With much of the world in economic turmoil, Canada makes an alluring safe haven. Yet at the very moment when wealthy foreigners are coveting our relative stability, they’re finding our doors more tightly barred—and the admission fee jacked up.
Canada is one of many developed countries willing to let rich foreigners buy their way in. Back in 1986, the federal government introduced the Immigrant Investor Program, which offered permanent residency in exchange for a three-year investment of $150,000. “If you have the money and you want to get into Canada quickly, this is a way to avoid the notorious waiting lists,” says Jeffrey Reitz, a sociology professor at University of Toronto. The U.S. and Britain subsequently established competing programs, and today such initiatives are found in many developed countries.
The thinking was the same everywhere: that nations benefit not only from interest-free loans, but from attracting an elite class of immigrant who would spend lavishly, and who might set up new businesses to boot. But relatively few millionaires took the bait. Canada has sold roughly 40,000 visas since 1986, mostly to Asians. (Today, interest is greatest among mainland Chinese.) Since applicants usually bring their families, Canada has acquired more than 130,000 new immigrants via the program, only about 3% of total immigration during that period. “It’s never realized the potential that was hoped for,” says Reitz.
Meanwhile, administration proved difficult. Immigrants’ money was originally administered by provincially managed venture capital funds; before recent reforms, some of it went to dubious or fraudulent schemes. Despite its flaws, however, the program has paid off—at least according to a 2010 study by Queen’s University economics professor Roger Ware, which concluded it contributed roughly $2 billion a year to Canada’s economy and helped ease economic challenges. “The program should not only be maintained,” he wrote, “but expanded.” (The study was sponsored by financial institutions that benefit if immigrants choose to borrow the up-front investment.)
Ottawa has ignored Ware’s advice. In 2010, the financial requirements—which had crept upward since 1986—were doubled, with applicants having to lend $800,000 for five years and prove legally obtained net assets of $1.6 million. And despite its positive economic impact, last summer the feds dealt with the growing application backlog by capping the number of applications considered each year at 700. Once introduced, says Porta Immigration regional director Jenny Perez, “that cap was reached within the first day.”
A back door remains open—for now. Quebec administers its own program, which still accepts applications. “Quebec’s hiring more staff to process those applications instead of just saying, ‘We’re going to close our doors.’” Perez says. Successful applicants still require federal approval, however, and Perez suspects Ottawa’s enthusiasm is waning. The federal program is to reopen July 1, but “we all wonder what is going to happen,” Perez says. “Most people think the requirements are going to increase again.”