. Lowy went on to found the Westfield group, the largest retail property group in the world.
Why are refugees such successful business people? The most likely reason, according to Hugo, is that refugees are a self-selected group of risk takers.
By taking the risk of fleeing in search of a better life refugees have shown a tolerance for risk that is higher than comfortable, affluent Australians. To be a successful entrepreneur, you need to take risks.
This appetite for risk of refugee migrants contrasts with our skilled migration programs’ migrants. They are selected for educational attainment, English proficiency and professional experience. All desirable traits certainly, but achieved by methodical hard work, not big gambles on business.
So, now that we know that refugees have shown they are more likely to succeed in business, what policy ramifications does this have for successfully settling refugees in Australia?
Australia’s settlement services
Australia’s (successful by world standards) settlement programs focus on assisting refugees to build their English skills, set up their households and navigate Australia’s complex consumer and government environments.
They don’t however focus on building on this recently identified talent for business among refugees.
These programs also cost serious money. Australia’s Settlement Grants Program alone costs 37 million dollars annually to deliver settlement services. Then there are the Adult Migrant English and Humanitarian Settlement Services programs which cost significantly more again.
I’m not arguing that this money is wasted. Far from it. But as we learn more about the contributions of refugees to Australia, we must ensure that our settlement services are as effective as possible.
Randomised refugee resettlement?
One approach to encourage these budding businessmen and women could use Tim Harford’s model for policy innovation (see my previous book review of Adapt for an explanation). This involves trying out risky new ideas on a small scale and conducting rigorous evaluation for success.
We could design a randomised trial to discover the best way to encourage refugee entrepreneurs. It may look somewhat like this:
- A control of refugees who simply receive the standard settlement services.
- A second control group would be provided information on starting businesses in Australia and provided with access to business mentors.
- A third group would also receive these business services, but in addition would receive start-up ‘micro-finance’ loans or even grants to kick start their businesses.
After a length of time, say 3 years, we could go back to each of these groups and evaluate their relative levels of success. We could look at the individual and their families health and education outcomes, income levels, English proficiency, and community involvement.
What might we find?
We may find that those who received the grants or loans were able to get their businesses off the ground more quickly. This head start may have allowed them to employ members of their family and thereby increase the wealth of their community in Australia. This might even flow back to their home country in the form of increased remittances.
On the other hand we may see that those who received money from the government saw it as a hand out. They did not value the money and wasted it. In fact it may be counter productive, and the control groups may have stronger business success.
Regardless of the outcome for the individuals we would know what helps refugees get started on an entrepreneurial pathway in Australia. And we would have hard evidence to back it up.
Too often service provision to the needy in Australia is not backed up by rigorous analysis. This weakens the argument for increased Government involvement.
And who knows, in thirty years this small amount of money may have provided the kick start that Australia’s next Frank Lowy needed to start a future mega-success in Australian business. Why don’t we try and find out?
I work for the Department of Immigration and Citizenship. I do not work in the refugee or settlement areas. Though I did previously work in the Department’s settlement branch. These views in no way represent those of the Department or Government and are mine and mine only.