July 30th, 2009
As the latest merchandise trade deficit reminds us, our balance of payments is in dire shape and we must desperately crank up our export production. Something much more effective than business grants to stimulate exports is needed – Economic Development Minister Gerry Brownlee, we hear, has been looking into the efficacy of these and finds them wanting. He favours other policy tools, such as the new business migration scheme launched this week to lift our economic performance by making NZ more attractive for business and entrepreneurial migrants.
New Migrant Rules. The new policy package, designed for migrants who want to invest or set up a business and gain permanent residence, gives effect to one of the high-priority initiatives announced at the Job Summit earlier this year. Brownlee sees it bringing in more investors, connecting them with existing business networks, and creating “real jobs.” Immigration Minister Jonathan Coleman says business migration investment has dropped significantly since 2005 due to unrealistic investment expectations and English language requirements. Since 2007, just 23 migrants had been brought in. The three categories for investor migrants hence have been streamlined to two, with more attractive requirements for capital, language skills and time spent in NZ annually, as well as a greater flexibility in terms of investment vehicles. The Wellington Regional Chamber of Commerce agrees the revamp will provide NZ with new skills and help deepen its capital base.
Safeguards Needed. The need to attract investment is reflected, too, in Finance Minister Bill English’s agenda. He will be promoting NZ as a good bet for foreign money in an upcoming trip to Tokyo, New York and London, and he aims to make it easier for foreign investors to buy strategic assets by scrapping constraints imposed by the Clark Govt to stop the sale of Auckland International Airport to the Canadian Pension Plan. But it’s the nature of the investment which matters, when foreigners arrive with wads of cash.
The important bit of the policy should be ensuring the money is invested in productive assets and the returns are re-invested in the NZ economy. Selling airports won’t boost the economy unless the new owners invest serious money in upgrading them and making long-term commitments to NZ’s productive resource base by re-investing profits here. When the Wisconsin Rail people bought NZ assets, they made a fast buck and shot through, leaving us with a run-down railway. The deal battered our balance of payments, too.
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