Citizenship and Immigration Committee on April 22nd, 2010

[The Chair, Conservative, David Tilson]

Good afternoon, ladies and gentlemen.

This is the Standing Committee on Citizenship and Immigration, meeting number 10, Thursday, April 22, 2010. Pursuant to Standing Order 108(2), we continue our study of immigration application process wait times.

We have three witnesses before us this afternoon. Thank you for coming, gentlemen. You will each have up to ten minutes to address the committee on this topic. Following that, there will be questions from the committee--or generally there are--and each caucus will have for the first round up to seven minutes.

I will ask Pierre Emmanuel Paradis, who is the senior economist for the Analysis Group, to address us first.

[Pierre Emmanuel Paradis, Senior Economist, Analysis Group]

Thank you for inviting me.

My name is Pierre Emmanuel Paradis. I'm with Analysis Group, which is a consulting firm with offices in Canada and the United States. I'm a co-author of the study that is before you on the economic impact of the immigrant investor program. I co-wrote the study with a professor from Queen's University in Kingston--his name is Roger Ware--and also with Pierre Fortin, who is an emeritus professor of economics at UQAM in Montreal.

Immigrant investors comprise more or less 3% of all immigrants who come into Canada each year. In the past 25 years or so, about 130,000 of them have arrived in Canada. They provide a substantial initial contribution and economic impact to the country. The study comprises four main parts. We described the inner workings of the program and the immigrant flows. We looked at the selection process and how funds of immigrant investors were used. For this part we essentially used data from CIC to present some basic statistics.

Second of all, we did something that had not been done before, which was to create a profile of the personal and economic activities of immigrant investors in Canada, which shows that essentially they establish their families here: they buy homes, and their children study here. A significant proportion get involved in their community.

The third part, which is the main part, assesses the economic impact of immigrant investor families who arrive in this country. Essentially, a typical immigrant investor family contributes to the Canadian economy in three ways. First of all, when they come into the country, the net impact of their initial contribution is valued at about $45,000. Provinces then use the funds that they receive from immigrant investors for various projects. The data on this is unclear, but we calculated that up to an additional $30,000 resulted from the use of these funds.

Third and more importantly, when immigrant investor families arrive in Canada, they buy homes, business assets, investments, and durable goods. In the survey we did of 107 families, the average assets that each family bought in this manner were valued at $721,000. If you calculate that we have 2,500 families coming into Canada every year and having this much economic impact, we're talking about an additional $1.9 billion to $2 billion every year for Canada.

Fourth, we looked at the prospective supply and demand of immigrant investors in the coming years in Canada. Essentially and in every way, economically and demographically, these families will provide a significant contribution to Canada. Regarding the international programs and policies, Mr. Major is going to talk more.

Our brief analysis concluded that Canada's program is fairly competitive. Its main competitive advantage is the initial contribution, which is lower than that of other countries. The main problem with it is the delays, which are the longest, by a significant amount, of all the programs we looked at.

Finally, in terms of the supply, there is a pool of wealthy families that would be interested in immigrating to Canada, which Canada taps into. It is really the tip of the iceberg. The pool of families is very large, and Canada could benefit significantly from having more of these investors.

I will give you the recommendations that we make in our analysis, which are on page 5 of the report in English. There are four of them:

First, the program should be not only maintained but expanded, considering all the economic benefits that I just presented.

Second, for the benefit of the general public, we believe the general public should know more about the impact of not only immigrant investors but all other categories of economic immigrants, so that the general public could appreciate the business activity, jobs created and investments performed by all these immigrants.

Third, I believe that Canadian authorities could build on our analysis to really optimize the program's criteria and conditions in view of what is offered internationally, and perhaps improve its weaker aspects, the greatest of which are the delays.

Fourth, I think that future research would be indicated if we looked at, for instance, the long-term impact of the second generation of immigrant investors.

I did my presentation in English, but I'm also willing to answer questions in French if any arise.

Thank you.

[The Chair, Conservative, David Tilson]

I guarantee you that Monsieur St-Cyr will ask you some questions in French.

[Pierre Emmanuel Paradis]

It will be my pleasure.

[The Chair, Conservative, David Tilson]

I want to thank you, Mr. Paradis, for an excellent presentation. I'm particularly impressed by the fact that you gave us this very attractive book and hardly looked at it. Thank you very much.

[Pierre Emmanuel Paradis]

I have to say this is Mr. Audet's book.

[The Chair, Conservative, David Tilson]

Oh, that's a real book.

[Pierre Emmanuel Paradis]

This is the one, yes.

[The Chair, Conservative, David Tilson]

That was Mr. Audet's book, that's why you didn't refer to it.

Mr. Audet is our next presenter, and he is with the immigrant investor program from Desjardins Trust.

Welcome, sir. You have up to ten minutes.

[Marc Audet, Vice-Chair, Immigrant Investor Program, Desjardins Trust Inc.]

Thank you.

My name is Marc Audet and I am a vice-president at Fiducie Desjardins, in the Immigrant Investor Program. I have worked in that program for over 15 years.

My presentation will deal with processing times for the immigrant investor class, for both the Quebec program and the federal program. It will be divided into three parts: current processing times, expected times and our recommendations.

I have prepared set of documents for the participants. There is an English version and a French version. I invite you to look at the various sections during my presentation.

Before looking at processing times, I would like to note that I have attached a list of countries of permanent residence showing the corresponding Canadian visa offices, for filing the application, in section 1A. This will help you follow.

Before looking at sections 1B and 1C, I would like to draw your attention to the fact that the number of months shown represents the number of months between the date the application is received by CIC and the date when the decision is made, that is, the date the visa is issued. So the processing time does not indicate the time it would take to finalize the thousands of cases now waiting.

You will see that 80% of the cases finalized in 2009, worldwide, were submitted 35 months earlier, so in 2006 and 2007. The current situation for the busiest Canadian visa offices, in terms of investors to be processed, is as follows: Beijing: 33 months; Damascus: 35 months; Hong Kong: 40 months; Islamabad: 46 months; London: 25 months; New Delhi: 23 months; Seoul: 29 months; Singapore: 37 months; and Taipei: 24 months. This is the situation for 80% of cases. So that leaves 20%. We will see the number of applicants that means in a moment.

Section 1C represents processing times for immigrant investors in the Quebec program. Here, it should be noted that for Quebec cases, a selection certificate is issued, and the $400,000 investment has been made. The federal government's job is therefore the background check and medical examination, which are a prerequisite for issuance of a permanent resident visa. You can see that for 2009, the average for all offices worldwide is 17 months, for 80% of cases. For Quebec cases, the processing times in the busiest offices are: Abu Dhabi: 1 month; Ankara: 6 months; Beijing: 13 months; Cairo: 28 months; Damascus: 27 months; Hong Kong: 16 months; and Islamabad: 29 months.

Sections 1D, 1E and 1F show the volume that CIC processed during a 12-month period, from October 1, 2008 to September 30, 2009. The document in section 1D provides an overall portrait of investors, both for Quebec and federally. The document in section 1E is limited to federal cases, and the one in section 1F is just Quebec cases. We can conclude that the number of investor cases processed by CIC, whether accepted or rejected, was 2,968. That figure breaks down as follows: 1,126 cases accepted and 486 rejected by the federal government, for a total of 1,612; 1,327 cases accepted and 29 rejected by Quebec, for a total of 1,356. The two totals combined come to 2,968 cases. That number is relatively low, given the total for other categories. We can conclude that processing the 1,612 cases in the federal programs took 35 months while the 1,356 Quebec cases took 17 months. The figures for recent years show substantially the same levels both in Quebec and at the federal level, 3,000 cases finalized per year, more or less, and average processing times of over 30 months federally and over 15 months for Quebec.

What is the current trend, given the inventory, the number of cases underway, in relation to the pace of processing? We estimate that if nothing is done for the 2011 fiscal year, the immigrant investor program will be in jeopardy. Processing times will be unacceptable to this clientele, which has other options. I think this subject will be covered by another participant.

I invite you to look at the table shown in section 2A. It is based on the latest official statistics from CIC. It summarizes the current situation, specifically for the federal program. The processing time, which was 35 months for 2009, will likely be about 60 months more or less for 2010 and 2011. In addition, Quebec's volume is also growing, so CIC is facing a double impact.

The table in section 2B offers an overall perspective for recent years. It is clear that the targets have to be increased if we want this program to continue to attract the international elite.

If we move on to section 3, we can see that there are hundreds of thousands of immigrants in line and that each one has reasons for seeking Canadian permanent resident status. However, given the conclusions from the study by Analysis Group, the low number of investor cases processed each year, disadvantages unique to investors and international competition, we recommend that CIC consider a substantial increase in the annual volume processed.

Considering the figures in the table in section 3A showing variations in inventory for the period up to 2013, we recommend that the federal program try to process 6,000 cases over the next three years, which would allow for reasonable waiting times of 24 months more or less to be achieved.

For the Quebec program, given the quality of the selection work done by the Quebec ministère de l'Immigration et des Communautés culturelles, there should be a target of a maximum waiting time of 12 months more or less, which would bring the number of cases processed to an average of 2,000 cases a year, more or less, based on current inventory and the 2010 and 2011 targets of the Quebec ministère de l'Immigration et des Communautés culturelles.

I will be pleased to answer your questions.

Thank you.

[The Chair, Conservative, David Tilson]

Thank you, sir.

Our final presenter is Mr. Eric Major, who is the managing director of global investor immigration services, with HSBC Capital (Canada) Inc. Is that correct?

[Eric Major, Managing Director, Global Investor Immigration Services, HSBC Capital (Canada) Inc.]

That's correct.

[The Chair, Conservative, David Tilson]

Good afternoon, sir. You have up to ten minutes. Thank you, sir.

[Eric Major]

Good afternoon, Mr. Chair. Thank you again for having me, and thank you to the members of the committee.

My name is Eric Major. I'm the managing director, as the chair explained, of this specific program or division within the bank, called global investor immigration services. Let me just give you a brief overview of HSBC, for those of you who are not familiar with our organization.

We're headquartered in London. I think we're now one of the largest--if not the largest--financial services organizations in the world, with over 8,000 offices in 88 countries. The HSBC group is named after its founding member, the Hong Kong and Shanghai Banking Corporation, which was in fact established in 1865 to finance the growing trade between Europe and China at the time.

We've been in this great country for 20 or 25 years, I believe, since the late 1980s. We have now 140 branches across the nation, making us, I believe, the largest foreign bank in this country.

As for the division that I head, essentially what my team and I do is assist our clients from around the world to migrate to this great country through this specific program called the immigrant investor program. It has a banking element to it. It has an investment element. The Government of Canada has brought financial institutions in to participate.

One of the interesting attributes we have is that we help families move to other countries. There are other countries in the world that also have similar types of programs but with different criteria. In fact, HSBC today facilitates migration. The greatest amount of migration is by far into Canada, but for the last five years now the second-greatest amount has been into the United Kingdom. Hong Kong as well, interestingly enough, has a program like this, as does Singapore. In fact, there are a number of countries that have it, but HSBC is involved with predominantly four right now.

I've been asked to comment on processing timelines, particularly as they relate to the federal program with which we're particularly involved, so I'll do that, although my friend Marc here has alluded to some of the issues that are arising there. Also, I'll give you a sense of the international marketplace, what other countries are doing, and how they're evolving.

One point is that each of these programs has its specific characteristics and its advantages and disadvantages, so it is somewhat challenging to compare one country to another. I believe you have with you now a table, an international comparison chart, in both French and English, which I tried to summarize neatly into one page so that you could try to get a sense of what the other--

[The Chair, Conservative, David Tilson]

Excuse me one minute. I don't know whether we got a chart.

[Eric Major]

I think it was left behind here, but we'll circulate it.

[The Chair, Conservative, David Tilson]

Sorry, sir.

[Eric Major]

No problem.

[The Chair, Conservative, David Tilson]

Sorry to interrupt you, but it's important that we have it before you speak.

[Eric Major]

Yes, it's helpful.

As it circulates, shall I maybe summarize it?

[The Chair, Conservative, David Tilson]

No.

[Eric Major]

Okay.

[The Chair, Conservative, David Tilson]

Okay, Mr. Major, I think we all have that, so you may proceed. Thank you very much.

[Eric Major]

Thank you.

This chart has attempted to outline some of the main nations that compete with the Canadian immigrant investor program. It tries to encapsulate some of the key characteristics that these programs have in terms of average process timelines, what you get when you apply and when you extend, what happens at the maturity of the investment, how much the investment is, and what the equivalencies are when you convert those dollars into Canadian dollars and factor in average exchange rates.

I'll give you the punchline of this chart. Essentially it shows that given that most nations provide a return.... They say you could invest your way into our nation, but in exchange we'll allow you to get a return on that investment. Canada, as you know, is $400,000 for five years--no interest. That's the nature of the program. The U.K., United States, Australia, and Hong Kong all provide a yield.

The yellow bar at the very bottom demonstrates that when you factor in the return you realize that the United States is roughly equivalent to $428,000 Canadian, whereas Australia is at $555,000 Canadian, and Hong Kong is at $650,000. I'll get to Canada in a minute. The United Kingdom is really in another stratosphere, at $1.5 million, which is maybe why they're attracting fewer than a hundred immigrants a year.

At $400,000, where the Canadian program is now, obviously this is why we're all so very busy. It's been a great program. It's eleven years old. This program has been in place since 1999.

I will conclude by saying it's time to reposition it. There are some bandwidths being discussed as to what could be a right amount for Canada, but clearly when you look at these comparisons, I would argue it's somewhere between $600,000 and $800,000.

In some respects we've been a victim of our own success. We've been very much the model of the world when it comes to this investor program. Those in the business know Canada is the reference point, so that's the good thing. We've managed this program very well over the last twelve years; the government has done very well in that regard. But now it's overly busy. Inventories have swelled up and we have a problem. We're now saying to clients that it's going to be three years, four years, five years, so they want to talk about other countries. It's way too long for any entrepreneur or investor to be told we'll get back to you in four years, for example.

The international comparison is an important one, and one that's always being upgraded. Countries are always amending their programs, so we can expect some further competition down the road.

One of the items that I think was also circulated, I hope, but if not, it's also in Mr. Audet's submission, is the overall inventories of the federal program. Without getting too scientific about it, you've got roughly 14,000 investor applications sitting in embassies worldwide, and simple math would suggest that if you're going to review 3,000 of them a year you're heading towards the five-year mark. Again, we're a victim of our own success. It's time to reposition the programs, slow that intake, raise the bar, and get more economic benefit at the investment level.

Mind you, I think Mr. Paradis has done a very good job in his report to outline that these immigrants, when they settle here, are big consumers. Living in Vancouver, I can tell you that more than 50% of our immigrant investors establish residency in that province. While Quebec has done a great job in also being a big participant in this program in terms of the investment, the real winners of this program are the areas that attract them. For the most part, that's been B.C. So the real ancillary benefits that the program brings, in terms of consumption, ancillary investments, business endeavours, their children in schools, and obviously their wealth, has been the success story of this program, as far as I'm concerned.

We have a number of recommendations, but I'll maybe leave that as part of the questions. I'm sure it will come up.

Thank you.

[The Chair, Conservative, David Tilson]

Thank you, sir.

All three of you are excellent, and we appreciate your coming.

The first person to ask you questions is Mr. Karygiannis.