Evaluation of the Federal Business Immigration Program — 7. Conclusions and Recommendations
Based on the evaluation evidence presented in this report, the following conclusions and recommendations are put forward.
7.1 Relevance
Based on the documents reviewed and the key informant interviews, the evaluation found that there is a continuing need to facilitate the migration of business immigrants to Canada, and the role of the federal government in the delivery of the BIP is appropriate. The BIP is broadly aligned with GoC and CIC objectives with respect to strengthening the Canadian economy. However, the BIP had become less aligned over time with current CIC and GoC priorities emphasizing innovation.
As the expected outcomes of the BIP are to contribute directly to the creation of jobs and businesses in Canada, the evaluation found a continuing need for this program. In addition, the majority of key informants felt that Canada needs a program like the BIP even while being critical of the ability of the BIP, as currently designed, to achieve its objectives.
Documents reviewed did not identify business immigration as a GoC priority, but identified job creation as a priority. As job creation is one of the expected outcomes of the BIP, the program is aligned with priorities in that regard. However, the review of recent government strategic documents highlighted innovation and growth in Canada as emerging economic priorities. These developments, in addition to low target and admission levels for this program, suggest that the BIP the way it was designed may not be in alignment with priorities for business immigration and GoC priorities more broadly.
Although there is a clear federal legislative framework through the IRPA for the federal BIP, and the program is consistent with overall federal government responsibilities for Canadian immigration, P/Ts also have a role in the selection of business immigrants through their respective programs. As such, some overlap can be perceived between the BIP and P/T programs as both provide avenues for business immigration, but it would necessitate further research to determine to what extent the two programs compete or complement each other, especially in light of the current lack of alignment between BIP and current GoC's priorities.
7.2 Management Outcomes
In the face of the high number of applications and a low immigration level allocation, CIC did not succeed in managing the intake of BIP applications and preventing a large inventory from building up. As a result of the inventory, processing times for BIP applications were long. During the time period under review, limited monitoring was undertaken by CIC on entrepreneur terms and conditions.
Over the period considered for the evaluation, the inventory of BIP files continued to grow as more applications were received than processed. CIC had an inventory of 24,976 cases, representing 82,832 persons as of February 4, 2014, which would take many years to eliminate unless the department puts forward measures to address the inventory issue, such as drastically increasing the levels, adjusting the pass mark, imposing caps on the number of applications, or refunding application fees to candidates. Consequently, processing times for the three classes of the BIP continued to increase between 2007 and 2011, reaching 81 months for the ENs, 83 months for the SEs and 43 months for INs in 2011 for 80% of the cases.
Given the low level of monitoring and the lack of data, it was impossible for CIC to assess whether or not entrepreneurs met their Ts&Cs. As such, CIC did not have the information required to appropriately enforce the Ts&Cs. It was noted by interviewees that monitoring Ts&Cs required a lot of resources. Hence, the responsibility to determine whether ENs comply with the program's requirements rested with CIC, as opposed to relying more on the EN to demonstrate that they have complied with the Ts&Cs.
7.3 Program Outcomes
When considering together the indicators of self-employment income, investment activities, employment income, taxable income (and taxes paid), and social assistance reliance, business immigrants demonstrated some level of economic establishment in Canada. However, their economic performance and extent to which BIs had economically established is low compared to other economic classes considered (FSWs and PNs).
Nevertheless, BIs have established businesses and created jobs in Canada through the EN class. Businesses and jobs were also created through the IN and SE classes, although to a lesser degree. In addition to the IIP funds provided to P/Ts which allowed for limited investments in economic development, many BIs have undertaken additional investment activities in Canada.
BIs are self-sufficient and have lower incidence rates of social assistance than PNs and FSWs. However, their economic performance is lower than that of other economic classes. BIs report considerably lower personal taxable incomes than do FSWs and PNs and they pay substantially lower personal income taxes. Lower personal taxable income is a reflection of the type of income earned by BIs. As expected, BIs have higher incidence of self-employment and investment income than FSWs and PNs and lower incidence rates of employment income. However, given the nature of the income of BIs, it is difficult to fully assess their economic situation in the country.
In addition to becoming established economically, BIs were expected to create additional job opportunities for all Canadians through business start-ups and additional provincial investment in economic development. The evaluation findings indicated that BIs have established businesses and created jobs in Canada. This expected outcome was achieved not only through the EN class but also through the IN and SE classes.
IIP investment funds have resulted in about 30% active investment by P/Ts. The economic impacts could have been greater if a higher share of the IIP funds had been invested actively. P/Ts did not submit reports to the extent required under section 95 of the IRPR, which reduced the ability of the evaluation to explore the nature and type of positions created through the use of the funds, and for CIC to monitor in an on-going way how P/Ts were using the funds for the purpose of economic development. In addition to the initial investment made by INs, many BIs have undertaken investment activities in Canada.
While benefits of the program generated by the investment funds and the economic activities of BIs are shared across Canada, they are not distributed equitably among P/Ts.
Given that Ontario and British Columbia receive the most BIs, they are benefitting the most of from the economic activities BIs engage in (such as business and job creation). In addition, despite the formula for the distribution of the investments that allows for better distribution of the funds across P/Ts, Ontario and British Columbia receive the highest share of the federal investment funds (excluding Quebec).
As shown by the analysis of interprovincial mobility, most of the BIs selected by Quebec settled outside of that province, which has implications for the federal BIP. While the rest of Canada can benefit from the businesses and jobs created by BIs, Quebec still received the largest share of the investment funds (58.4% between 2007 and 2011), as a function of the number of investors it selected.
There were unintended program impacts identified by interviewees and supported by the IMDB analysis related to residency issues.
In terms of unexpected results, there were two main program issues identified by interviewees and supported by the IMDB analysis, which related to residency. The first area relates to BI PAs not residing in Canada (mentioned mainly for INs), using the BIP as a way to establish their families to the country while maintaining their activities abroad. The second issue identified relates to BIs selected by Quebec settling in other P/Ts in high numbers.Footnote 60 This conclusion, linked with the ones on mobility, suggest that the migration of BIs is not strengthening Canada's economy to the extent possible.
Opportunities for amending the selection process that could improve the efficiency and economy of the program were identified.
Areas for improvement identified to support visa officers in their decision making include introducing minimum language requirements, introducing better tools to assess business experience, increasing investment capital amounts required of applicants and considering the use of third party involvement in application processing. Those suggested changes would ensure a better use of resources to achieve the program's expected outcomes.
7.4 Recommendations
Overall, issues identified by the evaluation relate to the design and implementation of the program. Although the economic performance of BIs was lower than that of other economic classes considered by the evaluation, BIs met the expectations for which they were selected: investment capital was raised for economic development projects by INs making the initial investment required of them to be granted permanent residence, most of the ENs owned businesses in Canada and created employment as per the Ts&Cs of the program under which they were admitted, and many SEs were either active on the Canadian labour market through self-employment or paid employment. In addition, many BIs contributed economically beyond program requirements, as it is the case for those INs who created businesses and jobs in Canada and undertook investment activities in Canada after admission. With a different program design, an increased monitoring of the EN class and a more active investment of the investment funds, the program could have generated even more benefits.
Given the current context where the GoC announced in early 2014 its intention to terminate the federal entrepreneur and investor programs, and that the findings indicate that the program could benefit from major adjustments, CIC should seize the opportunity, building from the evaluation's lessons learned, to inform the design and implementation of new federal business immigration programming. The following recommendation should be considered in the design and implementation of any program on business immigration (including the Start-Up Visa Pilot, any future investor pilot or any review of the current SE class).
Recommendation: In future business immigration program design and implementation, CIC should consider the following, as applicable, with a view to ensuring improved monitoring and reporting and increasing economic benefits:
- Developing a strategy to maximize the benefits of business immigrant investments for Canada;
- Using a phased approach to permanent residence;
- Leveraging third party expertise;
- Improving the management of application intake to prevent the creation of an inventory; and
- Ensuring appropriate data is available to support performance measurement strategies.
Further details on these considerations, based on evidence presented in this report, are presented below.
Component #1: Developing a strategy to maximize the benefits generated by the investment funds, related both to the investment required as well as to how the funds are used
The evaluation findings indicated that despite the monitoring that was done, CIC was only able to obtain limited information on how P/Ts used the fund for the purpose of economic development. The program also lacked strong levers to compel active investment. As such, the IIP investment funds resulted in limited active investments. In order to mobilize more capital for innovation and job creation and also in order to have a stronger link to GoC's priorities, this strategy should consider the following aspects:
- CIC should consider increasing the period of 5-year for the refundable loan to a longer period of time in order to provide more time for active investments and to maximize the return on investments;
- CIC should consider raising the investment to $2M or $3M to make the amount more valuable for Canada since it is fully repayable. In addition to bringing additional capital to Canada, it was mentioned that raising the amount, in the past, increased the quality of the applications and allowed for a more efficient assessment of the applications. Increasing the amount Canada requires of investors would be in line with what is asked in other countries, such as Australia and New Zealand who have programs requiring greater contributions (5 M and 10 M, in their respective currency);
- CIC should consider that capital be placed at risk. Review of the investor immigrant programs in Australia, the UK and the US showed that these countries require that investor capital be placed at varying degrees of risk;
- CIC should develop clear guidelines in terms of how funds need to be invested. These guidelines should identify clearly what proportion of the funds need to be actively invested and in which economic areas; and
- Finally, similarly to section 95 of the IRPR, CIC should consider imposing reporting requirements, as appropriate, to ensure funds are used appropriately to meet program expected outcomes, and enforce the compulsory nature of this requirement.
All of these approaches would allow CIC to mobilize more capital for innovation and job creation to Canada as well as provide stronger links to GoC's priorities.
Component #2: Using a two-phase approach where candidates would be required to first reside in Canada on a temporary basis and demonstrate meeting the programs' requirements prior being eligible to apply for permanent residency
Many challenges identified in the current evaluation report could be mitigated by this two-phase approach including: the monitoring and enforcement of the terms and conditions of ENs, residency issues, as well as the processing time and inventory of BIP.
This approach would consist of not granting permanent resident status until candidates have demonstrated meeting specific requirements, as determined by the program. The United Kingdom and Australia both have a provisional phase prior to being eligible to apply for a permanent visa. While considering this recommendation, CIC should further examine these avenues introduced by other governments.
First, in the case where monitoring and enforcement of terms and conditions would be required, with such an approach the responsibility to demonstrate compliance with the program would rest with the candidate and not with CIC. The evaluation findings demonstrate that the monitoring required substantial resources which led CIC to not monitor and enforce successfully terms and conditions. As a result, CIC was not able to measure the contribution of ENs towards the expected program outcomes.
Second, regarding the program issue related to residency, a two-phase approach would allow CIC to introduce requirements to be met while having a temporary status. As such, CIC would be in a position to determine whether immigrants are residing and undertaking economic activities in Canada (like investing, starting/acquiring businesses, creating jobs, or creating their own employment) prior to granting permanent resident status. This would ensure that BIs who have a genuine intention of establishing in Canada are being selected and therefore are contributing to strengthening Canada's economy.
Lastly, other countries that have a two-phase approach have a much shorter processing time for programs like the BIP. In that regard, this approach could potentially decrease the processing time of BI applications significantly.
Component #3: Leveraging third party expertise in the assessment and validation of some aspects of applications
Evaluation findings demonstrated that not all CVOA have expertise to assess the BI applications given their complexity. Aspects that were perceived as complex included the verification of the personal net worth and provenance of funds, the assessment of business experience, and the determination of who qualifies as a self-employed immigrant. In addition to increasing efficiency, third parties involvement would also allow for the selection of candidates who have the most potential to be successful in the activities they plan to undertake in Canada, while increasing program integrity by delegating parts of the processing to competent bodies.
CIC has already started using third parties for different parts of application processing, notably in its recently introduced Start-Up Visa program and for the assessment of language proficiency and foreign credential in the FSWP. These practices could be emulated to enhance BIP's program design.
Third parties involvement could be integrated differently within each of the three BIP classes. In the case of the EN class, interviewees identified the Start-Up Visa approach as being efficient given that parties with business expertise are best positioned to identify innovative entrepreneurs who could actively pursue business ventures in Canada. Similarly, for the SE class, other countries, such as the United Kingdom, recently introduced the exceptionally talented program that uses a designated competent body to recommend promising candidates. CIC should consider using designated bodies for the recommendation of SE candidates. The IN class could also benefit from third party involvement to verify the personal net worth and provenance of funds as well as to identify sectors of economy that could most benefit from these funds.
Component #4: Developing a strategy to improve the management of BI application intake to prevent the creation of an inventory
As indicated previously, CIC did not succeed in managing the intake of applications which led to the accumulation of a large inventory that would take many years to eliminate at the current pace, unless direct actions are put in place to address the situation. As such, CIC should consider different options to address the inventory, including a combination of the following options:
- Eliminating the inventory by refunding application fees to candidates;
- Imposing caps on the number of applications that can be submitted in a year for each of the BIP classes;
- Increasing the minimum number of points required of a BI on the selection grid; and
- Maintaining the current pause on the application intake for the EN and IN classes and introducing a pause on the SE class while drastically increasing the levels for BIP.
Many of these options have been used by CIC in the past for other programs, such as the FSWP. As these options would have an impact on the inventory, they would also increase the timeliness of the application processing.
Component #5: Ensuring appropriate data is available to support performance measurement strategies
Given the challenges identified in the monitoring of the entrepreneurs' terms and conditions and of the P/Ts use of investment funds, CIC should ensure appropriate data is available to measure program performance. As such, CIC should develop, implement and update performance measurement strategies to ensure the programs are achieving their expected outcomes and also ensure that CIC has financial information allowing for proper efficiency and economy analyses on its federal programs.
This over-arching recommendation, and its different components, will have an impact on all aspects of business immigration programs: program relevance, through a better alignment with GoCs priorities; management outcomes by being more proactive in the management of the intake and the inventory; and program outcomes with enhanced reporting on economic aspects contributing to maximizing the economic outcomes of the program.
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