During last month, Ottawa stirred up a hornet’s nest in the middle of Canadian immigration. The swarm of activity which ensued has left nearly everyone involved nursing one kind of sting or another.
The Immigrant Investor Program (IIP) was inducted in 1986 with the goal of luring a wealthy business class from abroad to settle and invest in Canada. The program allowed immigrants with a net worth of $1.6 million permanent residency in exchange for providing the government an interest-free, five-year loan of $800,000. The big idea was to provide funding for government projects at next to no risk and encourage spending and development within Canada. Sounds pretty good? Well, it depends who you ask.
Critics of the IIP have long since viewed it as a mechanism by which the super-rich are able to buy their way into the country – allowing them to effectively bypass those pursuing more conventional routes.
The Conservative Government has argued that the program no longer makes sense.
“This is not a program that was achieving its objectives. Canadian citizenship and permanent residency is not for sale,” Immigration Minister Chris Alexander said in a statement about the changes.
The Tories claim that the IIP is outdated and does little to generate tax revenue since many of those admitted under it still do most of their business overseas and not in Canada.
The government placed a moratorium on the program in 2012 and, in keeping with its recent slew of immigrations reforms, eventually cancelled the IIP in last month’s budget. The move seems straightforward enough, but here is where the complications begin.
Under the IIP a large portion of investor class migrants arrived in Canada from mainland China and Hong Kong and settled in Western Canada. In a response to the budget pronouncement, spokespeople from the Chinese community held a press conference in Vancouver to raise concerns about the demise of the long-utilized program.
According to them, Ottawa’s policy shift treads on the legacy of those who came to Canada by way of the IIP and the decision will likely discourage further investment in Canada by the Chinese business community. Other countries, such as Australia, may now appear more enticing to those in China’s top income bracket.
Harper’s Tories are not widely touted as a party prone to standing in the way of wealthy individuals. Some at the Vancouver event contend that the budgetary announcement had the look of political maneuver more than anything else.
“To me, it’s about pleasing the Conservative base,” Gabriel Yiu, a local activist, told the Globe and Mail. Others present added that the move was likely an attempt to sow division and discord with the suggestion that certain portions of the community were not shouldering their share of the tax burden. Business owners were quick to point out that if some individuals were getting off easy with their taxes the government should crack down on them rather than end the entire IIP.
This is not the only conflict in the mix, however. As with any good Canadian debate, at some stage provincial tensions come into the fray. Enter Quebec, stage left.
Pursuant to the Canada-Quebec Accord, Quebec will be able to keep the IIP in operation for its own purposes while the rest of the country waves goodbye.
“What I am concerned about here is more asymmetry in the federation, where Quebec is going to get a different deal than the rest of us,” warned Saskatchewan Premier Brad Wall.
Of particular concern to the Premier, the IIP provided investment for Saskatchewan’s housing sector, among others – money which will now be lost to all but Quebec.
But the picture is not as simple as that. The reality is that many who move to Quebec with the IIP do not remain there. What investment wealthy migrants do provide their new land of residency is by no means nailed down in one province or another. Given the tendency for the investor class to move West, Quebec is not assured those prolonged cash injections simply through maintaining the IIP.
The Federal Government has raised concern that as many as 90% of those migrants settling in Quebec under the IIP at some point find their way to other provinces. Despite this, Quebec still receives transfer payments from the federal government for every migrant arriving under the IIP, whether they are living in the province or not.
Quebec may not benefit from the continued economic activity of the investor class entering through the program, but the transfers provide another incentive to run the program. It’s a wonder Premier Wall did not include accusations of racketeering in his Quebec bewailing.
The irony now is that while the province continues to receive payments, the social climate for immigrants in Quebec is becoming increasingly uncomfortable under the efforts of Pauline Marois’s Parti Québécois and recent public relations stunts such as the supposed “charter of values.”
“As a matter of fairness, we cannot send federal transfer payments to one province for someone living in another,” said Immigration Minister Alexander. “We will work with our provincial partners to find a fair and reasonable solution.”
The government has revealed a new program to replace the IPP called the Investor Venture Capital Fund, but details on the project are still forthcoming.