:
Good afternoon, ladies and gentlemen.
This is the Standing Committee on Citizenship and Immigration, meeting number 10, Thursday, April 22, 2010. Pursuant to Standing Order 108(2), we continue our study of immigration application process wait times.
We have three witnesses before us this afternoon. Thank you for coming, gentlemen. You will each have up to ten minutes to address the committee on this topic. Following that, there will be questions from the committee--or generally there are--and each caucus will have for the first round up to seven minutes.
I will ask Pierre Emmanuel Paradis, who is the senior economist for the Analysis Group, to address us first.
:
Thank you for inviting me.
My name is Pierre Emmanuel Paradis. I'm with Analysis Group, which is a consulting firm with offices in Canada and the United States. I'm a co-author of the study that is before you on the economic impact of the immigrant investor program. I co-wrote the study with a professor from Queen's University in Kingston--his name is Roger Ware--and also with Pierre Fortin, who is an emeritus professor of economics at UQAM in Montreal.
Immigrant investors comprise more or less 3% of all immigrants who come into Canada each year. In the past 25 years or so, about 130,000 of them have arrived in Canada. They provide a substantial initial contribution and economic impact to the country. The study comprises four main parts. We described the inner workings of the program and the immigrant flows. We looked at the selection process and how funds of immigrant investors were used. For this part we essentially used data from CIC to present some basic statistics.
Second of all, we did something that had not been done before, which was to create a profile of the personal and economic activities of immigrant investors in Canada, which shows that essentially they establish their families here: they buy homes, and their children study here. A significant proportion get involved in their community.
The third part, which is the main part, assesses the economic impact of immigrant investor families who arrive in this country. Essentially, a typical immigrant investor family contributes to the Canadian economy in three ways. First of all, when they come into the country, the net impact of their initial contribution is valued at about $45,000. Provinces then use the funds that they receive from immigrant investors for various projects. The data on this is unclear, but we calculated that up to an additional $30,000 resulted from the use of these funds.
Third and more importantly, when immigrant investor families arrive in Canada, they buy homes, business assets, investments, and durable goods. In the survey we did of 107 families, the average assets that each family bought in this manner were valued at $721,000. If you calculate that we have 2,500 families coming into Canada every year and having this much economic impact, we're talking about an additional $1.9 billion to $2 billion every year for Canada.
Fourth, we looked at the prospective supply and demand of immigrant investors in the coming years in Canada. Essentially and in every way, economically and demographically, these families will provide a significant contribution to Canada. Regarding the international programs and policies, Mr. Major is going to talk more.
Our brief analysis concluded that Canada's program is fairly competitive. Its main competitive advantage is the initial contribution, which is lower than that of other countries. The main problem with it is the delays, which are the longest, by a significant amount, of all the programs we looked at.
Finally, in terms of the supply, there is a pool of wealthy families that would be interested in immigrating to Canada, which Canada taps into. It is really the tip of the iceberg. The pool of families is very large, and Canada could benefit significantly from having more of these investors.
I will give you the recommendations that we make in our analysis, which are on page 5 of the report in English. There are four of them:
First, the program should be not only maintained but expanded, considering all the economic benefits that I just presented.
Second, for the benefit of the general public, we believe the general public should know more about the impact of not only immigrant investors but all other categories of economic immigrants, so that the general public could appreciate the business activity, jobs created and investments performed by all these immigrants.
Third, I believe that Canadian authorities could build on our analysis to really optimize the program's criteria and conditions in view of what is offered internationally, and perhaps improve its weaker aspects, the greatest of which are the delays.
Fourth, I think that future research would be indicated if we looked at, for instance, the long-term impact of the second generation of immigrant investors.
I did my presentation in English, but I'm also willing to answer questions in French if any arise.
Thank you.
My name is Marc Audet and I am a vice-president at Fiducie Desjardins, in the Immigrant Investor Program. I have worked in that program for over 15 years.
My presentation will deal with processing times for the immigrant investor class, for both the Quebec program and the federal program. It will be divided into three parts: current processing times, expected times and our recommendations.
I have prepared set of documents for the participants. There is an English version and a French version. I invite you to look at the various sections during my presentation.
Before looking at processing times, I would like to note that I have attached a list of countries of permanent residence showing the corresponding Canadian visa offices, for filing the application, in section 1A. This will help you follow.
Before looking at sections 1B and 1C, I would like to draw your attention to the fact that the number of months shown represents the number of months between the date the application is received by CIC and the date when the decision is made, that is, the date the visa is issued. So the processing time does not indicate the time it would take to finalize the thousands of cases now waiting.
You will see that 80% of the cases finalized in 2009, worldwide, were submitted 35 months earlier, so in 2006 and 2007. The current situation for the busiest Canadian visa offices, in terms of investors to be processed, is as follows: Beijing: 33 months; Damascus: 35 months; Hong Kong: 40 months; Islamabad: 46 months; London: 25 months; New Delhi: 23 months; Seoul: 29 months; Singapore: 37 months; and Taipei: 24 months. This is the situation for 80% of cases. So that leaves 20%. We will see the number of applicants that means in a moment.
Section 1C represents processing times for immigrant investors in the Quebec program. Here, it should be noted that for Quebec cases, a selection certificate is issued, and the $400,000 investment has been made. The federal government's job is therefore the background check and medical examination, which are a prerequisite for issuance of a permanent resident visa. You can see that for 2009, the average for all offices worldwide is 17 months, for 80% of cases. For Quebec cases, the processing times in the busiest offices are: Abu Dhabi: 1 month; Ankara: 6 months; Beijing: 13 months; Cairo: 28 months; Damascus: 27 months; Hong Kong: 16 months; and Islamabad: 29 months.
Sections 1D, 1E and 1F show the volume that CIC processed during a 12-month period, from October 1, 2008 to September 30, 2009. The document in section 1D provides an overall portrait of investors, both for Quebec and federally. The document in section 1E is limited to federal cases, and the one in section 1F is just Quebec cases. We can conclude that the number of investor cases processed by CIC, whether accepted or rejected, was 2,968. That figure breaks down as follows: 1,126 cases accepted and 486 rejected by the federal government, for a total of 1,612; 1,327 cases accepted and 29 rejected by Quebec, for a total of 1,356. The two totals combined come to 2,968 cases. That number is relatively low, given the total for other categories. We can conclude that processing the 1,612 cases in the federal programs took 35 months while the 1,356 Quebec cases took 17 months. The figures for recent years show substantially the same levels both in Quebec and at the federal level, 3,000 cases finalized per year, more or less, and average processing times of over 30 months federally and over 15 months for Quebec.
What is the current trend, given the inventory, the number of cases underway, in relation to the pace of processing? We estimate that if nothing is done for the 2011 fiscal year, the immigrant investor program will be in jeopardy. Processing times will be unacceptable to this clientele, which has other options. I think this subject will be covered by another participant.
I invite you to look at the table shown in section 2A. It is based on the latest official statistics from CIC. It summarizes the current situation, specifically for the federal program. The processing time, which was 35 months for 2009, will likely be about 60 months more or less for 2010 and 2011. In addition, Quebec's volume is also growing, so CIC is facing a double impact.
The table in section 2B offers an overall perspective for recent years. It is clear that the targets have to be increased if we want this program to continue to attract the international elite.
If we move on to section 3, we can see that there are hundreds of thousands of immigrants in line and that each one has reasons for seeking Canadian permanent resident status. However, given the conclusions from the study by Analysis Group, the low number of investor cases processed each year, disadvantages unique to investors and international competition, we recommend that CIC consider a substantial increase in the annual volume processed.
Considering the figures in the table in section 3A showing variations in inventory for the period up to 2013, we recommend that the federal program try to process 6,000 cases over the next three years, which would allow for reasonable waiting times of 24 months more or less to be achieved.
For the Quebec program, given the quality of the selection work done by the Quebec ministère de l'Immigration et des Communautés culturelles, there should be a target of a maximum waiting time of 12 months more or less, which would bring the number of cases processed to an average of 2,000 cases a year, more or less, based on current inventory and the 2010 and 2011 targets of the Quebec ministère de l'Immigration et des Communautés culturelles.
I will be pleased to answer your questions.
Thank you.
:
Good afternoon, Mr. Chair. Thank you again for having me, and thank you to the members of the committee.
My name is Eric Major. I'm the managing director, as the chair explained, of this specific program or division within the bank, called global investor immigration services. Let me just give you a brief overview of HSBC, for those of you who are not familiar with our organization.
We're headquartered in London. I think we're now one of the largest--if not the largest--financial services organizations in the world, with over 8,000 offices in 88 countries. The HSBC group is named after its founding member, the Hong Kong and Shanghai Banking Corporation, which was in fact established in 1865 to finance the growing trade between Europe and China at the time.
We've been in this great country for 20 or 25 years, I believe, since the late 1980s. We have now 140 branches across the nation, making us, I believe, the largest foreign bank in this country.
As for the division that I head, essentially what my team and I do is assist our clients from around the world to migrate to this great country through this specific program called the immigrant investor program. It has a banking element to it. It has an investment element. The Government of Canada has brought financial institutions in to participate.
One of the interesting attributes we have is that we help families move to other countries. There are other countries in the world that also have similar types of programs but with different criteria. In fact, HSBC today facilitates migration. The greatest amount of migration is by far into Canada, but for the last five years now the second-greatest amount has been into the United Kingdom. Hong Kong as well, interestingly enough, has a program like this, as does Singapore. In fact, there are a number of countries that have it, but HSBC is involved with predominantly four right now.
I've been asked to comment on processing timelines, particularly as they relate to the federal program with which we're particularly involved, so I'll do that, although my friend Marc here has alluded to some of the issues that are arising there. Also, I'll give you a sense of the international marketplace, what other countries are doing, and how they're evolving.
One point is that each of these programs has its specific characteristics and its advantages and disadvantages, so it is somewhat challenging to compare one country to another. I believe you have with you now a table, an international comparison chart, in both French and English, which I tried to summarize neatly into one page so that you could try to get a sense of what the other--
This chart has attempted to outline some of the main nations that compete with the Canadian immigrant investor program. It tries to encapsulate some of the key characteristics that these programs have in terms of average process timelines, what you get when you apply and when you extend, what happens at the maturity of the investment, how much the investment is, and what the equivalencies are when you convert those dollars into Canadian dollars and factor in average exchange rates.
I'll give you the punchline of this chart. Essentially it shows that given that most nations provide a return.... They say you could invest your way into our nation, but in exchange we'll allow you to get a return on that investment. Canada, as you know, is $400,000 for five years--no interest. That's the nature of the program. The U.K., United States, Australia, and Hong Kong all provide a yield.
The yellow bar at the very bottom demonstrates that when you factor in the return you realize that the United States is roughly equivalent to $428,000 Canadian, whereas Australia is at $555,000 Canadian, and Hong Kong is at $650,000. I'll get to Canada in a minute. The United Kingdom is really in another stratosphere, at $1.5 million, which is maybe why they're attracting fewer than a hundred immigrants a year.
At $400,000, where the Canadian program is now, obviously this is why we're all so very busy. It's been a great program. It's eleven years old. This program has been in place since 1999.
I will conclude by saying it's time to reposition it. There are some bandwidths being discussed as to what could be a right amount for Canada, but clearly when you look at these comparisons, I would argue it's somewhere between $600,000 and $800,000.
In some respects we've been a victim of our own success. We've been very much the model of the world when it comes to this investor program. Those in the business know Canada is the reference point, so that's the good thing. We've managed this program very well over the last twelve years; the government has done very well in that regard. But now it's overly busy. Inventories have swelled up and we have a problem. We're now saying to clients that it's going to be three years, four years, five years, so they want to talk about other countries. It's way too long for any entrepreneur or investor to be told we'll get back to you in four years, for example.
The international comparison is an important one, and one that's always being upgraded. Countries are always amending their programs, so we can expect some further competition down the road.
One of the items that I think was also circulated, I hope, but if not, it's also in Mr. Audet's submission, is the overall inventories of the federal program. Without getting too scientific about it, you've got roughly 14,000 investor applications sitting in embassies worldwide, and simple math would suggest that if you're going to review 3,000 of them a year you're heading towards the five-year mark. Again, we're a victim of our own success. It's time to reposition the programs, slow that intake, raise the bar, and get more economic benefit at the investment level.
Mind you, I think Mr. Paradis has done a very good job in his report to outline that these immigrants, when they settle here, are big consumers. Living in Vancouver, I can tell you that more than 50% of our immigrant investors establish residency in that province. While Quebec has done a great job in also being a big participant in this program in terms of the investment, the real winners of this program are the areas that attract them. For the most part, that's been B.C. So the real ancillary benefits that the program brings, in terms of consumption, ancillary investments, business endeavours, their children in schools, and obviously their wealth, has been the success story of this program, as far as I'm concerned.
We have a number of recommendations, but I'll maybe leave that as part of the questions. I'm sure it will come up.
Thank you.
Thank you to our witnesses for coming today. I really appreciate the fact that you were able to outline the benefits from each country, the successes, and all that stuff.
We're looking at about 3,000 people coming in per year, and the amount of inventory is skyrocketing. There are people out there who say open the doors and let more people in, and there are people out there who say we can only accommodate 250,000 people of all the various categories. There are different groups that would vie for certain groups to be let in, be they parents, spouses, blue-collar workers, skilled workers, or investors, although the investors come and spend $700,000—
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There you go--$721,000—and they should be welcomed.
How do we go about maintaining the number we're allowing in--250,000 per year? Should we increase that number to 400,000, 450,000, or 500,000 to accommodate more people? How does the business community, the banking community, your group, see us allowing more people in? Is there a flavour to that? It is palatable to you? Or are you here to say just let the investors in, because they're spending $721,000, and never mind the rest? When you get somebody who wants his parents to be let in because they are glorified babysitters and will look after the kids when he and his wife go to work, if we're going to allow more people in, how would that fit in with the investors, the investment community, and the business community?
Thank you for being here.
I am going to start with an initial question about Mr. Audet's presentation. Obviously, I am very happy that a representative of Fiducie Desjardins, the great Quebec institution, is here today. As well, like my colleagues, I was very pleased to see the tables and presentations.
I would just like to examine section 1F in more detail. Right at the beginning, on the first line, it shows that the approval rate for applications from Quebec processed abroad is 98%, which is quite high. It seems to me, having been an engineer in the past, that this process is virtually useless. Ultimately, nearly everyone who starts the process finishes it, since only 29 were rejected. Compared to those applications, the approval rate at the federal level is 70%. So the process involves a larger number of rejections.
Can you tell us what explains the difference between the two approval rates? Also, do you have a breakdown of the rejected cases? Are those cases for security or health reasons?
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I could comment on that, given that our organization meets face to face with many of these applicants. We don't deal solely with third parties. We leverage off our network around the world, and my team and I meet with some of these clients. So we get to be very close to these needs and understand them.
For sure, once investors arrive they may have ancillary needs in terms of setting up a business, and we will guide them. What you're referring to maybe touches more what I call the active categories, the categories under which you have an active need to either enter the labour force and work, maybe as a condition of your visa, or to set up a business. That's the entrepreneur category. We come across many of those clients, and they have skill sets and they have experience and expertise in their home country, and they ask us about Mississauga or Calgary or Vancouver. So we try to make those linkages with the local bankers and accountants and lawyers, government representatives locally there as well, to try to make those connections. But I'd be lying if I said it was easy. I'd be lying because Canada is not Hong Kong, it's not Shanghai, and it's not Dubai. So there are adjustments there, but HSBC is sensitive to those kinds of situations because we're in all these markets and we try to brand ourselves as the group that can facilitate this, and we do, to some degree. But at some point obviously more could be done, I think, in terms of helping make that transition.
For investors it's more ad hoc because they don't need to do it. They do it on their own. They have their own networks. But for entrepreneurs in particular this is a very big need, and we're trying to help more and more.
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I know Marc is probably going to want to add to this, but that's one of the main recommendations I've been making for the last six or seven years, not necessarily just to have more staff. I will be honest: it relates to this very narrow area called “investor” category. I'm not talking about general immigration. There is a very narrow category called investors.
I believe in the SWAT team approach. Take three or four individuals who know what a balance sheet looks like, what financial statements look like, and what the nature of business in these countries is, and have them flown over to Accra, to Shanghai, to Mexico, to São Paulo to plow through their inventory, because in fairness, a lot of these visa officers don't have that skill set. It's not that they can't learn it. In fact, I've talked to the CIC and there have been tremendous strides in terms of training and all that. But as it relates specifically to this area, my main recommendation today is to create a SWAT team, up until there is some medium- to long-term view to maybe creating centralized processing around it so that you have that skill set in one area. But I don't think you need to go that far, because you don't have the scale. It's a small program still. So to have three or four well-trained individuals who go out there and address what is their expertise is my own view.
I don't know if Marc wants to add to that.
And thank you, gentlemen, for coming to this committee.
I came from Hong Kong and my doctorate degree was in studying immigrant entrepreneurs. I definitely have followed 40 immigrant entrepreneurs for two years, so I know the challenges they have had and the skill sets they have had.
I want to comment on a couple of things. First of all, I definitely agree with Mr. Major's recommendation. What the government has been doing is moving files between offices. In fact, if you look at numbers, in 2004 in Hong Kong alone we had 3,459. But in 2008 the number rose to 11,244. What the government has done is exactly what you have just said, which is to transfer files between offices, and that's why the waiting time has been reduced. But of course we can still do better.
Looking at some of the economic impacts of the investor class immigrants, I know that Mr. Major is very familiar with the Vancouver area. Could you quote some actual examples of the economic impact of these investor immigrants?
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I would love to. I have hundreds of them to give you.
Without naming names, a client from the U.K. migrated to the program, still very young, and just invested $5 million in essentially some manufacturing equipment out of Germany that was involved with the building wraps in relation to the Olympics. This chap migrated about six years ago. We put him in contact with the B.C. immigration people, with the entrepreneur and business immigration department there. They put him in contact with some key people they knew--a few bankers, a few lawyers, a few accountants. He got his skill set from his U.K. experience and brought it over to Canada and was involved in building wraps and did extremely well, thank you very much.
I can give you ten more of those kinds of examples, but the report was actually something.... We were hoping to get away from these anecdotal types of evidence and examples that I had always come to see some minister or some deputy minister to tell them about the great things these people are doing. So I applaud Mr. Paradis and Roger Ware's work on showing, beyond the specific examples that we see, the aggregate of the great contributions these people bring after they arrive here.
I know that in principle it might be harder to implement than business people like me could appreciate. I think it exists within government already that you can get a passport in four weeks or you can get it in two weeks. If you want it in two days or four days, you'll pay more for it. I think we are now at the point where the government should be looking at this.
It's very difficult to sit down with a client who has great potential under this program and say to them, “We'll get back to you in four years”. Australia, New Zealand, even the U.K. or the U.S. will pick them up. Again, we've obviously done well, though. I'm not going to deny the great ten years that this program has generated. But we've been a victim of our success now, and we need to reposition.
In terms of recommendations, very briefly I would say reposition the program. It has to increase. It's time--it's eleven years old.
With regard to SWAT teams, get more commitment from the client up front. Get a deposit. That will slow things down. A deposit is a partial payment on what they will later need to provide to fulfill the investment, but slow the process down by getting more commitment up front.
Increase the targets. I think the report suggests that's a good idea. I still don't understand why this program has FD targets as opposed to visa targets. Every other category I've ever seen has targets in terms of visas. This program has targets in terms of final dispositions. I don't understand that. We think it's time to go to 3,000 visas.
Maybe I'll hand it over to you, Marc, if I am permitted.
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We can work on the Quebec model. I think the industrial program, the success for the past.... We're now at 25 years in Quebec. We used to receive fewer than 2,000 applications a year; now it's close to 5,000 applications a year under the Quebec program. Quebec is in the same position as you guys are. They are limited in manpower. They have to grow from inside, so they have to find another way to do the business.
They decided to change their model. For the past five or six years the banks have been more involved in the process. That's something that CIC is now looking at, saying to the guys from Desjardins or HSBC, “What can you do? Can you do part of the work to help us to speed up the case?” Maybe; they'll have to see.
Again, I think having specialized people.... Because you know when you receive a skilled worker file, it's like this, and an investor case is like that. During the day, you do five like this and one like that. That's the problem, I think. In Quebec they have specialized officers for the business class, and they travel around the world. They have interviews in Hong Kong, in Damascus, in Ankara. It's a kind of tiger team, a SWAT team. That's part of our suggestions. This is possible.
:
Thank you, Mr. Chair. Now I understand the angle of that question.
To be frank, it wouldn't apply for the investor category. Why? Because the investor category doesn't tie any terms and conditions to their visa when they arrive here.
I think it's a brilliant idea to bring somebody in on a work permit and keep them on a short leash. Tell them they will now have one, two, or three years to fulfill what they said you would do, which is either enter the regular force or start a business. Those are different categories, for which I think this Australian idea.... Frankly, B.C. has a program like that right now, which says “I'll let you in for two years. Your said you had this business plan. I want to see you implement it. If you do so, I'll graduate you to permanent residency.”
But that's not the reason we let investors in. We let them in because they have business experience and net worth, and they inject today $400,000 and maybe tomorrow $600,000 or $800,000 Canadian. Once they're here, we don't ask them to, but as this report shows, they contribute through these big expenditures.
Over to you, Marc.
:
My answer will be twofold, if I may, Mr. Coderre.
The Quebec program is not necessarily easier. That may be the case if we calculate it in months. But unlike the federal program, when Quebec makes its choice, the client has to make their $400,000 investment. Whether it is eight months later or 10 months later, they then have to make the commitment by making their investment. It is the opposite for the federal program: they make their investment at the end of the process. So they can play with their funds while they're waiting.
That is one of our problems, certainly, because you have to go at it with the clientele. You understand that the leading market for immigrant investors, by far, is China. The second market is Iran. After that there is a gamut of countries, and it can change from year to year. Naturally, for the clientele from Asia, the first port of entry to Canada is often Vancouver airport. Unfortunately for Quebec, there are still no direct flights between Montreal and Peking, and that is a handicap.
The government of Quebec has created a partnership that brings together Investissement Québec and the ministère de l'Immigration. It is a sort of guidance program. We are working on it.
Yes, we bring money into our SMEs. However, as Éric and Pierre Emmanuel were saying earlier, these immigrants spend a lot of money. So it is to our advantage to increase the numbers, but I think we have to do more to get these people to discover Quebec.
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Again, I personally I haven't experienced that in terms of the people we've dealt with. Life is life, and there probably is some abuse in every category. It's not something we have any statistics or experience with personally.
My own view is that it's a foot in the door. Citizenship, as some of you may already know, is not an easy threshold to get. You have to be here. You have to be here for three out of four years. You're checked. My understanding is that more and more, the courts challenge this, and unless you can show not just memberships and bank accounts but physical presence, you're not going to get it.
I do have clients who have been on the cusp of that grey line. I'm trying to get that famous 1,095 days in a four-year box. You do the math. It's very challenging. If you say that this program gives you citizenship, I say no; it gives you permanent residency. For citizenship, we'll see if you are going to graduate to that. Frankly, their kids will, but most of the main applicants won't.
They run empires, and they have to run the empire to keep the machine rolling.
Citizenship is not an easy thing.
:
I guess the question is in regard to the recommendations you made, Pierre, in your report.
One of the things you asked, for the benefit of the general public, was that immigration authorities prepare an annual report on the overall impact of economic immigration stemming from immigrant investors and other categories of economic immigrants.
You said that this report can provide statistics on initial investment spinoffs and effects in terms of projects funded, jobs created, and so on. I'm not sure how this actually helps to speed up the program. It's nice to do all these reports and reviews, but the goal is to get some recommendations on how we can actually expedite it.
The biggest one I've received today is that we should double the amount of money invested. Then we'll be able to cut the list back as quickly as possible. I just want to know why you would have included in your summary such a critical component. It doesn't seem to me that it would necessarily assist us in getting the numbers down.