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Proposed New Program For Investor Immigrants To Canada

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Recently I interviewed the Honorable Gerry Weiner, Canada's former Minister of Immigration and now a member of my law firm about a prospective new investor immigration program for Canada. Here is what he said:

You were the Minister of Immigration under Prime Minister Brian Mulroney and you introduced the first investor immigration program to Canada. So what happened to it?

Well, initially it was a great success and a leading program in the world. Thousands of investors and their families came to Canada and invested their money here. The money went to the federal government, was used in expenditures and after five years was repaid to the investors.  However,  in 2014 the program was terminated. Some critics claimed  it was no more than  a way for investors to buy their way into Canada. The financial requirement was seen as relatively low and risk-free. The program was attacked due to its lack of a language requirement and its propensity to attract “astronauts” — mainly from China — who would move their families to Canada but continue to conduct their business abroad, eluding Canadian tax authorities. Monitoring and enforcement of residence were problem areas. The claim was that the  program merely attracted shopkeepers rather than a potential Bill Gates or Steve Jobs.

So was that the end of investor immigration to Canada?

No. An identical Quebec provincial investor program continued after the federal one was terminated. Since its inception in 1986, the Quebec program has pumped hundreds of millions of dollars into the Quebec economy. The year 2015 was its best yet, with some 5,000 investors were approved. Quebec’s is a passive investment program. This means that potential immigrants must ante up $800,000 for a period of five years, after which the money is returned in full but without interest. The prospective investor must establish a minimum net worth of $1.6 million and be able to demonstrate the legal provenance of the funds. Quebec also charges a substantial application fee, which more than pays for the program. Although the program is administered by the province, investors and their families must satisfy federal security and medical standards.

So how do you respond to the critics of these programs?

Well the key thing to see is that these programs brought millions of dollars into Canada and  created jobs. The 'astronaut' criticism is short sighted. An honest assessment of the impact of  investor immigrants needs to be long term. It must factor in the quality of the persons brought into Canada as well as their immediate financial contribution to the country. One has to include a calculation of the value of the children and grandchildren of investors who enter our schools and become tomorrow's leaders in our society. We must remember the legacies that investors will leave to Canada and their Canadianized families. Having worked with the investors who came from all over the world I can assure you they were not just 'shopkeepers,' but in many instances, captains of industry and the economies back home. Sure there were shortcomings in the previous program. Just as the fact that the criminal justice system does not catch every criminal is not an argument to abolish it, so too the fact that some investors were not contributing what was expected was no reason for terminating the whole program. Yes, some steps need to be taken to mitigate their impact on the housing markets in Vancouver and Toronto, or their tax avoidance practices, but these are matters to be dealt with in the context of the investments being made and the jobs created by their arrivals here.

How would you model a new investor immigration program for Canada?

A new federal program must highlight job creation and business stimulation in Canada. The program should be geared toward job creation in economically challenged areas of the country. Borrowing from the highly successful EB-5 conditional visa system in the United States, the Canadian program should provide for the creation of regional centres that would bring together investors and local and regional entrepreneurs and economic development officials to ensure the best use of funds.

In the Canadian context, the regional centre would always have as its focus the creation of new  permanent jobs. In the U.S. program for example, each investor must create 10 jobs as part of his investment. Substantial application fees and in some instances a security deposit, along with strict monitoring of the investment, will keep away tire-kickers, fraudsters and other charlatans. Complete transparency with regard to the investment process and allocation of resources is a must. In addition, the regional centre should be tasked with assisting the immigrant investor as well as other classes of immigration, including refugees, by providing integration and employment services in order to ensure that newcomers build successful lives in this country. Indeed, refugees could be major beneficiaries of the job creation component of a rejuvenated federal immigrant investor program

Such a program could require investments of $1 million for a minimum five years with conditional two-year residence granted at inception, with permanent status granted later if  conditions attached to the investment are met.  The Canadian program should of course include all necessary checks to ensure the legitimate source and path of the funds as well as to establish the minimum net worth of the applicant. An essential element to maximize chances for a successful initiative would be an undertaking by the federal government that applications be processed in a timely fashion. Serious overseas investors are not going to wait four and five years to have their applications processed. A minimum target of 1000 investors per year should be set which would produce some $ 5 billion in new investment in Canada over five years just from the program itself without calculating the spin off benefits.

A typical immigrant investor arriving with a family in a struggling area of the country will be serious and motivated. The investor, having paid $30,000 or more  dollars in application fees along with a risk capital investment of  a million dollars and spending a similar amount again in dwelling costs, clothing, schooling, vehicles and many other needed expenditures, will surely be an asset rooted in his or her chosen community. This, combined with the establishment of a viable commercial enterprise and the creation of employment opportunities, produces a winning situation that could economically and socially boost many Canadian locales, especially those outside Montreal, Toronto and Vancouver that currently attract the bulk of new immigrants.

 

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