Chinese visa seekers look through U.S. visa application forms at the U.S. embassy in Beijing (AP Photo/Elizabeth Dalziel)
The Canadian government is about to scrap its Immigrant Investor Program, which has been under fire for letting wealthy foreigners become citizens without generating the promised economic benefits.
The program has been in existence since 1986. Over 130,000 people have moved to Canada under the auspice of this program. Applicants will be granted permanent residency if they can lend the Canadian government $750,000 for five years interest-free.
However, the Canadian government has recently concluded the program is not delivering enough economic benefits to justify its continued existence, according to The Globe and Mail.
“Right now, all Canada gets from the investor immigrant program is five years of use of about $750,000,” former immigration minister Jason Kennedy said. “That’s the $800,000 contribution minus commissions and fees … it basically means that provincial governments getting that money are offsetting their debt service costs.”
The Singaporean government has also ended its financial investor scheme, which granted permanent residency to wealthy expats who brought a minimum of $S10 million into Singapore. The program generated backlash from local residents, who were concerned about a large influx of foreigners and the impact on property prices in the tiny island state.
While the Canadian and Singaporean governments are wrapping up their investor visa programs, Canberra is approving a record number of applicants – mostly from China – under Australia’s own Significant Investor Visa program, which allows applicants to buy their way into the country for $5 million.
The number of approvals has increased almost 600 per cent under the new government. A total of 73 visas were granted in the final two months of last year, compared with a total of 15 approvals during the life of the last Labor government (China’s Great wall of Visa money story, February 5).
Business Spectator understands that most investors’ money has gone into safe investment products, such as government bonds. In fact, the New South Wales government mandates that applicants who want to come to NSW must allocate at least $1.5 million to buy Waratah Bonds.
Like Canadians, we offer prized Australian residency in exchange for people who can dole out money to buy government bonds.
This does not seem like a good bargain. Most of our state governments boast about their gold-plated AAA credit rating. They can raise money easily from the market without resorting to a cash-for-visa program. It is not clear whether state governments have any coherent investment strategy to invest that money in areas of need, such as infrastructure.
The Canadian experience also suggests that people who immigrated under the Immigrant Investor program pay significantly less tax over decades than other economic immigrants, have less proficiency in English or French and are less likely to actually live in Canada.
Given the similarities between Australia and Canada and the fact that both countries attract similar kinds of applicants, it is important for our policymakers to learn from Canadian experiences. For example, nearly 90 per cent of Australia's Significant Investor Visa applicants are from China. There are 45,000 wealthy Chinese on the Canadian program’s waiting list who want to go to British Columbia alone.
The idea of using Australian residency to attract business people with significant assets is a sound idea. But it delivers dubious benefits to this country if they park their money in safe investment products such as government bonds or property.
The government should only offer visas to entrepreneurs who are serious about bringing in their capital, business acumen and connections to Australia and are committed to stay here. For example, Singapore still offers residency to people under its Global Investor program, which mandates that foreigners invest at least $2.5 million in a new business or an expansion of an existing business.
The company must have an annual turnover of at least $30 million to qualify.
Though the Canadian government is about to scrap its investor program, it is still committed to attracting high-calibre economic migrants through schemes such as the Canadian Experience Class, which offers residency to foreign workers in the country and non-Canadian graduates from universities there.
Canberra needs to look to Canada and Singapore for ideas on how to leverage Australia’s attractiveness to lure the world’s best economic talent. Australia should welcome entrepreneurs with ideas as well as capital. Bond buyers or property speculators should not be on the Significant Visa Investor waiting list.