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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