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Sweden’s governments collapsing under weight of refugees

The crush of refugees, straining governments to the breaking point, now represent 4 per cent of Sweden’s 2016 budget.

This article, by Lawrence Solomon, first appeared in the National Post

Earlier this month, the Swedish Association of Local Authorities and Regions stated that municipalities will need to increase the tax rate by 2 per cent – an average annual hit per household of about 15,000 kroner or $2,400 – to cope with the costs of the refugee crisis. But that lowballs the cost of the crisis, stated an analysis in Svenska Dagbladet, a major Stockholm daily, in an article entitled “Tax shock in the refugee crisis.”

The 2 per cent estimate assumes that the cost of servicing refugees with food, housing and healthcare will be comparable to that of servicing Swedes, yet all know the refugees’ needs are much greater – so great that they eviscerate municipal budgets. The municipality of Trelleborg in the south of Sweden, population 43,000, which received 14,100 asylum seekers in a 20-day period, feels overwhelmed, saying “there is no capacity” to cope with the newcomers, who include over 100 unaccompanied children and young people per day.

Refugees have become one of the country’s largest industries

“There is a great risk that ordinary businesses and society will suffer,” it warned in a letter to the country’s Immigration Service. Filipstad, population 6,000, “cannot cope with the refugee arrivals,” its officials told SVT, Sweden’s national public television broadcast network. According to P4, Sweden’s national radio, in a report on the chaos engulfing the province of Sörmland, the “Risk of collapse in Sörmland’s municipalities for refugee reception increases.”

The Swedish Migration Board is also feeling the financial strain. With governments unable to meet the demand for services, the private sector is stepping in, draining government coffers. Companies in the elder care business have branched into child care, charging the state $9,000 a month. The cost to place a child in a foster home is $13,000 per month. With Sweden expected to receive as many as 180,000 asylum requests this year, refugees have become one of the country’s largest industries, representing 4 per cent of Sweden’s 2016 budget.

Industrialists in the refugee sector – including the Wallenbergs, Sweden’s dominant industrialist family, and private equity firm IK Investment Partners – are reportedly earning profits three times that of the average on the stock exchange. Sweden’s single largest private provider of refugee accommodation for adults, Jokarjo, houses 5,000 migrants at 30 facilities. It tripled its revenues between 2013 and 2014, expects a doubling this year and has as its ambition, declares Jokarjo’s owner, to create an “Ikea for asylum reception.”

The hardships on Swedes extends well beyond these government expenditures, and the taxes that will follow. With public housing unable to meet the demand, the government is allowing private entrepreneurs to not only buy up housing but also to evict existing tenants, and allow units to be subdivided. As one example, after a Suzuki car dealer got the go-ahead from the Migration Board, he purchased the 12-resident building and had it rezoned to accommodate 144 refugees. The car dealer had persuasively argued that the building was providing inappropriately spacious accommodations, given the refugee crisis. His expected revenue from the Migration Board for housing the migrants is $2 million a month. Wallenberg-owned Aleris, one of the biggest housing providers, pockets $9,600 a month from the government for an apartment that normally rents for $800.

These desperate efforts by the Swedish government are nevertheless proving insufficient to meet the enormous demands placed on it – to accommodate the expected arrivals, the government states the equivalent of a new Stockholm would need to be built. There’s talk of invoking public emergency measures on the books since 1972 to allow for the expropriation of summer homes and other underused properties, particularly since the migration board believes that the needs of desperate refugees should take precedence over those of more comfortable, native-born Swedes in obtaining access to housing.

A temporary housing solution – needed because “we are facing a crisis situation,” explained a rattled Prime Minister Stefan Löfven in an extraordinary press conference earlier this month – are tent cities in shooting ranges and other lands. Longer term, in what is being billed as the largest building project in its history, Sweden plans to build some 600,000 new dwellings.

Löfven sees no alternative but to accommodate the refugees – “it is one of the greatest humanitarian efforts” he stated in the press conference. In this he has long had the support of most Swedes, but that support is fraying. Resentments are running high among many Swedes, and fear too, because of the many crimes, including rapes and other violent acts, attributed to the migrants. Some Swedes are reacting with violence of their own – arson is suspected in some of the dozen fires this year at refugee centres, and anti-refugee vandalism is becoming common. Swedes also demonstrate their displeasure otherwise. White flight is occurring in neighbourhoods that reach a critical mass of 4 to 5 per cent migrant. But with estimates that Swedes could become a minority in their own country by 2025 should waves of refugees continue to pour into the country, either white flight, or Sweden in its present borders, stops being an option.

Sweden has always been known as a tolerant, high-tax country. Today, refugees are taxing its tolerance and taxing its coffers as never before, possibly to a breaking point.

Lawrence Solomon is a policy analyst with Probe International. Email: LawrenceSolomon@nextcity.com.

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1 reply »

  1. The numbers in this article are difficult to understand.

    For instance, a 2% increase in taxes is said to be $2,400 annually. This would mean an incredible current tax burden of $120,000. This, in a country where the average household income according to the OECD is USD 29,185 per year! (Net-adjusted disposable income)

    The amounts for child care and foster care seem similarly astronomical: $9,000 and $13,000 respectively would amount to 3.7 times and 5.3 times the average per capita income.

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