MBIE interested in testing migrant investors' benefit to the economy

Thursday 3rd December 2015

The Ministry of Business, Innovation and Employment is keen on better understanding the boon that investor-category migrants provide the country, an area it doesn't yet measure beyond gauging the minimum entry requirements.

Deputy chief executive labour, science and enterprise Paul Stocks told Parliament's commerce select committee the ministry is considering research on extra economic spin-offs beyond the initial investment needed for migrants to enter New Zealand under the investor category visas. While there's an expectation those migrants will ramp up their domestic investment once they've arrived, the ministry only tracks that those people meet the the criteria of their visa.

"What we have found is that new migrants to New Zealand in the investor category will obviously do the minimum required, and once they've spent some time here and got more familiarity with the market, they will invest over and above that," Stocks said. "There is a valuable research avenue here to actually look at what we're getting from the additional investment, and it's something we have discussed as part of our potential research programme."

Last month MBIE released a summary of exploratory research into follow-on investment from migrants, which showed a higher proportion of those new arrivals could easily meet the investor-plus category, which requires $10 million, but chose to apply under the $1.5 million investor category. Those investors' initial investment was largely in corporate and government bonds, with follow-on investment for investor-plus mostly in commercial property, and investor migrants investing in their personal residence.

Stocks told the committee that initial investment in government bonds wasn't the most stimulating activity, but that had to be weighed against deterring those investor migrants by requiring more active use of their funds.

New Zealand approved 81 investor category visas in the June 2015 year, down from 88 a year earlier. The country has been experiencing record levels of net inbound migration this calendar year, with fewer New Zealanders leaving for Australia, and more new migrants arriving, with Asia showing the fastest growth.

MBIE officials were also quizzed on the efficacy of Callaghan Innovation's research and development grants after a Deloitte audit of a grant to Trends Publishing questioned the funding agreement.

Stocks said he couldn't comment directly on that case, which was being dealt with by Callaghan, but that MBIE believes the R&D growth and project grant system was working, and that Callaghan had significantly improved the administration since it was set up.

"We have kept an ongoing eye as to how those grants are being operated, in particular the extent to which they work in tandem, but with respect to comments by Deloitte's report, we've done no additional work at this point," he said. "It's always hard to see what the counterfactual might have been, or indeed whether something would have proceeded without it or not, but we think that the R&D grant system works well."

Labour Party MP David Clark questioned the purpose of a deferred expenditure of $2.6 million relating to the planned Saudi Arabia agri-hub, which MBIE chief executive David Smol said was a New Zealand Trade & Enterprise project led by the Ministry of Foreign Affairs.

Stocks said deferred expenses usually arose from delays to projects, though he couldn't be specific on what might have delayed the Saudi agri-hub. While there would have been an expectation that expense would arise when the cost was allocated, Stocks said he didn't know if that was still the case.

BusinessDesk.co.nz

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