Evaluation of the Federal Business Immigration Program — 6. Resource Utilization

This section focuses on the efficiency and economy of the BIP. As provided in the Directive on the Evaluation Function, the demonstration of Efficiency and Economy is defined as an “assessment of resource utilization in relation to the production of outputs and progress toward expected outcomes”.^{Footnote 56} This assessment of efficiency and economy provides information on cost of delivering the program and its efficiency. In addition, it looked at the perceived impact of the selection criteria and alternatives.

6.1. Efficiency

6.1.1. Program budget and costs

The cost analysis focused on the total costs for program delivery. The total and per-unit costs of BIP delivery were obtained from CIC’s Cost Management Model (CMM) in order to examine trends in costs over time and to compare with other economic programs (FSW and PNP). The cost data available for BIP, FSW, and PNP by fiscal year from 2006/07 to 2011/12 are summarized in the following table.

Table 6.1 includes costs related to both the federal and Quebec immigration programs. These data include internal CIC costs, as well as costs incurred by other departments and agencies (excluding costs incurred by Quebec for the selection of its candidates)^{Footnote 57} related to the delivery of these programs.

Source: CIC Cost Management Model (Data not available for 2008/09). It includes internal CIC costs, as well as costs incurred by other departments and agencies.

While there were year-to-year fluctuations, the average annual cost for BIP was $13.55M, ranging from $10.85M in 2010/11 to $17.67M in 2009/10. The estimated total BIP costs for the five-year period from 2006/07 to 2011/12 were $67.7M.

Costs by BIP class show that the average annual costs were highest for the IN class ($7.48M), followed by $5.23M for the EN class and lowest for the SE class ($0.84M). As a percentage of total BIP costs, 56.6% of the BIP costs were related to the IN class, 39.5% to the EN class and 6.3% for the SE class (which had small numbers of applications processed). However, 82% of those admitted in this period were in the IN class compared with 13% in the EN class. Therefore, the data indicate a higher average cost for ENs processed as compared with INs processed, which is discussed below.

Comparable data for FSW and PNP^{Footnote 58} showed considerable variations in annual costs over this period. This trend was related to changes in the volumes of applicants processed in these two classes as a result of changes in targets. Average annual costs for FSW ($85.14M) was higher than for BIP as a result of the considerably higher volume of applications processed whereas annual costs for PNP (averaging $12.64M) do not include P/T costs for applicant selection and nomination.

6.1.2. Efficiency of BIP

One indicator of cost-efficiency across programs is the average unit cost per application processed;^{Footnote 59} this is summarized in Table 6.2.

NOTE: Averages were calculated based on 2006/07 to 2011/12 data, excluding 2008/09 for which no cost information was available.

Source: CIC Cost Management Model.

Based on the average number of completed applications processed per year, the average unit cost for BIP ($2,680) was 2.5 times the average unit cost for the FSW program and the PNP. These data also indicate that the average unit cost for the IN and SE classes ($1,958 and $1,926) were almost double the average unit cost for FSW program and the PNP ($1,053 and $1,054). For the EN class, the average cost ($6,094) was 3 times the average unit cost for IN and SE class applications.

Based on per-unit costs, close to two applications for FSW or PNP could be completed for the cost of processing each IN or SE application. Further, six FSW or PNP applications could be processed for each EN application. Therefore, strictly in terms of output cost, FSW and PNP are considerably more cost-efficient than BIP.

However, a range of factors may contribute to higher processing costs for BIP and for the EN class in particular. Interviewees noted that processing BIP applications can be more complex and challenging than most of the other economic classes because of the review of financial information, verification of business experience, and establishing the provenance of funds where required (for personal net worth and capital investment amounts). These financial reviews are not required for FSW applications for example. Other factors that may contribute to the unit cost per application being higher for ENs include:

• the number of times a file is touched (and the requirement to update certain documents) to reach a final decision on the application due to longer processing times for this class;
• a higher proportion of EN cases being interviewed due to the complexity of assessing entrepreneurial background;
• the high refusal rate for EN applications, and increased level of effort required to process cases that are refused;
• the low concentration of EN files within specific CVOA (as a high concentration of files in a few offices, as seen for the IN class, lead to increased efficiency); and
• the monitoring of Ts&Cs for the program and any related enforcement action that may be taken where Ts&Cs are not met.

Therefore, processing costs are higher for EN and IN applications than for the other economic programs.

6.2. Selection Criteria and Alternatives

The evaluation considered whether the selection criteria (as described in Section 1) were effective in identifying applicants who have established themselves economically in Canada.

NHQ interviewees and case study representatives felt that current BIP selection criteria could be improved to better meet the objectives of the program (economic contribution to Canada). Some noted that the current selection criteria are not specific enough to ensure BIP attracts the kinds of business immigrants needed in Canada. Improving selection criteria would, in this regard, increase efficiency, as resources invested would be better targeted to achieve expected results. As shown in Section 5 of the report, over 80% of BIs have incomes from various sources, and very few BIs receive employment insurance or social assistance benefits. Based on this data, the BIP selection criteria appear to be relatively effective in selecting BIs who economically establish. However, as discussed in the previous section, the economic performance of BIs is low compared to that of other economic classes.

The evaluation also considered whether there were any alternative selection criteria that could meet policy objectives more effectively and whether there were any alternatives that would improve the program’s cost-effectiveness. This information can be summarized in the following proposed alternatives:

• Language: While the selection grid includes points for official language proficiency as a criterion, there are no minimum language requirements for selection. Applicants can obtain sufficient points to qualify (35 out of 100) without any points for language proficiency. As background data has shown (Section 1.2 Program Profile), 59.2% of BIP immigrants arriving from 2007 to 2011 have no knowledge of English or French. Some interviewees suggested that adding a minimum requirement for language proficiency would help immigrants function more effectively in business, self-employment and/or investment fields in Canada. Consequently, it would ensure program resources are best invested to admit BIs with the most potential to establish in the country and to generate the most economic outcomes.
• Business Experience: Stakeholders identified a need to better define previous business experience for the three BIP classes, such as to consider the size and type of businesses previously owned because the ‘business’ sector differs from Canada in many other source countries. However, it was recognized that assessing past business experience abroad is challenging and that it may take some time for new immigrants to establish businesses in a different business environment. In order to address this issue, some countries still use a points system, but they also provide temporary resident visas as pathways to permanent residency. This provides the opportunity for immigration officials to assess progress by new immigrants toward meeting business program requirements before permanent residence is approved. Such an alternative to the way business experience is currently assessed would increase cost-efficiency as less time and effort would be required to assess this aspect of applications, while ensuring links to expected program results.

• Investment Capital: With respect to the IN class, some interviewees suggested raising the investment to $2M or $3M to make the amount more worthwhile for Canada since it is fully repayable after 5 years. A few respondents also suggested that IN funds could be placed at risk. Review of the investor immigrant programs in Australia, the UK and the US shows that these countries require that investor capital be placed at varying degree of risk. The Australian program requires that applicants take no legal action if their investments lose value. The US program requires that investment funds to be at-risk and disallows the use of loans to secure the required investment funds. As for the other two countries, the UK also requires investment funds to be at-risk, while allowing loans in some instances (in which case it requires proof of assets in excess of the loan amount).

  While increasing benefits generated through the program, increasing the investment amount (and consequently the personal net worth) would also constitute a gain in efficiency for application processing according to case study interviewees. Case study interviewees mentioned that when the investment required for INs was raised from $400,000 to $800,000, it became easier for them to assess the personal net worth. Prior to this change, they saw a lot of non-business people applying through the program; increasing the requirements by 100% led to better quality applications.

• Third party involvement in the selection process: With respect to BIP delivery, some interviewees suggested the use of third parties for the verification of assets. Interviewees also suggested the involvement of private companies or businesses in the selection of business immigrants. Representatives from two of the four countries interviewed said that they had had success in delegating responsibility for screening applications and monitoring compliance to sponsoring institutions (e.g. for the UK’s Graduate Entrepreneur and Exceptional Talent programs). For example, in its Graduate Entrepreneur program, the interviewee noted that they were able to leverage a list of institutions already developed for its student immigration programs and had sanctions if partners did not fulfill conditions. Third party involvement would lead to increased efficiency, capitalizing on the expertise of partners (which officers often do not possess), and ensuring officers would not have to devote as much time to assessing an application. Officers would then rely on the analysis provided by those third parties to make decisions on applications, instead of doing the full assessment themselves.

• Other cost-effective alternatives: During the case studies, interviewees noted a number of alternatives that could improve cost-effectiveness. Centralized processing was noted as a possible alternative, however, it was mentioned that local knowledge about the business environment in countries of origin is important for effective review of applications. Increased use of online applications was also noted as a possible efficiency improvement. This approach was echoed in interviews with officials in other countries who noted efficiency gains through measures such as: the use of electronic applications, application process automation, consolidating or streamlining visa processing branches and placing caps on applications received, which assisted in managing the volume of applications. However, the majority of the CVOA case study interviewees responded that the current application review process was already challenging in balancing processing efficiency with quality of the application review and that no additional risks should be undertaken in an attempt to increase cost-effectiveness.

  Alternatives to improve cost-effectiveness were also considered by reviewing approaches used in similar business immigration programs in four other countries (Australia, New Zealand, UK, and USA). Interviews with officials identified the following approaches used successfully. Australia has adopted an on-line ‘expression of interest’ approach for applications to streamline and automate the application process. With this approach, the states or territories then select applicants they wish to nominate and applicants remain for only two years in the ‘pool’. The USA Regional Centre (RC) approach allows for bundled investments and coordinated economic development projects put together by the RCs. This approach is more efficient than approving each individual investment project and also allows for a coordinated economic development strategy over a number of years. The USA Targeted Economic Area approach links the investment amount required from the business immigrants to the investment location and local economic conditions. Approaches to the design and delivery of business immigration programs vary considerably in other countries. It would be important to assess alternatives used elsewhere in relation to the objectives of Canada’s BIP and its classes to determine their applicability in Canada.

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