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Parent Category - What To Do With It

Posted by Iain on Feb. 8, 2019, 2:10 p.m. in Parent Category

The Government announced last week that they were "hoping" to make a decision on what they're going to do with one of the two parent category residence pathways by the middle of this year. Hoping? They don’t have a plan?

A little over two years ago, the then Government, ‘temporarily’ closed the category most commonly used by parents to join their migrant children. Although they justified it at the time by saying there were more than enough applications in the system to fill the next two or three years’ worth of annual quota, I think the real truth was that the government was looking to as quickly as possible get net migration figures back down to a more historical norm as political pressures grew. Parents represented "low hanging fruit”.

I don't believe the Politicians had anything philosophically against letting parents into New Zealand permanently but they did have a philosophical objection to being voted out of office because immigrants (whether temporary or permanent) need houses, Auckland wasn't supplying enough of those and as a consequence values were going through the roof and that became a political problem because of increasing prices and falling affordability and there was an election approaching. 

The trouble with the ‘temporary’ closure is it looks in danger of becoming permanent. As soon as the government announced last week that they were hoping to make a decision soon, a former Minister of Immigration who loves the sound of his own voice, was very quickly quoted in the media saying the policy should not be reopened because many migrants "dump their parents in New Zealand and piss off home and leave them here”.

I would suggest that might be something of a generalisation and limited to certain markets but that is the problem with former politicians and a media hungry for sound bites. 

For the record I have no idea what the government is going to do but if I was to speculate I believe the current government believes that immigration policy should not be based purely on economic benefit and there can be a social element to a parent policy. Keeping migrant families together is a way of keeping migrant families strong and if we wish to leverage the skills of a generation of foreign skilled workers then we might just have to consider allowing some of them to bring their parent(s) with them. 

The last time the Labour Party was in government I had a really interesting and fruitful discussion with the then Minister of immigration when her government was talking about closing down the Parent Category. I asked the Minister if her officials had provided any advice on the economic benefit of allowing parents to join their New Zealand resident children? She said no. All she could tell me was how much money we tax payers spend on the health of all people aged 60, 65, 70, 75 and older.

I made a few points to her. 

The first was, given we are living longer and healthier lives many parents who come New Zealand go to work. Like the rest of us they pay tax and contribute towards the benefits that are available to all New Zealanders.

Further, and to my way of thinking more critically, I explained that if anyone wished to turn this into an economic cost/benefit argument, grandparents are often secondary caregivers and that allows their own adult skilled migrant child (and usually their partner) to hold down full time jobs which of course adds significantly to the tax revenue. In New Zealand at least the average skilled migrant earns more than the average New Zealander and therefore pays more tax than the average Joe.

If the parent/grandparent wasn't in New Zealand might that not force taxpayers out of work because they have to stay home to look after their children? 

I explained to the Minister that I knew of many skilled migrants that we desperately needed that told me they would not leave a parent or parents behind and so did not come to New Zealand. In thinking about what is good for New Zealand, if you don't care about what is good for migrants, what does the decision of some highly skilled migrants not to come to New Zealand cost us in terms of downstream impacts on job creation and skills alleviation? 

It is too simplistic to argue that parents are a "drain" on the public purse.

The policy remained in place.

Now it seems the same arguments that parents are a drain on our economy seem to be front and centre but it is shortsighted in the extreme.

Only this morning I was discussing with a client who has just been granted a Skilled Migrant Resident Visa, thus joining her sibling who has been living in New Zealand for many years (who also entered as a skilled migrant and runs his own successful business) how we might deal with the fact that the Minister of Immigration has just advised their widowed mother, who has no one and nothing to return to in South Africa, that she must leave the country because her only pathway is "temporarily" closed.

The decision the Minister has made means my client who was the main applicant for skilled migrant residency will now likely have to give up her job in order to take care of the couple’s young son. For the past few months her mother filled this role. This grandmother has also filled the same role for her other son (the business owner) who has his own young family. His wife will now also have to resign her job in order to stay at home and look after the children. Between the two women I estimate their personal tax paid to be around $50,000 a year.

So in exchange for one healthy parent migrant we could have had four tax payers in her two adult children and their partners. We are about to reduce that to two.

If the non working mothers stay out of the labour market for, say five years until all the children are at school, then the government has, in making this decision, walked away from $250,000 and possibly more. What economic sense does that make? 

If we set aside the inhumanity of separating an ageing mother from her children and a grandmother from her grandchildren because we gauge a migrant’s value purely on their dollar value, then this grandmother is one valuable immigrant! We should be begging her to stay!

I would have thought that a fairly simple solution is to adopt the Australian model whereby parents pay a resident visa application fee of around NZ$45,000 per person plus a health bond of several thousand dollars (refunded if they don’t use expensive health services a few years later). Yes, it is expensive and yes there are probably many that can't afford it but this is not meant to be a solution that allows all migrants to bring all parents.

Perhaps consider, as is done with some categories of visas already in NZ that we make parents take out private medical insurance if we think they are such a cost to the public purse.  

Perhaps also if they hold down jobs for 10 years in New Zealand then the requirement to hold private medical insurance stops. 

The legal issue with that last idea at Resident Visa stage is that the New Zealand Bill of Rights does not allow that to happen (there is only one class of resident/citizen enshrined in what is in affect our unofficial Constitution) but I'm quite sure if you said to a parent we are going to let you stay, give you full work rights if you wish to work but it'll be a temporary class visa for 10 years, most would still grab it with both hands even at the expense of maintaining a minimum level of  private health insurance cover. 

I would also make the New Zealand child sponsoring the parent underwrite the cost such that if the parent failed to maintain a minimum level of insurance, then their resident child would be forced to cough up the money or the parent’s visa would be revoked. There would undoubtedly be cases from time to time where this would happen and no doubt the media would jump on it but still this would solve a lot more problems than it creates. 

There is no reason why there could also not be a rule that says that the adult child sponsoring their migrant parent must be in New Zealand for, say a minimum nine months of every year, during the first five following the grant of the parent visa, or the parent’s visa would be revoked. This should alleviate any concerns about migrants "dumping their parents in New Zealand and pissing off home” which I know is not an issue in respect of South African or British immigrants and tends to be one, if there is any truth to it, that is limited to the Asian countries. 

And yes it would be complicated around the margins but every immigration policy is complicated around the margins! 

Politically, which let’s face it, is at the centre of everything governments to do, something along these lines is elegant and while there are always unintended consequences of policy change, I have been thinking about this for a number of years, even before the category was temporarily closed and there are solutions which will satisfy most of the people most of the time, including the New Zealand tax paying public.

Until next week 

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Your Parents - Can They Come to NZ Too?

Posted by Iain on July 14, 2018, 12:17 p.m. in Parent Category

I am often asked how parents can join their children and grandchildren in New Zealand.

Historically there were two pathways:

  1. Joining one already NZ resident and well settled adult child and demonstrating that the NZ child, as sponsor, earned enough to fulfil their obligations such as they were; or
  2. Parent Investor Category - where parents have to invest $1 million for a period of four years.

The first was always far more popular than the second for obvious reasons; no investment was needed. That was until the category was ’temporarily’ put on hold two years ago. I was advised a few months ago that the outcome of the planned review of the decision to keep it on hold was going to be made in June of this year, but was then advised in April the Government had other priorities. I really thought that a left leaning Government as we now have would be more likely to re-open it than the last right leaning one that put things on hold. Alas, it has not turned out to be.

The risk of course is the longer they leave it the greater the numbers seeking one of the places within the quota (2200 per year when it was closed down) and if they do re-open it, the problem, if that’s how the government views it, will only become compounded. I am sure the Minister must be receiving hundreds of requests from people to let their parents come and stay permanently. We are certainly looking at filing a few.

The second option is the investment pathway, but clearly this is really only for the small numbers of independently wealthy. The main criteria for these parents to qualify are:

  1. Have at least one adult child in NZ with a resident visa;
  2. Have a verifiable net worth of NZ$ 1.5 million;
  3. Be prepared to invest $1 million of that $1.5 million for four years (subject to visa approval) which involves at application stage providing a list of ’nominated assets';
  4. Have had an income in the 12 months preceding the application of NZ$ 60,000.00; and
  5. Be of good health and character.

Like all ‘investors’, it is critical that the parents can show that the funds they intend transferring to NZ were lawfully earned or acquired, which can be onerous. Further, they must then demonstrate via the evidential paper trail the transfer of the ’nominated funds’ to NZ down to the last dollar, i.e. they cannot introduce new funds to invest that were not previously cleared and approved by the Immigration Department.

The interest or other income they derive from their NZ investments is theirs to keep. There is no requirement to earn any additional money whilst in NZ. This is important because they are unlikely to ever qualify for a state pension (they must reside in NZ for ten years to become eligible).

I was surprised when the previous Government put things on hold given the often vital role these (grand)parents play. Valuable not only socially in terms of family cohesion but also economically as so many become secondary caregivers to their grandchildren, while the parents of these children are out working. 

NZ gets two taxpayers rather than one parent working and one staying at home with the children.  

Of course many of these parents themselves are fit and healthy and want to work and contribute before they start consuming services, so by letting them in we may in fact get four tax payers - themselves and their children who would not otherwise have come to NZ.

If, as I suspect, the previous Government slammed the door shut on older people for perceived economic reasons (they saw them as a drain on public services, particularly health) I wonder what analysis they ever did on the ‘big picture’ covering say the three generations that usually are in that picture being parents, children and their children.

That is, if we get those grandparents' children both working while they look after their grandchildren, simple maths would suggest that the net cost to the state is almost certainly neutral.

This is reinforced by the fact that these migrant applicant parents likely have migrant applicant children and those children will, if they gained residence as skilled migrants, be more educated and earn more than the ‘average’ Kiwi and therefore will pay more tax. It is only a hunch on my part but if we can attract more skilled migrants (we didn’t fill last year's quota of skilled migrants by close to 35% because we have raised the bar so high) in part because they know they can bring their parents once they are well settled (currently three years which is stupidly long) then I would challenge anyone to provide me with evidence that these older folks are any sort of net cost at all.

But then that is all a bit logical I suspect.

It is time that the Government, in the national interest, re-opened the first pathway and let parents who may not have enough to invest, join their children in New Zealand.

Until next week...

Iain MacLeod, Southern Man

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Bringing Your Parents to New Zealand

Posted by Iain on Feb. 16, 2018, 11:46 a.m. in Parent Category

Many clients ask us what the options are to bring their parents over to NZ to join them.

If they are older than 56, their options are limited to two potential pathways only:

  1. Parent Category – two sub-categories, one of which we will ignore here as to all intents and purposes it’s a blind alley
  2. Parent Retirement Category

In recent years Government has been cutting back on the annual quotas on the first from around 5000 three years ago to a little over 2000 today. As a consequence of having enough applicants in the system no more applications have been accepted over the past couple of years and there is no official indication of when they might open up again. If it is purely mathematics, we are picking another 12-18 months.

For Parents (the first category above) the primary criteria are:

  1. have at least one adult child ordinarily and permanently resident in NZ (hold a resident visa for a minimum of three years and live in NZ); and
  2. if the sponsoring child is single they must earn gross $65,000 per annum and if they are in a relationship (has a ‘partner’) it increases to $90,000
  3. good health and character

Note the old rule of having to have the same number or more adult children resident in NZ no longer applies, there is no age cut off and there is no minimum funds required to be brought with.

The issue with this pathway is the time it takes to file an Expression of Interest, be selected from the pool, be invited to apply for residence and then prepare and process the resident visa application. The time it takes is longer than parents can remain in NZ on temporary visas and it creates all sorts of problems if you are trying to keep parents together with the family. I suspect every week scores of parents approach the Minister of Immigration to grant a ‘special direction’ which seeks an extended temporary stay. While every family will have many good reasons why their parents are different I rather suspect that the vast majority are rejected.

I have never quite understood why NZ has cut back on parent entry to NZ they so often act as secondary care givers to younger migrant families with children and create for the economy a second tax payer. Often one or both parents work too – my oldest that was still working was into her eighties. She worked because she wanted to and paid the same tax as the rest of us.

Australia makes parents pay an upfront fee of around A$47,000 per parent to ‘compensate’ for the tax they have never paid and a $10,000 deposit which I understand is returned at the ten year mark if they haven’t used expensive local health services. I am sure the Aussies are playing politics with this, but it makes the category suit everyone (that can afford it).

The Parent Retirement Category was once seldom offered as an option but has been increasing in popularity since the restrictions were placed on the Parent Category.

Under this pathway parents must:

  1. have an adult child with a resident visa
  2. have a net worth (cash and/or assets) of NZ$1.5 million
  3. be willing to invest $1m (of the $1.5m) for a period of 4 years
  4. have available $500,000 (of the $1.5m) for settlement (not mandatory to bring it)
  5. have an income of $60,000 per annum*
  6. be of good health and character

*Like so much of the NZ rule book it is silent on how long that level of income must have existed, current interpretation is the 12 months preceding the application.

For those that can afford it this ‘Retirement’ category is a really good option.

I do wonder however as the Government stays silent on when they might reopen the first of these two pathways if there might be greater scrutiny placed on the second.

I find the system has a way of pushing back on applicants if the bureaucrats decide people are taking a different pathway to what the ‘system’ historically experienced. Lord knows why they don’t realise that if you block one pathway up the mountain and people want to get to the top they’ll find another.

One way it seems to be pushing back is on health criteria. Obviously the older we are the more likely it is they may be suffering the general physical decline that comes with age. The Medical Assessors that sit in judgment on all migrants are at the best of times tough and in my view often poorly informed and unreasonable. Luckily, all resident visa applicants including parents have the right to argue what is known as a medical waiver if their health is found to be less than optimal. A medical waiver doesn’t really come with rules – it is up to the applicant to argue why letting them stay in NZ is so important.

Until next week...

Iain MacLeod, Southern Man


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