New migrant rules spark anger amongst potential investors

Strict controls over investor immigrants and their money are expected to lead to a further decline in the number of investor applicants.

Business lobbyists say it will help drive foreign investors to Australia.

And New Zealand First says the Government has plagiarised its immigration policy.

But the Government justifies the changes announced yesterday by saying the applicants will be genuine.

The changes follow anecdotal evidence that some "investors" are borrowing their way into New Zealand - borrowing money to place in any old venture that might have no benefit to this country and paying it back as soon as they are granted residence.

The minimum amount to be invested has been doubled from $1 million to $2 million and the funds must be handed over to the Government for five years to invest in infrastructure projects. Investors will receive their money back at the end of that period with interest based on the inflation rate.

They can have access to their funds after two years but only to transfer them to another Government-approved investment.

A tough age restriction has also been imposed, from an outer limit of 84 years previously to 54 years.

Immigration Minister Paul Swain said that under the old system it had been difficult to verify that the investment was genuine. Applicants would put their money into any investment they chose which often did not benefit New Zealand.

"Rather than passively accepting applicants, investors will now be selected on the basis of what they can contribute to New Zealand."

Previously applicants who fell short of the points required through business experience and age criteria could compensate by bringing in more money.

The investor category will now be run in a similar way to the skilled migrant category, in which applicants submit an expression of interest and the best prospects are then invited by immigration officials to continue.

The changes have been criticised by Business New Zealand chief executive Phil O'Reilly, who said the Government had immediately slashed the number of potential investors.

The decision that the investment must go directly to the Government for infrastructure spending was potentially worse. "Investment in the private sector has been banned."

Mr O'Reilly questioned the incentive to invest in New Zealand.

"People who have $2 million to invest have not got it by investing in schemes which return only the rate of inflation."

It was a heavy-handed response that would drive potential investors to Australia.

New Zealand First leader Winston Peters said the Government was introducing his party's immigration policy in a piecemeal fashion. "It is ironic that on the one hand the Government continuously labels New Zealand First xenophobic and racist and yet on the other is plagiarising our immigration policy."