Economic Action Plans 2012 and 2013, and the Speech from the Throne have all committed to exploring ways to reform business immigration programs to ensure that immigrant investors make a real contribution in exchange for the security and pathway to citizenship that Canada provides.
Following on those commitments, Economic Action Plan 2014 announced the Government`s intention to terminate the existing federal Immigrant Investor and Entrepreneur Programs, as they provide limited economic benefit to Canada. Eliminating the existing IIP will give Canada the opportunity to explore new ways to generate venture capital investments in support of early-stage Canadian companies.
The global economy has changed significantly since the IIP was created three decades ago. Investment capital flows increasingly freely across borders, and interest rates are low. Other peer countries have adapted by increasing the investment and commitment required under their programs. Under the existing IIP, Canada offers guaranteed permanent residence for an $800,000 loan. The United Kingdom, Australia and New Zealand require as much as $5 to $10 million, and do not offer up-front permanent residency.
Most immigrant investors are not making a long-term positive economic contribution to Canada. They report employment and investment income below Canadian averages and those of most other economic immigrants. Over a 20-year career, an immigrant investor pays about $200,000 less in income taxes than a federal skilled worker and almost $100,000 less in taxes than one live-in caregiver.
A recent survey concluded that immigrant investors have the lowest official language ability of any immigrant category, including refugees. Official language ability is a key factor in the successful integration of immigrants. Data also indicate that immigrant investors are less likely than other immigrants to stay in Canada over the medium to long term.
The existing IIP is of limited economic benefit to Canada. There is very little “new” money coming into Canada. Almost all initial investments made through the program come from loans from Canadian banks to provincial governments.
The amount of IIP capital actively invested in economic development initiatives has been disappointing. The requirement for provinces to guarantee repayment of IIP investments after five years limits their ability to invest funds into more high-risk initiatives that tend to reap greater rewards for Canada in terms of true innovation and job creation. Fifteen years after provinces and territories were factored into the equation, less than half of the funds are actively invested.
Similarly, the Federal Entrepreneur Program was designed in the 1970s when Canada’s economic priorities were quite different than they are today. Then, the focus was on protecting jobs in Canada. While that is still important today, a more globalized economy requires a shift towards innovation, productivity and creating better jobs and stronger businesses that can compete on a global scale.
Given this shift, CIC launched the Start-Up Visa in April 2013. It is designed to attract the best and brightest entrepreneurs from around the world, with ideas for new business ventures.