Rich immigrants use Quebec to obtain their passports

*This report by Philippe Orfali was originally published in the Journal de Montréal and was translated by Henry Gray of the True North Initiative.

Most of those immigrant investors subsequently leave for other provinces.

Ottawa ended its immigrant-investor program in 2014, deciding that it “did not provide economic advantages to the country”. But Quebec insists on preserving its version of the program, even if the benefits are practically non-existent.

Nine out of 10 immigrant-investors do not ultimately settle in Quebec even if they use a Quebec provincial program in order to obtain their Canadian passport.

Quebec’s immigrant-investor program falls quite short of generating significant economic benefits in Quebec since 90% of its participants leave the province to choose a home elsewhere in the country, data compiled by Statistics Canada for Le Journal reveal.

Close to 1,900 foreign businessmen are admitted every year through this Quebec program. These businessmen must:

  • Possess at least $1.6 million worth of assets;
  • Have the “intention of establishing themselves in Quebec”;
  • Lend $800,000 without interest to Investment Québec.

Between 1991 and 2016, 57,935 immigrants, mostly from China, benefited from the program.

Of this lot, only 6,050 reside in Quebec today. Vancouver and Toronto welcomed 46,000, or 80%.

Their revenues in this country are below the Canadian average, which leads experts to believe that most of their wealth remains in their countries of origin, escaping the Canadian tax system.

 

A “landing point”

“Montreal is nothing other than a landing point. […] Quebec gets its loan and the costs end up in the other Canadian cities”, says David Ley, of the University of British Columbia, an expert in the immigrant-investor programs of Canada and Quebec.

Ottawa ended its program in 2014 because it did not “provide economic advantages”, according to the government. However, Quebec insisted on keeping its program, bemoans Mr. Ley.

“It was ended by the Conservatives, whom we cannot accuse of being anti-business. The revenues of these people in Canada were so low that they did not really contribute to economic growth, and this is the case at the same time that they send their children to school and use our health services. They also contribute actively to the explosion of housing costs in Vancouver and Toronto.”

Moreover, this state of affairs led former BC Premier Christy Clark to ask Quebec to change its program in such a way as to require that immigrant-investors “spend and live in Quebec”. In vain.

The Quebec Council of Employers, which produced a study about this program, is more nuanced. The program is imperfect and must be reformed, believes economist in chief Norma Kozhaya.

 

Not as bad as all that

She claims to be “surprised” by the proportion of applicants who leave Quebec, but argues that these wealthy people contributed to the economy through their purchasing power. Their loan of $800,000 helps a lot, she adds.

It is true that Quebec enjoys through this program a no-interest loan of $5 billion. Revenues generated by the placement of candidates finance two programs that aid businesses.

“If we made it a requirement that they stay in Quebec or that they purchase residences here, they would spend more, perhaps start businesses, create jobs,” believes Ms. Kozhaya.

 

More than $10M per year to manage the program

Controversial and criticized by the Western provinces, Quebec’s immigrant-investor program cost the Quebec government close to $12 million last year, data obtained by Le Journal reveal. Far more than the old federal program, even though that program served nine provinces and three territories.

The costs associated with the Quebec program have not stopped rising since 2012.

 

Rising costs

During this period, the costs of all kinds linked to this program rose from $9.3 million to $11.8 million, according to the data obtained through the Access to Information Act.

In comparison, for the rest of the country, the operating costs of the federal program were only $5 million per year at the time that the Conservatives abolished it because of its inefficiency in 2012.

The vast majority of the costs are attributable to the salaries of the people employed by the Department of Immigration, Diversity and Inclusion of Quebec (MIDI) and Investment Quebec, in Quebec and overseas.

These funds are allocated primarily for evaluating applications presented by candidates for the Quebec program of immigrant-investors.

 

An office in Hong Kong

“These [employees] must ensure adherence to the norms of the programs [sic], especially the conventions of investment and the legality of the funds that shall be placed in Quebec,” states a spokesperson for MIDI in an email exchange.

The Minister of Immigration, David Heurtel, declined to accord an interview to the Journal.

The costs are also attributable to occupying space in Hong Kong, including rent, furnishing, office set-up, and administrative costs, according to the department.

The revenues generated by the placement of the candidates, around $45 million per year, finance two initiatives that support businesses, in addition to covering all of the costs associated with the management of the program.

 

The Program in numbers

57,935 people have benefited from the Quebec program since 1991

10.4% of those live in Quebec today

$21,856: Average total revenue in Canada of the participants

$47,487: Average total revenue of Canadians

$12 million: Cost associated with the program for the Government of Quebec

$52 million: Invested per year on average in immigrant-investor programs for business assistance and for assistance in integrating immigrants into the job market

SOURCES: DATA COMPILED BY STATISTICS CANADA AND LE MIDI AT THE REQUEST OF THE JOURNAL