The Harper government is shaking up the federal immigrant investor program to ensure the money that wealthy foreigners bring here as a condition of entry is put to work in Canadian companies instead of languishing in bank accounts.
The Conservatives are also expected to at least double the cash that immigrant investors must inject into Canada, to $1.6-million from $800,000. The money is currently given to provincial governments for five years until it’s returned, without interest, to the immigrant.
The government’s game plan is to wring more benefits for Canada from the vast pool of foreign millionaires looking for a safe haven in places such as North America.
Immigration Minister Jason Kenney kicked off consultations Friday on reforming the federal immigrant investor program.
“There are literally millions of millionaires around the world who would love to come to Canada and are willing to invest in this country,” he said. “But we’ve been massively under-pricing that program relative to our major competitors like Australia, New Zealand, the United States and the United Kingdom.”
The exercise is ultimately expected to result in changes requiring newcomers to invest more directly in Canadian businesses – making what Mr. Kenney calls more “durable investments.”
Canada currently admits about 3,000 immigrant investors per year through the federal program – or about 11,000 including their families. Largely from China, Taiwan and South Korea, these newcomers’ primary destinations are Ontario and British Columbia..
The existing program requires investors to make what amounts to an interest-free loan to a provincial or territorial government, ostensibly as investment capital to be used for economic development activities.
But Mr. Kenney complained the cash frequently ends up sitting idle on provincial government balance sheets rather than stimulating the economy.
“Right now, all Canada gets from the investor immigrant program is five years of use of about $750,000,” he said. “That’s the $800,000 contribution minus commissions and fees. ... It basically means that provincial governments that are getting that money are offsetting their debt service costs.”
Mr. Kenney said the Tories will also rewrite the Immigration and Refugee Protection Act to allow Ottawa to rapidly create specialized investor programs targeting particular groups.
“If they have a brilliant idea, if they have Canadian investors, for example, who are willing to backstop them to start a business that will create jobs and wealth, we want to get them in the country.”
The immigration minister cited an article from the Wall Street Journal last November that said more than half of China's millionaires are either considering emigrating or have already taken steps to do so. Thirty-seven per cent of those named Canada as a top destination, he remarked.
That’s proof, Mr. Kenney said, that Canada can afford to hike the investment requirements.
Ottawa is currently scrambling to process a backlog of more than 25,000 wealthy foreigners – representing 90,000 people – hoping to gain a Canadian visa under the program.
“There are more people clamouring to buy seats on the plane than there are actually seats available on the plane. And that indicates to us that we can raise the price for the ticket,” the minister said.
Immigration lawyer Richard Kurland predicted changes would see immigrant investor cash funnelled into lending by the Ottawa-backed Business Development Bank or investments made by the Canadian Pension Plan Investment Board.
He cautioned against allowing investors to invest directly in Canadian companies, saying in the past this led to firms secretly returning the money to immigrants, minus a fee. “It’s too easy to hoodwink the system.”
Mr. Kurland said Canada should at least triple the required investment. “We’re selling five-dollar pies at fifty cents.”