Douglas Todd: Ottawa insider warns about immigrant-investor schemes – Vancouver Sun

2024/01/20 Leave a comment

Wise warning (disclosure: I am friends of some of those quoted):

An adviser within Canada’s immigration department is warning about the dangers of entry programs that favour entrepreneurs, given the failure of earlier initiatives.

The internal cautions come at the same time the immigration department, which has been under fire from top bank economists for damaging the economy by bringing in a record 1.25 million permanent and temporary residents in a year, is expanding another program that gives preference to would-be entrepreneurs.

The internal government memo, obtained by Vancouver lawyer Richard Kurland under an access-to-information request, reveals how an adviser to Immigration, Refugees and Citizenship Canada (IRCC) warned that a variety of earlier immigrant-business programs suffered widespread abuse — resulting in a trivial number of new businesses being opened in Canada, and other problems.

The defunct schemes that targeted wealthy foreign nationals, which the correspondents generally refer to as “business-class programs,” opened the gates to a flood of foreign capital moving into Canadian housing, says the adviser. That raised prices, especially in cities such as Vancouver and Toronto. In addition, the internal email thread alerts decision makers to the way many entrepreneur immigrants ended up paying low amounts of income tax.

The in-house memo comes to light in the same month the Canadian Press reported the IRCC was internally warned two years ago that increasing immigration levels would harm housing affordability and services. A Nanos poll also finds support for migration has in less than a year plunged 20 percentage points, with 53 per cent now wanting fewer immigrants.

The group email shared by top immigration department officials, titled “The strange story of Vancouver,” reveals just how badly things went with the earlier schemes, specifically the longstanding immigrant-investor and entrepreneur programs, which were poorly monitored.

The email thread shows that senior officials in March of last year were working “under the radar” to expand similar business-class schemes, particularly the so-called Start-Up Visa (SUV) program, to welcome more would-be entrepreneurs into the country who have the “potential” to start a new business.

However, when the directors sought advice from Daniel Hiebert, a former UBC geography professor who is now working in the department’s strategic planning section, he said the earlier programs led to only 15 per cent of business-class immigrants actually starting a business.

“Ouch,” Hiebert says in the email, explaining how most of the business-class newcomers failed to start a new company even though their status as permanent residents was supposedly contingent on it.

The Conservatives disbanded the immigrant investor and entrepreneur programs in 2014, openly saying the people who came in through them were generally not having a long-term positive impact on the country, not bringing in significant investment capital for business, had low ability in Canada’s official languages, were tending not to stay in the country, and were paying far lower taxes than the average skilled worker.

Even many of those entrepreneurs who did begin a business through the old program dropped it after two years, said Hiebert. “They started businesses to meet requirements and then later let them go.”

Hiebert said, as far as he knows, not one of those entrepreneur-class immigrants ever had their permanent resident status revoked.

Furthermore, Hiebert explained how many of those business-class immigrants who bought expensive houses in the city tended to pay low mortgages and low income taxes.

“This is still the case,” Hiebert wrote. “The story is that many of the residents of these areas came through business-class programs with the intent to retire and live a comfortable lifestyle.”

After initially transferring their money out of their country of origin, typically somewhere in East Asia, Hiebert wrote, most purchased a house “along with a Mercedes, Audi or whatever. And then life is lived quite simply, on a small budget and with little owing in terms of income tax. The kids get to go to UBC or SFU while paying domestic fees, which is a big bonus.”

Hiebert concludes his March, 2023, memo by saying, “I think it’s time to review the economic outcomes of the Start-Up Visa program and I suspect they will show more of the same.”

At one point in the email thread, Umit Kiziltan, director general of the IRCC, said the “burning questions” that Hiebert raised required the “outmost (sic) attention” while the department evaluates whether to expand the Start-Up Visa program and others aimed at wealthy immigrants.

Also included in the thread are Maggie Pastorek, director of policy, and James McNamee, senior director in the economic immigration branch.

The group email includes a discussion of a study covered in a Postmedia article from 2022, which shows how UBC business professor Thomas Davidoff and others discovered the owners of Greater Vancouver homes with a median value of $3.7 million pay income taxes of just $15,800 — which is exceedingly low for North American cities.

“Most luxury homes in Greater Vancouver appear to be purchased with wealth derived from sources other than earnings taxed in Canada,” said Davidoff’s study, which confirmed earlier research by Statistics Canada and Hiebert himself.

Several years ago, StatCan and Hiebert found the average value of a detached house bought by more than 4,400 millionaire immigrants who came to Metro Vancouver under the investor program was $3.2 million. That compared to an average of $1.5 million for a Canadian-born owner.

While working at UBC, Hiebert’s studies also found a correlation between neighbourhoods with large foreign-born populations and neighbourhoods that appear to have unusually low taxable incomes, despite their inflated housing prices, such as Richmond and Vancouver’s west side.

Based on the documents provided in response to an access-to-information request by Vancouver immigration lawyer Richard Kurland, it is not clear how the internal discussion affected later decisions the Liberal government made about its Start-Up Visa program

Last year, however, Ottawa scaled up the annual intake of the Start-Up Visa program from 2022, when it offered 1,000 spots. The program’s intake rose to 3,500 last year and is set to bring in 5,000 this year and 6,000 in 2025.

Immigration department officials did not respond by deadline.

Source: Douglas Todd: Ottawa insider warns about immigrant-investor schemes

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Douglas Todd: Refugees earn more than most Canadians after 25 years

2018/10/10 Leave a comment

Good solid analysis by IRCC and confirms what I am seeing in some of the data that I am looking at:

Refugees who arrived in the late 1980s and early 1990s are now earning more than the average Canadian.

An internal immigration department document shows that, after 25 years in the country, a typical refugee is earning as much or more than the Canadian norm, which is about $45,000 a year.

The document quotes a senior department official who says the long-term study of refugees’ wages suggests the recent wave of 50,000 refugees from Syria could several decades from now do as well as earlier refugees in regards to earnings.

“In a nutshell this is the trajectory we would expect (all things being equal) from government-assisted refugees and privately-sponsored refugees,” senior immigration department official Umit Kiziltan writes in a memo obtained under an access to information request.

The immigration and tax department data, which tracks refugees’ earnings from 1981 to 2014, shows that average government-assisted refugees earned less than $20,000 a year in their first decade in the country, when many families rely on provincial welfare and other government benefits to get by.

However, after 25 to 30 years in Canada, the average refugee is earning roughly $50,000 a year, about $5,000 more than the average Canadian. The study also shows the earnings gap between government-assisted refugees, who initially do worse than privately-sponsored refugees, basically disappears over the long run.

The largest groups of refugees to Canada in the 1980s and early 1990s came from Vietnam, Cambodia, Latin America, Eastern Europe and Africa. In that era the total number of refugees arriving ranged from 15,000 to 40,000 annually. In recent years Canada has accepted more than 50,000 refugees from war-torn Syria alone.

Vancouver immigration lawyer Richard Kurland, who obtained the internal government documents, said they contain reliable information that strongly indicate most refugees, no matter where they come from, develop usable skills and do well in the labour market over their careers.

However, even though the senior immigration department’s memo welcomed the news that refugees who arrived several decades ago perform well, Kiziltan cautioned that it’s hard to forecast how more recent refugees will do, given the “cyclical nature of the economy overall and especially (the) human capital of the Syrian cohorts.”

The report, in addition, also does not compare the earnings of refugees who have been in Canada for several decades (which means many would be in their 50s and at the peak of their careers) with the earnings of other Canadians of the same age cohort.

The data on refugees’ slow road to labour-market success in Canada comes on the heels of 2018 controversies over thousands of asylum seekers illegally crossing the Canadian border, a Syrian refugee being charged with the murder of Burnaby teenager Marrisa Shenand a Postmedia story revealing the federal Liberal government has not produced any report in two years on whether recent Syrian refugees are learning English or French, working, receiving social assistance or going to school.

This is not the first federal government indication, however, that many refugees eventually earn solid incomes. In 2014 then-federal Conservative immigration department minister Jason Kenney cancelled the contentious immigrant-investor program while revealing that refugees were actually paying more in Canadian income taxes than wealthy newcomers who had in effect bought their Canadian passports.

Asked about the contrast between taxes paid in Canada by refugees and rich immigrants, Kurland said it’s “a complicated comparison.” The breadwinner of an immigrant-investor family, Kurland explained, “usually returns home to support the family’s millionaire lifestyle in Canada” and therefore, unlike a refugee who stays in Canada, doesn’t pay significant income taxes in this country.

Previous studies have consistently shown that, while adult refugees often struggle in the short to medium term, many of their children quickly perform well in their new land, in large part because they gain extra social support, a taxpayer-funded education in English or French and the time to develop skills.

This recent internal study of refugee earnings, however, is among the first to emphasize that, over many decades, most of the refugees who had direct experience of war, persecution and trauma in their homeland are capable of attaining financial success in the country that welcomed them.

Source: Douglas Todd: Refugees earn more than most Canadians after 25 years

Filed under Immigration, Integration, Refugees Tagged with , , ,