How to Destroy A Migrant Entrepreneur’s Dream

March 21, 2014
Iain MacLeod

Immigration officials should be careful what they wish for.

There is something about the immigration system that resembles the pendulum of an ailing grandfather clock. A timing mechanism that swings wildly from extreme position to extreme position. Oh for the comfort of predictable and stable rhythms.

It seems that once someone inside the Department gets the idea in their heads some part of entry policy is too ‘easy’ they counsel their political masters change is necessary. Because on the whole, their political masters wouldn’t know a work visa from a visitor visa, they tend to be easily persuaded.

Honestly, I sometimes think they need to take medication. Or at least try and understand what drives migrants, the risks they are willing to take, the investments they are willing to make and find some middle ground with policy settings that attract the skills and capital New Zealand needs but equally appreciates migrants are willing to assume only so much financial, emotional and logistical risk.

A case in point is the Long Term Business Visa (LTBV).

We updated readers recently on the closure of the LTBV category in December 2013. This policy had offered a self-employment pathway to residency for those that wished to buy, buy into or establish a small(ish) business that would benefit New Zealand modestly, principally through attracting self-starting, financially self-sufficient migrants who would create employment for locals.

In recent years officials felt they were being forced to approve low quality applicants. A nonsense if ever I have heard one. I have never known an immigration officer to do what they do not want to do – they can always find a way to decline applicants should they choose.

As a result we now have, available from Monday, the all new Entrepreneur Work Visa (EWV) which I confidently predict will fall flat on its face. Numbers will crash simply because the threshold for entry is now so high it will be virtually impossible to gain approval.

A two stage process to get the visa, applicants will now need 120 points for starters. On the face of it won’t be too difficult to work those points out if the business plan applicants prepare is highly detailed and highly researched but as always with the immigration rules the devil is in the detail.

Points will be awarded principally for:

• Age

• Self employed work experience – relevant to the business planned for NZ and indirectly relevant to the planned business in NZ or ’senior management’ experience

• Investment funds – starts at NZ$100,000 and tops out at $1 million

• Numbers of new full time jobs created

• The business being ‘export’ related and projected sales

• Business being bought outside Auckland

The fine print is what matters in this business and how immigration officers might interpret it all. In the case of this new policy it seems reasonable to conclude the Immigration Department policy wonks got in some Treasury Department policy wonks, they had a coffee (or several triple Jack Daniels), pulled out their text books, had a few giggles and threw into the policy some bizarre criteria which to real people make no sense (but which provide ample opportunity for immigration officers to decline applications).

Take for example the definition of ‘benefitting New Zealand’ which all proposed business plans must demonstrate the potential to do. One of the requirements is for applicants to demonstrate they are:

‘Introducing productivity enhancing spillover benefits or increased capacity utilisation.’

Sorry? Say what?

I have run a successful business for 25 years and I have no clue what that means. What is a ‘spillover benefit’? And who defines that?

Perhaps, for good measure, have a read of the requirement to satisfy that the business investment will be ‘innovative’…….’an innovative business is one that demonstrates a high probability of succeeding in discovering and applying new ways to produce more with the same quantity of inputs.’

Help me out here. I prove that exactly how? I consider myself pretty creative (you have to be to work in this game) but that one leaves me scratching my head. I can submit an argument that with the same inputs my snazzy new idea will lead to the’ discovery’ of a new way of doing the same thing – but how with pieces of paper, before I can put the brilliant ‘discovery’ into place in my proposed New Zealand business do I actually provide evidence to prove it will work?

I could go on.

The sublime to the ridiculous. A policy that was complicated, inconsistently administered and I am the first to concede has given me plenty of low rent cheap ethnic eateries close to where I live but of dubious ‘Entrepreneurial’ benefit, has been replaced by a policy that has an entry threshold so high few will meet it. As I have observed in the past Australia’s richest man walked off a boat 60 years ago a penniless refugee with nothing but the shirt on his back. He became a billionaire. He wouldn’t have scored anything like 120 points under this scheme and all he had was grit, determination and a will to succeed. Like most Entrepreneurs. He most certainly could never have satisfied some state functionary he was going to introduce ‘productivity enhancing spillover benefits’ that’s for certain.

If guaranteed success was your criteria if you were an angel investor looking to back a start-up you’d never invest in anything would you?

So what we have here is the same old typical knee jerk reaction we always get. Numbers will crash. Why buy or establish a business in New Zealand with a set of rules that reads more like a flight manual for an Airbus A380? The very real risk is in three years time when the first review of the policy is done the politicians will realise they have been duped by immigration officials who do not have the first clue what it means to set up, run and be successful in business – because none of them have ever done so.

It has occurred to me perhaps the move was deliberate – offer the world’s wealthy (but not overly so) an opportunity of getting into New Zealand by destroying the LTBV pathway. Early evidence supports this. Under the investor category (requiring passive investments of only $1.5 million) the numbers being selected from that pool have roughly doubled since December when the LTBV programme closed down.

I predict with some confidence the Entrepreneur Work Visa will be die shortly after its birth on Monday.

The beneficiary will be passive investments into New Zealand through the $1.5 million ‘park your funds in Government bonds for four years’ category. These investments are not unwelcome but surely a good mix of risk takers is potentially just as important as those that want no risk?

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