Let Immigration Reduce the Deficit
First, a bit of good news: Canada will likely weather the current economic storm better than any other Western nation. As the Prime Minister recently pointed out, Canada has a low debt burden, an efficient inflation regime, a diversified economy, flexible labor markets and proper fiscal management going back for more than a decade. Canadian banks have not needed the government bailouts that have become a necessity in the US and many European countries. In fact, Canada has the world’s soundest banking system according to a survey by the respected World Economic Forum. To top it off, many economists predict that Canada will be the first advanced country to emerge from this worldwide economic downturn.
Now for the not so good news: Canada, like every other country, is in the midst of a recession that will probably go on for quite some time. In the last two months, 200,000 Canadians have lost their jobs, which is about 1.7% of the workforce. After ten consecutive years of budget surpluses, the Federal government will run a deficit of upwards of $33 billion for the 2009/10 fiscal year, and this shortfall is expected to grow to 85 billion dollars over the next five years.
The deficit, in large part, will be due to a massive spending program that the government will begin to implement on April 1st. The economic stimulus plan will immediately pay out $12 billion for infrastructure projects that are shovel-ready, and that’s only the beginning.
Given that Canada is attempting to stimulate its economy by way of government spending, it then follows that the government will be looking for capital, preferably of the inexpensive variety, in order to fund its infrastructure payouts. This is where Canadian immigration can play a positive role.
As far as immigration is concerned, Canada is a favored destination and consistently ranks as one of the top countries in the world for overall quality of life. And despite, or perhaps because of, the current global economic environment, many successful entrepreneurs and managers around the world are considering Canada as their destination of choice to begin a new life for themselves and their families.
Individuals with a high net worth (in excess of $800,000 CAD) and managerial or entrepreneurial experience can qualify for a Canadian Permanent Resident Visa by investing CAD $400,000 with the Canadian government at zero interest for five years, under what is called the “Federal Immigrant Investor Program” (FIIP). There is no risk to the immigrant investor, and after five years, he/she receives the full investment back. Canada, in the meantime, gets to use the Immigrant Investor’s $400,000 for five years at no cost.
The Immigrant Investor and immediate family members gain Canadian Permanent Residency, and Canada has access to an inexpensive pool of capital to help fund its stimulus spending.
There are currently approximately 7,000 Immigrant Investor applicants in queue in the FIIP awaiting assessment, all of whom are ready and eager to make their required $400,000 investment in return for a Permanent Resident Visa. They are simply waiting for their immigration processing to be completed. This represents $2.8 billion in available capital that could be put to good use in the funding of infrastructure projects.
Last year, Citizenship and Immigration Canada (CIC) issued 1400 Permanent Resident Visas to Immigrant Investors. This made up just over 3% of Canada’s overall immigration intake. By increasing the number of Visas available under the FIIP to 3,000, the capital available to Canada would increase from $560 million to $1.2 billion annually.
Now, in these trying times, doesn’t that make cents?
First, a bit of good news: Canada will likely weather the current economic storm better than any other Western nation. As the Prime Minister recently pointed out, Canada has a low debt burden, an efficient inflation regime, a diversified economy, flexible labor markets and proper fiscal management going back for more than a decade.
Selling the family jewels for short term gain does not support the long term goals of anyone. it is time to cut immigration to around 50,000 per year.