Should Canada make it easier for immigrants to send money home? -

Should Canada make it easier for immigrants to send money home?

No country matches Canada on remittances, per capita. Our infographic follows the money

Homeward bound

Mohamed Nureldin Abdallah/Reuters

When Piara Singh Bual arrived in Vancouver from India in 1970, he was 18 and alone. With his parents and seven siblings living in a small village in Punjab, he took jobs picking blueberries and worked at a sawmill, sending half of all his earnings back to them. Over the following decades, and now into retirement, the money transfers have continued.

Bual’s situation isn’t unique, but recently released data suggests no country comes close to matching, on a relative basis, how much cash Canadian immigrants send back to their home countries. In 2012 an estimated $23.4 billion was sent overseas, according to new World Bank figures which track remittances. On a per capita basis that’s double what flows out of the United States or the United Kingdom. India was among the countries receiving the largest chunk of that money, while China and the Philippines were other top recipients.

Part of the reason for the great outflow from Canada is the sheer number of immigrants in this country, accounting for roughly 20 per cent of the population. Canada’s immigration point system favours higher-skilled, higher-earning, and thus higher-remitting immigrants. Workers on temporary permits also tend to send much greater amounts of money back home than traditional immigrants, and few countries use temporary foreign workers to the extent Canada does.

But it’s also true that globally the flow of money to developing countries is soaring, hitting $400 billion in 2012 and forecast to grow by another $130 billion by 2015. And those figures only capture funds being transferred through banks and firms like Western Union, not cash packed into suitcases or withdrawals made at ATMs while people are visiting their home countries. The figures are, as Michael Clemens, an economist at the Center for Global Development in Washington puts it, “ginormous.”

Despite the vast sums crossing Canada’s borders, there’s little evidence the government takes much of an interest. Unlike most other countries, no Canadian agency monitors remittances. Often, that information is gathered by central banks, which is how the World Bank calculated Canada’s remittance figures—by working backwards from the countries that received those funds. “Canada is really an exception. It’s amazing that there’s a blank there,” says Dilip Ratha, a senior economist who heads the World Bank’s migration and remittance unit. The result: a great flood of money passing silently through the system. Indeed, when contacted for this story, no one from the departments of Citizenship and Immigration, Foreign Affairs or Finance could even say which government arm oversees remittances.

To Ratha, the government’s neglect is baffling. “Twenty-four billion dollars is leaving the country every year and so many people are benefiting,” he says, adding that this “really complements Canada’s official development policy.” That’s because remittances are viewed as a critical factor in reducing poverty in poor countries. The money often has an immediate impact, going directly to households to buy consumer goods or to invest in education or health care. “It’s arguably more effective than some foreign aid,” Clemens says, which can be siphoned by corrupt governments or otherwise mismanaged.

In developing countries remittances often dwarf foreign aid, notes Dane Rowlands, director of Carleton University’s international affairs program. That’s certainly the case with Haiti, which received $49 million in direct aid from Canada in 2011, and $125 million from Haitian immigrants living here.

“If you begin to accept these remittances are contributing to international development, you get the sense people are prepared to argue maybe we don’t need to do foreign aid at all,” says Rowlands. Indeed, the Hudson Institute, an American think tank, lumps remittances in with private aid donations to calculate America’s development impact.

But those who study the dynamic between official aid and remittances warn they shouldn’t be confused. Foreign aid is better suited for larger projects, such as funding an anti-malarial program or rebuilding infrastructure after disasters.

What Canada and other countries can, and should, do more, says Ratha, is to make it easier to send money. To that end, Canada has made progress. Along with other G20 countries in 2011, it agreed to try to reduce remittance fees paid to banks and transfer firms to five per cent—they often reach as high as 24 per cent. Still, economists argue such change is too slow for results that would be dramatic. Remittance costs averaged 7.5 per cent globally in 2012. If that came down to 5 per cent, it would mean another $11 billion sent to families like Bual’s.


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Should Canada make it easier for immigrants to send money home?

  1. If newcomers are working and paying taxes, then why not help their families overseas. If newcomers are on social assistance, then no ~ OUR taxpaying money (aka their welfare cheques) should not be accepted at these fast cash/wire services. Do the banks or government have checks and balances in place to identify these transactions?

    • Once the money is paid to them….it’s theirs, and up to them what they do with it.

      Why complain….it’s a further incentive to get a job, so they both have money and can send money.

    • Any newcomer that can survive on only a portion of social assistance deserves to do whatever they want with that other portion.

      But given how difficult it is to survive on the entirety of it.. I expect that number is vanishingly small.

    • How much money is going to the UK and the USA and the rest of Europe from Canada from the previous generation of immigrants???

      • What? This is supposed to be some sort of new revealtion? What about the vast amount of money sent back to their native countries by foreign companies doing business in Canada. Does the oil sands ring a bell?

    • Agreed, an immigrant making an honest living and paying his taxes has every right to do what he wants with his money as long as it is legal. Sure it may not contribute to the Canadian economy, but you could say the same of a stingy local who stashes all his money in his mattress.

      I don’t think our welfare checks pay THAT much, thank god. In the EU (especially Sweden) welfare checks are so generous that refugees have literally been using that money for vacations or even funding terrorism in Somalia (not making this up).

      Welfare shouldn’t be in the form of spendable currency anyways. Food stamps and rent stamps are a much better idea. Make it a crime to trade those stamps for cash, and enforce a law that limits what supermarkets can credit to food stamps (i.e. no alcohol, not too much junk food).

      And yeah, immigrants coming here to leech off welfare (typically refugees, not the people waiting in line the hard way like I did) shouldn’t even be allowed to stay. I’m talking about those vile scum who spew anti-western babble while proudly living off welfare, not an honest immigrant who worked for some time but lost his job during bad economy (I don’t have a problem with the latter using welfare as long as he makes an effort to get off it when times improve).

      • Your comments about welfare are really ignorant. I love it that you can sit behind your computer screen and say what types of goods and services people should be able to buy with their welfare cheques. If you have the liberty to poison yourself with junk food, so should a welfare recipient.
        Also, what data do you have that shows that refugees are really “leeching off welfare”. A good number of these people have actually escaped wars and political persecution which is the reason why they’re here in the first place.
        And thirdly, we live in a democratic nation so I think everyone has the right to “spew anti-western babble” at any point in time as long as they’re doing it within the confines of “free speech” and not actually hurting anybody. It’s so easy to see the world in terms of black and white, but it becomes much more unnerving having to consider that grey does in fact exist.

  2. Makes me proud to be Canadian!

  3. Just take a Dollar Shop – cheap stuff Made in China, owners are usually Punjabis, Pakistanis or Middle Eastern folks. Visiting relatives take the profit back home – how good is that for Canada?

  4. It buys lots of Kalashnikovs.

  5. Should Canada make it difficult for me to spend the $150K salary I make on Big Macs? What kind of a dumbass headline is that?

  6. 24 BILLION dollars? Wow. Think about it people. If this money stayed in the country and circulated through the hands of Canadians and they only spent this money once, on goods & services, this would add up to 1.2 Billion dollars in 5% GST tax alone. Plus adds up in income tax by exchanging hands in Canada. Anyone complaining about how much we get taxed should think about this. Every dollar that leaves our country hurts us. Every dollar is gone forever.

  7. When you give your money to companies like Walmart, McDonalds and Home Depot your heard earned Canadian dollars go to the beautiful land of the United States…and I bet this amount of money beats out the few dollars some poor immigrant suckers send back home to their families. And you forget that the nanny you hire from the Phillipines to wipe the butts of your children has every right to send those hard earned dollars to wherever she wants to.

  8. I don’t think our welfare checks pay THAT much, thank god. In the EU (especially Sweden) welfare checks are so generous that refugees have literally been using that money for vacations or even funding terrorism in Somalia (not making this up).

  9. I love and am very proud to be Canadian. Thank you Canada! Best country in the world hands down and it’s because of free market policies like this that makes our country great. Sure we have red tape where red tape is needed but this policy of not hindering remmittence is what makes me grateful to be a Canadian.
    I do business in China and I can tell you that their citizens are only allowed $50 000US a year in receiving and sending out of their country. For someone like me sending $50 000 is a monthly thing to my suppliers in China and it’s making it a heck of a hard time trying to find creative ways of getting around that cap.

  10. Does nobody else see anything wrong with billions of Canadian dollars leaving Canada and being pumped into another country’s economy instead of being put back into our own? Frankly I think there are way too many Filipinos immigrants in Canada. Call me racist, I don’t care. I am of Asian ancestry but born and raised in Canada. My parents were immigrants (not temp foreign workers) but here is the difference – my parents money stayed in Canada and they raised children who work and contribute taxes to the Canadian economy. As long as there is unemployment in our country, why are we bringing over immigrants to take our jobs and give the money to another country?

    • I’m Filipino-Canadian and my family rarely sends remittances. Please don’t generalise Filipinos, some of us immigrated here to get away from the Philippines. My family only sends remittances for emergency purposes, other than that we view remittances as unhealthy because it creates a dependency. We’re not ATM machines for them, we have our own lives in Canada.