New Zealand citizenship for Sale
New Zealand citizenship for Sale
Address by Pansy Wong to the annual conference for the New Zealand Association for Migration and Investment, 28 July, 2006.
Since changes were made to the Investor's Category last year there have been three successful applicants. We are certainly in the money!
Immigration New Zealand's website says that funds brought in by migrants under this category will help with our economic growth and development.
$6 million is a drop in the ocean to what potential investors could really do for our country. $6 million won't sort out Auckland's roads.
For the record, the criteria for the Investor Category is as follows:
- The minimum amount for investment was increased last year from $1 million to $2 million. These funds are transferred into a Government account and go towards infrastructure projects.
- These funds are returned after five years with returns only at the rate of inflation.
- Applicants must be 54 years old or younger, have at least five years' business experience and be willing to make New Zealand home.
- There is a Level 5 English requirement and the usual criteria for good health and good character.
With these warm and welcoming entry requirements it's hard to see why investors aren't lining up!
A Cabinet paper that dealt with the changes to the Investor Category said that "perhaps 150 to 300 applications per annum" would be received, resulting in $200 million to $400 million worth in investment funds.
Looking back at this category's stunning lack of success it's easy to see that those officials, and the relevant Ministers, were simply deluded.
Someone should have thought to consult with your organisation. After the initial announcement was made your president, Marcus Beveridge, said about the changes:
"This will deter most potential investor migrants from seeking to relocate here, particularly as we continue to impose unrealistically high English language requirements on these would-be investors. Such a self-defeating approach could have been avoided if government had listened to experienced immigration professionals with a knowledge of the market".
Officials didn't need to gaze into a crystal ball either. News headlines warned that the rule changes would drive investors away and that the price was just too high.
I am surprised that this unrealistic and unworkable policy took more than two years to develop. Between November 2002 and June 2005, government departments, officials and the Ministers of Finance and Immigration worked on this project which was signed off by Cabinet.
I have followed this paper trail and found both pleasant and unpleasant surprises. Today, I would like to share these with you, and perhaps this will give us a glimpse as to what future may hold. One hopes the same decision will not be repeated.
New Zealand has had a policy for investor migrants since 1978, and during 2001/02 and 2002/03 there were more than 1,300 successful applicants per annum, who mostly came from Asia. The criteria to score enough points included age, business skills and funds available, with a minimum requirement of $1 million.
Based on these figures, more than $1.3 billion would have been pumped annually into our economy, excluding the other funds that families would have brought for buying their home, setting it up etc.
Well, there are light years between $1.3 billion and $6 million - and this goes for the detail of the policy as well.
After the changes were made to the English language requirements in October 2002 the number of successful applicants took a nosedive.
The review of the Investor Category began in November 2002 and officials embarked on an intellectual debate as to whether investors were wanted for their business skills or purely for their money.
Official papers reveal that they believed that potential investors had to benefit New Zealand with their business skills and personal attributes (which is, of course, code for wanting a younger age group).
So why hasn't this desire for business skills been carried through to final policy, and why aren't investors allowed to decide on how and where to invest?
Officials also expressed concerns at the low return from the Investor Category to the country. Somehow they forgot the then existing policy required investors to put their money into a financial institutions, largely banks, for two years in the first place.
They were divided between allowing the investors to make their own decisions or requiring them to put these funds into developing public infrastructure. It seems that Treasury and New Zealand Trade and Enterprise lost the debate on that one.
Further problems were identified during the development process, including that Investor Category immigrants weren't staying for long periods of time in New Zealand.
Well, this problem isn't confined to only one group of people. More than 600 people are leaving our shores for Australia each week. This isn't a recent phenomenon; it has been happening over the long term and needs to be addressed.
So, policy boffins wanted to attract younger people, lock their $2 million in for five years and expect them to hang around. What are they supposed to do during this time - improve their golf handicap?
Against this backdrop, Cabinet agreed to a new policy for the Investor Category in April 2003 which required $2.5 million to be invested for five years. This was despite the fact that officials were persistent in wanting to get a clear steer on whether this policy aims to attract entrepreneurial people or foreign investment.
Ladies and gentleman, it's clear the Cabinet wanted to have its cake and eat it too.
By June 2004, Cabinet demanded to know why nothing had been done about it. The Ministers of Finance and Immigration said the issues were complicated and there was a need to co-operate with other work and processes. Oh, and also that the investment level of $2.5 million wasn't competitive against other countries.
There was one voice of reason throughout this and that was the one of Treasury heavyweights who were keen to encourage investors to leverage off their global networks. They were against creating a government fund.
They were joined by New Zealand Trade and Enterprise who believed that investors should decide how to best earn a return from their funds.
The Ministry of Economic Development also had this to say:
"MED does not support the establishment of a government investment option. It carries a financial risk for the government and its associated administration costs will erode any financial return."
Well, we all know that Dr Cullen regularly ignores advice from Treasury so ignoring advice from other departments is no surprise.
Now, here's where it gets interesting.
In amongst all this an email has revealed what the Minister of Finance and the then Minister of Immigration, Lianne Dalziel, were really thinking about all of this in 2003.
An Immigration official sent an email to Treasury, MFAT, Internal Affairs, Education, Trade New Zealand, and Health and Justice officials saying that these Ministers had expressed an interest in not bothering with investment criteria and simply selling residence at a high price.
Now the question on the tip of your tongue must be, at what price? How much do they think New Zealand citizenship is worth?
Somewhere between $5 million and $10 million.
How extraordinary that a self-proclaimed workers' party believes that the more money you have, the better migrant you will be.
And if that's too expensive, don't worry. If you can lay tiles or paint houses you might still qualify!
This is the same party that has accused National of comparing the growing income gap between Australia and New Zealand as unpatriotic with a Prime Minister who talks about national identity, and yet her senior Ministers can put a price on that identity.
It is no wonder that the Investor Category has been a total failure when there is a lack of intellectual rigour and street-smart understanding of why investors choose to come to New Zealand, and when the Ministers of Finance and Immigration were under the spell of one of the seven deadly sins - namely, greed.
Who knows when there will be a resurgence of their appetite of cash for citizenship!