Kerre Woodham: Are we sure foreign investment will grow our economy?

The government, as you will have heard, is relaxing immigration settings to encourage migrants to invest in New Zealand businesses. While everyone was at the beach yesterday making the most of the golden weather the Prime Minister was suited and booted and spelling out the changes to the Active Investore Plus (AIP) visa category to the Auckland Business Chamber.

The way it works is that there will be two “simplified” investment categories that will replace the existing “complex waiting system”, as set up by Labour.

From April 1, the visa will be split into two categories: Growth and Balanced. The growth category applies to those making “higher- risk investments”, including those directly in local businesses and will require a minimum investment of $5 million for a period of at least three years.

Visa holders in this category would have to reside in New Zealand for a minimum of 21 days. Not a long time.

The balanced category focuses on mixed investment, allows for a minimum spend of $10 million over five years, and requires 105 days spent in New Zealand with the potential to get reductions if investments exceed $10 million.

Several other changes have been made, including the stripping away of the visa's English language requirement, which demanded applicants have an English language background. Christopher Luxon said yesterday that the requirement had scared off many potential investors in recent years and the numbers certainly seem to support that.

Since 2022, migrants entering New Zealand under the investor category have invested just $70 million. By contrast, in the two years prior to Covid-19 migrants invested $2.2 billion. There’s a hell of a difference. However, Labour says by dumbing down the rules for the investor visa risks watering down the economic benefits for New Zealand.

In his press release, Phil Twyford says “allowing people to buy residence by parking their money in a passive investment like property that won't generate jobs or sustainable economic development for New Zealand does not sit well”. And I guess that's the rub. Is it going to generate real jobs? Is it going to generate real growth? Or is it just going to be money washing around in the system?

Simon Bridges talking to Andrew Dickens on Early Edition says it's a good move and most people don't realise just how important foreign investment is to the growing of the economy. 

“If you look at the results over time, under more permissive settings if you want to say that, the results pretty clear ... a lot of very wealthy came and I think history shows they invested in our best companies, our golf courses, they made bequeaths to our art galleries, they had an oversized contribution to New Zealand. Then we tightened them up, I think it was under the last Labour government. And we saw less of that right? You know, I think possibly New Zealanders don't quite understand how much good investment migrant settings can be really important to our economic success and we sure as hell need that at the moment.”

Well, we certainly do. We certainly do need that kind of investment, but I think Simon Bridges from the Auckland Chamber is probably quite right.

I don't understand how foreign investment is going to grow our economy. I can understand how bringing money in and just using it as an investment opportunity to offset your other investments if you're a wealthy foreign investor just allows you to slush money around. How does it grow it?  It is it going to be the next Rocket Lab or the next Xero. How?

Art galleries and golf courses are all very well and good, but they're lovely, gorgeous vanity projects and gifts to New Zealand from wealthy investors that don't really generate jobs. Where's the benefit to the ordinary Kiwi? 

So the government has banged the sign on the shop door and is sitting about telling the world we are open for business. But what sort of business? You know, where is it going to franchises? It going to nail bars? Is it going to fast food? Is it just money going round and round in a continual cycle within the economy?

How do we ensure it's going into these businesses where we've got brilliant Kiwi entrepreneurs, brilliant startup businesses that need that extra capital to go to that next level? How do we direct it there? 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Carrywood and Morning's podcast from News
Talks head b So.

Speaker 2 (00:12):
The Government, as you will have heard, is relaxing immigration
settings to encourage migrants to invest in New Zealand businesses.
While everyone was at the beach yesterday making the most
of the golden weather, the PM was suited and booted
and spelling out the changes to the Active Investor plus
visa category to the Auckland Business Chamber. The way it

(00:34):
works is that there will be two simplified investment categories
that will replace the existing complex waiting system as set
up by Labor. From April one, the visa will be
split into two categories, Growth and Balanced. But like your
Kei Wei savor. The Growth category applies to those making

(00:56):
higher risk investments, including those directly in local businesses, and
will require a minimum investment of five million dollars for
a period of at least three years. Visa holders in
this category would have to reside in New Zealand for
a minimum of twenty one days, not a long time.
The Balanced category focuses on mixed investment, allows for a

(01:20):
minimum spend of ten million dollars over five years and
requires one hundred and five days spent in New Zealand,
with the potential to get reductions if investments exceed ten
million dollars. Several other changes have been made, including the
stripping away of the visa's English language requirement, which demanded
applicants have an English language background. Christopher Luxon said yesterday

(01:46):
that the requirement had scared off many potential investors in
recent years, and the numbers certainly seem to support that.
Since twenty twenty two, migrants entering New Zealand under the
investor category have invested just seventy seven zero million dollars. Contrast,

(02:06):
in the two years prior to COVID nineteen migrants invested
two point two billion dollars. There's a hell of a difference. However,
Labour says dumbing down the rules for the investor visa
risks watering down the economic benefits for New Zealand. In

(02:28):
his press release filed twife, it says allowing people to
buy residents by parking their money in a passive investment
like property that won't generate jobs or sustainable economic development
for New Zealand does not sit well. And I guess
that's the rub. Is it going to generate real jobs.

(02:50):
Is it going to generate real growth or is it
just going to be money washing around in the system.
Simon Bridges, talking to Andrew Dickens on early Edition, says
is a good move and most people don't realize just
how important investment is to the growing of the economy.

Speaker 3 (03:08):
If you look at the results over time under more
permissive settings, if you want to say that, the result
is pretty clear. A lot of are very wealthy came
and I think history shows they invested in our best
companies or golf courses, they made bequeath to our art garers.
They had an oversized contribution to New Zealand. Then we
tidened them up. I think I think it was under

(03:28):
the last labor government and we saw less of that, right, So,
you know, I think possibly in New Zealanders don't quite
understand how much good investor migrant settings can be really
important to our economic success. I'm sure as they'll need
that at the moment.

Speaker 2 (03:42):
Well, we certainly do. We certainly do need that kind
of investment. But I think Simon Bridges from the Oakland
Chamber is probably quite right. I don't understand how foreign
investment is going to grow our economy. I can understand
how bringing money in and just using it as a
as an investment opportunity to offset your other investments. If

(04:03):
you're a wealthy foreign and v just allows you to
slush money around, how does it grow it? Is it
going to be the next rocket, label, the next zero?
Or how I mean? Art galleries and golf courses are
all very well and good, but they're lovely, gorgeous vanity
projects and gifts to New Zealand from wealthy investors that

(04:26):
don't really generate jobs. Where where's the benefit to the
ordinary Kiwi? And that was the question that Andrew Dickens
asked smon Bridges too. So the government has banged the
sign on the shop door and is setting about telling
the world we are open for business. But what sort
of business? You know? Is it going to franchises? Is

(04:49):
it going to nail bars? Is it going to fast
food shops? Is it just money going round and round
in a continual cycle within the economy. How do we
ensure it's going into these businesses where we've got brilliant
here we entrepreneurs, brilliant startup businesses that need that extra

(05:10):
capital to go to that next level. How do we
direct it.

Speaker 1 (05:14):
There for more from carry Wood and Mornings. Listen live
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