Immigration Canada Launches Online Consultations to Improve Federal Investor Program

The federal government is launching online consultations today to get feedback from the public on how to improve the federal Immigrant Investor Program.

Citizenship and Immigration Canada (CIC) today launched an online consultation campaign to solicit input from the Canadian public on ways to modify the federal Immigrant Investor Program (IIP) to increase the benefit it provides to the country.

“We can no longer be a passive player in the global competition for talent and investment. That is why we need to review our immigration programs to create dynamic opportunities that enable immigrants’ investments to directly benefit the Canadian economy,” said Immigration Minister Jason Kenney in a statement put out today.

Acceptance of new applications under the federal IIP was temporarily suspended on July 1st to give the federal government time to revamp the program to address shortcomings it had according to the Immigration Ministry.

One change that CIC has signalled it is considering is requiring immigrant investors to make an active investment in the Canadian economy. The current investment requirement for applicants under the IIP is to provide an interest-free loan of $800,000 to a province or territory for five years, which CIC representatives have argued is too passive and does not contribute enough to the Canadian economy.

The online consultations are open to the public until September 4th 2012, and CIC says it is planning to re-open the investor program in the beginning of the 2013.

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Group Suing Government Over Wipe-Out of 280,000 FSW Application Backlog Making One Last Try in Court

A group of applicants whose applications for permanent residence in Canada were wiped out by legislation passed by parliament on June 29th are asking a federal court judge to order CIC to process their applications on 'humanitarian and compassionate' grounds. (Montrealais)

A group of approximately 900 people whose applications for permanent residence in Canada were closed after the federal government wiped out the back-log of 280,000 Federal Skilled Worker program applications are making one last attempt in court to force the federal government to process their applications.

The group had previously scored a victory when a federal court justice ruled that the federal government must assess their applications due to the legal obligation it had to process applications in a timely manner once it had filed them. Soon after the ruling, Bill C-38, legislation which includes a legal provision that wipes out the back-log of applications that were filed before February 27th 2008, was passed, which the federal government argues invalidates the court ruling.

The lawyers representing Citizenship and Immigration Canada (CIC) stated that the federal government would process the applications of 165 of the litigants whose files were not among the 280,000 applications in the backlog, but that the applications of the remaining litigants would not be processed as they were eliminated by Bill C-38 when it was passed on June 29th.

The group’s lawyer, Tim Leahy, is making a final effort to save the group’s applications and asking the presiding judge to order CIC to process the group’s applications on ‘humanitarian and compassionate’ grounds.

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Canada’s Real Wage Growth Stagnant For Last 30 Years -Report

Average hourly wages increased by only three dollars from 1981 to 2011 after adjusting for inflation

A report published last month as part of Statistics Canada’s Economic Insights series finds that average real wage rates increased by only 14 percent in Canada from 1981 to 2011.

According to the report, real hourly wages, meaning hourly wages after adjusting for inflation, increased from approximately $20.70 in 1981, to $23.70 in 2011, a $3 wage gain in 30 years. Median real hourly wage growth was even more meager, increasing by approximately $2, to $20.90, between 1981 and 2011 -a 10.6 percent increase over three decades.

Different rates of wage growth were observed in the earlier and latter halves of the last 30 years, with average real hourly wages rising by only 4 percent in the 17 year period from 1981 to 1998.

After deep spending cuts by the federal government in the mid-1990s, which brought total government spending levels down from 53 percent of GDP in 1992, to 43 percent of GDP in 1998, the rate accelerated, with wages increasing 10 percent in the 13 year period from 1998 to 2011.

Much of the developed world has experienced wage stagnation over the last four decades. Explanations for the slow down include:

  • the break-down of the Bretton-Woods system, which pegged the world’s currencies to gold, in 1971, and the subsequent increase in monetary inflation, resulting in nominal wage hikes not keeping up with inflation
  • globalization and corporate outsourcing to low wage countries
  • an ‘innovation saturation’ as economies mature
  • the entrance of women into the work force increasing the supply of labour
  • an increase in government spending levels diverting economic output from private sector investments

Nominal wages in Canada increased by 1.1 percent in 2011, substantially less than last year’s annual inflation rate of 3.2 percent.

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Crime Rate in Canada at 40 Year Low, Still Above 1962 Levels

Canada’s crime rate is now at a 40 year low, after eight consecutive years of declines in the incidence of police-reported crime (UNODC)

Statistics Canada reported this week that the incidence of police reported crime declined 6 percent in 2011 from the previous year, and is now at the lowest level it has been since 1972.

The Crime Severity Index, which measures the severity of crime, also fell 6 percent, while the Violent Crime Severity Index, which measures the severity of only violent crimes, dropped 4 percent, continuing a two decade long downward trend in crime rate metrics.

Canada’s crime rate was 3,000 incidents per 100,000 residents in 1962, but then rapidly increased through the 1960s and 70s. The increase in the crime rate slowed in the 1980s and finally reached its peak in 1991, before beginning its 20 year decline to the present.

The current rate of 6,000 incidences of crime per 100,000 residents is 40 percent lower than the 1991 peak, but still double the rate in 1962, a fact that the federal Public Safety Minister, Vic Toews, stressed on his Twitter account after announcing the milestone.

“Rate is still 208% above 1962 levels, more work for our gov’t to do,” Toews tweeted.

The Statistics Canada report showed Manitoba and Saskatchewan with the highest Crime Severity Index among the provinces, and Ontario the lowest.

Much of the violent crime in Manitoba and Saskatchewan is concentrated in the provinces’ sizable native communities which have been racked by high rates of alcoholism and violence for decades.

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Canadians Now Wealthier Than Americans, Mostly Due to Housing Prices

Condo construction in Canada. The crash in the US housing market was the main cause of the average net worth of households in Canada surpassing the net worth of households in the US (Raysonho)

A report that first surfaced on Canada Day stating that Canada now has higher average household net worth than the US set the news media on both sides of the border buzzing. Advocates of robust government intervention in the economy pointed to this development as vindication of their faith in their economic ideology, while Republicans blamed the news on Obama’s term in office.

The real cause of the switch in household net worth standings is much more mundane: a drop in housing prices in the US. As the National Post’s Andrew Coyne notes, home prices declined by nearly one-third in the US from 2006, when the US was ahead in household net worth, to 2011, when the wealth comparison used in the report was done, while they remained steady in Canada, and this accounts for almost all of the drop in the average household net worth in the US relative to that in Canada. A commodity boom driving up the value of the Canadian dollar also helped Canada’s relative position.

The key policy decision in the US that caused the divergence in the wealth of American and Canadian households was the goal the American political establishment set in the early 2000s to purposefully encourage a boom in the housing market using the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, and low interest rates from the Federal Reserve as the tools.

As far back as 2001, popular American pundit Paul Krugman, in classic Keynesian economic fashion, trumpeted the benefits a housing bubble could provide for the US economy and proposed the means of creating it:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

The Federal Reserve obliged and sharply lowered interest rates and kept them there for the next three years.

The GSEs did their part and expanded their volume of purchases of privately issued mortgage backed securities from $20 billion in 2000 to over $150 billion at the height of the housing bubble, in 2006.

In contrast, the Canada Mortgage and Housing Corporation (CMHC), a crown corporation which has a role somewhat similar to that of the GSEs in the US, remained conservative in the type of mortgages it insured, while the Bank of Canada kept its overnight lending rate a full two percentage points higher than the Fed’s, and consequently, no bubble formed in Canada’s housing market.

Whether the US economy would have been spared a housing bubble in the absence of the expansion of GSE subsidies and lowering of the Fed’s lending rate is a matter of much scholarly debate. At the very least, the decision by the American political establishment and Federal Reserve authorities to expand government mortgage subsidies and keep interest rates low for three years, respectively, did nothing to prevent a bubble from forming, and made the one that did form worse than it otherwise would have been.

The real story that emerges in Canada overtaking the US in average household net worth is the superiority of a more prudent approach to economic intervention that emphasizes sustainable economic development over one that focuses on boosting GDP in the short term at any price.

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Financial Post Addresses Growing Income Disparity Between Recent Immigrants and Other Canadians

1880 poster inviting people to immigrate to Canada. The income gap between recent immigrants and native born Canadians has grown from 20 percent in 1970 to 39 percent today.

The growing income gap between recent immigrants and longer-established Canadians received special news coverage today with a report in the Financial Post by the deputy chief economist of CIBC, Benjamin Tal.

The article describes the deteriorating position of newly arrived immigrants relative to native-born Canadians by comparing what it was in the 1970s to what it is today:

A male immigrant who arrived in Canada in the 1970s made about 80¢ on the dollar relative to a Canadian-born worker, and he was able to narrow the gap at a rate of roughly 1¢ per year. Today, despite the fact two-thirds of newcomers have post-secondary education, their earnings have dropped to close to 60¢ on the dollar and the gap is narrowing at a much slower pace. Nearly half of the individuals who immigrated to Canada between 2001 and 2006 are overqualified for the jobs they occupy.

Tal places a large economic price on the growing income gap, estimating it deprives Canada of $20 billion in earnings a year, and argues that the Canadian economy will need to do better at harnessing the economic potential of its immigrants if it is to make up for the decreasing ratio of Canadian workers to retirees as Canada’s population ages.

The editorial counsels against expanding immigration programs designed to meet Canada’s short term labour market needs by allowing lower skilled workers to become permanent residents, arguing that lower-skilled workers are less able to adapt to changing labour market conditions. It points out that even in the comparatively long-term-focused Federal Skilled Worker Program, one third of the preferred occupations are construction-industry related, and that a slowdown in the housing market could leave immigrants in these vocations lacking the qualifications to work in Canada.

Tal recommends that to address the income gap, the Canadian government should borrow from Australian immigration policy, which manages to keep income disparity between its immigrant and native-born workers at 50 percent the level seen in Canada, and raise language proficiency requirements for immigration.

This is not the first time an economist for a large Canadian bank has recommended increasing the language bar for immigrants. A report by TD chief economist Craig Alexander in February proposed increasing official language proficiency requirements for immigration applicants along with expanding the role of provincial nominee programs in selecting immigrants in order to reduce the income and employment gap between immigrants and native-born Canadians.

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Immigration’s Crime-Reducing Effect Gets Media Attention

Chinatown in Toronto. A growing visible minority proportion has coincided with a decline in the crime rate in Toronto. (chensiyuan)

Study findings suggesting that immigration reduces crime have been picked up today by the online version of MacLean’s magazine, one of Canada’s largest weekly news magazines, in an article, Does immigration reduce crime?

One study referenced, conducted by researchers Ronit Dinovitzer and Ron Levi at the University of Toronto, compared the rate of youth delinquency in a group of 900 teenagers, 66 percent of whom were non-European immigrants, in a Toronto community in 1999, to the rate found in a group of 835 teenagers in the same community, but twenty three years earlier, when only 10 percent of respondents came from an immigrant background.

The findings show a significantly lower rate of youth delinquency, which includes activities like smoking marijuana, getting into fights and stealing cars, in the newer cohort of teenagers over the older, less ethnically diverse cohort.

Another finding by Statistics Canada shows a strong negative correlation between the rate of violent crime in Montréal neighbourhoods, and the proportion of the neighborhood’s population that is made up of recent immigrants.

The more general correlation that advocates of the ‘immigration reducing crime’ theory point to is the nation-wide decline in the crime rate since the 1970s, when immigration levels were significantly increased by the Trudeau government and maintained by governments since. Major Canadian cities like Toronto have seen their crime rates decline by up to 50 percent since 1991, as their proportion of foreign born residents, now at 50 percent in Toronto, has increased.

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Alberta Temporary Worker Program to Expand List of Eligible Occupations

The temporary foreign worker pilot is intended to alleviate the acute labour shortages that natural resource industry hubs like the city of Fort McMurray face (Regional Municipality of Wood Buffalo)

Citizenship and Immigration Canada (CIC) and the provincial government of Alberta jointly announced this week that the Alberta temporary worker pilot program will be expanded to include more occupations.

The pilot project began in June 2011 and issues special work permits to foreign nationals who meet the program’s requirements, including being qualified in an eligible occupation, which allows them to work temporarily in Alberta in a single occupation without the constraints that typically come with work permits for temporary foreign workers, like requiring a Labour Market Opinion (LMO) from Services Canada to change employers.

The expansion of the program will add the following occupations to the list of approved occupations:

  • Welder
  • Heavy duty equipment mechanic
  • Ironworker
  • Millwright and industrial mechanic
  • Carpenter
  • Estimator

The pilot previously accepted only a single occupation, pipe/steam-fitter.

Alberta faces some of the most severe labour shortages for skilled trades workers in Canada, as companies are unable to find a sufficient number of Canadian residents that are able and willing to work in often remote resource extraction sites like the oil sands in the province’s north.

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TD Bank Says it is Looking to Reverse Closure of Some Iranian-Canadians’ Accounts

TD Bank is looking to smooth over relations with the Iranian-Canadian community after it closed dozens of Iranian-Canadians’ bank accounts. (Matthew G. Bisanz)

After a maelstrom of criticism for closing the bank accounts of dozens of Canadians of Iranian descent, in some cases with little to no explanation, TD Bank announced this week that it is looking to address the complaints and handle its enforcement of financial sanctions against Iran more delicately.

In an interview on Monday, a spokesman for TD Bank, Mohammed Nakhooda, said the bank realizes that the closure of the accounts had been “distressing and disruptive” and that it was looking to improve the way it communicates with its customers about the issue.

The Canadian financial institution said it would try to reach out to those affected and explain the cause of their account closure, and put in place a process whereby it would obtain more information from some affected clients to clarify their personal status and activities, and depending on the information obtained, re-open their accounts.

Letters sent up until recently, seen by media, from TD to customers to inform them of their account closing contained only a statement that the sanctions prohibit the bank from “providing any financial services to, or for the benefit of Iran, or any one in Iran” in the way of an explanation.

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Half a Million Visitor Visas Issued so far in 2012

10 percent more visitor visas have been issued so far this year than this time last year. The “Honeymoon Capital of the World”, Niagara Falls, is Canada’s top tourist spot (Ujjwal Kumar)

Citizenship and Immigration Canada (CIC) announced last week that it has issued 500,000 temporary visitor visas in 2012, a 10 percent increase from the number issued this time last year.

The total number of people who visit Canada far exceeds the number of temporary visas issued, as ninety percent of international visitors to Canada are from one of the over 50 countries whose citizens do not need a visa to visit Canada, including the US which is the source of 76 percent of foreign visits to Canada.

Not surprisingly, the Canadian province that attracts the most foreign visitors every year is the country’s largest and most populous, Ontario. British Columbia and Quebec are the second and third most visited provinces, respectively.

Niagara Falls, Ontario remains far and away the most popular tourist destination in Canada, with an estimated 12 million people visiting it each year.

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