Golden visa? More like lead balloon

The coalition Government’s recent revisions to the business investor visa, officially the Active Investor Plus but commonly known as the ‘golden visa’, has put pay-for-residency back in the headlines. While many object to the commodification of citizenship implicit in this policy, questions should be asked about its potential as a source of economic stimulus.

The changes the Government has announced will lower the amount of capital an applicant needs and the duration of its investment, reduce the number of days the applicant needs to be on the ground in New Zealand, and remove the need to speak English.

From April 1, those seeking residency can apply under two categories of investors. They can apply via the ‘growth’ category if they have $5 million to commit to supporting one or more local ventures for three years which will allow them to board the train to New Zealand citizenship. If applicants can muster $10 million to drop here, they can obtain residency through the ‘balanced’ pathway.

Golden visas are not new or especially rare, here or abroad. The Active Investor Plus Visa was launched in New Zealand in 2022, replacing earlier investor migration schemes. Analogous residence-by-investment programmes operate in Australia, Canada, and several European countries, which provides monied migrants looking for a safe haven with several options.

But I’m not persuaded by the economic reasoning behind pay-for-residency. Academic research in Europe has failed to find any economic justification for them, suggesting that they may be more useful as domestic political theatre when the economic stimulus well has run dry.

The Government’s argument for them is that New Zealand is in desperate need of capital and could capitalise on being an irresistible place to live – that the smart thing to do is allow individuals who can rustle up $5 to $10 million and grant them residency, if they commit the money to New Zealand-based assets for three years.

The idea that New Zealand is an irresistible place to live is somewhat undermined by the number of Kiwis trying to live somewhere else. Record numbers are looking to move to another country, without the privilege of simply buying their way in; all they have to recommend them to other nations is their skill, experience, determination, and optimism.

The true promise of foreign investment in young New Zealand companies lies in the people making the investments and what they do – here – once the money is in play. Nations encourage foreigners to invest in local businesses because they’re expected to be more likely to succeed, and on a more impressive scale than we would have had we been given the same responsibility.

If you squint, it might seem that the ‘growth’ pathway to residency will deliver this, but I don’t see anything in the design of this programme that ensures the investor shares strategic responsibility for the businesses boosted by their capital. The visa rubric does not even try to assess the applicant’s entrepreneurial potential.

It might seem the previous government had no luck with their version of the golden visa. The number of successful applicants since Labour’s 2022 revamp would easily be accommodated in one of the Department of Conservation’s bigger tramping huts and the amount of capital invested here was very modest. But there remains a chance that something much more significant will arise from Labour’s model.

Labour’s version of the visa made a determined effort to draw blood, sweat, and tears from visa-holders and so hardly anyone went near it. But current visa-holders, with a few years of genuine entrepreneurial effort, are much more likely to have found the inspiration to build something that will take root and grow. The proof of that success could be another 10 years in the making. Discovering the secret sauce of Made in New Zealand is much less likely on the new terms set out by the coalition Government.

Wanting residency and having the capital to secure it is not a measure or indicator of future entrepreneurial breakthrough. Applicants might have money to burn, but it could have been inherited, gifted, or made by cashing up passive investments. Small fortunes can be made through gambling or from a court award of damages. Their wealth could have come from the proceeds of crime. Concerns around money laundering has led to the curtailment or cancellation of similar programmes overseas.

Inverting the migration process may help clarify my scepticism. New Zealand is not short of people who could raise the sorts of sums required by the visa were they to liquidate their real estate holdings, but why should foreign nations want them? Making a living from rental income is the opposite of the risk-taking, market-making, imaginative and constructive effort a country should demand from people in exchange for fast-tracked citizenship. Other countries have their own rentier class and have no need to import ours.

There is much to be gained by attracting truly entrepreneurial migrants, so long as we make the effort to properly identify them. We could implement a rigorous screening and post-investment monitoring process for the golden visa that improves the chances of socially and economically beneficial outcomes, but with a low number of successful applicants. This would be expensive and still prone to disappoint in the short term, if enhanced economic growth is really what is intended.

Alternatively, we can abandon the golden visa altogether and focus instead on bringing in skilled people from countries that offer far fewer opportunities than New Zealand to amass fortunes. People who aspire to take every advantage of the life New Zealand offers them, to make better futures for themselves and their children – the next New Zealanders – by dedicating themselves to achievement. The research is very clear on this: such immigrants grow an economy like ours and give established Kiwis a reason to stay.

They typically demand less and deliver more. Not because they are wealthy, but because they are not. Yet.