There are currently dozens of different categories for potential immigrants to apply under, whether through federal or provincial nominee programs. Categories change as governments adjust policies to respond to changing economic and social circumstances. When the federal budget was unveiled last month, the government announced it was canceling the federal immigration investor program. The program had been in existence for nearly 30 years. The program was modified several times. In its final incarnation, the program offered permanent residence to potential immigrants having a net worth of $1.6-million, who invested $800,000 in a government fund for five years.
Earlier versions of the program allowed potential immigrants to invest in private businesses and funds. That proved open to abuse, with some businesses failing to carry out their intended investments and some investors losing their funds. The administrative cost of regulating such schemes, effectively requiring the immigration department to become a securities regulator, resulted in the adoption of the government fund model.
The government claimed, in canceling the program, that most immigrant investors are not making a long-term positive economic contribution to the country. It said employment and investment income is below Canadian averages and those of most other economic immigrants. Investors pay less in taxes over a 20-year career. They have the lowest official language ability of any immigrant category and are less likely than other immigrants to stay in the country over the medium to long term. Finally, very little “new” money came into the country, with almost all initial investments made through the program coming from Canadian bank loans.
On the other hand, other reports indicate that in settling in the country, investors added capital through the purchase of residences and transfer of personal property, as well as contributing through the purchase of goods and services. For several decades debate over immigration and investors has focused on its purported effect on real estate prices. Critics claim that housing prices in Vancouver, one of the more expensive places to live in the world, is the result of a large influx of investor immigrants buying up property to live in or for investment. Others suggest there is no direct correlation and the total number of sales does not reflect the number of immigrants coming as investors.
Much of the debate is premised on anecdotal evidence, as property sales do not track the origin of purchasers, or their immigration status. In 2012, the former governor of the Bank of Canada, Mark Carney, warned of the risk of foreign capital inflating the housing market. The 2011 census shows a shift in demographics in Metro Vancouver, with an increase of the immigrant population from 30 per cent in 1991 to 40 per cent in 2011, with 61 per cent of the immigrant population arriving since 1991. About 50 per cent of the immigrants coming in the past 10 years chose to settle in Vancouver and Surrey.
The effect of immigration on housing prices is not limited to Canada. The Sydney Morning Herald in Australia noted a few weeks ago, after the immigrant investor program was cancelled, that one major property developer reported that offshore investment in residential properties had doubled in 2013. The article speculated that Canada’s decision to limit investment immigration could only boost interest in Australia’s market.
The decision to cancel the program has prompted a reaction from some of the would-be immigrants who applied under the program. Earlier this week a group held a news conference in Beijing, asking that the government to process the 65,000 outstanding applications. They are also contemplating legal action against the decision.
That action will likely have an uphill battle to succeed. When the government introduces budget legislation to give effect to the cancellation, I expect it will include express terms to retroactively cancel the program and outstanding applications, as it did recently with another program for skilled workers. While the decision may be unfair and cast doubt on the government’s trustworthiness, it would be within Parliament’s power to enact such legislation.
The government’s decision raises fundamental questions about immigration law and policy, just as does the recently proposed changes to the citizenship law. How should would-be immigrants be chosen? What are the criteria in measuring an immigrant’s contribution to the country? To what degree should an immigrant be contributing economically to society, if they are to receive the social, health and economic benefits from the state?
The government says it will create a new immigrant investment program. It will be interesting to see what criteria it uses to select immigrants under the new program, and what economic and social benefits the new program will create for the country.
Earlier versions of the program allowed potential immigrants to invest in private businesses and funds. That proved open to abuse, with some businesses failing to carry out their intended investments and some investors losing their funds. The administrative cost of regulating such schemes, effectively requiring the immigration department to become a securities regulator, resulted in the adoption of the government fund model.
The government claimed, in canceling the program, that most immigrant investors are not making a long-term positive economic contribution to the country. It said employment and investment income is below Canadian averages and those of most other economic immigrants. Investors pay less in taxes over a 20-year career. They have the lowest official language ability of any immigrant category and are less likely than other immigrants to stay in the country over the medium to long term. Finally, very little “new” money came into the country, with almost all initial investments made through the program coming from Canadian bank loans.
On the other hand, other reports indicate that in settling in the country, investors added capital through the purchase of residences and transfer of personal property, as well as contributing through the purchase of goods and services. For several decades debate over immigration and investors has focused on its purported effect on real estate prices. Critics claim that housing prices in Vancouver, one of the more expensive places to live in the world, is the result of a large influx of investor immigrants buying up property to live in or for investment. Others suggest there is no direct correlation and the total number of sales does not reflect the number of immigrants coming as investors.
Much of the debate is premised on anecdotal evidence, as property sales do not track the origin of purchasers, or their immigration status. In 2012, the former governor of the Bank of Canada, Mark Carney, warned of the risk of foreign capital inflating the housing market. The 2011 census shows a shift in demographics in Metro Vancouver, with an increase of the immigrant population from 30 per cent in 1991 to 40 per cent in 2011, with 61 per cent of the immigrant population arriving since 1991. About 50 per cent of the immigrants coming in the past 10 years chose to settle in Vancouver and Surrey.
The effect of immigration on housing prices is not limited to Canada. The Sydney Morning Herald in Australia noted a few weeks ago, after the immigrant investor program was cancelled, that one major property developer reported that offshore investment in residential properties had doubled in 2013. The article speculated that Canada’s decision to limit investment immigration could only boost interest in Australia’s market.
The decision to cancel the program has prompted a reaction from some of the would-be immigrants who applied under the program. Earlier this week a group held a news conference in Beijing, asking that the government to process the 65,000 outstanding applications. They are also contemplating legal action against the decision.
That action will likely have an uphill battle to succeed. When the government introduces budget legislation to give effect to the cancellation, I expect it will include express terms to retroactively cancel the program and outstanding applications, as it did recently with another program for skilled workers. While the decision may be unfair and cast doubt on the government’s trustworthiness, it would be within Parliament’s power to enact such legislation.
The government’s decision raises fundamental questions about immigration law and policy, just as does the recently proposed changes to the citizenship law. How should would-be immigrants be chosen? What are the criteria in measuring an immigrant’s contribution to the country? To what degree should an immigrant be contributing economically to society, if they are to receive the social, health and economic benefits from the state?
The government says it will create a new immigrant investment program. It will be interesting to see what criteria it uses to select immigrants under the new program, and what economic and social benefits the new program will create for the country.
William Macintosh started practising as an immigration lawyer in
1984. You can reach him for advice or help on any immigration or
citizenship matter at 778-714-8787 or by e-mail at
macintoshlaw@gmail.com.
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