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Collapse in business investor numbers

3 October 2005

Collapse in business investor numbers confirms fears

Business NZ's predication that the Government's changes to the Investor Category immigration rules would drive investors away has been confirmed in figures released by the Department of Labour.

Business NZ had warned that doubling the amount of investment required and forcing the money to be invested with the Government would slash the number of potential investors.

"When we made our concerns known in June, New Zealand was attracting around thirty business investor migrants a month. Since the changes came into force in July, New Zealand has accepted only two," said Chief Executive Phil O'Reilly.

"The sad fact is that the business investor category is attracting such little interest it is virtually meaningless and is contributing nothing to infrastructure. What makes this worse is that official papers reveal the Government was predicting 200-400 migrants a year to use the business investor category. As we warned, the changes have deterred investors to such a degree that these expectations will not even come close to being met," Mr O'Reilly said.

"Official papers obtained by Business NZ under the Official Information Act also reveal a high level of opposition to the changes from officials. Several agencies recognised the implication of the changes and attempted to change the policy," said Mr O'Reilly.

The Treasury had strong reservations about requiring business investors to invest solely with the Government. They warned Ministers that "forcing migrants to place their funds in a government option does not give them an opportunity to leverage off their personal business attributes and make their own investment decisions for their capital, which seems counterintuitive to making business attributes a requirement of the system."

Several agencies were worried about the funds being used for infrastructure. The Ministry of Social Development "expressed concern at the rationale for directing migrant funds to infrastructure" while Treasury concluded that the proposed scheme "may not necessarily be the best source of funding."

ENDS

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