KEY POINTS:
The problem with stop-go policies is that stopping is much easier than restarting. That, in itself, places a major question-mark over the Government's latest attempt to attract more millionaire migrants. As much as the policy is a step in the right direction, it is blighted by past miscalculation. In many cases, millionaires who might have been attracted to New Zealand have either gone elsewhere or are wary of approaching this country a second time.
That is the legacy of what must, by any standard, be one of the Government's more catastrophic misjudgments. Two years ago, spooked by an outbreak of New Zealand First-inspired anti-immigrant sentiment, it decreed that investor migrants would have to surrender $2 million to the Government for five years for investment in infrastructure projects. The migrants would receive their money back at the end of that period, with interest based on the inflation rate. The move was said to be a response to anecdotal evidence that some "investors" were borrowing their way into this country. This involved borrowing money to place in any old venture, which might have no benefit to New Zealand, and paying it back as soon as they were granted residence.
Whatever the validity of that claim, the reaction was absurd. Few people would be prepared to invest such a large sum for so slender a return. The outcome has been a whitening immigration trend, and a sharp decline in investor migrants from China and South Korea. Before the 2005 rule change, the number of investor migrants totalled more than 1000 a year. In this almost-completed financial year, that figure has slumped to 18. Australia has been the main beneficiary, reaping millions of migrant dollars.
The new policy, announced last week, amounts to an almost complete u-turn. Virtually all the obstacles formerly placed in front of investor migrants have been removed, and the expected 300 millionaires and their families get first, fast-tracked dibs on places. Under the policy, the investors cannot leave the "active" portion of their funds in bank accounts. They must buy into or set up local businesses; investing this money in residential property is not allowed. Remaining funds must be in a "semi-active" investment, which could mean placing it in a managed fund, or in a local company without becoming a significant shareholder.
This should go much of the way to ensuring the investment genuinely benefits New Zealand, and is not merely a means of acquiring residency. At the very least, it has the ring of realism. As does the decision that top-ranking "global investors" - those who bring in $20 million for four years and actively invest $5 million of that - do not have to pass an English language test or age requirement, and have only to spend a fifth of every year here. An unreasonably tough language test has been a bugbear for many years. The simple fact is that the major market for millionaire investors is North Asia, where the vast majority of people do not speak English. This fact has not fazed Australia, and should not disconcert this country.
Nor should the Government have ever been swayed by the notion that New Zealanders resent immigration. By and large, they do not. They understand this country needs its share of migrants, and that this has been a significant factor in the economic growth of the past decade. Investor migrants should be an integral part of this, given the potential to boost investment in local business. That tap has, however, been turned off. The Government, having seen the error of its ways, must now ensure the welcome mat is set down far and wide - and convince possible migrants that this is not just another piece of short-term tinkering.
