Offshore detention is a horrendous waste of taxpayer money

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By Leith van Onselen

I have previously argued that Australia is an “anti-humanitarian nation”. This view is based on the following facts.

First, Australia’s foreign aid budget has cratered over the past half century:

Second, Australia’s permanent migrant intake is incredibly light on humanitarian places – just 16,250 in 2018 – but heavy on so-called ‘skilled’ migrants (162,500 in 2018):

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Around 80% of these ‘skilled’ migrants come from developing nations, with most working in jobs well below their reported level of skill (e.g. driving an Uber). There is also widespread visa rorting and exploitation going on.

Therefore, in addition to being a scrooge on foreign aid, Australia’s immigration system is built around robbing developing nations of their skilled human resources – thus stifling their economic development – while at the same time accepting a comparatively tiny number of refugees.

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Third, Australia’s offshore processing system of asylum seekers is unambiguously cruel – akin to holding people prison camps. It also happens to be an enormous waste of taxpayer money, with The AFR reporting that little-known firm Paladin Group is being paid an estimated monthly average of $20.8 million to provide security at three asylum-seeker accommodation sites on Manus Island in Papua New Guinea, as well as managing the East Lorengau Transit Centre.

According to The AFR, it is costing the federal government around $1,600 a day to house asylum seekers on Manus Island, and this does not include food and welfare services. Industry observers note that Paladin’s margins are “unbelievable”; most of its staff are local, with security guards getting paid only around $2 an hour:

Calculations by the Financial Review indicate Paladin is being paid on average $20.8 million a month by the government to provide security at all three sites and manage the East Lorengau Transit Centre. That amount has risen 48 per cent from an average of $14 million a month last year. A Home Affairs spokesperson said there were now 422 people housed at the three camps – 213 at East Lorengau, 111 at West Lorengau and 98 asylum seekers at Hillside Haus.

That means on a daily basis it now costs the Australian government over $1600 to house each refugee on Manus, not including food and welfare services, more than double the price of a suite at the Shangri-La hotel in Sydney.

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Clearly, Australia is running an anti-humanitarian and wasteful foreign aid and immigration policy. The whole system needs an overhaul.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.