'Migrant bonds' to fund works

By PAUL PANCKHURST

The Government will hit up business migrants for up to $500 million in a scheme to help fund infrastructure spending.

The amount is a drop in the multi-billion-dollar bucket of the country's requirements.

Critics see plans for "migrant bonds" - mandatory investments with the Government by business migrants - as likely to discourage investors the country needs.

Because repayments would come from future migrants' bonds, critics also say the plan is like a pyramid scheme.

However, Australia and Canada already operate such schemes and Government officials indicate New Zealand's would be constructed to be competitive with Australia.

The Budget is the first time numbers have been put on the amounts the Government believes could be raised.

It says the scheme is likely to be implemented in 2004-05 and to raise $200 million to $500 million.

Migrants in the business investor category are required to invest a minimum of $1 million in New Zealand.

One option would be to simply flip that amount over as the bond scheme requirement.

Migration under the category has been running about 1000 a year, but is slowing.

A back-of-the-envelope calculation suggests the Government expects 200 to 500 migrants to each shell out $1 million.

Last year, Iain Macleod, vice-chairman of the New Zealand Immigration Institute, a policy think-tank, criticised low-interest, long-term bonds.

"You would be very lucky to get more than 100 business migrants a year with those rules - and that would barely pay for a few sets of traffic lights."

Auckland Chamber of Commerce chief executive Michael Barnett and Rodney Mayor John Law were advocates, citing the success of the scheme in Canada.

Law said: "Immigrants I've spoken to feel good about it. They say they will feel they're contributing to the development of New Zealand, rather than just adding further strain on existing infrastructure."

The Budget did not spell out where the money would be invested, but officials indicated it remained an infrastructure proposal.

The document said: "The funds will be repayable to migrants after a specified time period, and such repayment is intended to be financed through future migrant investment."