What Should The New Investor Program Look Like?2012-03-16
A commentary in on of Canada’s national newspapers – The National Post – argues the case that Canada’s new investor program should cost investors a lot more than the previous one.
As readers of this blog may know, the Investor Program was suspended last year due to a couple of reasons. First and foremost, the delay in processing files was unbelievable. I have clients who are approaching three years waiting for a decision on their file – completely unacceptable.
As well, the government and Citizenship and Immigration Canada wanted to revise and re-work the Investor Program to ensure it met the needs of Canadians and the immigration system.
The article in the National Post (quoted above) asserts that the previous $800,000 investment requirement was too low, and that we should raise the limit to $5 million or even $10 million.
Because Canada is so in demand that we can charge a premium rate.
I don’t agree with this assertion.
The writer fails to mention that $800,000 was not enough to qualify under the Investor category. You needed net assets of $1.6 million, and enough cash to invest $800,000 (or finance that amount locally).
In addition, you had to prove you gained those funds legitimately, and you had to prove you had business or senior management experience as well – so inheriting cash or windfall did not count.
You also had to wait 3 or more years to be accepted (unless you went through a provincial nominee program such as Quebec).
So qualifying wasn’t quite as easy as the writer made it out to be.
More importantly however, is the demographic issue. All industrialized, “first world” countries are facing an aging population. All of them will inevitably have to compete for talented, skilled and wealthy immigrants to boost their aging (and non-tax paying) populations.
Charging a premium to immigrate to Canada now will likely start sending those immigrants to other countries where the price of admission is not so high. High net worth immigrants aren’t as concerned with health care and social services (big advantages in Canada) as they can purchase these services on the private market in other countries.
When the tide of investor immigration shifts to another country, it can take a long time to turn it back to Canada.
In my view, the investor program amounts should remain where they are. However, the method of investment and use of the funds that immigrants bring to Canada should change. These funds should be put to work in actual businesses. In fact, “Investor Program” is a bit of a misnomer, as these funds sit in government bank accounts, and are not generally invested in the private sector at all.
If we re-vamp the investor program to ensure that funds are invested where they can create growth and jobs, we need not raise the bar to the point where wealthy immigrants find another place to land.