The 2021 Residence category is drawing to a close... so what's next?
The 2021 residence policy was unprecedented, effectively a lolly scramble for the vast majority of migrants who had been in NZ throughout the pandemic to become residents. Over 100,000 applications have been lodged under this category since it opened in December, involving over 200,000 individual applicants – and from what we are seeing, there are very few borderline cases. Most will be approved.
While this is excellent for those eligible and gives them certainty about a future in New Zealand, it does come at a price to our workforce and our businesses. Pioneering individuals who have the confidence to make a new life for themselves in new countries are typically entrepreneurial types who want to make their own way, be their own boss, and start their own businesses. It is already apparent that the approval of these visas is coming with a swathe of resignations, as these individuals are no longer beholden to their jobs in order to remain here. And with borders reopening, those Kiwis that came home during the pandemic are again a flight risk. But with our borders about to open fully at the end of the month and a simplified COVID-19 border process, employers can once more turn their attention to recruiting some fresh talent from overseas.
So, what help is being given to those businesses to balance the scales? Certainly the future of the Skilled Migrant residence category continues to be shrouded in secrecy, or perhaps indecision. But, four shiny new residence products have just rolled off of the shelf, so let’s unpack the good, the bad and the ugly in those.
THREE NEW WORK-BASED RESIDENCE PRODUCTS
Following its rollout of the Accredited Employer Work Visa policy, Immigration New Zealand (INZ) have now announced three new residence pathways that flow from that and the closure of other residence streams last year: the Green List Straight to Residence (StR) and Work to Residence (WtR) pathways and the Highly Paid Residence (HPR) pathway.
While INZ may hail its Accredited Employer Work Visa policy and these new residence pathways as a major reset, to a large degree it appears to have reinvented the wheel.
True, all employers now need to be signed off by INZ before they can support migrant workers for work visas or residence, but we still have a subsequent work visa process that looks suspiciously like a deconstructed Essential Skills policy, an Accredited Employer work to residence pathway based on a high pay rate (albeit significantly higher) and a Skills Shortage residence pathway, just with an additional fast track residence option thrown in.
The above referenced Green List is a slightly shorter, two tiered version of the Long Term Skills Shortage List (LTSSL) and like the LTSSL, the Green List exempts an employer from having to test the labour market for a New Zealander before offering the role to a migrant, provided the migrant can meet the listed criteria around qualifications, experience and/or occupational registration. This therefore continues to make it as easy as possible for employers to recruit international talent for these roles.
And while employers must now go through an accreditation process with INZ before they can offer positions to migrants, that accreditation process is largely an exercise in ensuring good workplace / human resource practices and should not prove much of a deterrent for the types of employers that would be looking to recruit off of the Green List.
Also like with the LTSSL, there is a pathway to residence if a migrant secures employment in one of the listed occupations, but under the Green List this has been split into two pathways: StR for those with an offer of employment in a Tier One occupation and WtR for those in Tier Two occupations.
There is also a third new pathway, the Highly Paid Residence visa, for migrants paid at least twice the median wage, working in any occupation.
All three of these new residence pathways have an age limit of 55, and require a minimum standard of English mirroring that required under the existing Skilled Migrant Category. The generic health and character requirements for residence also continue to apply.
Applicants do not necessarily need to hold an Accredited Employer Work Visa before applying under one of these new categories, however their employers will need to be accredited by the time the residence application is submitted.
Those who have an offer of employment in a Tier One occupation, and who have the requisite experience/qualifications as specified on the Green List, will be eligible to apply for an StR visa outright, without the need for a work visa first and thus from offshore. This is new and will come into force on 5 September. There is also provision for contractors to be eligible for the StR pathway but there are narrow parameters placed on that.
For those with an offer of employment in a Tier Two occupation, they will be eligible to apply for residence under the WtR pathway after they have held employment in the role for a period of 2 years. This is essentially a replication of the old LTSSL policy. INZ will accept work experience accrued from 29 September 2021 on, and so the earliest this visa can be applied for is 29 September 2023. Applicants do not need to show 24 months of continuous employment, without breaks, in order to be eligible; but they must have worked full-time in a Tier Two occupation for at least 24 months in the 30-month period prior to the date they lodge their WtR application. This is an improvement on the wording of the old WtR policy which referred to a need to have 24 months of continuous employment, often leaving applicants in angst over a gap when changing employment.
The HPR pathway mirrors the WtR pathway, but instead of a listed occupation, the requirement is to have an offer of employment paying at least 200% of the median wage, and to have worked for at least 24 months in a role that meets that pay threshold. This pathway can also be effectively combined with the WtR pathway, in that an applicant may be eligible for residence through having a mix of highly-paid experience, and experience in a Tier Two occupation, which again gives a nice level of flexibility not previously seen.
The new residence pathways should certainly facilitate employers in attracting fresh talent to New Zealand in those shortage areas, and a straight to residence product is going to be particularly powerful as it gives migrants the certainty of permanence they need before making the move. However, as long as uncertainty reigns around the future of the Skilled Migrant category, employers will continue to struggle to fill those vacancies created in the retail, hospitality and agricultural sectors by the 2021 Residence visa approvals.
ACTIVE INVESTOR PLUS VISA
At the same time, INZ have also announced that the Active Investor Plus Visa is replacing the Investor 1 and 2 products. The Investor categories exist to bring capital to New Zealand businesses and the government, and a positive by-product is that many who have obtained residence through the Investor streams end up bringing additional capital, knowledge and skills to New Zealand, above and beyond the investment required to secure residence.
As part of its residence policy reset, the government has replaced the two existing Investor streams with one, two-tiered visa product. While the full policy is yet to be released, early indications suggest a significantly more restrictive policy, with one small sweetener thrown in.
The sweetener can be covered quickly. The 'presence requirement' is being simplified to just 117 days over the entire four-year investment term, rather than an overall day count and year on year day count typically being required. Previous feedback has been that the current threshold was difficult to achieve, particularly during the pandemic, and so the new presence requirement will give more flexibility and should be received positively by stakeholders.
However that is where the positives end. The bump from $3 and $10 million to $5 and $15 million was not unexpected and was probably overdue given the figures had not been revised year on year. While an increase is not unreasonable, the new brackets and particularly the lower bracket, will close the door to many; prospects who would have otherwise made significant contributions to New Zealand’s economy and skills base.
Of further concern is that the $5 million threshold also now comes with a requirement that it be put into active investments. Under existing policy, an NZ equities portfolio was an extremely popular choice of 'acceptable investment' as funds would typically already be held in a similar offshore portfolio and could be comfortably switched over. It was an option of low-moderate level of risk with a decent return.
That is now only an option if investing at the $15 million bracket and while those who have been expressing interest in the Investor 1, $10 million, product, are likely to be able to find the additional funds to meet the new $15 million threshold and put that into indirect investments, those who were looking at the Investor 2 category now need to not only stomach a 66% increase in nominated investment funds, they also need to put that additional money into active, i.e. riskier, investments, in a market with which they are unfamiliar.
Additional requirements are that both tiers will now include an English language requirement at IELTS band 5 (akin to what is required to complete Diploma level study) and an investment term of 4 years, where the current Investor 1 policy had no English requirement and only required a 3-year investment term.
So in essence the new policy requires more money, more hoops, more risk. And that is going to be a hard pill to swallow. Requiring investment directly into NZ business from the outset is unlikely to increase uptake of this product, or even sustain current levels of interest. Risk does not appeal in an unfamiliar market and a period of volatility. Investors want to play it safe until they are familiar with the market in which they are operating, and this policy does not give them the chance to familiarise themselves in New Zealand’s products, businesses and ways of operating, before requiring them to dive in, boots and all. The existing model worked and could have continued to work with some refinement and a bit more willpower and resource. The new model requires too much for the 'privilege' of being able to gain a resident visa, and will likely see a downturn in investment into the NZ market.
So, is this the result of arrogance over New Zealand's value and attractiveness on the global stage, or a political stance against the ultra-rich? Regardless, it is NZ businesses that will suffer the fallout… again.