By: Colin R. Singer
The federal government will spend $218 million over the next five years to create a new one stop agency to attract foreign investment. This announcement comes at a time when foreign governments are souring on international trade agreements. For good measure, Ottawa should also consider improving its failed immigration policies to attract high net worth investors. In doing so, it can reclaim its role as a dominant player in the residence through investment industry.
Until 2014, the federal government gave entry-level millionaires a pathway to residency and ultimately, citizenship in Canada through its Canada Immigrant Investor Program (CIIP). The scheme operated largely on the interest income earned from investors’ funds. The program benefits to Canada peaked during the 1990s, when interest rates were high. The program was terminated under much controversy in 2014 by the previous government which despite compelling favourable studies, claimed it provided no benefit to Canada. It was replaced in February 2015 with an unpopular Immigrant Investors Venture Capital Pilot Program (IIVCP) which the current federal immigration minister has publicly stated is practically non-existent due to the lack of interest from international investors.
As a consequence of this failed policy, Canada is losing out on attracting the world`s most successful business people and their families who otherwise would choose to settle here. British Columbia and to a lesser extent, Ontario is losing out on transfer payments being paid to Quebec for immigrant investors applying under its program which statistics show only 16% ultimately reside in the province.
The way out of this morass is clear. The Trudeau government should immediately get on with the task of re-designing the IIVCP. It just needs to create the right policies and a re-structured program that will succeed in attracting carefully chosen high net worth business people who will bring billions of dollars to Canadian businesses and create new businesses that will in turn create more jobs.
The benefits of the QIIP residency program to Quebec are undeniable. From 2001-2016, it gave $714 million to 4737 businesses in 17 territories in the province. As well, a compelling 2010 study conducted by three economists in Ontario and Quebec concluded that an average investor directly injects more than $770,000 into the economy during a five-year investment period.
Additionally, a recent statistics Canada report Immigration, Business Ownership and Employment in Canada, the first of its kind, confirms that immigrants are more likely than Canadians to establish businesses.
Ottawa should also consider establishing a citizenship through investment program, for ultra high net worth individuals and become a dominant Tier 1 country in the citizenship through investment arena.
Currently Austria, Malta and Cyprus are the only Tier 1 countries offering a direct path to citizenship while Antigua and Barbuda, Dominica, St. Kitts and Nevis and Saint Lucia also offer such programs. In pursuing this new policy initiative, Canada would be in position to attract the world’s most successful ultra high net worth business people along with their families and by extension their business networks. This could prove highly lucrative and provide Canada with a large inflow of cash which it badly needs. If executed strategically, Canada will also realize significant gains to its human capital in the immediate term and through the children of such business people, in the long term. The human capital benefit that the children of successful business people bring to Canada is immeasurable and invaluable.
How beneficial can a new federal residency and citizenship program be? This year, some 5,000 newcomers will be admitted under the Quebec program alone, which has been selecting its own business investor immigrants since 1986. Under a revised federal immigrant investors` program Ottawa would likely account for more than 70% of the market, a position it held at the peak of its popularity in 2010. In doing so, British Columbia and Ontario would then benefit from its share of Ottawa`s transfer payments as the two provinces would become the default choice for the overwhelming majority of applicants applying under the Quebec program.
Together with Quebec, Canada could again become a dominant player in the international residency through investment industry and perhaps match or surpass the popularity of the EB-5 program in the United States which admits 10,000 business immigrants annually.
If Canada is to return to the forefront of the business immigration field, it must replicate a modified format of the QIIP and other successful international programs by installing a well-devised, targeted model that creates a capital fund for Canadian businesses and attracts the right calibre of applicants on the basis of clear policy objectives featuring program integrity, international competitiveness, processing cost efficiency and fast processing.
The federal immigrant investors` venture capital program is dead but the need for high net worth business immigrants to Canada is not. The substantial financial benefits to Canada, a welcome advantage in the face of our current economic difficulties, could well be surpassed by the undeniable human capital benefits it would receive from the world’s most innovative and wealthiest business people and their families who would choose to live in Canada. Additionally, Canada could take the lead on the global stage by creating an international charitable fund for refugees from a portion of the proceeds of investment inflow. In doing so, it would ensure that the world’s wealthiest are directly assisting the world’s immigrant population who are most affected by international conflicts. This is one of the hallmarks of effective immigration policy.
Colin R. Singer is Managing Partner of www.immigration.ca.
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