– 3 August 2021
In the last decade New Zealand has attracted in excess of $10 billion under its Investor categories. Yes you read that right, ten thousand million dollars -a fair chunk of change.
Next month the government is intending to shut down these Investor categories. It is understood that NZTE have hijacked INZ to some degree. Approval now sits with a Cabinet committee and the intention is to dish this up as a fait accompli in August 2021. It is proposed that some months thereafter a new category will be announced which requires an individual to remit $25 million to New Zealand, discounted in some circumstances.
This policy will be a massive failure, plain and simple. It simply won’t work. Australia has just dispensed with it’s A$15 million category and is actively targeting 13,500 millionaires in the A$2.5 and A$5 million range. Canada is easier and New Zealand is at the end of the word and of the supply chain. We are perhaps the 6th most desirable destination for those wanting a western lifestyle, so we are kidding ourselves. Australia’s government took a wide and deep public consultancy process. Ours to date has been covert-like and the changes may become the law of the land next month if Cabinet gives it the green light.
So at a time when New Zealand has become more indebted than ever before, and after we’ve lost the America’s Cup and the vast majority of the super-yachts have left, our Wellington based boffins have decided to throw the baby out with the bath water. We would predict that inbound business immigration investment would drop to around $100 million dollars from $1000 million dollars per annum. So this represents a 90% decline but that’s not the end of it as it is understood that for every dollar that gets invested by these migrant investors, it leads to another $2 or $3 invested elsewhere. This means that the total inbound investment is probably closer to $40 billion per annum. Again, if the current changes are slipped through under the cover of darkness we would expect to lose 90% of the business immigration based investments.
It is also understood that collateral damage of these changes will include 100 or so disenfranchised investor families whose expressions of interest will not be honoured and who will not proceed with investing $250 million into New Zealand. On one hand this may seem trifling but it will create reputational damage for our little nation. Aotearoa has the sovereign right to determine who we make permanent residents but from time to time we do screw it up.
It’s a pity that there has not been wider consultation. When Hon. Lianne Dalziel was formerly Minister of Immigration she got off her chuff and actually interviewed business migrants. What she found was that business immigrants acknowledged that Kiwis and their ancestors had paid tax over their lifetimes to create our infrastructure including roading, electricity, waterworks, public transport, police departments, social housing, and so on and so forth. All of them expressed a desire to make financial contributions to something that they could see and touch and take some pride in. So, Sir Bob’s second harbour crossing or a tunnel or fixing our waterworks or seismic strengthening or whatever solutions our aging infrastructure requires could easily be designed into our Investor framework. Or the money could go towards paying nurses and teachers a proper wage rather than the Aussies poaching them. Instead, we have come up with a policy that will encourage bugger all and will probably end up in the rubbish bin over the fullness of time. The exquisite irony is that we have been to this rodeo before and I am partially to blame as we contributed to a previous $20 million category proposed about 20 years ago that yielded a total of 4 families. A complete waste of time, money and energy.
Looking under the bonnet a little, it is also noteworthy that 90% or so of the money coming into New Zealand under these categories has flowed from China. The new policy settings will require a level 5 IELTS which means that a successful candidate would be required to have a reasonable command of the English language, and cope with overall meaning in most situations. In reality, this will wipe out most of the Chinese, Korean and Japanese markets anyway.
We experienced a large spike in interest from the USA during lockdown, and there are some rockstars who have taken up residency here like the god of gaming. He has even spoken about moving some of his labour-force, particularly if our internet infrastructure improves. But the sad truth is that our bureaucrats and more likely our politicians are as slow as a wet week and have failed to exploit this opportunity. Now that the US is Trump-free and NZ is at the bottom of the OECD for vaccinations, there is not any real driver for such entrepreneurs to make God’s own their permanent place of abode. The fact is that we’ve largely missed the bus even though some of the wealthiest business people in the world are still in the queue.
We are now in a strange sort of apocalyptic type world where our travel and international freedoms has been curtailed. Our government has borrowed a substantial amount of debt but New Zealand has managed to sail through these turbulent international times very well so far. The business investor program of the New Zealand government is about to have a full engine rebore rather than the fine tuning it needs. Currently it is understood there is a further 3 billion queued up in the immigration logjam which will mainly further pump the New Zealand stock market. This is more desirable than the old days when vast amounts of immigration investment funds sat in our trading banks fueling our residential property sector.
Aotearoa competes against Australia, Canada, and the USA as one of the most popular immigration destinations. We have freedom of speech. We can fly political kites. We could easily modify our policy settings for the Investor categories to require a component of the investment funds to be actively mobilised into regional areas for example. Alternatively we could make it a pre-condition of residency that a portion of the investment funds go into the construction of a second harbour crossing for Auckland or something smart that alleviates Auckland’s frustrating traffic jams. We are only limited by our inability to utilise this important component of our economy in a smarter and more bespoke manner.
Abandoning the Investor 1 and Investor 2 programme is a dick move. Doing it largely under the cover of darkness, with one government department acting upon another, is daft. They say all roads lead to Rome. In this case, it is understood that Rome is personified in the form of Minister Grant Robertson. We will see whether the Cabinet committee approves these changes. At times, the Government does not seem to listen to its Ministries or the private sector. If the approval to remove these categories goes through next month, our economy will suffer and it will have a further choking impact on commerce in New Zealand.
It is not hard to envisage a day when the rooster comes home to roost and we may well lament not applying a little bit more intellectual horsepower to these immigration and investment flows and better harnessing the opportunities presented to us on a platter.
Marcus is the Managing Director of Queen City Law NZ Limited.
You can see Marcus talk about the NZ Government shutting down the investor immigration policy here
For over 25 years Queen City Law NZ Limited’s managing director, Marcus Beveridge, has been intricately involved in the world of business immigration to New Zealand. Marcus was previously chairman of NZAMI, and is the immediate past Convener of the New Zealand Law Society Immigration Committee.
In addition, Marcus has chaired many NZ immigration conferences and presented widely on business immigration, travelled and presented offshore with NZ government officials and banks, been interviewed numerous times on these topics, published widely and has also acted on hundreds of successful cases (QCL’s business immigration team is one of the largest and most active in NZ). His experience has also included direct involvement in the design of the business immigration framework and settings, liaison with INZ’s policy team, several Ministers of Immigration, business and construction NZ and other such stakeholders.