Скачать презентацию Business Migration Review and the Property Sector Presented Скачать презентацию Business Migration Review and the Property Sector Presented

aec9c163d331e99be64245dc0b8d5d24.ppt

  • Количество слайдов: 82

Business Migration Review and the Property Sector Presented by Marcus N. Beveridge Principal, Queen Business Migration Review and the Property Sector Presented by Marcus N. Beveridge Principal, Queen City Law – www. queencitylaw. co. nz Chairman New Zealand Association of Migration and Investment (“NZAMI” www. nzami. co. nz) LEXISNEXIS IMMIGRATION LAW CONFERENCE 22 JUNE 2006

This session examines: • • • Trends in Business Migration Have we got it This session examines: • • • Trends in Business Migration Have we got it right? Changes to the Investor Category (IC) Examination and critique of the IC in practice Critique of requirements Review of other business categories Intersection between business migration and property Recent Tax Changes Conclusion/Summary/Recommendations

Trends in Business Migration • At the end of this presentation one can draw Trends in Business Migration • At the end of this presentation one can draw one’s own conclusion - here is some data which may assist. • LTBV Start up funds indicated were: 2001 NZ$140, 707, 237 2002 NZ$316, 736, 589

Trends in Business Migration • Number of LTBV Applications 2001 856 2002 3218 2003 Trends in Business Migration • Number of LTBV Applications 2001 856 2002 3218 2003 1817 2004 581 2006 116 (applications rcvd 76 approved Jan 06 – Jun 06)

Investor Category • Funds indicated 2001 2002 • $1, 132, 000 $1, 203, 400, Investor Category • Funds indicated 2001 2002 • $1, 132, 000 $1, 203, 400, 000 Number of Investor Applications 2001 1008 2002 1087 2006 39 (YTD)

Investor Category • Total Business Applications 2001 2551 2002 3359 Investor Category • Total Business Applications 2001 2551 2002 3359

Investor Category • 2006 YTD Expressions of Interest and Investor Category 39 EOI’s were Investor Category • 2006 YTD Expressions of Interest and Investor Category 39 EOI’s were received of which 31 invitations to apply ITA were issued. 8 EOI’s have been declined, 17 Investor Applications have been received. 11 approved in principle – 6 in progress • 2 Applications have been approved sinception of new Investor Category in 2005.

Investor Category • Total investment funds indicated for LTBV & Investor Category 2001 $1, Investor Category • Total investment funds indicated for LTBV & Investor Category 2001 $1, 272, 707, 237 2002 $1, 520, 136, 589

Have we got it right? • Total business applications 2001 2551 2002 3359 2006 Have we got it right? • Total business applications 2001 2551 2002 3359 2006 (YTD) 1208 (see overleaf)

Other Recent BMB Activities/Issues • New Branch Manager Jock Gilray is now on board. Other Recent BMB Activities/Issues • New Branch Manager Jock Gilray is now on board. • Managed queue will be cleared as of 1 July 2006. • From 1 July, all applications to be allocated to a processing officer immediately once accepted. • Applicants can expect applications to be decided within a 3 month timeframe.

Other Recent BMB Activities/Issues Outcomes: • NZIS believes it is seeing higher quality applicants. Other Recent BMB Activities/Issues Outcomes: • NZIS believes it is seeing higher quality applicants. • NZIS would expect improved settlement outcomes for New Zealand.

Entrepreneur Category Key Stats • For the 05/06 Financial Year to 09 June 2006: Entrepreneur Category Key Stats • For the 05/06 Financial Year to 09 June 2006: 1. A total of 815 of 907 decided Entrepreneur Category applications have been approved. 2. BMB currently has a total of 318 Entrepreneur applications on hand, 68 of these are currently held in our managed queue. • 39% of decided Entrepreneur applications received from South Korean nationals, 30% China, 9% UK, 4% Fiji, 1% India, 1% Hong Kong, 16% Other.

Interim LTBV Key Stats • • • For the period January 2006 to 9 Interim LTBV Key Stats • • • For the period January 2006 to 9 June 2006, 76 of 116 decided Interim LTBV applications have been approved. For the 05/06 financial year thus far: 41% of decided Interim LTBV applications received from UK nationals, 9% UK, 9% China, 7% South Korea, 6% India, 28% Other. BMB currently has 43 Interim LTBV applications on hand. None of these are held in the managed queue.

Work to Residence • A total of 146 Residence Applications have been received and Work to Residence • A total of 146 Residence Applications have been received and approved under this category for the financial year to 31 May 2006. This breaks down as follows: 1. 2. 3. 4. Talent – Accredited Employer: Talent – Arts and Culture: Talent – Sport: Long Term Skill Shortage List Occupation: 129 8 6 3

Work to Residence • For the 05/06 Financial Year thus far: 33% decided applications Work to Residence • For the 05/06 Financial Year thus far: 33% decided applications received from UK nationals, 16% South Africa, 11% South Korea, 5% India, 5% USA, 4% China, 3% Germany, 3% Fiji, 20% Other. • BMB currently has 21 Residence Category Work to Residence Applications on hand.

Dare to Compare How do our figures compare to Australian figures. All business sub-class Dare to Compare How do our figures compare to Australian figures. All business sub-class visas for Australia are as follows: Applications Rcvd • 2001 -2002 2152 2004/2005 2257 2005/2006 (YTD applications received) 2174 • • New Zealand 2001 2002 2006 (YTD decisions made) 2511 3359 1208 Adopting crude mathematics and adding all Investor, Entrepreneur, Interim LTBV and Work to Residence Applications this would give a sum total of 1, 208 applications submitted to NZIS/BMB in 2005 – 2006 YTD.

Trends in Business Migration Have we got it right? • • In one word Trends in Business Migration Have we got it right? • • In one word the answer is NO In summary we have: 1. Fallen way back against Australia; 2. Last calendar year numbers of applications under the Investor and LTBV Categories are woefully low; 3. NZ has probably captured less than 2% of the investment funds it gained in say 2001/2002. 4. The new Investor Category is a waste of time and resources. It has been poorly designed. It is commercially naïve. It is unattractive. It will not and is not working.

Have we got right? • NZ Business Immigration Policy • Objective – to contribute Have we got right? • NZ Business Immigration Policy • Objective – to contribute to New Zealand’s economic growth through: a) b) c) Increasing New Zealand’s level of human capital; Encourage enterprise and innovation; and Fostering external links.

Changes to the Investor Category (IC) • • • Two step process similar to Changes to the Investor Category (IC) • • • Two step process similar to Skilled Migrant Category • Successful applicants invited to lodge Residence application under Investor Category. After verification, approval in principle is issued and investments funds transferred to New Zealand • To be eligible, applicant’s need to invest NZ$2 million in Government approved infrastructure projects for 5 years. Security and return of the funds is guaranteed by the Government and administered by the Treasury. • Other conditions are required to be met before conditional 5 year Residence is granted including standard criteria: health, age, character, English language, evidence of source of funds and other criteria Complete an “Expression of Interest” NZIS make selection based upon information disclosed in the “EOI”

Examination and critique of the IC in practice • NZIS Business Migration Branch (“BMB”) Examination and critique of the IC in practice • NZIS Business Migration Branch (“BMB”) have just indicated that “applicants can expect applications to be decided within a 3 month timeframe”. • IC does not guarantee indefinite RRV status until $18 A requisition uplifted 5 years later. • Introduction of English language requirement has effectively stopped the flow of predominantly North Asian business migrants, but has not resulted in any significant increase in business migrants from the U. S. A, U. K, Canada or other English speaking countries • An objective of the new IC is to increase economic growth and also development through the injection of funds into our economy. This vision is sound, however the reality is that solid numbers of experienced entrepreneurs with overseas business networks along with their investment dollars are just not materialising.

Critique of IC • The IC is more likely to attract older or retired Critique of IC • The IC is more likely to attract older or retired migrants who can afford to have NZ$2 million tied up for 5 years, and it follows that these migrants are less likely to subsequently become actively involved in our economy because of their stage in life. • To qualify, the maximum age at the time of application (EOI), is less than 55 years, hence persons aged 54 will be 59 years old before their unconditional Residence status in NZ can ultimately be assessed. Reality dictates that not many applicants in this age group would risk leaving their future in abeyance for 5 years. • It is interesting that NRWT at zero percent is expressly permissible for non NZ tax residents and that policy provides “The investment funds are a registered security for the purposes of the Approved Issuer Levy regime”(BI 13). This may well cause headaches for applicants and their advisors in light of the requirement pursuant to policy BI 12. 10 that an applicant either spends significant time in NZ (BI 12. 10. 1) or has a base established in NZ (BI 12. 10. 2) in order to ultimately obtain full and unrestricted PR status 5 years thereafter.

Critique of IC • It is probably fair to assume that many potential applicants Critique of IC • It is probably fair to assume that many potential applicants are aware of how previous NZ business immigration policy decisions were made retrospectively and without notice or prior consultation or without proper consideration of the financial impact upon applicants. Understandably, there is therefore a lot of nervousness over unilateral changes which can be made by the Government at any time. The North Asian or non-English speaking applicants affected by the overnight English languages changes of 20 November 2002 may still view NZ in a dim light. • It is planned that the Treasury Department will become caretaker of Investor funds and administer the funds for capacity building, sustainable growth, innovation and infrastructure projects through the budget process.

Critique of IC • The control of IC funds by the Government and Government Critique of IC • The control of IC funds by the Government and Government agencies raises the question of whether or not this control or channelling of funding will undermine free-market enterprise upon which many financial institutions and lenders rely upon for their businesses. Could it be that SOE’s like Air New Zealand, Telecom and others have a commercial advantage by having access to better rates of interest than say private sector organisations? • Since the Government is going to invest in “capacity building”, “sustainable growth”, “innovation and infrastructure projects” do we really know what these are? • From a taxation point of view, the top end tax rate of 39 percent is unattractive and may act as a significant deterrent notwithstanding that this will only be applicable for immigrants who actually elect to live in NZ. As noted above non (tax) residents will NOT pay any income tax on the CPI adjusted return they receive from the Government after the expiry of the 5 year term.

Critique of requirements • Another big ask is the requirement that assets must be Critique of requirements • Another big ask is the requirement that assets must be liquidated or converted into cash for the NZ$2 million investment. This has serious consequences given that once assets are liquidated it is often difficult to ultimately turn the cash into income producing assets again without paying a premium for inflation. Many investors are likely to prefer borrowing the investment funds using their leveraged assets as collateral and in most cases, they would likely be able to borrow the money cheaper overseas than the interest rate the Government is able to offer. • Another thorn in the IC is the paper trail process of assessing the source of funding and also the bank transfer, after the approval in principle, hence an applicant may liquidate his or her assets and then fail the next part of the assessment process. One cannot disagree that risk management is necessary, but the process should surely by now move from being “cart before the horse”.

Critique of requirements • Applicants are required to make New Zealand their home by Critique of requirements • Applicants are required to make New Zealand their home by the end of the 5 year journey. This is not an unreasonable expectation however, once again, applicants are required to commit to New Zealand by building up a life in this country and getting well settled before New Zealand has made any meaningful commitment to them. • It is reasonable to expect that business entrepreneurs will be able to achieve a higher return from a business venture than say the modest return promised by the Government. Applicants may elect to withdraw 50% of their investment (maximum therefore NZ$1 M) after two years so why is it that applicant’s may take the risk of withdrawing their investment after two years , lodge another application along with the required business plan and pay more fees.

Critique of requirements If the business plan is rejected or declined, does the applicant Critique of requirements If the business plan is rejected or declined, does the applicant then lose out entirely? No. BI 11. 25 b provides “If the requirements of this policy have not been met the business proposal will be declined and the Government will continue to hold the investment funds” – some may see an inherent conflict here. At this stage, given the depressing number of applications a lot of this will be of academic interest only. • The IC road is complex, the Minister of Immigration’s proposal that some of the appeal processes should be abolished raises the question as to what recourse will be open to an applicant who has been here for 5 years but then is assessed to have failed some or the final stage of the IC process. It would not be ideal if NZIS was judge and jury. The IC Category must provide access to meaningful appeal rights.

Review of other business categories 1. 2. 3. 4. 5. Entrepreneur figures featured earlier Review of other business categories 1. 2. 3. 4. 5. Entrepreneur figures featured earlier – great and welcome news. Work to Residence numbers low but growing – would hope that this will continue. Lack of LTBV numbers alarming and policy should therefore be relaxed. Paucity of IC applications means policy must be redesigned. To avoid redundancy I would also refer attendees to 2 papers presented and provided at last year’s conference: i. Policy and Practice Update given by myself and Michael Carley (Former Branch Manager BMB); and ii. Case Law Review Business Residence Categories (David Ryken). These 2 papers are still highly relevant to all practitioners dealing with Business Migration.

Review of other business categories 6. Other issues: a) b) c) Interim Permits under Review of other business categories 6. Other issues: a) b) c) Interim Permits under LTBV policy – NZAMI members are not at all happy with these arrangements and are in correspondence with the Ombudsman’s office. Residence status of (pre-existing) Investor cases where applicants borrowed their investment funds. Although precise numbers are scarce, it is thought a couple of hundred cases may still be in the Minister’s hands. In some cases interim RRV’s have now issued for 4 or 5 years and s. 18 A requisitions have still not been uplifted. Several thousand former Investor Category applications from PRC have now been very much declined and are now off the radar screen.

Review of other business categories d) e) f) BMB current process is that the Review of other business categories d) e) f) BMB current process is that the PA provides evidence of English that he or she considers to demonstrate that he/she meets minimum English language standards, then their Entrepreneur Category application will be accepted for processing as long as all other lodgement requirements have been met. This is a welcome change as a few months ago BMB had been rejecting such applications failed lodgement one consequence of which meant there was no ability to appeal to RRB. Definition adopted by BMB of “relevant business experience” (please refer to attachment 21) still problematic and should be modified. Same applies if LTBV applicant wants to try new business in NZ – the test of “transportability of business skills” should be user friendly given that the subsequent PR application will, in any event, depend on how well the business has performed and the benefit to NZ (see last year’s paper).

Intersection between business migration and property • Without question, business migration has been a Intersection between business migration and property • Without question, business migration has been a significant driver of economic development of our economy in recent years. However, it is safe to say that this development has come to an end for the foreseeable future. Business immigration investment can only take place when there is confidence and stability in our business migration policy. Unfortunately for New Zealand, the Government has perhaps ignored the red lights as we have approached this intersection and the resulting drop in our economic confidence is now a reality. Nevertheless, as we all know things change and sensible policy adjustments would result in more business immigration traffic to NZ.

Intersection between business migration and property Let’s quickly look back at 2001 - • Intersection between business migration and property Let’s quickly look back at 2001 - • • In the BNZ Weekly overview of June 2001 consumer confidence was steady with inflation expectations easing to 2. 84% from 2. 99%. The construction sector employment intentions lifted from 4. 1% to 14%. The volume of residential building work was down 16. 8% but in contrast non-residential building activity was up by 0. 6%. In essence the building industry had not moved much since 1994. It was forecast that over 2001, there would be strength in construction of farm buildings, factories, hotels & motels, retail especially malls and retail upgrades.

Intersection between business migration and property • • • Let’s now look at June Intersection between business migration and property • • • Let’s now look at June 2002 and June 2003 Retailing was strong, housing strong, business investment strong – good prospects. There was firm domestic growth in housing and business investment. Non-residential building work was up by 11% - however, consents data showed that this trend would reverse to strong housing and weak non-residential in the June quarter. Retail sales were 11% stronger than in the previous year - however, consumer confidence went up to 35% feeling that things were heading in the right direction, up from 32%. House building was equal to 5% of NZ GDP, very strong housing construction, there was good turnover from surging migration resulting in accommodation building, growing student numbers, investor interest, jobs and real wages growth.

Intersection between business migration and property And now a glance at June 2004 • Intersection between business migration and property And now a glance at June 2004 • • • An NBNZ Business Outlook survey found that in May, a net 22% of businesses felt pessimistic about the economy over the next 12 months. In April, it was 36% and 42% in March. The annual total of 31, 677 units was 35% above the average for the past 10 years and the highest annual total since the year to April 1976. The value of consents issued for construction of nonresidential buildings was NZ$239 million in April. Over the preceding 3 months to April consent values were up 19%, led by the construction of offices +105, shops etc +75, and hotels & motels 63% increase. Factory consent values were up by a healthy 34% and farm buildings 2%. In the year to April total consents were up 12% at NZ$3 billion.

Intersection between business migration and property • • Finally June 2006 The economy has Intersection between business migration and property • • Finally June 2006 The economy has clearly ended its recent period of unusually strong growth and is now tracking along at below average pace. The housing market is cooling and it is freezing cold!! Consumer confidence is deteriorating. The One News Colmar Brunton poll revealed that during May, consumer confidence about the economy over the next 12 months dropped to a net 38% pessimistic from net 29% pessimistic in the last survey taken in March. There has been a downward trend in the number of dwelling consents. In April, the total number of dwelling consents issued was 25, 330 and this was down from 29, 329 from a year ago. It is expected that there will be some property developer casualties.

Intersection between business migration and property • • • During April, the value of Intersection between business migration and property • • • During April, the value of non-residential building consents issued was NZ$209 M - this was an 8. 3% decrease from a year earlier. The value of factory consents was down by almost 28% from the year before whilst consents values for office buildings were down by 9% while shops and restaurants were down by 16%. The monthly Business Outlook survey from NBNZ shows a net 31% of businesses in May expected the economy to get worse over the coming 12 months. The correlation between the significant drop in business migration and the drop in property development is compelling and although there a number of other economic factors which contribute to the downturn including the high New Zealand dollar, interest rates and suchlike, it appears that there is a direct and tangible nexus between business immigration and NZ’s property sector.

Intersection between business migration and property • What is also not always understood by Intersection between business migration and property • What is also not always understood by our economists is that in excess of 2000 pre-existing Investor cases approved between 2001 and 2003 would have resulted in an estimated NZ$4 B of investment funds being placed on term deposits for 2 years with our primary funding trading banks. The business of banks is to make money from money (which banks have considerable expertise in) hence these trading banks have been awash with capital which they have aggressively put back into circulation further fuelling the major residential property boom NZ has experienced over the last few years – there is no question therefore that business immigration has to date had a significant impact on our property sector. In the next part of this presentation you will also see that major housing cycles are driven most by net migration.

“Construction & property sector outlook” Rodney Dickens – ASB Bank 23 March 2006 “Construction & property sector outlook” Rodney Dickens – ASB Bank 23 March 2006

Key points è Underlying demand for housing will be below average for the next Key points è Underlying demand for housing will be below average for the next couple of years driven by below average net migration (in turn driven by a strong international labour market). è Low interest rates, developers, investors and spec builders have created mega-booms in urban, coastal and lifestyle subdivisions, meaning we face major oversupply in all three areas and material negative risks ahead. è Economists have their heads in the sand over inflation risks, while interest rates are not high enough to mount a serious battle against inflation (i. e. despite all the talk to the contrary, upside risk still remains for interest rates). è Some other stuff.

Major housing cycles driven most by net migration Major housing cycles driven most by net migration

But downside risk to house prices still some way off But downside risk to house prices still some way off

Net migration driven most by the global labour market Net migration driven most by the global labour market

Quantifying the oversupply of coastal sections Quantifying the oversupply of coastal sections

Urban subdivisions, investors & spec builders Urban subdivisions, investors & spec builders

Oversupply of apartments in Auckland, Mt Maunganui, Nelson, Whitianga, Whatakane etc Oversupply of apartments in Auckland, Mt Maunganui, Nelson, Whitianga, Whatakane etc

Provincial angle of the residential building boom Provincial angle of the residential building boom

The hospital pass Dr Bollard got from the economists The hospital pass Dr Bollard got from the economists

Interest rates are not high enough to battle inflation Interest rates are not high enough to battle inflation

Housing still in the Reserve Bank’s firing line Housing still in the Reserve Bank’s firing line

Alterations & additions, & nonresidential building Alterations & additions, & nonresidential building

Valuations stretched in most (all? ) property markets Valuations stretched in most (all? ) property markets

NZD and the game the forex traders are playing NZD and the game the forex traders are playing

GRAPH GRAPH

GRAPH GRAPH

GRAPH GRAPH

GRAPH GRAPH

GRAPH GRAPH

GRAPH GRAPH

GRAPH GRAPH

MAJOR TAX CHANGES STARTING 1 APRIL 2006 MAJOR TAX CHANGES STARTING 1 APRIL 2006

The Taxation (Depreciation, Payment Dates Alignment, FBT and Miscellaneous Provisions) Bill became law on The Taxation (Depreciation, Payment Dates Alignment, FBT and Miscellaneous Provisions) Bill became law on 22 March 2006. Some of the changes are reasonably significant. These changes include:

Depreciation changes There has been significant changes to depreciation rates: v from 1 April Depreciation changes There has been significant changes to depreciation rates: v from 1 April 2005, tax depreciation rate on most plant and equipment have increased v effective 19 May 2005 depreciation rates on most buildings have been reduced v from 1 April 2005, tax depreciation rate on motor vehicles have increased v effective from 19 May 2005 low asset threshold has increased from $200 to $500

FBT changes & Motor Vehicles The new legislation introduces significant changes to the Fringe FBT changes & Motor Vehicles The new legislation introduces significant changes to the Fringe Benefit Tax regime. The key changes include: v Effective 1 April 2006, the FBT valuation rate applying to the cost of a vehicle will be reduced from 24% to 20% v Effective 1 April 2006, a new valuation method of 36^ of the tax written down value of a vehicle will be available for vehicles acquired on or after 1 April 2006 v Effective 1 April 2006, vehicles under a 9 -5 lease/flip-fop lease/business use lease will become liable for FBT. This applies to existing as well as new arrangements v From 1 April leased vehicles will be deemed to be owned by the lessee for FBT purposes

Other FBT changes A new FBT exemption has been created for “business tools” such Other FBT changes A new FBT exemption has been created for “business tools” such as mobile phones and laptops, as long as the following criteria are met: v items provided mainly for business use v items are must be used in the performance of their work v cost to the employer is not more than $5, 000

Other Changes v Tax Exemption for New migrants and returning New Zealanders A four Other Changes v Tax Exemption for New migrants and returning New Zealanders A four year exemption from NZ income tax will apply to new migrants and certain returning New Zealanders who become tax residents on or after 1 April 2006. The tax resident test is modified for this purpose – i. e. the physical presence test is abandoned and the permanent place of abode test is used. The exemption from tax will apply to most form of overseas income. This may be in conflict with Investor Category requirements set out earlier requiring migrants under this category to make NZ their home at the end of the 5 year term. However, it is a step in the right direction and will hopefully negate the requirement for complex and protracted structuring requirements for senior business personnel on secondment to NZ.

Other Changes v Changes for Trustees of Foreign Trusts NZ resident trustees are required Other Changes v Changes for Trustees of Foreign Trusts NZ resident trustees are required to disclose certain information to the IRD and to keep certain records in NZ in relation to offshore trusts they act for. v Companies Migrating Offshore With effect from 21 March 2005, rules have been established for companies who transfer their place of incorporation from New Zealand to an offshore jurisdiction. The migrating company will be treated as if it had been liquidated and all assets realised and distributed to shareholders.

Conclusion/Summary/ Recommendations The Good, The Bad and The Rugby: 1. New Investor Category will Conclusion/Summary/ Recommendations The Good, The Bad and The Rugby: 1. New Investor Category will not cut the mustard. It demonstrates an overly influential role by Treasury officials totally out of touch with business immigration internationally.

Conclusion/Summary/ Recommendations 2. A quick comparison with Australia illustrates this: Australian Investor Policy (state Conclusion/Summary/ Recommendations 2. A quick comparison with Australia illustrates this: Australian Investor Policy (state sponsored) a) b) c) d) Same age cut-off (55) No English language skills required in Australia Approx. ⅓ capital to invest ($750, 000 vs. $2, 000) Term = 4 years vs. 5 NZ

Conclusion/Summary/ Recommendations e) f) g) h) Interest payable quarterly and commercial rate approx 5% Conclusion/Summary/ Recommendations e) f) g) h) Interest payable quarterly and commercial rate approx 5% vs. NZ rate of inflation payable after 5 year term In 2 years can apply for indefinite PR vs. 5 years NZ In 3 more years can apply for Australian citizenship vs. 5 more years in NZ Economic opportunity greater in Australia

Conclusion/Summary/ Recommendations End Result: i. Less money needed ii. Less time involved iii. Better Conclusion/Summary/ Recommendations End Result: i. Less money needed ii. Less time involved iii. Better return in Australia Therefore, it is currently cheaper and quicker to go to Australia, get PR and/or citizenship and then fly to NZ and get PR at the airport !! This is not acceptable and is very difficult for those at the coalface to digest.

Conclusion/Summary/ Recommendations A different analysis of our current Investor Category for which I cannot Conclusion/Summary/ Recommendations A different analysis of our current Investor Category for which I cannot claim copyright reads as follows: Look at the figures – it’s _ _ _ unacceptable. A year of tax funded Government spending on a government office and all they have to show for it is 2 x Investor funds paid (total NZ$4 M). And this money is not even the governments – it’s a loan that we have to repay in 5 years. For an Investor NZ $2 M @ 7% p. a. forgone for 5 years = NZ$700, 000 less 39% taxable = $NZ$427, 000 (disregarding NRWT option of zero tax that is) net cost of having “bought” residence for family. For that, 2 kids get a University Education that would have cost say NZ$30, 000 p. a. x 2 kids x 5 years = $300, 000 so net cost therefore down to NZ$127, 000 (for which you get free healthcare for whole family for 5 years = father/mother and 2 kids ÷ by $127, 000 = $6, 350 per annum).

Conclusion/Summary/ Recommendations Factor in potential exchange rate fluctuations and the Investor may even finish Conclusion/Summary/ Recommendations Factor in potential exchange rate fluctuations and the Investor may even finish up getting paid by the government ! Compare this to the heyday of the earlier policy when in excess of NZ$1 B was introduced in one year vs. the present performance of NZ$4 M to be repaid with interest. It represents the result of Treasury officials with little life experience bouncing off politicians who have never had a real job being frightened by a certain other politician who does not even take himself seriously – it’s an outrage !! For the record these words are not mine but both scenarios above show spin doctors at play. Nevertheless, important issues are raised.

How did we get here? Well those of us a little older will remember How did we get here? Well those of us a little older will remember earlier policy in the 1990’s: A. B. C. $500, 000 in active investment outside Auckland or Wellington; or $625, 000 in active investment in Auckland or Wellington; or $750, 000 in passive investment. Then in 1996 this was adjusted to $750, 000 - $3, 000 (points indexed). In 1999 this changed to NZ$1 M to NZ$6 M (points indexed) through to 2005. Now no more points, age limit and investment funds are fixed at NZ$2 M.

Pre Existing Investor Category Points - Test Pass Mark 12 Age Points Business Points Pre Existing Investor Category Points - Test Pass Mark 12 Age Points Business Points Investment funds (NZ$) Points Experience 25 -29 10 2 years 1 $1, 000 1 30 -34 9 4 years 2 $1, 500, 000 2 35 -39 8 6 years 3 $2, 000. 00 3 40 -44 6 8 years 4 $2, 500, 000 4 45 -49 4 10 years 5 $3, 000 5 50 -54 2 $3, 500. 00 6 55 -64 0 $4, 000 7 65 -74 -2 $4, 500. 00 8 75 -84 -4 $5, 000 9 $5, 500, 000 10 $6, 000. 00 11

How did we get here? During these years the level of English language required How did we get here? During these years the level of English language required was fiddled around with, culminating in a mandatory level of English language for the Principal Applicant suddenly introduced under cover of darkness on the 20 th of November 2002 (which it is noted then Minister of Immigration now regrets). This change in 2002 decimated numbers of applications from China, Taiwan and Korea which were our biggest markets – this is in fact a serious understatement. The 2005 changes introduced an age limit of 55, a 5 year complying period (formerly 2 years), unrealistic commercial terms and pretty much took away an immigrants ability to be the master of his or her own financial destiny – to date there is little human capital “yield”. The changes are widely considered to be unrealistic, inherently delusional, selfdefeating and have been and will continue to be poorly subscribed to.

The Good Oil 1. As noted above great to see many LTBV holders realising The Good Oil 1. As noted above great to see many LTBV holders realising their dreams and obtaining PR under the Entrepreneur Category and no doubt after a fair bit of sweat equity. To see 815 families (YTD) rewarded with PR after running their own businesses in NZ for 24 months is good news. What is not so good is that the new numbers coming through under this category will ultimately be significantly less given the poor number of new LTBV applications directly attributable to the English language changes of 2002. The approvals under this category in a sense prevent business immigration becoming a thing of the past but for the time being only.

The Good Oil 2. Work to Residence In the greater scheme of the annual The Good Oil 2. Work to Residence In the greater scheme of the annual immigration intake 146 PR approvals is very modest. However, it should be noted that the Talent – Accredited Employer policy is quite new and that employees working to residence must have been in employment for 24 months, so hopefully this will become a burgeoning part of business immigration. I understand the minimum salary of NZ$45, 000 gross p. a. may be under review by INZ/DOL.

Recommendations 1. 2. 3. 4. Wake up i. Scrap Winston’s existing Investor Category – Recommendations 1. 2. 3. 4. Wake up i. Scrap Winston’s existing Investor Category – start again – it ain’t working so get rid of it. Make it user-friendly and attractive. Consider further harmonising of OIC / IRD and immigration rules. ii. If any form of deal has been struck between Labour and NZ First in relation to NZ Government Business Immigration Policy dishonour it and get on with it. Reduce English language fluency levels – either regard immigration as an intergenerational issue or introduce “user-pays” charges. Solve Auckland’s roading problems by creating policy that is commercially realistic but at same time encourages high net worth individuals to make NZ home. Get the detail right. Make it a winwin reciprocal arrangement whereby investing migrants get tangible value for their investment and feel they are genuinely contributing to our economy. Look at Canadian model(s). Consider private – public partnerships. If suitable adopt policy and go for it !!

Recommendations 5. 6. 7. Make business immigration a priority again. Consider changing LTBV policy Recommendations 5. 6. 7. Make business immigration a priority again. Consider changing LTBV policy so that requirement for elaborate business plan is replaced with simple positive obligation to employ say 5 kiwi’s for 2 years. Promote Work to Residence policy (again!) amongst corporate/employer NZ. Consider increasing application fees for NZ companies so that DOL Purchase Agreement (for services) and Minister’s Service Level Agreement works profitably. As required increase staffing levels.

Recommendations 8. Consider introducing new policy to fast-track direct investment and to allow and Recommendations 8. Consider introducing new policy to fast-track direct investment and to allow and facilitate priority processing for those willing to commit substantial capital to NZ and create significant economic benefits for NZ regardless of age or English language ability of applicant. 9. Create another new policy to encourage regional investment and for making investor funds available to local economic development initiatives again with a win-win outcome.

Recommendations 10. Understanding the importance of business immigration to our small economy: i. Elevate Recommendations 10. Understanding the importance of business immigration to our small economy: i. Elevate it beyond current DOL workforce adjunct; ii. Market and promote it so that it is not perceived to be about “buying PR” by New Zealander’s but rather what its objectives stand for namely, contributing to our economic growth through increasing our level of human capital, encouraging enterprise and innovation and fostering external links. To get “buy-in” from stakeholders this would require a compelling strategic vision which to date has not been sighted. iii. Whilst recognising need for policy to remain robust, fluid and transparent consider introducing some underlying guidelines as to what investment is encouraged (even if there is some form of points indexing for different types and levels of investment as required from time to time) e. g. deep green ecofeminist wind generation may be flavour of the month so develop system to recognise this akin to way Immediate Skills Shortage List updated.

Recommendations iv. Ensure active investment is v. vi. appropriately rewarded. Ensure BMB is managed Recommendations iv. Ensure active investment is v. vi. appropriately rewarded. Ensure BMB is managed by personnel with business experience/acumen and an empathy for those with the drive to make things happen. Cross-fertilise services more vigorously with other appropriate Government agencies including MFAT/Trade NZ as well as private sector.

The Rugby Next year NZ is hoping to bring home the Rugby World Cup. The Rugby Next year NZ is hoping to bring home the Rugby World Cup. We then host the World Cup in 2011. We will be a busy little nation. Let’s hope that we have our act together so that we manage to attract our fair share of talent, human capital, enterprise and innovation during our short tenure on the World stage. Thank you