Friday, July 22, 2022

Point of Order: Govt lures migrants with millions to invest

But its “rebalanced” policy is still weighted in favour of English speakers

The  government’s  immigration  policies  have  come  under heavy  fire  in recent  weeks,  even   though  the  shortages  of  key  workers — nurses  for  example — have  become  acute.

One response to the critics – included among the latest Beehive announcements – is something the government is calling its  “Immigration Rebalance  strategy”.  But one flaw quickly becomes obvious.

More of that later.

For now, let’s note that the Immigration Rebalance strategy is vying for media attention, analysis and debate  along with

* The latest ministerial bragging about benefits continuing to fall;

* A message to the biggest polluters that they will have to do more to help meet climate targets because of changes the government is making to decade-old settings (these settings “have allocated far too many free climate pollution credits to New Zealand’s largest emitters”, Climate Change Minister James Shaw said);

* The launch of the country’s  first nationwide tsunami evacuation map (perhaps to heighten our anxieties as we increasingly observe the impacts of climate change around the world);

* The provision of $179m of government funding to seven centres around the country for groundwork infrastructure such as  pipes and roads that will enable over 8,000 new homes to be built;

* A speech from the PM to the Local Government New Zealand conference (our team is struggling to find nuggets of hard news in the contents).

The Ministers  who made the immigration policy announcement — Stuart  Nash  and Michael  Wood — clearly  think they  have  a  winner  in their  move to attract experienced, high-value investors bringing growth opportunities to domestic businesses.

The main features of the strategy are:

* A new Active Investor Plus visa category is created to attract high-value investors.

* The new visa will replace the existing Investor 1 and Investor 2 visa categories.

* Eligibility criteria includes a minimum $5 million investment and encourages greater economic benefit to New Zealand companies by capping passive investment in listed equities to 50 per cent and excluding bonds and property.

* Visa category will open 19 September 2022.

But whoa.   They  have   failed  to  remove  the  requirement  that applicants must  be English-speaking.

This  rules out would-be  Chinese  or  other  Asian investors  who are  not  multilingual.

It could have been worse, of course.  The requirement could have been that applicants must be fluent with Te Reo, so they can quickly grasp the meaning of Ardern government press statements and work out which government agency deals with which issues (although it might not be immediately evident to the newcomers that Waka Kotahi deals with road transport matters rather than shipping).

ACT  says  New Zealand  needs  “real  change” in  what is  an inflexible  and illogical  immigration system.

National’s  Erica  Stanford  says the  new migrant investor visa conditions risk turning billions of dollars away because Labour’s “convoluted rules” will make it harder to invest in New Zealand.

“Stuart Nash and Michael Wood are risking billions of dollars in future investments that would benefit Kiwis based on a hunch that individuals just come to New Zealand and don’t provide any investments in the wider economy,” she says.

“This is yet another example of Labour not understanding how migrants behave, and as a result, they will turn away crucial investment that New Zealand desperately needs”.

Stanford says the new categories ask new arrivals to New Zealand to immediately invest directly in private companies, a high-risk investment in a market they would not yet understand.

“Productivity Commission research looking at the typical investor lifecycle found that high-risk investments generally follow low-risk investments, while overseas investors find their feet in New Zealand”,  Stanford says.

In  his  role  as  Economic  and Regional Development Minister, Nash obviously is chuffed with the new initiative:

“We have so many fantastic businesses in New Zealand that are making a real name for themselves in the global marketplace. Our Government has a goal to support these businesses to grow into even more successful global brands, and updating our investor visa settings is a key part of our strategy to attract high-value investors,” Stuart Nash said.

“Our Government has a goal to support these businesses to grow into even more successful global brands, and updating our investor visa settings is a key part of our strategy to attract high-value investors.

“This is part of our Immigration Rebalance strategy, which aims to attract high-skilled migrants, and aligns with our goal to build a more productive, competitive and sustainable, economy. The new visa settings will attract active and high-value migrants who will bring their international expertise to help New Zealand businesses to grow, which increases local employment and directly benefits the economy.”

The new Active Investor Plus visa will replace the old investment visa categories.  While these had been successful in attracting a large amount of funds over past decade – more than $12 billion – Nash said they often resulted in passive investment in shares and bonds rather than directly into New Zealand companies.

This meant the opportunity to attract more active investors who could deliver real benefits to the economy over a long period of time was being missed.

“We want to encourage active investment into New Zealand, which generates more high-skilled jobs and economic growth compared to passive investment. This new visa category will also leverage the skills, experience and networks of migrants who will bring their access to global networks and global markets to help Kiwi companies grow faster and smarter”.

Nash  hailed the visa changes, overall, as a win-win for New Zealand and migrant investors.

Investors would secure an opportunity to invest in smart and innovative New Zealand businesses that have the potential to be globally successful, and Kiwi businesses would gain valuable skills, connections, and capital.

This would  make New Zealand more competitive in the international marketplace and take  businesses to the next level.

Immigration Minister Michael Wood said applicants who make acceptable direct investments, among other requirements, will be eligible for the new visa with a $5 million minimum investment and receive the highest rating which is a lower minimum amount than those who choose more indirect investments.

The minimum amount required for indirect investments will be $15 million.

“We’re also improving the flexibility for the investor by allowing them to invest over a three-year period and maintain their investments up to the end of a fourth year. Investors will need to spend at least 117 days, or around a month a year, in New Zealand over the four-year investment period. This is increased from 88 days in the previous category in order to ensure that investors are actively getting hands on with local companies to help them grow.

“Being in New Zealand will provide more opportunities to become involved in the businesses they’ve invested in, further sharing their expertise and connections. Spending time here also increases the likelihood of further active investment. The changes align with similar investor migrant settings in Australia”.

The new Active Investor Plus visa will open on 19 September 2022. Applications under the Investor 1 and Investor 2 visas will no longer be accepted after 27 July 2022.

All applications in the current pipeline will continue to be processed by Immigration New Zealand.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton

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