CITI Committee Meeting

STANDING COMMITTEE ON CITIZENSHIP AND IMMIGRATION

COMITÉ PERMANENT DE LA CITOYENNETÉ ET DE L'IMMIGRATION

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, February 10, 1999

• 1619

[English]

The Chairman (Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.)): The meeting for the study of the business immigration program has resumed. We have the department's witnesses back with us.

Mr. LeBane, would you like to start? Was Ms. Atkinson here last time?

Ms. Joan Atkinson (Director General, Selection Branch, Department of Citizenship and Immigration): No. Unfortunately, I wasn't able to attend last time.

The Chairman: Welcome, and welcome again to the others.

• 1620

Please proceed. Or would you like us just to pose questions?

Mr. Jeff LeBane (Director General, International Region, Department of Citizenship and Immigration): At the last meeting I delivered an opening statement. I know there was a request from members for a number of statistics on how many entrepreneur visas we had issued, our total visas. I hope you have that in your possession. We've tried to provide you with as much information as we could within the timeframe you requested. There was also some interest in what other countries do in terms of their entrepreneur programs, and you should have that information as well. We're really at your disposal for questions, Mr. Chairperson.

The Chairman: Thank you.

Are there any questions? Where did we end last time? We'll start with the Reform again.

Mr. Leon E. Benoit (Lakeland, Ref.): I'd like to start with a question on exactly what you've mentioned. Starting with the United States, could you outline what some other countries do with their programs? I think that will be a very useful comparison. I don't believe I received that information. There's nothing here about it. There are some numbers, but they're not what I'm looking for.

Ms. Joan Atkinson: There's a chart giving an international comparison of investor programs in Canada, the United States, Australia and New Zealand, in which we indicate the minimum investment amount, what's proposed in Canada in terms of the new investor regulations and what's currently the case in Australia, the United States and New Zealand. The second line refers to risk; that is, are there guarantees on that money to the investor or is the money invested by the investor-applicant totally at risk with no guarantees of return? The third line is the term, the period of years for which that money is required to be held.

Mr. Leon Benoit: I'm looking for a little bit more than that in terms of substance by way of comparison. We have the overall dollar amounts required, and I'd like some comment on that. In regard to the risk, what exactly is your “no, yes, no, no” indicating?

Ms. Joan Atkinson: It means that in the Canadian program, the Australian program and the New Zealand program, there is a guarantee of return of principal to the investor-applicant, whereas in the United States there is no guarantee of return. In the American program, that is a risk investment for the applicant. There is no guaranteed return on the principal in the American program.

Mr. Leon Benoit: So this looks at it from the applicant's point of view.

Ms. Joan Atkinson: It looks at it from the applicant's perspective. You're quite right.

Mr. Leon Benoit: Okay. If I could get some more information, then, again comparing... I think these countries are useful countries to compare us to. Could I get a little more information than just these basic numbers? Basically, what's handled in a similar way and what's handled differently? Were these other countries looked at carefully in designing the new regulation?

Ms. Joan Atkinson: If I understand you correctly, what you're interested in finding out is how the programs are structured in United States, Australia and New Zealand in terms of the investment vehicle, in terms of what kind of funds people are required to invest in. Is that what you're looking for?

Mr. Leon Benoit: I'd like information on the kinds of evaluations that have been done of the programs to see whether they're meeting targets and I'd like information on exactly what the governments' stated targets are for the programs. That's the type of thing I'd like.

Ms. Joan Atkinson: Okay. I don't know whether we have any of those numbers for you here today, but we can certainly make sure that we get them for you.

In terms of monitoring evaluation of compliance, I'm not sure if we have that information readily at hand. It might take us a little longer to get some of that information for you, but we certainly can do so.

Mr. Leon Benoit: I don't seem to be getting an answer here. If we're looking at comparing the programs, I think it would be very worthwhile to start with the stated purpose of the program in the different countries and then compare and contrast that stated purpose. Let's start right there and then carry on through, ending with an evaluation of how the different countries evaluate or whether they in fact do evaluate to see if the programs are meeting their stated purposes.

• 1625

Ms. Joan Atkinson: Okay. I'll let Mr. Myatt expand upon that a little bit more.

Mr. Don Myatt (Director, Business Immigration, Selection Branch, Department of Citizenship and Immigration): Although I don't have all the data available, perhaps I can provide some context for the numbers.

Canada was the first country to have an active investor program—from Hong Kong in the early days. It became so successful the other three large immigrant-receiving countries established their own program shortly after the Canadian one. Over time, they all have taken a different approach.

The New Zealand program is a straight investment amount that's invested into New Zealand government bonds that are held by the central government. After two years, the principal is returned to the investor. The interest is used to support the deficit, I guess.

In Australia they've had what they consider to be a very high-level program, focused at very wealthy individuals with high amounts of money. Again, the money is invested but not in the federal government. It's invested in state governments. The amount depends on which state the money is invested in. How far away the immigrant is from meeting the pass marks is also a factor.

In other words, if you're deficient in terms of your age or your education or your skills, you can up your ante by adding some money to the process. Again, the money is invested in state bonds in the country, and the principal is returned after three years.

The Americans have a very different program from the three Commonwealth countries. The United States program is really a mixture of our investor and entrepreneur programs. The entrepreneur invests anywhere between $700,000 to $1.5 million Canadian into a business that will create employment in the area in which the business is established. The amount reflects the economic conditions of the area in which the money is invested. The lower amounts are in high areas of unemployment and the higher amounts are in successful areas—New York City, for instance.

The immigrant undertakes to create a business that he will actively manage and control during his time in the United States. He is given a two-year conditional admission to the United States. After two years, the program is evaluated to determine whether his business has been a success and whether he's been actively involved in it. At that point, he would be given his green card status.

The whole U.S. investor program is under re-examination at the moment. Everyone who has used financing to qualify for the U.S. program has had their visa application put on hold. All the applications are being looked at again. The refusal rates are becoming quite high, because they have discovered that their program has been open to some abuse and to problems in terms of the amounts invested and the businesses being created.

Mr. Leon Benoit: Can you explain that a little bit more? What types of abuse has it been open to, and why are the amounts a problem now?

Mr. Don Myatt: The reporting on this program is publicly available through the proceedings of the U.S. INS reporting system.

The goal of the program is for people to come into the United States and create a business that they will actively manage. In fact, consultants and agents have been creating shell companies in which investors invest, on the surface, $1 million U.S. In fact, they have only to invest $100,000. There are promissory notes for the balance.

The shell companies really just set up a paper post office existence, a corporate entity somewhere in a strip mall in a high-unemployment area, to qualify for the program. The investors aren't really living in that area. They're not actively involved in the business. It's creating no jobs, and the money is either being flowed back to the applicant directly or he's being given an interest rate cutback.

Mr. Leon Benoit: Do the Americans feel that these programs are perhaps being used by organized crime to launder money?

Mr. Don Myatt: I don't know. That's not been reported in the official transcripts concerning the U.S. program.

Mr. Leon Benoit: What is their concern there, that they're not...? You've just said—I understand—that one of the concerns is that they're not really meeting the requirements of the program.

• 1630

Mr. Don Myatt: Both countries want to attract people with entrepreneurial spirit who are in short supply in our own economies and welcome these people to our countries to create businesses that will create employment. The program is failing to bring high-wealth individuals who are actually creating jobs in the United States. That's their concern.

Mr. Leon Benoit: Back to the stated purpose, you touched on that just now, saying that the purpose of the programs is to create jobs and of course investment. Perhaps you could elaborate on what the stated purposes are in the other three countries and go a bit beyond the very basic information.

Mr. Don Myatt: I'm more familiar with the United States program because it has more problems to it and we get better reporting on it.

The Australian program is quite small. I think we're only talking about 200 to 300 admissions a year. The people have very high net worths, over several million dollars. They see the program as, you invest the money in Australia and you can come and live here. I'm not sure what their stated program objectives are. I would have to do research to find that out. Similarly, New Zealand has a very tiny program, again aimed at a very few individuals.

In terms of numbers, the large programs are in Canada and the United States. One of the aspects of our program from day one, aside from creating jobs, is getting people with an entrepreneurial outlook and abilities to leaven up the level of our own economy.

The Chairman: I now give the floor to Mr. Ménard.

[Translation]

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ): The last time we spoke, Mr. LeBane, you seemed to say that Quebec agreed with the federal government proposals at that stage in the negotiations. Did I understand you correctly? I've been hearing somewhat different things. Do you reaffirm at this moment that the Quebec government agrees with the proposal, including the $500,000 amount?

[English]

Ms. Joan Atkinson: I'll answer that question, Mr. Ménard.

At this point in time we have no indication that the Quebec government is not in agreement. Under the terms of the Canada-Quebec accord, the Quebec government needs to adjust its definition of “category”, and in the definition of “category” the minimum net worth requirement and the minimum investment amount are factored in. At this point in time the Quebec government has indicated to us that they will be changing their regulations to comply with whatever changes we're making at the federal level.

[Translation]

Mr. Réal Ménard: Are the negotiations between deputy ministers, or has the federal minister herself been in touch with her counterpart? Do you have an agreement in principle between ministers, or between deputy ministers?

[English]

Ms. Joan Atkinson: There has been communication at both the deputy ministerial and ministerial levels.

[Translation]

Mr. Réal Ménard: I would like to ask three questions. First, could you give us a document outlining in brief the impact of this program on Quebec and Canada, so that we are clear on it? I would like to thank you, by the way, for the chronology you gave us. Have your people already assessed the impact of these new proposals? I have here some assessments by people who work in this field, one of which was written by the brokerage firm of Lévesque, Beaubien, Geoffrion Inc., which provides specialized services to immigrant investors. Their conclusion is that these proposals could create significant problems for Quebec and that the number of immigrants interested in investing in Quebec could drop from 1,520 to 600.

My second question is somewhat technical. I understood that it would not be possible for the Quebec government to select immigrants who want to invest in Quebec and who have already been selected by the federal government, and that the number of potential immigrant investors would be reduced. Some people understand that only immigrants selected by Quebec could invest in Quebec. Would that really be the case if Quebec were ever to agree to your proposals?

• 1635

[English]

Ms. Joan Atkinson: In the proposed regulatory changes it is true that individuals who are selected by Quebec make their investment in the Quebec program, and individuals who are selected by the federal government make their investment in the federal program. That is the way the Canada-Quebec accord is intended to work, and that's certainly within the parameters of the accord.

In terms of what the program—

[Translation]

Mr. Réal Ménard: Just a moment, I want to understand this correctly. At the moment, can immigrants selected by Canada invest in Quebec?

[English]

Ms. Joan Atkinson: Yes, that is correct.

[Translation]

Mr. Réal Ménard: I heard that your new proposals would mean that this would no longer be possible.

[English]

Ms. Joan Atkinson: That's correct. When an immigrant applicant is selected by the federal government, they invest in the federal fund. That is a change from what is currently the situation.

[Translation]

Mr. Réal Ménard: Ms. Atkinson, you will agree with me that this is not a detail, but rather a condition. You are being foxy; you are hiding certain things from me.

To tell you how much of a concern this is to the business community, I would like to point out that the publication Les affaires published a special issue on this subject. I could send you a copy of it if you'd like. This publication is not in favor of the federal government's proposals. It is correct to say that one of the significant changes would be a substantial drop in the number of immigrant investors in Quebec. Moreover, if the Quebec government wishes, it will be in charge, but that is not what I have been hearing. In any case, however, we will have an opportunity to look at this aspect in greater depth. Do you think there is any basis to the concerns expressed by some representatives of the business community, who say that these proposals could cause half of the immigrant investments in Quebec to disappear?

[English]

Mr. Don Myatt: Perhaps I could clarify that. No, we don't agree with the Quebec business community that the amount of investment in Quebec will be reduced by half. We expect that the investment amount in Quebec will decline somewhat because of the efforts to restructure the program in order to bring some balance between the Quebec program and the federal program. Historically, Quebec in 1997 received 71.5% of the immigrant investment brought into Canada under this program. The previous year, 1996, they received 59%. In 1995 they received 50%; in 1994, 42%; and in 1986 to 1992 they received 28%. So as you can see, Quebec has gone from 28% to 71.5%.

[Translation]

Mr. Réal Ménard: I would like nothing better than to be convinced that your proposals will not produce the consequences expected by the business community. Do you have any internal documents you could give committee members that would support this viewpoint, or is it more speculative in nature?

Did I understand you correctly, are concrete negotiations underway with Quebec at this moment? If I were to table a motion tomorrow to invite officials from the Quebec government to appear before the committee, do you think they would be telling us the same things you are?

[English]

Ms. Joan Atkinson: Going back to the point of consultation with the Province of Quebec, we have been consulting with provincial officials all the way along in terms of the redesign of the investor program. As I indicated, there has been an exchange of correspondence at both the deputy ministerial and ministerial levels vis-à-vis the design of the new program and the specific change we're talking about, which restricts Quebec to taking the money for the people they have selected.

[Translation]

Mr. Réal Ménard: Could you table this correspondence?

[English]

Ms. Joan Atkinson: We can certainly go back and see. You're asking for—

[Translation]

Mr. Réal Ménard: I can tell you that we are the most discreet guys in Parliament.

[English]

Ms. Joan Atkinson: —copies of the actual exchange of correspondence between the Province of Quebec and the minister.

Mr. Don Myatt: It's part of the negotiations and part of the history of that. It has to culminate in several meetings as required by the court. I'm not sure if it's available.

• 1640

If I may clarify again, I think you're concerned about impact of changes verses what Quebec has agreed to in the technical changes. Quebec has been an active participant in all of the working group meetings with the provinces on the new design. Under the accord Quebec will agree to harmonize its category. Now, as to what the impact will be of this harmonization of investment amount and net worth, we can't say, but in speaking with the investment communities in Canada and Quebec, we think there'll be some decline in the Quebec program.

If you wish to go to Quebec, you must be selected by Quebec, and therefore you must invest in the Quebec program. If you wish to go to Quebec, you're not able to invest in the Canadian program and be admitted to Quebec. The regulation hopes to make sure the programs are mirror images of each other.

[Translation]

Mr. Réal Ménard: There's a difference as regards my last question. Is it not true that, at the moment, people who want to invest in Quebec, but who do not live in Quebec and are not selected by Quebec, may do so nevertheless? However, under the new proposals, people would have to first reside in Quebec as well as be selected by Quebec in order to invest there, and this would reduce the potential number of immigrant investors. You therefore cannot think that these new provisions will have no impact. The figures I have here show that at least 40 p. 100 of people who are not selected by Quebec do invest in Quebec.

[English]

Ms. Joan Atkinson: It's true that there will be some impact in terms of a reduction of the current 71% of the total investment that comes into Canada through the investor program that currently goes to Quebec—or in 1997, rather, went to Quebec. There will be some reduction in that amount. That is true.

It's difficult for us to forecast exactly how much the reduction will be because it depends on a number of factors. Those include the total number of immigrant investors that come into the program, how successful the federal fund is marketed in the investor applicant market internationally, and the marketing of the Quebec program. There are many factors at play that will determine the amount of investment that will come into the federal program and the Quebec program. So it's difficult for us to say with certainty exactly what the nature of the impact will be on the Quebec program and the amount of moneys that come into Quebec under the investor program.

Mr. Don Myatt: If I may make one tiny point, to turn your model on its head, it is not possible at this time for someone who wants to immigrate to Montreal to choose to invest in British Columbia. That's not possible. That investment is not allowed by Quebec as eligible grounds for admission to Quebec.

The Chairman: I yield the floor to Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair.

I want to thank the officials who prepared the data I requested the last time. I find it's clearer for me.

I noticed that in Canada our term is five years, which is quite long compared with those with two- or three-year terms. I understand that three years of physical presence in Canada would be required in order to qualify for citizenship. Is that so?

Ms. Joan Atkinson: What we're referring to in this table is the period of time the money must be held in the investment fund before there's any return to the investor applicant.

Ms. Sophia Leung: Yes, I understand that. So that also could be a deterrent, a discouragement, because your $500,000 are frozen for five years.

Ms. Joan Atkinson: Correct.

Ms. Sophia Leung: The other two countries, the United States and New Zealand, have two years. There must be a reason. We want to compete with other countries, so you have to make it more attractive. I'm sure you know what I'm saying.

Ms. Joan Atkinson: Yes.

Ms. Sophia Leung: Now, another thing is that we all know that the investors tend to be quite accomplished businessmen and to have businesses in other places before they permanently settle in Canada. So that poses a lot of difficulty for their physical presence. This will increase a lot—three years, if I understand it. That's the requirement.

• 1645

We all agree you have to make a permanent commitment to this country if you really want to become a Canadian citizen. We have no argument with that. But in reality, if we assume all the investors have business interests in other lands—and I know that's reality, that they have to go overseas more frequently and not as tourists, that they don't have to go only once or twice—that poses some concerns and questions about flexibility. If we really want to compete with other countries and be more attractive, this actually adds a lot of restrictions.

It doesn't mean that if you have to leave the country you have less permanent residency. It doesn't mean this person is not committed, if you follow me. If you have many other international businesses, it's almost a reality. This has been voiced to me. I'm from the west, and this is very important. They find it discouraging—I just want to share that—also because of the long term, the five years. Can you explain why it's five years?

Ms. Joan Atkinson: First of all, the term we hold the money for is in no way related to residency status. The five-year holding period for the money is not at all related to either the retention of permanent residence status in Canada or meeting the residency requirements for citizenship.

In the United States, Australia and New Zealand, the term we refer to here in the table only refers to the holding period for the money. It is not related to residency requirements, for either retaining residency status or citizenship in those countries. I think we have to make a clear distinction between the holding period for the money and the period of time you need to be resident in Canada for citizenship or to retain your permanent resident status.

Certainly, in terms of retaining your permanent resident status for immigration purposes, we recognize the flexibility business people often require in order to meet residency requirements. In the context of legislative review, that is one of the issues we are looking at in the immigration context. But I would like to reiterate, on the five years versus the two years versus the three years versus the two years, when we looked at what the appropriate holding period would be for the investment in Canada, we looked at what other countries do, in terms of having our program competitive with other countries. We felt the five years was a period of time that would allow the provinces to extract the best economic benefit.

We have to remember that the money that comes into the federal fund, under the investor program we are proposing, will be distributed to the provinces for them to use to meet their economic development objectives. The principal, the half-million dollars, will be returned to the investor after that five-year period. Five years was really the minimum period of time we felt, in consultation with the provinces who were very much involved in the development of the program, was most appropriate for the provinces to get the maximum economic benefit out of the money that will come to them under the program. But it is not related at all to the residency requirement. That is a completely separate issue.

Ms. Sophia Leung: I have just one more question.

• 1650

I've also been informed—you may correct me—there's a requirement for the investor to have a high education and language proficiency. We all agree it's necessary. But I also have some data that two-thirds, or a majority of investors, do not have language proficiency. Even Bill Gates didn't finish two years of post-secondary education. So if you impose that, no one will be qualified. I just want you to comment on that. Is that a reasonable restriction?

Ms. Joan Atkinson: Again, in the context of legislative reviews and strategic directions the minister announced, we are looking at selection criteria, as you point out, for both business immigrants and skilled workers. We are looking at what weight we should give to language skills and level of education for business immigrants, both entrepreneurs and investors. It's clear that we do not necessarily need the same level of language skills or education for entrepreneurs and investors that we require for skilled workers—individuals who will be entering into the labour market and seeking jobs.

Our focus will very much be on two things. Number one will be ensuring we have a much clearer and more robust definition of business experience for the business immigrant, so we are selecting the individuals Mr. Myatt characterized in his comments—people who have that entrepreneurial spirit and the kind of business acumen and skills that will convince us they will make a significant contribution and create jobs in Canada by establishing businesses or investing in Canada.

Along with that, however, there is a minimum amount of language and education skills that will be required for settlement in Canada, and that's the nature of the discussion we're currently engaged in. What is that level of language and education one should have as a minimum in order to successfully establish in Canada?

We will be consulting with non-governmental organizations and stakeholders; practitioners, including the bar association; the immigrant consulting organizations; and the provinces as we go through our further refinement of those directions and decide what that new selection system might look like for business immigrants.

We're certainly very mindful of the concern that has been expressed about our intentions on language and education requirements for business immigrants. We're certainly going to pay very close attention to all of the comments we receive from all of the interested stakeholders and the provinces on that.

Ms. Sophia Leung: Thank you.

On the west coast, specifically in Vancouver, they had several forums. All the experts from law and different sectors came together and expressed a real concern.

I want to be more specific about the language requirements. Does language account for 25% of the points? I think that's what one other colleague told us.

Ms. Joan Atkinson: Under the current selection system for entrepreneurs and investors, their language skills are assessed. They're only required to obtain, under the point system, a total of 25 points in all factors, which would include age, education, language skills, personal suitability, presence of relatives in Canada and so on. The total number of points they are required to obtain is only 25, which in effect means virtually all of the entrepreneurs and investors can meet the points requirement.

What is critical in the assessment of both the entrepreneur and investor currently is whether they meet the definition of an entrepreneur or an investor. In the current entrepreneur program, entrepreneur is defined as someone who has the intention and the ability to establish a business in Canada that will employ at least one Canadian resident, other than the entrepreneur and his or her immediate family. An investor is defined as a person who has experience in operating, controlling or directing a business enterprise, has accumulated a net worth by their own endeavours, and has made a minimum investment of the required amount in the appropriate investment vehicle.

We are looking at changes to the definition. The entrepreneur definition is currently problematic because visa officers are required to assess ability and intent. We want to get a more objective criterion for assessing business experience.

• 1655

We're also looking at the points that are awarded to entrepreneurs and investors to determine whether or not we should in fact have more emphasis given to language and education. If so, what type of emphasis should it be? What is the scope and the nature of that emphasis? Thank you.

The Chairman: Mr. Martin, you have the floor.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you very much. I have a number of very short questions that require almost yes or no answers just to clarify things.

First of all, who is Paul Coolen in this document that was circulated to us?

Ms. Joan Atkinson: He's an employee of the Department of Citizenship and Immigration working in Nova Scotia.

Mr. Pat Martin: Mr. Coolen has some very strong opinions. He's either a very dated individual or he's very, very critical of the programs. Some of my questions are in regard to what I've been reading here. First of all, just as a matter of history for myself as relatively new to this, it says in 1984 the number of jobs to be created was reduced from five to one. That's accurate?

Ms. Joan Atkinson: That's accurate, yes.

Mr. Pat Martin: Secondly, one of the first things Mr. Coolen points out is

...this program has never been audited since its inception in 1978. Any claims of investment and job creation are suspect and not reliable due to faulty methods of collection...

This is a terribly critical statement. I won't ask you to comment on that, because there's a lot of personal opinion there. Is it a fact that this program has never actually been audited since 1978 for outcomes?

Ms. Joan Atkinson: In fact that's not true. There have been a number of reviews of the performance of the entrepreneur program. As a result of those reviews and evaluations of the entrepreneur program we have made changes. For example, the change that was referred to, the dropping of the number of jobs to be created from five to one, was a change we made as a result of looking at the performance of entrepreneurs.

Another important change that was made was expanding the period of time in which entrepreneurs are required to meet the terms and conditions of landing. Initially the period was one year. It was determined after evaluating the performance of entrepreneurs that were under terms and conditions that this was highly unrealistic. A new business person coming to Canada could not be expected to acquaint themselves with the business environment, develop some options and alternatives, and do the proper investigation before deciding where to invest their money. So we expanded that to two years.

I wouldn't agree with that statement. There indeed have been reviews, and we have made changes as a result.

Mr. Pat Martin: That's what I was looking for. It seems like a very strong statement and I just wanted to know if there have been performance reviews over the years.

In the province of Manitoba we've been horrified by all kinds of scandals associated with immigrant investor funds, terrible scandals and real fraud. Again, in Mr. Coolen's opinion in the province of Nova Scotia

...fraud and misrepresentation in this program runs at least at 80 percent. It is my opinion and experience that this rate of non-compliance is probably the same across the country.

Eighty percent would be about Manitoba's experience. People were not far away from jail—anybody who was remotely associated with the Maple Leaf Fund or the Bison Fund, all of those scandals. Is this an overstatement? And could you just give me pretty much a yes or no answer? As I'm fourth party opposition, I get very little time to speak here.

Ms. Joan Atkinson: Yes, it's an overstatement. It's an opinion that is not supported by the facts. I think I should clarify here before I start that the incidents you were referring to in Manitoba related to the investor program, and Mr. Coolen's memo is referring to the entrepreneur program and entrepreneurs meeting the terms and conditions of their visas.

Certainly on the entrepreneur program we have had incidents of abuse and fraud. Indeed that is one of the things we are trying to address in our new investor program regulations by having a single federal fund, where funds will be collected by the federal government through a single window and then distributed to the provinces, with elimination of the middle man and so on.

• 1700

In terms of the entrepreneur program, in fact the statistics don't bear out that 80% fraud and misrepresentation figure that Mr. Coolen has been using.

We carried out a review that covered a three-year period, from 1995 to 1998, during which we looked at how many of the entrepreneurs did in fact come forward and report on their terms and conditions so that we could do the monitoring on compliance. Our data showed us that 80% of entrepreneurs did come forward and report in order for us to do the monitoring on compliance. So I think if we look at the facts, we'll find that figure is correct.

Mr. Pat Martin: I could ask questions regarding all of his comments, but I won't because I can see where it's going. But one point he raises is that we entered into an agreement with Revenue Canada to try to do an in-depth study of what has happened to clients, and over one year ago they agreed to open their records. Is that correct? If so, what is the result of that study? Is that information available yet?

Ms. Joan Atkinson: We in fact have more than an agreement with Revenue Canada. We have a database where we link up tax-filer information and immigration data, whereby we can look at the performance of immigrants by looking at their tax revenue. This database has been developed with Revenue Canada, Statistics Canada, CIC, and other federal government partners. There is a consortium of federal government departments that fund and use this database. A number of departments have access to it, those that are members of the consortium, and provinces as well are beginning to have access to this database.

The information we've been able to extract from this database on the performance of entrepreneurs based on the income tax returns they file gives us some indication as to how they're doing. The percentage of entrepreneurs that show investment income in their tax returns is 68%, while Canadians residents in general show 36% of their income is investment income. So one can surmise that entrepreneurs are investing in businesses and so on.

We look at which entrepreneurs are declaring employment income on their tax returns as opposed to investment income, and we see that 39% of entrepreneurs declare employment earnings. So some of them definitely are working rather than creating jobs. That compares with 70% of Canadians who have employment earnings.

So when we look at the data that's available to us on the tax-filer database, it gives us further indications as to whether entrepreneurs are in fact creating jobs and running businesses, and we think it is indicating that they are doing so.

Mr. Pat Martin: The only question I'd ask in closing is why was this circulated to us? Is it from a disgruntled employee or what?

The Chairman: No, it was quoted by the Reform Party, and the committee decided it would request copies, since it was a public document anyway.

Mr. Pat Martin: This is the first time I've seen it. Is the gist of this that far off? Is this a case of slander? Is this from somebody in your department?

Ms. Joan Atkinson: I would say that we certainly encourage all of our employees to let us know what they think of the programs and policies, and we seek their input on them.

Mr. Pat Martin: But he's blowing the whistle on a grossly malfunctioning system here, and he's calling for a complete moratorium and an audit because of what he sees as wretched abuse and excess.

Ms. Joan Atkinson: I think that what's important for us to be able to do with Mr. Coolen is to invite him to comment on the proposed direction we're currently going in the legislative review to try to address some of the... Granted, there are some abuses and fraud in both the entrepreneur and investor programs, and we hope that the changes we're currently working on are going to address some of that fraud and abuse that does exist in the program. Mr. Coolen, as with all other employees of the department, will certainly be invited to continue to make his views known.

The Chairman: Mr. Telegdi.

Mr. Andrew Telegdi (Kitchener—Waterloo, Lib.): Thank you, Mr. Chairman.

It certainly is an interesting document.

• 1705

Let me ask you about the investor program. Actually, when I was looking at the whole topic, I could think of at least a half dozen people in my riding who are business people who are very successful, and if I look at the circumstances that allowed them to come into this country, I don't think they would be allowed into this country today. One of the people I'm thinking about still signs his name with an X. He has to be worth well in excess of $5 million, and he pays a lot of taxes. As a matter of fact, he complains about it sometimes. I'm not sure how you measure that kind of entrepreneurship. They came here, they started as labourers or washed dishes in a restaurant, and they started accumulating. I don't know if there's any way we can capture those kinds of people. I think we're going to be losing them.

With regard to this investor program, in terms of the moneys invested, what is the return? We have an amount put in, we have the risk, and we have the term. Do we have any numbers for the return on the investment?

Ms. Joan Atkinson: I'll comment on that first, and Mr. Myatt may be able to give you some more context on it.

In the Canadian program the return is of the principal, so the return is the $500,000 at the end of five years. In the United States it's a risk investment. So an individual could invest a minimum amount, and because it's a risk investment they'll receive whatever the rate of return is on that risk investment. It could be high, it could be low, or they could lose it all. It is a risk investment. I believe in the Australian and New Zealand program, again, we are talking about a return of the principal. So there is a return to the applicant of the money they initially invested. There is no guarantee on any additional return above and beyond the principal.

Mr. Don Myatt: Your question in terms of the return is where is the benefit for Canada in this program? The return in terms of interest payments is the benefit. So $500,000 at five years is lent to the governments of the provinces, and they can do what they wish with it. If they were very creative, they could bank it at a minimal rate of 4% or 5%, and then return the principal to us. If they're a dynamic province, they can take the money and invest it in high-risk entrepreneurial activity and try to leverage that into some more economic growth and job creation. We're leaving the provinces with the choice as to what they want to do. Some with large and deep infrastructures, such as Ontario and British Columbia, will probably use the money for high-risk SME investment. Others with more shallow economies will use the money perhaps a little more cautiously. So the return is really what Canada and the provinces get from this loan of the money for the five years.

Mr. Andrew Telegdi: Those are big criteria. So essentially what the people coming into Canada do is give $500,000 a year, or they could actually borrow it.

Mr. Don Myatt: That's $500,000 for five years.

Mr. Andrew Telegdi: It's for five years, but they can borrow it and they pay $500,000. If you had collateral, you'd pay $30,000 a year on it, probably around 6%. So it would $30,000 a year for five years, which would be about $150,000.

So there's quite an issue involved in terms of what the interest rate is. If the cost of money goes up, then the value to Canada goes up but the cost to the investor goes up.

Mr. Don Myatt: Yes, but we're not going to be lending the money to the applicant. The applicant is going to have to cut the federal government a cheque for $500,000. If he has borrowed it, the interest rates affect what his opportunity cost is. He will have lost that opportunity, depending on what his interest rate is. That's between him and the lender. As far as we're concerned, Canada gets the money, and then the province, wisely or foolishly, whatever it chooses, uses it to further their economic development, and pays back the individual the principal.

So like any good portfolio technique, the provinces should manage the money that's flowing to them, setting aside enough to meet their obligations and using the remainder for investment and growth. So the interest rates will affect the provinces and the individual. They won't create a debt for the federal government.

• 1710

The Chairman: Are there any other questions? If not, let me pose a few questions, if I may.

On the point system—you indicated there are points on the various criteria—are there maximum points per criterion? Of the 25 points, are there maximum points? You indicated several criteria. Are there maximum points per criterion, and are there minimum points below which you may not pass?

Ms. Joan Atkinson: No, there are no minimum points under which you could not pass for the investor and entrepreneur program.

The Chairman: But do you have maximum points per criterion?

Ms. Joan Atkinson: Yes, we award a maximum of 15 points in language, 18 points in education, and 10 points in personal suitability, and so on, but there's no minimum number of points you have to meet in each of those factors in order to pass.

The Chairman: Good.

On what you indicated about the employment investment income, the investor's income as a way of ascertaining that indeed investment is taking place, or dominantly employment, do the data permit an analysis that the employment income may actually be only a declaration on the part of the entrepreneur that he or she is an employee? How do you reconcile that, and also that an investment income may not be an investment return on the business but interest on money earned, deposited in the bank as bonds? How do you ascertain those factors?

Ms. Joan Atkinson: Those are very valid points. The level of analysis we can do based on the data we have available doesn't permit us to get down to that level of detail. Indeed, we do want to do more research on this, and the database should allow us to look at things such as the T5 supplemental slips that employers submit.

We have not yet gotten to that level of detail in our analysis, but that's the next phase of analysis we want to do on the database to try to give us an even clearer picture of how many jobs possibly have been created and how many people are being employed by immigrants who came in as entrepreneurs or investors, for example.

The Chairman: With respect to jobs created, would you have an ability or is it in the process of your design that you are able to trace the job created in terms of income of the person employed or contracted with the one who would have that income? Is that a possibility to collect to truly assess the number of jobs created as envisioned by the program?

Mr. Joan Atkinson: We're certainly going to attempt to do so. The database is relatively new, and we've just started tapping into that database to do the kind of research we need. We're certainly going to explore that further to determine whether we can get a more exact number of jobs created.

The Chairman: This is something on which I'm sure the committee would like to encourage you.

Ms. Leung, do you have some more questions?

Ms. Sophia Leung: I'm interested in this. With these four countries, if the interest rate were 5% for each, I calculated roughly—there may be mistakes—that Canada will cost the investor $125,000; for the United States, I take the lower, and it costs $70,000, only two years; Australia costs $120,000; and New Zealand, $80,000.

If you are an investor, if you are a businessman, you do calculate every dollar. Right there, on the cost, we are not competitive. I'm saying this quickly, but you may want to comment. It costs so much. In five years, the money will just freeze; it will not produce anything.

Ms. Joan Atkinson: As Mr. Myatt had indicated, the federal government will not be offering financing.

Ms. Sophia Leung: I know that.

Ms. Joan Atkinson: Obviously, it's up to the investors. For each of those countries—United States, Australia, and New Zealand—I don't know whether we have information on financing by the funds themselves, but in terms of financing, I would think at least in Australia and New Zealand, again, it's between the investor applicant and the lender, and investors will seek the most competitive interest rate.

• 1715

Ms. Sophia Leung: No, that's not what I'm talking about. I'm assuming that the investor has their own funding for it. I'm just saying comparative. People shop around, I hate to say.

Ms. Joan Atkinson: Yes, certainly.

Ms. Sophia Leung: Essentially you pay $500,000 to get a Canadian passport. That's more or less a given. But I was saying that it's not competitive in the business world in terms of the cost.

The Chairman: I wonder if Mr. Myatt would comment on whether it has been part of your discussion that competitiveness could be based on dollars but it could also be based on non-dollar valuables, because we are the number one country in the world, such as security, etc. Are those factors in your consideration of confidence as to why this value has been increased?

Ms. Joan Atkinson: Very much so. Obviously the dollar amount is important, and the business person always keeps an eye on the bottom line. So the dollar amount is important, but the security of the program is also very important. And that is another reason why we need to make the kinds of changes we're making, because of the kind of fraud and abuse that Mr. Martin had referred to in Manitoba and other places.

There's been insecurity, if you will, in the market about Canada's investor program. We need to stabilize the investor program so that we can ensure that the image of the program is robust and strong in the investor market. But you're quite right that we're not just talking about investors here. We have to remember that we're talking about immigrants and that we're talking about people who have made a choice to come and live in Canada. The vehicle they've chosen to come through because they meet the requirements may be the investor program.

But we have to remember that it's not just the Canadian passport they're getting; they're getting life in Canada. So there is the quality of life issue that definitely comes into play. That is part of an investor's decision, the quality of life for themselves and for their family. We think on that ground we stand up very well to the other three countries we're competing against.

It's true. You have to look at the composite of factors that go into an immigrant investor's decision to choose Canada over the other two or three countries.

The Chairman: I will go to Mr. LeBane for further comments and then I will call on Mr. Telegdi.

Mr. Jeff LeBane: I would just add that when we do our marketing strategies abroad and with the provinces, and when we look at the business programs to Canada in those markets, what are the other factors that make Canada attractive, and what are people looking to Canada for?

If we accept the argument that perhaps other programs right now may be more attractive in an economic sense, investors are not looking exclusively for those reasons. There are parts of the world where there are very serious environmental problems—I think of Mexico, I think of Malaysia—where we are very attractive for environmental reasons.

In Europe part of the business interest we get is because of, in simple terms, open space, land opportunities, a certain amount of freedom. Some countries' investors look to Canada for security, lack of crime on the streets, quality of education for their children, and a universal health care system. And a health care system versus the American system, when you're with children, for many investors makes Canada much more attractive.

So when we're developing our marketing strategies we're also trying to capitalize on those advantages for Canada.

The Chairman: Thank you.

Mr. Myatt, would you like to add to that?

Mr. Don Myatt: Madam Leung had a bottom line question, and perhaps I could help her with it in that narrow comparison of dollars. Yes, the Canadian program would cost someone $125,000 to come in if they were in Hong Kong. This is a proposal.

In the United States program they are faced with putting their money at risk. They may not get it back. And they have to sit in the United States for two years and then have their application adjudicated to even find out whether they become a permanent resident of the United States. So the risk factors, even on their personal ability to remain, is much higher.

In Australia, technically no financing of that amount is allowed. The Australian authorities go back through the immigrant's records for two years prior to the application to verify that the assets actually are there and there's no financing. And New Zealand also does not permit financing of that amount. So people have a lot more worry about meeting the admission requirements.

• 1720

Yes, we've done the bottom line numbers too to gauge where our price point is on that. As Ms. Atkinson and Mr. LeBane say, the other factors are very important in those markets.

The Chairman: Mr. Telegdi.

Mr. Andrew Telegdi: Actually, just doing a quick calculation at 6% return on the money, the cheapest one would be New Zealand, at $96,000. Australia would be the most expensive. It goes from the middle of the range $144,000 to $360,000, depending on whether it's $800,000 or $2 million; so $360,000 would make it certainly the most expensive. The U.S. is $84,000 to $168,000, and Canada is $150,000.

I don't see that in itself as being a huge factor for this type of investor. What I have heard from lawyers who deal with people they're trying to bring in under the investor program is that our processing time takes too long. So beyond looking at this as saying okay, let's compare ourselves on a financial basis, I don't think that's really the determining factor. I think we should be looking at some of the other factors, like how long does it take to process.

At the last meeting I suggested that we have discussions, formal discussions, maybe have some workshops, with those lawyers who do deal on the international scale with the investors and who are shopping around and take a look as to what some of the barriers are for them to be successful, keeping in mind what our requirements are with security and everything else. So that might be a useful kind of exercise so that at least you're aware of what their concerns are.

The Chairman: I wonder if I may piggyback on that idea. From your experience and your feeling and from the actual sort of appraisal of this program, what would be the ideal time for processing, from time of application to completion, all things being ideal?

Ms. Joan Atkinson: Maybe I can start.

I think the first thing I'd like to say is that we're dealing with individual human beings who have different agendas and plans, and particularly for a business person. We've already noted that business people have interests that are not easily dissolved, they have business activities that are going to keep them in the home country, opportunities to continue to make money, even while they're preparing for a new life in Canada. There's a period of time when they need to go back and forth and so on. I think what we find in business immigration is that sometimes the business immigrants are not interested so much in having speedy processing as they are interested in knowing for sure that they will be positively dealt with, and that they will get an immigrant visa.

I think one of the issues we tend to deal with a lot for business immigrants is their desire for certainty. When they submit an application they want to know quickly whether or not that application is going to be accepted. So in terms of what's an ideal time, I think that varies tremendously, depending on individual circumstances. I think it is fair to say that applicants probably do want to know sooner rather than later whether they're likely to be accepted.

Mr. LeBane would like to comment.

The Chairman: Before I leave that response, if they would like to know the certainty, the element of time is an essential component of certainty. So then following an application, what do you think would be a time period beyond which apprehension could be developed as to the ability of Canada to process in time, whatever that means, a given application? Do we have any sense of what that minimal time ought to be so that we can have a goal in management?

• 1725

Mr. Jeff LeBane: It's a very, very difficult question you put. Let me go back just one step.

There has been some criticism, with some justification, that our processing times abroad in the business category are long. One of the reasons the minister chose to go to the creation of business immigration centres was to bring pools of expertise together, to bring officers together, so we would be able to process faster, more expeditiously, and yet have proper controls. That's one of the objectives of the business centres. While we're working through the older cases, and we have yet to clear those out, the expectation is that processing timeframes will reduce.

I will build on what Ms. Atkinson said. When a person makes an application, the most important thing on their mind is whether there is going to be a requirement for an interview, and in most cases—not all, but in most cases—there will be an interview. I would suggest that the expectation is that an interview should take place within a period of time up to a year, not longer—within a year's timeframe.

But very often—we see this in all categories, not just the business—when they come to the interview and they know we're accepting them, on the assumption that there are no medical problems, or criminality or security, they very often will say to us, “How much time do I have? Can I defer my medical examination because I have to sell my property, I have to transfer my assets, my children have to finish school, the school year is this time? When does the school year start in Canada? When does winter end?” You get that question as well. So those are all factors, and frequently they're looking for medium to long-term timeframes after they get the assurance, rather than leaving as quickly as possible.

In terms of the assurance, what they're looking for—and this is just an educated opinion—would be less than a year.

The Chairman: It would be less than a year. With the establishment of the nine processing centres and four interview centres that have been implemented, when were they implemented, and are we already seeing the results that have been envisioned?

Mr. Jeff LeBane: They were implemented on June 1 last year. And we have not yet been able to get clarity on the timeframes because one of the commitments the minister made was that cases that were in process worldwide would be processed to conclusion at those posts. So we have not worked those cases out of the system. It's unfortunate, but it is too early.

The Chairman: Thank you.

Are there any other questions from the committee? If not, we have one minute to adjournment.

I thank the officials for their time and effort and expertise on behalf of the committee. We may invite you again, because we have just decided we will make this a formal study. Therefore we will be circulating the terms of reference and we may want to re-clarify some of the points. Witnesses other than yourselves may give us other ideas and observations, so please be on the alert. Thank you for your expertise.

Mr. Jeff LeBane: Thank you.

The Chairman: The meeting is adjourned.