Andrew Barnes: What Govt should demand of wealthy investors coming to NZ

OPINION:

Back in May 2017 an intriguing – and potentially helpful – change was made to the investor visa application programme; applicants were allowed to donate up to 15 per cent of their investment to registered charities or not-for-profits in New Zealand.

However, the latest figures from Immigration New Zealand show that in the four years that have elapsed since applicants were given this option, not a single person is recorded as having done so – despite $9 billion being invested to date under the terms of the visa programme.

Currently, wealthy investors who want residency must invest between $3 million and $10 million over three to four years, taking into account variables around business experience; clearly, there is a significant potential pool to drip-feed into charitable causes to benefit countless New Zealanders.

When offering residency status through this programme it is, I believe, self-evident we as a country wish to attract well-rounded applicants. We deserve individuals who are not just focused on developing businesses but who will contribute to New Zealand society.

As it stands, acceptable contributions include investment in government bonds, which delivers no tangible, additional benefit to New Zealand. In most cases, the bonds already exist and have previously been purchased by investors, so a mere change of ownership represents no significant investment to the country. After three to four years, the bonds can simply be sold once more, having not brought any sustainable value to New Zealand.

It would be a better demonstration of commitment to Aotearoa New Zealand if investors were not just allowed to but obligated to deposit a minimum of 15 per cent of their application funds to charity. These donations could come with an attached tax credit (33 per cent in New Zealand) so that a donation is grossed up for the purposes of the application. Under this model, an offshore investor bringing in $3 million would be obligated to allocate at least $450,000 to charity and would immediately receive the donation tax credit, which would be $150,000 in this case – so the investor would only have to donate $300,000 of their own money.

There is a material benefit to New Zealanders, to whom the $450,000 is distributed via charitable causes, and an incidental benefit to the investor, who can be granted an automatic tax credit at the time of donation and therefore only has to stake two-thirds of the charitable gift.

There have been high-profile instances of ultra-rich people who have been granted a New Zealand passport on the apparent agreement with authorities that they will attract substantial business and other financial contributions and opportunities to New Zealand. In one high-profile case, in particular, that promise does not appear to have eventuated, though the investor has retained his New Zealand citizenship.

Conversely, the advantage of a charitable deduction on investment is it is not based on a promise of future investment – it must be paid upfront and the investor cannot get it back, regardless of what he promises. It is money that stays in New Zealand for the benefit of New Zealanders.

By this method, the investor visa programme could operate like the Overseas Investment Office, whereby non-residents seeking to buy land or high-value businesses in New Zealand must ensure their proposed investment results in a substantial and identifiable benefit to New Zealand, such as improvements or protections of land, services, infrastructure or the natural environment.

As part of a move towards charitable obligations, I propose establishing a government-sponsored charitable trust to which existing charities could submit applications for funding. The trust would have defined categories – such as education, health, cultural heritage, child poverty, environment/climate – which would give offshore investors some choice in the category of funding they support, but the successful charities in each funding round would be decided independently by the trust’s advisory board. The board could be comprised of people with credible philanthropy experience (the likes of Stephen Tindall) to ensure that monies are deployed as broadly, appropriately, usefully and measurably as possible.

To honour Te Tiriti O Waitangi, a portion of the monies should be reserved for charities and social enterprises which support kaupapa Māori services, endeavours and enterprises and address critical areas such as health, housing and education.

Let’s put this in context – if around $9 billion has been invested under the investor visa programme to date, a 15 per cent compulsory contribution would have yielded $1.35 billion to support charities and social programmes across Aotearoa New Zealand. I reckon this kind of money would solve many funding gaps commonly experienced by charities and would deliver concrete benefits to many New Zealanders.

It would also prove a serious commitment and be a worthy legacy from wealthy people seeking to call New Zealand home.

– Entrepreneur and philanthropist Andrew Barnes is a former chair of Regional Facilities Auckland, the innovator behind the 4 Day Week and founder of a number of entities in the financial services and technology sectors.

Source: Read Full Article