CITI Committee Meeting

STANDING COMMITTEE ON CITIZENSHIP AND IMMIGRATION

COMITÉ PERMANENT DE LA CITOYENNETÉ ET DE L'IMMIGRATION

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 4, 1999

• 0915

[English]

The Chairman (Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.)): The meeting is now called to order. I see a quorum.

We have before us officials from the Department of Citizenship and Immigration. Pursuant to Standing Order 108(2), we are considering selected aspects of the business immigration program.

I would like to welcome our witnesses: Mr. Jeff LeBane, director general of the international region of Citizenship and Immigration Canada; John Mizobuchi, acting director of operational coordination of the same international region; and Don Myatt, director of business immigration in the selection branch of the department.

We will now proceed to hearing the witnesses, if the group would like to make their opening remarks.

Mr. Jeff LeBane (Director General, International Region, Citizenship and Immigration Canada): Good morning, Mr. Chairman and members. It's a pleasure to be here today with you.

As you've indicated, Mr. Chair, I'd like you to meet Don Myatt, who's responsible in the department for business policy design. In the simplest terms, I'm responsible for the delivery of our immigration program abroad, and Mr. Mizobuchi works with me on both delivery abroad and operational design—how we're going to implement the immigration program abroad.

We've distributed some material for you this morning. I hope you've had the opportunity to look at it. I'd like to make a few very brief comments on our business immigration program, and then I would invite your questions.

Canada's business immigration programs were introduced in the 1980s and are currently in transition. Regulatory amendments to redesign the investor program were announced last December. Changes focus on the use of investment in Canada and are slated for implementation this April 1. At the same time, CIC is updating selection requirements for business immigrants as part of the government's legislative review exercise.

Migration of business immigrants is determined by two main factors. Push factors are events in one's home country that motivate people's desire to uproot their families and businesses to start over again in a foreign country. These are developments that are often completely beyond our control. Pull factors also play a role: What makes Canada attractive in terms of the quality of life and social and economic opportunities?

Business migrants to Canada have traditionally come from Hong Kong, Taiwan, and Korea. Since 1997 applications from business immigrants have been declining. This trend can be attributed to a number of factors, such as the Asian economic downturn, which began early last year and which continues, and the completion of the handover of Hong Kong to China in July 1997. Many people, through the late 1980s and early 1990s, made a decision before that turnover to migrate to Canada and left at that time. Other factors include foreign currency exchange rates and economic opportunities in Canada, as opposed to competitors we have in migration, such as Australia, the United States, New Zealand, and the United Kingdom.

• 0920

Provinces, in partnership with CIC, actively promote business immigration to Canada. There is at present a very significant change in source countries, countries from which we are now dealing with business-class migrants. Emerging new markets are now appearing in the former Soviet Union and in South America.

On June 1 of last year we designated and introduced nine visa offices abroad, with the goal of specializing in business immigration. The goal of this initiative is to develop expertise amongst our officers in the assessment of business applications in order to ensure a global consistency in decision-making, which also will help and contribute to program integrity, and yet afford to the degree possible expeditious processing.

I'll conclude there. Thank you. We would invite your questions.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit (Lakeland, Ref.): The three factors that you said have led to the reduction in business immigration were the Asian flu, the handover of Hong Kong to China, and the currency changes. Could you comment on the relative importance, as you see it, of these different factors?

Mr. Jeff LeBane: The Asian economic downturn significantly affected our movements out of Korea, Thailand, and to a much lesser degree, other parts of Asia.

Korea, as an example, was a very important market, and remains so, for skilled workers and business migrants, something the Korean government also encouraged. But what has happened is that a lot of people who had made applications in the business category and in the skilled worker category as well had their applications in process, and when it really came to the time to migrate, when it came to final decision-making, they no longer had the funds they anticipated they would have. The house market collapsed, and I would include Hong Kong in that, to some degree. They no longer had the funds they had anticipated they could leave the country with to make a new start in Canada.

Two phenomena resulted from that. First of all, cases that were in process were withdrawn or cancelled—people did not come to interview. And secondly, people who had been issued their visas—who had complied with all of our requirements and had paid the cost-recovery—did not migrate. We estimate that people did not use up to 10% of the visas that were issued, and I'm referring primarily to Asia. They did not come to Canada.

Mr. Leon Benoit: Yes, but is that—

Mr. Jeff LeBane: I would say that is the first and primary reason.

Mr. Leon Benoit: Okay.

Mr. Jeff LeBane: Usually in previous years we've identified a wastage rate, of people who don't migrate at the end of the day, of 3% to 5%. So the 10% is a very significant development.

The other factor I would comment on is the handover of Hong Kong to China on July 1, 1997. As you know, in the late 1980s and 1990s, we were taking between 30,000 and 35,000 migrants every year from Hong Kong, in all categories: business migrants, skilled workers...

Mr. Leon Benoit: Until what year, sorry?

Mr. Jeff LeBane: From the late 1980s up until 1997.

Mr. Leon Benoit: Okay.

Mr. Jeff LeBane: There was tremendous migration, and Canada was a very preferred destination. A lot of the migrants we were taking were young people who'd been educated in Canada, gone to university here, spoke English, some spoke French, were very acquainted with the Canadian lifestyle, and knew a great deal about Canada. This was a real gain, a real plus for us. July 1 came, and from that time on, we have seen a very significant drop in the number of applicants from Hong Kong.

• 0925

In preparation for the committee today I wanted to give you a statistic on how significant the drop is. In December 1998 our program in Hong Kong processed and examined 1,000 new immigration applications in all categories—business, skilled workers, family class. Only 70 were from people who actually lived in Hong Kong. That's only 7%. And that was a very good market for us, for recruiting to Canada.

Mr. Leon Benoit: Was the reason the numbers were so high from the late 1980s to 1997 in anticipation of the takeover?

Mr. Jeff LeBane: Correct.

Mr. Leon Benoit: And did Immigration Canada know this was happening? Did they expect that there would be a real reduction after the fact?

Mr. Jeff LeBane: We knew there would be a reduction. I don't think we completely realized how significant the reduction would be, because it was also combined with this economic crisis in Asia, and that was unforeseen.

So in Hong Kong we have this tremendous drop.

Where are the new applications coming from in Hong Kong, as an example? We have many new applicants from the PRC—the People's Republic of China—from Macao, from Taiwan, and from other countries. That's a very significant fact.

Another factor I mentioned is that we are receiving business migrants from new areas of the world. These have to be examined more carefully, partly for program integrity reasons. They're less familiar with the Canadian market. We have to examine their documents. We have to interview more of them. They have different skills from what we had grown to expect from applicants in Hong Kong. So there's a changing market out there, and that has affected processing.

Mr. Leon Benoit: Do you think there's any point in actively recruiting in Hong Kong, or do the people there know enough about Canada and what it is that it wouldn't really have much of an impact?

Mr. Jeff LeBane: At this point the great majority of people who wanted to migrate have migrated. For those people who chose not to migrate—and I don't have figures for you, but we know that some Hong Kong residents of Canada went back to Hong Kong after July 1—there are a number who would be interested in coming to Canada if there were a real economic downturn in Hong Kong.

Everybody is waiting to see how the relationship with the Government of the PRC is going to work out. But I don't think at this point a very proactive recruitment campaign would bring significant results. I think those people in Hong Kong are waiting yet to see how the market plays out there.

Mr. Leon Benoit: The third fact you mentioned was currency changes, but the currency changes should in fact be encouraging people to come, because the Canadian currency has dropped relative to Asian currency as well as American.

Mr. Jeff LeBane: It depends on the country you're looking at. In a number of Asian countries, such as Korea at one point, their currency just fell out. It just collapsed.

Mr. Leon Benoit: Yes.

Mr. Jeff LeBane: I'm referring to Korea as a good example, because we saw and we continue to hope for a lot of potential there. The value of their currency compared to Canadian and American currency just collapsed.

Mr. Leon Benoit: So you're talking about the effect on last year, not right now.

Mr. Jeff LeBane: Yes, that's right.

Mr. Leon Benoit: The next question has to be, what are you planning on doing about the fact that we've just lost a big part of 30,000 of the people who have been coming under this class? I'd like some specifics.

• 0930

Mr. Jeff LeBane: We approach this in two ways. We introduced the concept of the business immigration centres to enable us to examine and process good applications quickly, because we do have large backlogs in different parts of the world, and we recognize that. We wanted to be able to provide fast, informed processing in these business centres. When a businessman is interested in Canada, he can apply at one of nine business centres in the world, his choice, and if he is a good business migrant, he's guaranteed a fast, expeditious processing.

That makes us more attractive than competitors, such as Australia and the United States. It gives us an advantage. If we have a businessman, for example, from Korea, who for valid personal reasons decides to apply in London or in Damascus, he's guaranteed that he's going to have staff who are informed on where he's coming from, that there's some expertise there, and that he can be processed quickly. It's a priority.

The Chairman: Mr. Ménard has the floor now. You can ask your question next time.

[Translation]

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ): I apologize for being late, Mr. Chairman.

I'd like you to talk to us about the business immigration program for investors, entrepreneurs and self-employed persons and how it ties in with the Quebec-Canada accord on immigration. Could you give us some idea of the legislative framework? I would then have two or three questions for you about the investor class of immigrants.

[English]

Mr. Don Myatt (Director, Business Immigration, Selection Branch, Citizenship and Immigration Canada): Thank you. That's a very interesting question.

Under the immigrant investor program there are in effect two programs in Canada. There is the federal program, which is created by the federal legislation, and then the Quebec program. Quebec has an accord with the federal government that provides it with powers for the selection of immigrants of all categories. There is an annex to that accord, annex D, which not only provides Quebec with the selection abilities for an investor class of immigrants but allows it to set more or less independent standards for the selection and operation of the investor program.

Under the accord there is a requirement between the federal government and the Government of Quebec to harmonize at the top level certain requirements, and the harmonization takes place at the level of the definition of the class of who is an investor. So Quebec and the Canadian program both have the same requirements for who is admitted into the category.

That means an investor is someone who will make an investment of $350,000 in Quebec or $350,000 in Ontario or B.C. or $250,000 in the other provinces. That's the first requirement: that he make the investment. Also, he must have a net worth of a certain figure, which is currently $500,000, and that net worth must have been raised through his own business activity.

So Quebec and Canada have, at that level, the same requirements for net worth and for amount of investment. After that point, Quebec selects people who meet its requirements for socio-cultural reasons, and Canada selects its programs. So in terms of selection, there is a great deal of similarity at the front end in who's admitted to Canada.

There are differences, for provincial reasons, at the next level of selection. The major differences in the program relate to what is done with the money once it flows to Canada. In the Canadian program as it's currently structured, the investment the immigrant makes must be placed with a provincial government venture capital fund, and then the program regulations require that these investments be made in a certain prescribed manner.

On the Quebec side it's a different process for handling the money. The money goes to a series of licensed brokers within the province of Quebec, and they place the money with—

[Translation]

Mr. Réal Ménard: One moment, please. I want to be certain that I understand you correctly.

[English]

Mr. Don Myatt: Sorry; it's a very complex subject.

[Translation]

Mr. Réal Ménard: We'll manage to sort it all out. You say that there are two programs: one for all of the provinces, with the exception of Quebec...

[English]

Mr. Don Myatt: Yes.

[Translation]

Mr. Réal Ménard: ... and a specific program for Quebec arising from the accord between the federal government and the Government of Quebec. You stated that Quebec and Canada have harmonized their requirements in terms of defining the investor class of immigrants.

[English]

Mr. Don Myatt: Yes.

• 0935

[Translation]

Mr. Réal Ménard: For instance, in order to be categorized as an investor in Quebec, an immigrant must be prepared to invest $500,000.

[English]

Mr. Don Myatt: Yes, that's correct.

[Translation]

Mr. Réal Ménard: That is the first criteria. Quebec can then select other individuals on the basis of other criteria.

[English]

Mr. Don Myatt: Yes.

[Translation]

Mr. Réal Ménard: You say that we should be aware of the investment vehicle. Could you be more specific and speak more slowly, because I want to take some notes.

You indicated that under the federal program, immigrants must invest in a province in an approved fund.

[English]

Mr. Don Myatt: Correct.

[Translation]

Mr. Réal Ménard: In Quebec, they could invest through a real estate broker.

[English]

Mr. Don Myatt: Correct.

[Translation]

Mr. Réal Ménard: Fine then.

Mr. LeBane started off by saying that the criteria were slated to change on April 1, and as I understand it, there is considerable disenchantment at the moment with the provinces because of regional variations when it comes to investment. It seems that there is no consensus on this issue.

Perhaps we could get a brief written explanation about the consequences this has for Quebec? We would appreciate that. Then we could analyse the facts and take them into account when we draft our report.

Could you talk to us about regional variations? Have any provinces argued that the investment amount required is too high or too low? As for the changes slated to take effect in April, is the consensus the same as the one achieved on the social union?

[English]

Mr. Don Myatt: We'll be able to provide you with the information in a written note. To correct one misunderstanding I made, the investment amount currently is $350,000 in Quebec, Ontario, and British Columbia.

On April 1, the new program... We have spoken with Quebec and there is an agreement that we will harmonize the new definition of an investment amount, as pre-published in the regulations, of $500,000 for Canada, for all the provinces, and for Quebec. So a $500,000 investment will be required—and it will still flow in two different ways: to a provincial fund or to a courtier en valeurs mobilières in Quebec—and a net worth figure of $1 million.

As for the impact within the province and within the other provinces of Canada, that will depend on the number of cases that flow through the system and the relative attractiveness of the two programs.

[Translation]

Mr. Réal Ménard: There's something I don't understand and perhaps you would be so kind has to provide me with a written explanation, as this would benefit all committee members. When an immigrant investor heads to Prince Edward Island to operate a business, he is required to invest the same amount as if he were operating a business in Toronto, whereas the PEI economy is different. I'm not saying that this is discrimination, but in my opinion, the business community in Prince Edward Island and the stock market or economy in Toronto are two extremely different realities.

How can we justify requiring the immigrant investor to put up the same investment, regardless of whether the business will be located in PEI or Toronto?

[English]

Mr. Don Myatt: In the current program, regional differences are met because each province competes for its own amount of investment. The Prince Edward Island fund actively goes abroad and recruits investors. They receive the benefit for the money they recruit directly. People arrive and they may settle in Prince Edward Island. They may settle anywhere in Canada, because mobility rights are protected under the charter.

That program is our current program. It's been in operation since 1986. It has some problems. It hasn't worked as well as we anticipated.

In the proposed program there will be no more competition amongst the provinces for investment. The investment will come directly to the federal government and it will be then shared amongst the provinces on the basis of a formula. The formula recognizes the historical role of each province in the program so that all provinces can continue to participate at a certain level, and it also recognizes the deeper, as you said, the more profound economic depth and breadth of certain economies so that a larger share will be going to places such as Ontario and British Columbia.

• 0940

[Translation]

Mr. Réal Ménard: That means then...

[English]

The Chairman: Réal, I shall now give the floor to Steve Mahoney.

[Translation]

Mr. Réal Ménard: I'll come back to it later.

[English]

Mr. Steve Mahoney (Mississauga West, Lib.): Thank you. Actually I want to follow a little bit on that as well, if I might. My understanding is we're talking about two different things: one an investor, the other an entrepreneur, someone who would actually buy a business. An investor doesn't buy or start or work in a business. Is that correct?

Mr. Don Myatt: That's correct. There are three categories of applicants within business immigration programs. There is the self-employed category; he must come to Canada and create a job for himself and be successful. There is the entrepreneur category, someone who is going to come to Canada and be actively involved in the management and direction of his own business, and he must create employment for one Canadian in addition to himself. Then there is the investor, who is a passive business person; he is making an investment of a fixed sum currently in a provincial government fund or with a dealer in Quebec.

Mr. Steve Mahoney: So the entrepreneur invests at a certain level in any province and there are different levels.

Mr. Don Myatt: No. There is no financial requirement in the regulations for how much an entrepreneur must invest. An entrepreneur's selection is based on his ability to make his case to the visa officer that he has the experience and knowledge from his past endeavours and that he has the likelihood of making a significant contribution in his business plans in Canada.

Mr. Steve Mahoney: So it's only the investor who has to invest a specific amount.

Mr. Don Myatt: It's only the investor who has a pre-required amount to make and a net worth.

Mr. Steve Mahoney: Is that the same in every province?

Mr. Don Myatt: Yes.

Mr. Steve Mahoney: I heard you say that in Quebec, Ontario, and B.C. the investment is $350,000.

Mr. Don Myatt: The requirement for an investment is the same in every province. The amount is structured now on a tier system. For the smaller provinces, the amount is lower; it's $250,000. In Ontario, B.C., and Quebec it's $350,000.

Mr. Steve Mahoney: So for the rest of them it's $250,000.

Mr. Don Myatt: Yes.

Mr. Steve Mahoney: I'm just curious. If you're strictly an investor and you're investing in a provincially sponsored venture capital fund, presumably in that fund, certain securities would be available. We're talking about a stable investment, I take it.

Mr. Don Myatt: You would hope so. I don't mean to make light of it.

Mr. Steve Mahoney: Backed by the provincial government?

Mr. Don Myatt: No. In the original program, the rationale was that the investor program was set up to attract high-wealth, skilled entrepreneurs who wanted to make a passive investment and come to Canada. As the price for coming, the concept was that their money would go into risk venture capital funds. As the price of coming, their money was going to be at risk. The rule was the money had to be invested in small and medium-sized enterprises under $35 million. So yes, in Prince Edward Island the price would be $250,000 for the investment.

Mr. Steve Mahoney: The point I'm getting at is you said the price at P.E.I., for example, is $250,000.

Mr. Don Myatt: Yes.

Mr. Steve Mahoney: And it's an investment in what sounds to me like a provincially sponsored venture capital fund. It could be a labour fund. It could be any fund that had status in that province. You may call that risk, but it seems to me it would be a fairly secure investment for the investor. Considering that they have mobility anywhere in the country, why would they spend $350,000 to invest in a Quebec fund or an Ontario fund when they could get in for $250,000 in P.E.I. and live wherever they wanted?

Mr. Don Myatt: You're right in the sense that that became the flaw in the current program, because you had 10 provinces competing with different investment amounts. The investor's interest, frankly, is to put his money at the least risk possible, so he looks for the least risky province fund to invest in. The provinces began to compete on providing more and more security within the program to attract investors, so historically the provinces that benefited the most were Nova Scotia, Prince Edward Island, and Quebec. That's because they were able to lower the risk.

Mr. Steve Mahoney: So now it's going to be a federally sponsored venture capital fund?

• 0945

Mr. Don Myatt: It's a little more complex than that. The federal government will be the window for the investment. There will be a single window of investment of $500,000. Everybody pays through that one window to the federal government. There will be no competition amongst the provinces. The receipts will be shared amongst the participating provinces.

Mr. Steve Mahoney: Who determines who participates?

Mr. Don Myatt: The provinces themselves decide whether they sign onto this new program or not.

Mr. Steve Mahoney: But what I mean is, I'm the investor and I come in and pay my $500,000 into the federally sponsored fund...

Mr. Don Myatt: The actual model is that the department will act as agent for the provinces; we'll collect the money.

Mr. Steve Mahoney: So how do you determine which provinces? Say I want to come to Canada.

Mr. Don Myatt: The money will be pooled on a biweekly basis. The money is distributed to the provinces according to a formula in the pre-published regulations. The first half of the dollar, the first 50¢, goes equally to all provinces, all 10 provinces and two territories.

Mr. Steve Mahoney: So what happens if Alberta decides not to sign onto this?

Mr. Don Myatt: Then the money that would have gone to Alberta makes the pie bigger for the rest of the provinces.

Mr. Steve Mahoney: I see.

On a slightly different tack, what's the relationship between, say, the mainstream visa applications and the business applications? What I'm getting at is this. Do the business visa officers deal with the mainstream officers, and if so, is there a correlating increase in visa applications in other categories that would relate to the decrease of 10% that you've talked about on the business side?

Mr. Jeff LeBane: There are many aspects to this question. First of all, we have a limited number of Canada-based officers abroad. We have approximately 210 Canada-based officers abroad. In our business centres, certain of the officers would be encouraged to develop the expertise to deal with the business migrants, the business applicants.

Mr. Steve Mahoney: But have you been able to track any kind of...? You told us there was a decrease in business applicants, for the reasons you talked about.

Mr. Jeff LeBane: Yes.

Mr. Steve Mahoney: Have you been able to track the fact that perhaps these people have slipped over to the other side, and now, because they've lost their real estate investment in Hong Kong or whatever the reason might be, they are sliding over and applying for visas as family applicants?

Mr. Jeff LeBane: We don't have that statistical information, but we are seeing a very small increase in the number of family-class applicants. If you were seeking to enter Canada and if you had close enough relatives in Canada, you would probably in first instance seek to be sponsored and be processed in that category.

The business immigration centre framework came into place on June 1 of last year, so it's a recent innovation, and we said we would review it after one year. I can't give you a great deal of statistical precision yet, because as one of the conditions when we introduced this framework overseas, we said cases that were already in process before June 1 would be processed to conclusion at the posts they had originally applied to.

Mr. Steve Mahoney: But you may monitor that and may come up with that?

Mr. Jeff LeBane: Yes.

Mr. Steve Mahoney: I'd like to ask a question about what I would call—I don't know what you'd call them—short-term visa applications for business purposes. I was involved some years ago with an organization that ran a show with companies from Asia coming here to display their wares to the Canadian marketplace, and there was an incredible amount of difficulty for the people who owned the businesses, who wanted to come or send their employees to come to do the show.

The show runs for a week, two weeks, or whatever. They're going to come. They might stay an extra week as part of a vacation and then return home.

The percentage of applicants turned down was approximating 50%, and in my view, that was probably the single item that wound up putting the Asia show out of business, after three years. They just simply could not afford to go and rent the coliseum and do all the things they had to do without having a guarantee that the people who were buying the booths were able to send bodies over here.

• 0950

Do you have any thoughts or comments on that, or is that a separate...? Who handles that? Is it your department?

Mr. Jeff LeBane: Persons coming to Canada for a temporary purpose—and that includes business people—would make application overseas at the same immigration offices. One of the challenges abroad—and I know the frustration and I know you get representations—is if we get groups of people coming to Canada for business, there are from time to time in those groups people who are added on whose intent is not to do business but who are coming for other reasons to Canada. That very often results in these persons disappearing from the business groups, going underground, going into the United States, or making refugee claims.

Mr. Steve Mahoney: Surely not 50% of the applicants?

Mr. Jeff LeBane: I can't comment on that specific case, but we have seen, in business delegations and in sports delegations, significant numbers—I'm talking generally here—of people disappearing, not going back, and making refugee claims.

The Chairman: I ask you to yield the floor to Andrew Telegdi, please.

Mr. Steve Mahoney: Okay.

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

Mr. Benoit commented earlier that the Canadian currency dropped in relationship to the Asian currencies. Just to correct that piece of misinformation, the Canadian currency is very strong against the Asian currencies, and that's one of the reasons we're having a problem in terms of our business-class migration.

What I'm wondering about is this. We have a new fee structure going in place on April 1, and it's going up. Given that that's the case and given the problem with the Asian flu in terms of the economy, did you do some kind of study to see how this is going to affect the business migration from Asia?

Mr. Don Myatt: The proposal in the pre-published regulations is to raise the amount of investment required of an investor. The reasons for raising the amount are the following. The last increase was in 1992, so we've had a change in relative value. We've also had a change in the inflation rate between 1992 and currently. The third factor is that in 1992 the cost of borrowing $350,000 to immigrate to British Columbia, Ontario, or Quebec—the value of that borrowing at those interest rates—approximated what the current interest rates are to borrow $500,000. Those are three factors.

We have done some modelling on the amount of money available from people coming in the investor category, and $500,000 seems about right. The people had the assets up until a year ago in terms of liquidity or assets or capital to borrow from. It's internationally competitive with our competitors: the United States, Australia, and New Zealand. So it seemed to be about an acceptable number.

However, as you've said, the lack of liquidity in Asia has raised concerns, and those have been noted in many of the submissions the minister is receiving on the pre-published program.

Mr. Jeff LeBane: The Asian business program and Asian migration to Canada are very important, but we can't simply be fixated on Asia. The department is working with provinces to develop and explore other markets.

Throughout the world, the department invests in a number of immigration fairs, business fairs, and high-tech fairs to make Canada known. We work very closely with provinces. We share the costs to make Canada more visible and heard at these fairs.

• 0955

As an example, last year we participated—and we have been doing it on a regular basis—in prestigious business fairs and high-tech fairs in Los Angeles and Las Vegas, called COMDEX. Canada participates there. Last November a number of the provinces went on an immigration tour to make Canada known in South America. And in March of this year there's an Emmigrate fair in London. Canada's going to be represented there, we're going to be represented there, and seven provinces have also identified that they will participate in the fair.

So the Asian market is important, but we're trying to capture other markets as well.

Mr. Andrew Telegdi: You mentioned Latin America, and of course there are problems with the economy in Latin America as well. I would tend to think that in meeting our targets for this year, they're going to be facing greater barriers than they have faced in the past, because of the raising of the fees. That's not to say it's not justified—it certainly is—but it's something we should take into account.

The other question I have is this. Of the people who want to come here as investors, do many change their application and just apply to come as regular immigrants?

Mr. Jeff LeBane: I don't have that statistical data with me. We could certainly look into it. My immediate reaction is that the number would not be significant.

Mr. Andrew Telegdi: Okay. The last question I have is on the self-employed category. Down the street from us there was a shoe repair shop. The gentleman died over a year and half ago, and that's one less person we have in the community repairing shoes. This is a dying profession, if you will, in my community, and I'm sure it's the same in the rest of the country. Would a shoe repair person from Europe or someplace qualify as a self-employed person?

Mr. Jeff LeBane: If he met the criteria, yes.

Mr. Andrew Telegdi: What criteria would he have to meet?

Mr. Don Myatt: Under self-employed, he would have to establish that he has been profitably self-employed in his homeland and that he has reasonable prospects of maintaining himself in Canada. It's a very poor and very subjective definition, which is one of the new areas we'll be looking at as the minister moves forward in program redesign for the Immigration Act.

Mr. Jeff LeBane: I would add to that. It's a very good question. The provinces in their own right are also becoming more interested and more active in trying to recruit immigrants—I use the term first generally—as well as, more specifically, business immigrants to fill particular needs in the provinces, partly population, partly economic. As an example, the Province of Manitoba has been very active in this regard.

Mr. Andrew Telegdi: Thank you.

The Chairman: Mr. McNally.

Mr. Grant McNally (Dewdney—Alouette, Ref.): Thank you, Mr. Chair.

Mr. Myatt, I'd like to focus on the entrepreneur category. You mentioned that somebody has to talk to a visa officer and prove to them that they have the experience in whatever area they're involved in and the likelihood of success. Do I have that right?

Mr. Don Myatt: Well, they must have business experience.

Mr. Grant McNally: Business experience in that area.

Mr. Don Myatt: No, it doesn't have to be in that area.

Mr. Grant McNally: Not in that area.

Mr. Don Myatt: In any area. They have to be a business person. And then they have to make a credible case that they have a business plan for Canada and will succeed here.

Mr. Grant McNally: Okay.

I want to ask you—and anybody can respond—about some comments that were made by one of your CIC officials, a Mr. Coolen, an investigator. He mentioned in a memo to his manager about the entrepreneur program, and I'm going to directly quote his words here—these aren't my words; they are his:

This program assists and promotes citizenship of convenience fraud, promotes abuse in national and provincial social programs and in my opinion is a national disgrace.

• 1000

Later on he also says, and I quote directly:

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 the faulty methods of collection and the lack of any quality control.

Could I have your comment on that?

Mr. Jeff LeBane: If we may, Mr. Myatt will talk about the program structure and domestic, and I'll talk about some initiatives overseas.

Mr. Grant McNally: No, I would like to know what's... Here is an official pointing out a problem that he sees with the system. In fact he thinks it's so serious he calls it a national disgrace. I would like to know what's being done about that specific area, if I could.

Mr. Don Myatt: The official is one of the officers in the regions of Canada whose role is to assess the terms and conditions under which immigrant entrepreneurs come into Canada. As I indicated earlier, an entrepreneur must, within two years of arrival, establish a business that employs more than himself.

The process is this. When they arrive in the region, they notify the local immigration office. The immigration office has a follow-up on a six-month or yearly basis and helps the immigrant settle into the community and determine whether his business is making a significant contribution.

Mr. Grant McNally: With any other immigrant coming to Canada, it's my understanding they are screened as to who they are.

Mr. Don Myatt: All immigrants are screened as to who they are. The entrepreneur has an additional term and condition placed on his admission with a two-year follow-up, so the officer knows—

Mr. Grant McNally: So you're telling me this screening is also done for the entrepreneur before entry into Canada.

Mr. Don Myatt: The screening in the sense of selection: Is he a business person?

Mr. Grant McNally: The screening in terms of security and criminal background check is all done?

Mr. Jeff LeBane: Yes.

Mr. Grant McNally: That seems to be what's not involved here. This official is saying that's not happening. Is he wrong?

Mr. Jeff LeBane: All persons who seek to migrate to Canada must meet certain basic requirements. They must all be examined in terms of any criminality, in terms of security, in terms of any potential threat to Canada, and as to whether they are in good health or not. They must all equally provide documentation as to family relationships, education background, and professional background. That's a universal requirement.

Mr. Grant McNally: So you're saying to me that all these entrepreneurs go through all those checks and everything is fine before the arrive?

Mr. Jeff LeBane: Yes, absolutely. But in addition, in various categories, whether you're an entrepreneur or an investor, there are other specific criteria to that category that those persons would be examined by as well. But there are certain universal criteria, and the ones I just described to you are conducted on every applicant.

Mr. Grant McNally: Okay, so you would disagree with this official, who says, “This program assists and promotes citizenship of convenience fraud”?

Mr. Jeff LeBane: I would reply to you that these are the requirements we apply universally abroad.

Mr. Grant McNally: Okay, but obviously there's an official who's raised a red flag and said there's a problem with the system. I'm wondering if anything is being done to look at the job creation aspect of this entrepreneur.

He's saying he doesn't think there are the right quality controls in place, once the people are here, to verify the fact that they are doing what they say they are doing. He says it's open to fraud. I'm wondering if officials agree with that and if anything is being done to investigate that to see if it's accurate or not accurate, and if there's anything being put in place to pursue this, because it seems quite a serious issue.

Mr. Don Myatt: He and his colleagues in the regions are the officials charged with determining whether significant economic activity has been created in the province.

Normally in most regions there's a process when you find that there has been a failure to meet the terms and conditions. There's a normal process in the immigration system where you write them up; it's called a 27 report. You can direct them to inquiry and deportation. That's the process that's followed in most regions.

He was presumably making the case that he was concerned with that problem. It was an internal memorandum, which I remember having seen at the time, and it was a request for more resources to do his job more rigorously. His process and his input are what allow us to do the quality control and evaluation of the program. He is one of a number of officers across Canada.

• 1005

Mr. Grant McNally: Could you quickly run through the quality control for me? What kind of follow-up would be done in terms of quality control?

Mr. Don Myatt: The entrepreneur arrives at his destination. If he says he's going to Nova Scotia, like the 200-plus who've settled in Nova Scotia, he's advised to report to the immigration office. Mr. Coolen would make an appointment with him and set up—

Mr. Grant McNally: So it's a voluntary compliance system?

Mr. Don Myatt: It's not voluntary in the sense that there are penalties if you fail to report.

Mr. Grant McNally: Okay, so they're advised to report.

Mr. Don Myatt: Everyone who has terms and conditions is told, “The condition of coming to Canada is that you must report and you must create this job within two years. You are to work with the local regional officer to determine what you have done to create a business, what efforts you have made, and whether you've been successful or failed. If along the way he's not satisfied, he can write up the report that you've failed in your terms and conditions, and he can recommend removal from Canada.”

Mr. Grant McNally: Do you have any individuals who don't establish that? How many individuals would not establish that within a two-year period? Do you have statistics on that in the different regions?

Mr. Don Myatt: I'm not sure that we have statistics. Removal rates are relatively low.

Mr. Grant McNally: So there are no statistics as to how many—

Mr. Don Myatt: There will be statistics. I don't have them off the top of my head.

Mr. Grant McNally: Could you get those? Would that be possible?

Mr. Don Myatt: I can make an effort to, yes. But the removal rates are low, for a number of good and reasonable grounds. Many people come and establish businesses, and they fail. They're not successful the first time around or—

Mr. Grant McNally: But we're saying with this system, they have up to two years to establish a business.

Mr. Don Myatt: Two years is a very short time to become acclimatized to the Canadian business environment when you come from a different culture and country.

Mr. Grant McNally: It's also a long time if you're a person who's using that system in a fraudulent manner to come. With the voluntary compliance system that we have in place, I would say two years is a long time if you're an individual who's intending to abuse the system. Of course I'm not saying that everybody who's coming is doing that. It's a small percentage of people. But if there is a door open, if there's a crack in the door, I would say there are going to be some individuals who are going to look for that crack and go through it.

Mr. Jeff LeBane: I would answer in another way, if I may, and give you the assurance that one of the reasons we created the business immigration centres abroad was to be very rigorous in the evaluation of business applications.

Mr. Grant McNally: What does that mean, being rigorous? What steps are put in place so that you know it is rigorous?

Mr. Jeff LeBane: Before the business immigration centre network was put in place, if you were a business applicant, let's say from Korea, you could apply anywhere in the world. You could apply in Mexico City, and the officer was immediately put at a disadvantage. If somebody comes in from Korea, they don't know the economic situation of Korea, they can't read Korean documents, etc. We ask for translation, but there's a slow process there.

What we wanted to do with the business centres, number one, is that if you're applying somewhere, we have a large pool of officers who have knowledge and expertise in the Korean market and are familiar with the documents. We also put in a requirement at the end of 1997. If somebody—

Mr. Grant McNally: This is what you would mean by rigorous...?

Mr. Jeff LeBane: There are other steps. We have a computer network abroad called CAIPS, and we put in the universal requirement that if anybody applies offshore—for example, if somebody from Korea applies in London, England—it's mandatory that a referral is made back to the home country: Is there a record on this person? Are there are any concerns about the application, the documentation, or the background? The home post in Seoul, for example, is asked to investigate and provide a report before the case is finalized.

We've also put into our computer system what we call an early warning flag, an advisory. If somebody makes inquiries in Hong Kong that seem suspicious, and suddenly disappears or withdraws his application for no apparent good reason, a note is made in our computer system saying, “If this person applies elsewhere in the world, please refer back to us.”

So a lot of safety features are built into it, and we are—

Mr. Grant McNally: Wouldn't it make sense to have people apply in their—

The Chairman: Mr. McNally—

Mr. Grant McNally: Am I out of time?

The Chairman: Yes, unless Réal will yield his rotation.

Would you like to take your rotation?

[Translation]

Mr. Réal Ménard: Yes.

[English]

The Chairman: Okay, and after that we will go to Raymonde.

• 1010

[Translation]

Mr. Réal Ménard: I want to come back to the subject of immigrant investors.

You mentioned that previously, the provinces were competing with one another, and Mr. Mahoney also mentioned something similar. You have held one round of talks with the provinces and you are in the process of concluding an agreement. Perhaps there is even an accord in place as we speak, since the criteria are going to change this coming April 1.

Could you explain the situation in greater detail to us so that we have a clear picture of what's happening. What we have here is a situation where the federal government is acquiring fiduciary responsibility for loans. It will be responsible for collecting loans and for redistributing the monies to the provinces, according to certain guidelines. However, this doesn't apply to Quebec. The program you spoke of earlier will continue to apply. Could you describe for us briefly the current situation in Quebec? Quebec has said that it is willing to adjust the amount of the $500,000 investment required. What is the latest news on this?

[English]

Mr. Don Myatt: It's a good question, and it comes to the question of liability.

In the current program, the liability for the loss of the funds rests with the provincial government-owned venture capital fund. In the new program, there's an obvious concern that the federal government and the people of Canada not become liable for the losses of the provinces.

In structuring the program, the federal government, the citizenship and immigration department, will be the recipient of the investment for redistribution to the provinces. In that role, the Minister of Citizenship and Immigration will act as the agent on behalf of the provinces. She will be taking the money in for the provinces and distributing it to the provinces, which in turn will create provincial government-owned venture capital funds for making the placements of the investment.

Liability will flow through the agent relationship to the provincial government funds, which each province will set up. After five years, those funds will be liable to return the principal of the investment to the agent, the federal government, who will return it to the investor. If the fund in the province fails to return the money to the federal government, the province then accepts liability to return it to the federal government.

So the structure is that three agreements will be entered into.

[Translation]

Mr. Réal Ménard: You realize that this is a very important point for our ongoing work. We need written evidence of the outcome of the accord. Such information is important because the committee will be reviewing the business immigration program. All of this is extremely valuable information. It is absolutely critical that we have a complete file on the subject for our next meeting. The initial description you gave us was interesting, but by no means does it give us in overall picture of the situation so that we can assume our responsibilities. Everyone must have and understand this information. It would be presumptuous of us to think we are as well-versed in the situation as you are, but understanding things a little better is our objective.

[English]

Mr. Don Myatt: It's a good point. It's perhaps a little early in the process, because we are still... These are pre-published regulations for a new program. Final approval hasn't been given. The exact details of the agreements, the accords, with the provinces are under negotiation and with our lawyers discussing them. When the final regulations are prepared and passed by Parliament—or come forward, I should say—then we'll have the details of the kit, the exact nature of these agreements between the department, the provinces, and the funds, and back again.

[Translation]

Mr. Réal Ménard: Very well.

[English]

Mr. Don Myatt: But we'll be glad to furnish it when completed.

[Translation]

Mr. Réal Ménard: Getting back to the specific case of Quebec, the minister acts as the investment agent and redistributes the funds based on the criteria that will ultimately be in place. Quebec would, however, maintain control over this matter. The funds would continue to go to the province. One issue on which we agree with the federal government is the definition of investor class. We agree on the $500,000 requirement, but it is up to Quebec to choose the appropriate investment vehicle, and the federal government has no right to intervene in this matter. Have I understood the situation correctly?

• 1015

[English]

Mr. Don Myatt: That is absolutely correct. Quebec of course has the option of joining the federal program if it wishes. It has not signalled it wishes to, and if it does not, then it can continue, as per the accord, to run its own program and manage the investment according to its own criteria. That will be a matter of relations between the Government of Quebec and its partners in the investment industry.

[Translation]

Mr. Réal Ménard: Before I turn the floor over to my Liberal colleagues, I'd like to close on this note. As we speak, you seem tempted to say that you are moving toward an agreement with the nine other provinces on the issue of business immigrants, at least with the provinces that represent English Canada.

[English]

Mr. Don Myatt: I'm sorry; I was not listening to the translation and I couldn't follow the whole question.

[Translation]

Mr. Réal Ménard: As we speak, given that everything is slated to change in April, you seem to be very close to reaching an agreement with the nine other provinces in English Canada as to the definition of immigrant category, the criteria and the investment amounts required. Wouldn't you agree?

[English]

Mr. Don Myatt: Yes, you're correct. We have negotiated with the provinces on whether they agree with the pre-published regulations, and they are making their comments now on specific details of the regulations. That's still under discussion. But the broad outlines and the broad objectives of the new investor program they are in agreement with.

[Translation]

Mr. Réal Ménard: I am not asking you to disclose any negotiating secrets. If you did, we would have to cover our ears. As far as we're concerned, these details are strictly confidential.

I have no further questions. Thank you.

[English]

The Chairman: Thank you.

Madame Folco.

[Translation]

Mrs. Raymonde Folco (Laval West, Lib.): I want to reassure my Bloc Québécois colleague that I have no doubt the negotiations between the federal and provincial governments, in particular the government of Quebec, will be conducted openly and that the government of Quebec will have full knowledge of the impact of these amendments on the Canada-Quebec immigration accord.

Mr. Réal Ménard: This is the era of the social union, Mrs. Folco.

Mrs. Raymonde Folco: Absolutely. I have a question concerning entrepreneurs or rather investors.

You say that obviously you're going to seek out new markets. Surprisingly, you mentioned the former Soviet states and, less surprisingly, countries in South America. As far as Russia is concerned, the press has reported on the grave economic problems that this country is facing and in particular on business people who often have profited from their illegal activities. Apparently, there is a serious drug and crime problem, not only in Russia but in other former Soviet states as well.

Considering that we have a legal obligation toward Canadians to verify the source of the profits and investments brought into this country by immigrants, what steps are you taking to check out the source of these investment funds?

[English]

Mr. Jeff LeBane: It's a very good question you raise.

The former political and economic structure collapsed in the Soviet Union, and as Russia moves to a private market and new structures, a significant number of people are making significant amounts of money in privatization. Some Russian entrepreneurs and business people have been very active in establishing ties abroad. The papers talk about organized crime, and we're very vigilant.

One of the reasons we opened up the subsidiary office, a secondary office, in Moscow was so that when Russian business people applied at one of our nine major centres, we could require them to be interviewed in Moscow and we could have our officials in Moscow examine their documentation and do their best to verify their sources of funds.

• 1020

It's difficult outside of Russia. Unless moneys have been moved abroad and put in international companies, it's very difficult to track. So what we have done with this centre in Moscow is to require applicants to be interviewed there. Our officers have the language capacity. They're aware of privatization. They're aware of new, innovative banking procedures in Russia. They have that expertise there.

[Translation]

Mrs. Raymonde Folco: For example, does the RCMP automatically get involved in checking out these sources, not only in Russia, but elsewhere as well?

[English]

Mr. Jeff LeBane: The RCMP are our partners in Canada and overseas and play a role.

Ms. Raymonde Folco: They play a role. Merci.

The Chairman: Sophia.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chairman. My apologies for being a little bit late. I just have a couple of questions.

I understand there's a decrease in applicants for business immigration from 1997 to 1998, for various reasons. Assuming we are competing globally for more business people to come, I don't understand why you will increase the $500,000 and make it $1 million on April 1, 1999. That's quite a jump. If we want to attract more, then we should make our requirement a little more lenient; $1 million is a lot of money. I was just wondering what rationale you base it on.

Mr. Don Myatt: Thank you for the question. As I suggested earlier, the rationale for increasing the amount recognizes the time that has elapsed since 1992. Since the last time the investment amount was set, there has been a difference in interest payments for how much it costs to borrow that sum of money. There's a difference in inflation in assets.

And I forgot to mention previously that there is a fundamental change in what we do with the money. In 1992, under the old program, when someone invested $350,000 in British Columbia, Ontario, or Quebec, they stood the chance of losing 100% of that money. That was not a guaranteed investment; it was a risk investment.

In the proposed new program on April 1, the $500,000, the principal, is guaranteed. So the investor has no risk at that. All he is going to lose from his $500,000 investment is the opportunity cost—the interest he would earn on the $500,000 over five years.

Ms. Sophia Leung: Who guarantees it?

Mr. Don Myatt: The provincial fund that receives the money will guarantee the amount they receive, so the investor's money would be divided up and supported by each of the funds in the provinces.

In effect the investor is going to lose the opportunity cost: 6% on $500,000 over five years is about $125,000. That is the very significant change in the paradigm. It's going to cost you $125,000. Currently you may lose $350,000.

Ms. Sophia Leung: I see.

For the entrepreneur, do you have a specific requirement on language? Actually, for all three categories, what is the basic requirement for proficiency in language—English, French?

Mr. Don Myatt: The selection criteria are somewhat similar for all the business categories. The first threshold is the definition. If you meet the definition of investor, entrepreneur, or self-employed, you receive significant bonus points on the selection grid, and then the rest of the selection grid is applied below that definition. There are points for language, education, age, professional formulation, demographic factor, and personal suitability.

The effect of the current selection standards is that if you meet the definition, you need 25 points to pass as an entrepreneur and 25 points to pass as an investor. If you get 12 points for your primary and secondary schooling, five or six for English, and five or six for personal suitability, you're basically accepted.

• 1025

So in the current structure, the real impact of language is quite minimal.

Ms. Sophia Leung: I just want to express that a great deal of concern is being expressed in the community. The language can be a real block, because we all know a lot of entrepreneurs may have a very limited education, not necessarily a PhD or college education, but they do have a lot of business acumen. This could be discouraging, a real deterrent for them, because we know it plays a very important role. A lot of people can be handicapped.

I just want to point this out strongly. It's 25%, one-fourth. That's very high. It's not just 5%. Self-made millionaires may not understand our basic language, but we want them because of their skill and experience as businessmen. As for language, they could hire five people who speak fluently. They don't have to have the language themselves. This has been demonstrated repeatedly. I know that.

I always get into this debate. I say we want to help them to have a good start, to have some basic language to be able to adapt to our culture, but they are saying that could be really detrimental. I just want to express that. I don't know if there's still room for you to consider that. I'd like you to comment.

The Chairman: Would any of you care to comment?

Mr. Don Myatt: I can comment broadly that the minister's current review of the immigration legislation and new selection criteria is in process. It was begun by the legislative review. In business immigration, we are still consulting with our provinces. We are very aware of the levels of language education in the current population, and we have been receiving many submissions from the communities in Canada about the impact of language. No decisions have been made yet on the potential selection grids for business immigrants.

Ms. Sophia Leung: I would like you to take that into consideration.

Mr. Don Myatt: Yes.

Ms. Sophia Leung: Thank you.

The Chairman: Mr. Benoit.

Mr. Leon Benoit: Thank you, Mr. Chair.

First of all, I'd like to make a comment to Ms. Leung. I recognize that the comment she's made on the importance of language is a good point. Part of the issue, though, is the cost of educating children who have a very difficult time learning one of the official languages because those languages aren't being used at home. That's a cost borne by the provinces. That's just another factor to be considered there.

My first question is in response to a question by Ms. Leung. You've mentioned twice now the impact of the interest rate on raising the level of investment requirement. Is that just due to the fact that interest rates are lower, so that borrowing against assets to get the money to invest is less expensive? Is that what you're getting at there, or is there something else to that?

Mr. Don Myatt: No, that's what I'm getting at. The reality is no wise businessman would take hard assets and invest them in Canada if he could borrow the same amount at a cheaper amount somewhere else. It's a fact of life. Just as we borrow money for our cars and our homes and mortgage them, they do that also for their investment to come to Canada. Interest rates are much lower now than they were in 1992.

Mr. Leon Benoit: Okay. Now I'd like to go back to the investor class and some questions that were asked before. You're talking about the proposed changes to regulation as if they're a done deal, although you did say negotiation is going on with the provinces. You also said there is broad acceptance by the provinces of the overall changes. Does that include the change that would have this money being funnelled through the immigration department? Is that accepted by all provinces?

• 1030

Mr. Don Myatt: When the proposal was made to the minister and when the minister presented it to cabinet and pre-published the regulations, there was broad provincial consensus for that process at the time, yes.

Mr. Leon Benoit: At the time?

Mr. Don Myatt: Yes.

Mr. Leon Benoit: Which was when?

Mr. Don Myatt: That was in mid-December, when the regulations were published.

Mr. Leon Benoit: All provinces supported that?

Mr. Don Myatt: At the time, yes.

Mr. Leon Benoit: There's been a change since then?

Mr. Don Myatt: The pre-publication period only closed on February 2. We haven't had a chance to analyze all the responses and all the material that's come in.

Mr. Leon Benoit: The way you said that, you must know there's a province that's expressing a concern with that now.

Mr. Don Myatt: We meet regularly with the provinces at the official level. Officials make recommendations to the political level, and the political level makes the final determination in all of these cases, just as here. Provinces may have concern, not with the structure per se, but with some of the details, but that yet is not clear to us, because we haven't had a chance to analyze all of the responses.

Mr. Leon Benoit: What detail is most likely to be the problem?

Mr. Don Myatt: The provinces are surrendering the ability to compete for investment overseas and are going to rely on the federal government to deliver the program for them and present them with the fruits of their efforts, the money. Provinces are concerned that levels are sustained at a high enough degree that the money they get through the federal program will make it worth while for them to continue to participate in the program. That's their concern.

Mr. Leon Benoit: But are they concerned about having to guarantee the initial investment at all?

Mr. Don Myatt: No.

Mr. Leon Benoit: Not that?

Mr. Don Myatt: No, it's not a fundamental issue. It's just that, for instance, let's say my province receives $20 million. I would like to make sure we're still going to get $20 million under the program.

Mr. Leon Benoit: Isn't this an awfully substantial change to be made through regulation? Shouldn't it be a legislative change that would allow a substantial change in immigration policy such as that?

Mr. Don Myatt: That's a good question. The policy is that Parliament has said there are immigration categories and there is a business immigration program. The investor program is to attract high-net-worth individuals who contribute to the development of Canada and create jobs. As for how we get those people into the country, we have an investor program now, which says, “Yes, we have an investor program. There's a price; it's $350,000.” All we're doing really is changing the administration of how the money is moved in the country.

Mr. Jeff LeBane: And that is regulatory.

Mr. Don Myatt: Yes, that is within the regulatory powers.

Mr. Leon Benoit: Well, the way the act is now, that probably is the case. I guess I'm expressing some concern that the legislation is quite broad and would allow that kind of change to be made under regulation. That's just a concern I'm expressing. I realize you can't do anything about that. You're working within the law that's there now.

Going back to the first questions I asked, Mr. LeBane, you said there were three reasons for the reduction in people coming under the investment class: the Asian flu, the handover of Hong Kong to China, and currency change. Have any other significant factors that you know about, or that you would guess at, even, led to the decrease?

Mr. Jeff LeBane: In the overseas market, when persons are considering migrating, we are only one amongst many countries, and it's something very difficult to quantify. Potential immigrants, especially if they don't have relatives, look at the Canadian market and social conditions versus those of Australia, New Zealand, and the United States.

Competitors in their own right can be at varying times more aggressive in competition. It's decreased somewhat most recently, but Australia had a very ambitious migration program. They have most recently reduced numbers. New Zealand most recently has been very aggressive in certain types of categories. But it's difficult to quantify. People overseas are hearing different messages about—

Mr. Leon Benoit: What about the disclosure rules that the revenue department put in place just last year? I've heard a lot of concern expressed about that, and my guess is that Ms. Leung has as well, because she's indicating that that is the case. Could you comment on that?

Mr. Jeff LeBane: I've not heard comment on that.

• 1035

Mr. Don Myatt: National Revenue has recently made two changes to its procedures, and these two distinct changes have raised concern in some of the communities in Canada. One change is the handling of emigrant taxes. That means when Canadians or residents of Canada choose to leave Canada, they now accrue a tax liability on their departure from Canada, and they have to meet this liability on departure by payment of the tax or leaving a credit with Revenue Canada.

We don't think that has much impact on business immigration, because it would presuppose that someone overseas is making a choice to come to Canada in the first place, and in making that choice, they're already preconceiving what their tax situation is for the next day on leaving Canada.

Mr. Leon Benoit: What about the disclosure of financial information, though, of assets being held in—

Mr. Don Myatt: The second change is this. Like all of us around this table, all Canadians are required to declare all their income, wherever it exists, offshore and in Canada. We do not work for Revenue Canada, but we understand there has been fairly strong concern across the country, and Revenue Canada brought in some regulations that persons must declare specifically offshore assets over $100,000. That's to meet the national standard for that department that all of us must declare all our assets each year, our income.

Mr. Leon Benoit: But it is a change.

I have one more question. The minister indicated in her broad statements that she presented on January 7 that in fact she is looking at even tougher disclosure measures in the department, I guess. I'd like you to comment on that. What was she getting at?

Mr. Don Myatt: There's a mixture. National Revenue has new rules. All Canadians must declare all our income; that's the standard. In addition, all of us, if we have assets over $100,000 offshore, have to declare them. It's in the recent tax form. That's one set of National Revenue rules that are applicable to everybody in the country, whether you're an immigrant, born here, or recently moved.

Our minister was talking about concerns that were expressed around this table about the source and provenance of funds coming to Canada within the immigration categories. Right now we've been discussing our concern about where the investment money comes from in the former Soviet Union. Where do the entrepreneurs—

Mr. Leon Benoit: It's to weed out money that's been gained through crime.

Mr. Don Myatt: Correct, illicit funds, yes. We're concerned with the source and integrity of the funds. That's what our minister is talking about. She's not talking about Mr. Peterson's changes.

Mr. Leon Benoit: Okay.

The Chairman: The chair would like to pose a few questions, if he may.

In your document, it says you have landed 298 more than the number of visas issued. Please explain.

Mr. Jeff LeBane: Yes. Because of the timeframe of the validity of an immigration visa, people who may have been issued visas in the second half of 1997 could have chosen to arrive in Canada in the first part of 1998.

The Chairman: Good.

Allusion was made that the regulations are a done deal. Can you assure me that they are not a done deal?

Mr. Don Myatt: No, the regulations are pre-published. It's not a done deal. The minister hasn't made her mind up on the final package at all.

The Chairman: The risk-free investment was one of the rationales for increasing the investment amount to $500,000. Who takes the risk? The provincial government, you've indicated. If the provincial government defaults, who makes the ultimate guarantee, since the federal government is the agency?

Mr. Don Myatt: The first level of risk is with the provincial structured fund, and that risk will be met by assets held in the fund of the province. The provinces will probably create crown corporations that have other assets. If the fund defaults, the provincial government then takes the risk. To your question, ultimately the taxpayer in the province will be responsible for the repayment of the money to the immigrant investor.

The Chairman: And as a way of contract, the federal government cannot be sued?

Mr. Don Myatt: No, because it's the agency agreement.

• 1040

The Chairman: I would like to follow on Mr. McNally's question about the official who has made this notation about the problem in that part of the country.

I am intrigued by the remarks being made by that official. I haven't seen that letter, of course, so I'm a little handicapped. He says there is no exhaustive evaluation, and yet at the same time he has made an evaluation. That intrigues my mind. Is it possible for the committee to get a copy of that report from that official?

Mr. Don Myatt: The report was accessed by the press, so I'm sure we can find a copy to give you, yes.

The Chairman: I think the committee would be interested to see that report so that the committee may examine it in its fullest.

My second point is on the shoe repair issue that Mr. Telegdi alluded to. Does that fall under the so-called family program, or is it something separate?

Mr. Don Myatt: A local small businessman on the corner—a cobbler, a dépanneur, or whatever—can come to Canada in many different categories. They may say they're an entrepreneur and come through that door, or they may come as self-employed. They may come as an investor who then creates a secondary business to maintain themselves in Canada. They could even be an independent applicant who has enough points on the grid to come as a—

The Chairman: At the present time we have in place a so-called family program, which allows the entry of members of the family for reasons of trust and because of unusual work hours and demands. Is there a plan to abolish this program in the pre-publication document?

Mr. Don Myatt: The family business job offer I think is within the minister's document that she pre-published, but again, I wouldn't know. It doesn't fall within the aegis of business immigration, so I'm not aware of the current thinking on that. That would be another section of the branch I'm in.

The Chairman: It is not part of this business aspect?

Mr. Don Myatt: No. It's considered part of the family. The focus is the family connection, so it falls within the division that deals with the family class.

The Chairman: Fair enough.

In terms of not meeting the target, do we have targets for each of the categories of business—the three categories you have mentioned? Have we set targets for those?

Mr. Don Myatt: We have ranges. As in all immigration targets, we have ranges for the three categories of business class and the business class itself.

The Chairman: In which of the categories did we not meet the target?

Mr. Don Myatt: The three categories were uniformly down. As Mr. LeBane prefaced earlier, immigration is down across the board in the independent categories, and that's pretty uniformly reflected in the investors, the entrepreneurs, and the self-employed.

The Chairman: You have indicated the many reasons that potentially could explain the drop in numbers. Did I hear that the limitation of resources to process the applications could be an explanation for a drop in numbers?

Mr. Jeff LeBane: The primary reason was that 10% of the persons we issued visas to did not use those visas. About 15,000 immigration visas were not used. That is the most significant factor following from the Asian economic crisis.

To this point we have not discussed resourcing issues. As you know, under program reductions in the early and mid-1990s, we had to reduce the number of Canada-based staff abroad by something in the range of 35%. With the resources we have available overseas, we have to meet the expectations of the business category, the family-class programs, spouses, etc. There are a number of priorities overseas, and program managers must manage their resources to meet the expectations of those various priorities.

Certainly the amount of resources is a factor in the delivery of the business program.

The Chairman: You say the amount of resources is a factor. Of course when you reduce it, on the surface at least, it will tend to put a pressure on the system, and when you increase it, the pressure will be eased.

Mr. Jeff LeBane: Yes.

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The Chairman: Why then, in the pre-published guidelines, is one of the objectives to reduce the human resources, when in fact we are not meeting the targets, and part of the reason could be resources? Why would it be the objective of a redesigned program that resources ought to be reduced?

Mr. Don Myatt: Are you referring to the redesign of the immigrant investor program?

The Chairman: Yes.

Mr. Don Myatt: The resources we speak of in there are... The division here at headquarters is a very expensive, highly resourced division. The resources it uses are to monitor the investment of the provincial funds, or previously the private funds, to ensure that the funds are complying with the federal rules: 70% of the money must go to small and medium-sized business, the business has to be under $35 million, there are quarterly reports, there are annual reports—

The Chairman: So they have nothing to do with the people—

Mr. Don Myatt: Overseas endorsements? No.

The Chairman: Or processing applications?

Mr. Jeff LeBane: No.

Mr. Don Myatt: My division headquarters has several forensic accountants who spend a great deal of time analyzing company books. That costs us a great deal of money, and we think there's a better way of doing it.

The Chairman: Can applications be made by people within Canada?

Mr. Jeff LeBane: For the business program?

The Chairman: Yes.

Mr. Jeff LeBane: No, it's an overseas program.

But Mr. Chairperson, if I may, on the issue of resources and backlogs, one of our frustrations is that with our resources, we spent a considerable period of time to process those 15,000 people—a lot of resources went into processing those cases—and those people did not use their visas. That exacerbates other aspects of our processing.

The Chairman: My last two questions relate to the deadline for submission. The new program is supposed to start April 1, 1999?

Mr. Don Myatt: Yes. This is the new immigrant investor program and the rules for handling the money in Canada. It does not deal with selection.

The Chairman: Oh, I see.

Mr. Don Myatt: We're not talking of the front end. That will happen as the minister comes back to the government with proposals for a new selection requirement.

The Chairman: One of the objectives of this redesigning is the harmonization. Is that right?

Mr. Don Myatt: Yes.

The Chairman: Of all provinces, we hope.

Mr. Don Myatt: It's to re-balance provincial shares of immigrant investment. Again, it's the back end: How much money comes in, who receives it, and at what rates? It's to redistribute the share, to harmonize that aspect.

The Chairman: In the emerging proposal that you have seen to date, can you assure the committee that in fact we are meeting that objective of all provinces having equal opportunity, risk, benefits, and privileges? In other words, are they almost uniform in terms of risks and privileges?

Mr. Don Myatt: Yes, I think it's a superior system that is being proposed. The process has been ongoing since 1994. It's involved all the provinces and territories and the Government of Quebec, which has been actively participating in the working group. They've all discussed how the program works and how the current system has many anomalies that have grown up so that some provinces receive a significant proportion and other provinces, such as your own Manitoba, have not participated for a number of years. Under the new program, the formula will deal with all provinces on a more or less equal footing.

The Chairman: I think the chair should cut his questions now.

Mr. Telegdi.

Mr. Andrew Telegdi: Thank you, Mr. Chair.

You mentioned that we're in competition with numerous countries for business-class immigrants. Has your department met with Canadian law firms that are active overseas in working with business-class immigrants?

Mr. Jeff LeBane: The department meets biannually with the Canadian Bar Association and various consultant organizations, and in those discussions they convey their views on processing overseas.

Mr. Andrew Telegdi: The ones I talked to seemed to complain that our process ends up being too lengthy in relationship to the countries we're competing with.

• 1050

It might be good for the committee at some point to have some of them in as witnesses. We have a commitment that we're going to meet our targets in the coming year, and we fell short by quite a number, so that's going to be quite a challenge. Somehow we have to find a way of being a little more successful, given the changing world economy.

It seems to me that those lawyers and law firms who are active overseas could be very much a resource to the department, keeping in mind that they wouldn't have exactly the same kinds of security considerations we would, but maybe they can assist in some ways to speed things up so that people who initially target Canada as their first choice don't get derailed because of the timelines.

Mr. Jeff LeBane: Where immigration applicants choose to employ a lawyer consultant, one of the things a lawyer consultant can do to help his client is to ensure that all of our requirements are met, that all the documentation and application forms are complete, because in a number of countries, the documentation that comes in is incomplete, and it slows processing down.

We know the department is doing its best. It will be a challenge to meet the levels. One of the things we're trying to do, where posts have significant backlogs and processing timeframes can be lengthy, is we are identifying experienced temporary duty officers to go to those posts to reduce backlogs and reduce processing timeframes.

The Chairman: I'd just like to advise the committee that the research staff has just told me we have to plan some time for next week. We have about nine minutes ahead of us before the conclusion of the meeting. We can go to the completion of questioning the witnesses or we can discuss the terms of reference of this particular study we are doing. We have the outline. That's why we proceeded. Can we discuss this before the end of this meeting?

I'm in a quandary, because after him, I will go to Grant and then to Leon. Can we discuss some business items now and excuse the witnesses, or would you rather just proceed with the witnesses?

Mr. Leon Benoit: We should do that through the steering committee first.

The Chairman: Well, we can do that too. Is that your predisposition, to discuss it at the steering committee, which I hope I can squeeze in perhaps tomorrow, Friday?

Mr. Leon Benoit: I'm gone.

The Chairman: Late Monday?

Mr. Leon Benoit: Late Monday, yes.

The Chairman: Okay.

Ms. Raymonde Folco: So long as it doesn't coincide, Mr. Chair, with the social policy committee caucuses meeting.

The Chairman: Right, okay. That's at 3:30, so maybe even at about 5 o'clock? No?

Ms. Raymonde Folco: No, it would have to be before 3:30. It could be at 3 p.m. possibly.

The Chairman: Okay, can we meet at 3 o'clock?

Mr. Leon Benoit: It might work.

The Chairman: Okay, so we will plan on 3 o'clock for the steering committee.

We will conclude. Are you done now, Andrew, with your questioning?

Mr. Andrew Telegdi: Yes.

The Chairman: Grant and then Leon.

Mr. Grant McNally: Thanks, Mr. Chair. I just want to follow up where we left off in the last round. Of the numbers indicated here, the 13,350 business-class immigrant visas, do you have a breakdown of how many are entrepreneurs or investors? You may have mentioned that earlier; I'm not sure.

Mr. Jeff LeBane: I didn't provide a breakdown.

Mr. Grant McNally: I'm interested to know what the breakdown would be in terms of numbers.

Mr. Jeff LeBane: We're just searching for that right now.

Mr. Grant McNally: Okay. I was reading a report here that said approximately 17,000 to 20,000 entrepreneurs. I was wondering if that was accurate or not. Or is that 17,000 to 20,000 total business-class individuals in all three sub-categories?

Mr. Don Myatt: The numbers are 1998 numbers.

Mr. Grant McNally: Just a rough ballpark figure would be fine.

Mr. Jeff LeBane: These are preliminary figures.

Mr. Grant McNally: Yes.

Mr. Don Myatt: The figures we've given you are for the total number of people, principal applicants and dependants. I'm sorry; I only count by the head of the family, so my numbers are very different. I don't have the breakdown with me. I'm sorry.

Mr. Grant McNally: Could we get that breakdown?

Mr. Jeff LeBane: Yes, we can provide that.

Mr. Grant McNally: Okay.

• 1055

Mr. Jeff LeBane: When we say a total of 13,350 business-class immigration visas were issued in 1998, that includes the principal applicant, the spouses if applicable, and children. That's everybody. But we will provide you with a breakdown by the three categories.

Mr. Grant McNally: Okay, that's great.

And just to follow up, I was pleased to note that the chair asked for that report. It would be great if we could get that as well.

Also, could we get that other statistic about how many individuals don't comply? I know it's a voluntary compliance system and individuals have to file a report at, I believe, six months, 12 months, and 18 months.

A witness: Yes.

Mr. Grant McNally: Of those totals, how many individuals, particularly in the entrepreneur category, don't comply with the act after the fact?

That's all I have.

The Chairman: I will yield to Leon after just one short question. How many withdrew their applications? I would like to know.

Mr. Jeff LeBane: Overseas?

The Chairman: Yes.

Mr. Jeff LeBane: It was 11%.

The Chairman: Okay, thank you.

Mr. Jeff LeBane: I just want to be very clear: 11% withdrew or cancelled their applications, but I want to explain that when they withdrew, some of them may have re-applied at another post overseas.

The Chairman: Oh, okay.

Mr. Jeff LeBane: We don't have that statistical—

The Chairman: Cross-checking?

Mr. Jeff LeBane: Yes.

The Chairman: Okay.

Leon.

Mr. Leon Benoit: I have two questions. First, if, under this new investment deal that's being worked, one province chooses not to get in, you've said the pot will just be redistributed to other provinces. Will the province that chooses not to take part operate as they are now pretty much? How would that work?

Mr. Don Myatt: If the province chooses not to create a fund, be approved by the minister, and participate in the new program, they will be out of the game for receiving immigrant investment funds. They of course will be the recipient of the immigrants themselves who come, settle in their communities, and create subsequent jobs, but in terms of receiving funds, no, they will not receive any.

Mr. Leon Benoit: And last, you talked about setting up nine new offices overseas. What are your goals in terms of increasing the number of investor-class people from those nine offices?

Mr. Jeff LeBane: What we're trying to achieve with those business centres is greater consistency in decision-making and faster processing. We can compare that to what processing timeframes are normally at home-country offices. We also want to achieve greater program integrity gains.

Mr. Leon Benoit: What about numbers, though? What about the number of people? We fell far short last year in the number of people coming in under the investor class.

Mr. Jeff LeBane: Yes.

Mr. Leon Benoit: Obviously you must be doing things—and this must be part of it, I would assume—to increase those numbers. So what are your goals for these nine offices in terms of an increase in the number of people coming in from those locations?

Mr. Jeff LeBane: We don't have, if you will, precise... I can't quantify that at this point, because, as I said, these offices only came into place June 1.

Mr. Leon Benoit: But if you're doing it, you must have some goals. You have to have thought that through. You're not just—

Mr. Jeff LeBane: Greater consistency in decision-making, faster decision-making, and ensuring that we have greater comfort in the sources of funds from these people.

Mr. Leon Benoit: That's good, but what is your department doing to try to increase the number of investor-class immigrants?

Mr. Jeff LeBane: It's through promotion, working with the provinces, attending fairs—investment fairs, migration fairs.

Mr. Leon Benoit: And how effective is all of that going to be? You must have done some evaluation of that. What's your anticipation?

Mr. Jeff LeBane: We have yet to see whether the situation in Asia is going to improve significantly and how effective we are in other markets. We are readjusting our focus on non-Asia markets now.

• 1100

Mr. Leon Benoit: But you've said already that you—

The Chairman: Excuse me. Our time is about up. I can see the chair of the next committee wanting to seize possession of this room. However, because of the interest in the subject, may I ask the committee, would we like to invite the officials for next Wednesday, if we have no other new legislative agenda?

Mr. Leon Benoit: Yes, that sounds good.

The Chairman: Is that the consensus of the group?

Some hon. members: Yes.

The Chairman: We would like to invite you again for next Wednesday at 3 o'clock, please, for a two-hour period. We would appreciate that.

Mr. Jeff LeBane: Yes.

The Chairman: I'm sorry; it will be 3:30, and we will announce the room later on.

Mr. Jeff LeBane: Fine.

The Chairman: Thank you so much for coming, on behalf of the committee.

The meeting is now adjourned.