Through my close involvement in the wider immigration industry I have just seen a recent discussion paper about a significant shift in NZ Long Term Business Visa (“LTBV”) policy.
I should point out that this is only in the Proposal stage but it does indicate where the Government’s thinking is heading. A key feature is a focus on actively encouraging the set-up of “innovative” businesses. This means introducing new technology or services that are somehow quite different to what is already on offer. Immigration will also accept the “enhancement” of existing businesses, but my sense (from what I have seen) is that this must mean more than simply pouring more money into a business that is otherwise dead in the water. The clear implication is that if the business proposal is not new, jazzy and involves lots of overseas exports, then don’t bother applying. This was clear from the Minister’s expressed desire in his speech for the NZAMI Annual Confrence in August that:
the businesses being created by business migrants have good growth prospects, are innovative and enable New Zealand to tap into the skills and capital migrants bring.
This shift in direction (along with other ideas which are being floated) is clearly aimed at plugging the current crop of applications where someone simply wants to buy a café or service station and give it a new coat of paint. Also, the talk from Immigration managers and press releases has been that they want to see more high-value operations being set up. Lots of LTBV cases involve shops worth maybe $500,000. I think they want to see more businesses being set up which are worth millions – or tens of millions – and which are set to go stellar.
This is all very laudable, but there are a couple of systemic problems which it ignores. The first comes back to the fact that more than 90% of New Zealand businesses are small. They are run by one or two people, whether it be a High Street shop or a lawnmowing run, and their turnover is only meant to make a good living for the owner and their family. Many of these shops and offices are run by baby boomers in their 50s to 60s, and a lot of them are thinking of retiring and selling up. Those in the business broking market will tell you that it’s migrants – and not local buyers – who are willing and able to take these businesses off their hands. If they are not able to use the LTBV avenue to do this, then we will see more and more empty shops; and the investment of time, money and effort by business owners will just wither on the vine.
Secondly, the Government’s hope that offshore investors will use an LTBV to build a multi-million business empire collides with the relationship of that policy with the other Business policies. To see this, you must first understand that applying for an LTBV is a lot of work – possibly the hardest and most intensive kind of NZ visa application. That’s why we at LaurentLaw have an interest in doing them because they represent a good challenge. Now, anyone who has a decent business background, and more than NZ$2.5 million in hand, has a much easier route to Residence in the form of the Investor category. If they have more than $10 million then the Investor Plus option is even simpler. They would be mad to do an LTBV when they can simply put their money into shares or invest in someone else’s company and spend their days lazing by the pool.
So this means that the LTBV option will only be attractive to those who can’t raise the $2.5 million minimum, and who must instead put their money into a funky, NEW business model.
The upside of this is that it may well encourage the establishment of lots of small, lean and exciting operations (with a bias toward encouraging them to set up outside Auckland, by the way). That would be great if it happens, and it would in fact tally with the sort of self-starter success stories which New Zealand has become famous for. I do wonder, however, whether it will leave existing, retiring New Zealand business owners out in the cold.
It really amounts to a form of deliberate economic engineering, and I’m not sure if the Government has quite thought through the wider impact of what it is thinking about. That, however, is nothing new.