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Evaluation of the Federal Business Immigration Program — Executive summary

Purpose of the Evaluation

This report presents the findings of the evaluation of the federal Business Immigration Program (BIP), including its three classes: the Entrepreneur (EN) class, the Self-employed persons (SE) class and the Investor (IN) class. The evaluation was conducted from January to December 2013, in fulfilment of requirements under Section 42.1 of the Financial Administration Act and the 2009 Treasury Board Policy on Evaluation.

Program Profile

The BIP is one of seven federal economic immigration classes and is included under CIC's Strategic Objective 1: Migration of permanent and temporary residents that strengthen Canada's economy. It includes three classes: the Entrepreneur (EN) class, the Self-employed persons (SE) class and the Investor (IN) class.

The expected program outcomes are to select and admit business immigrants (BIs) who would be able to economically establish themselves in Canada, to create additional job opportunities for all Canadians through business start-ups and additional provincial investment in economic development, and to share the benefits of expanded economic development activities across Canada.

The BIP consists of three classes:

  • Entrepreneur (EN) Class: The objective of the EN class is to attract experienced business persons who will own and actively manage businesses in Canada that contribute to the economy and create jobs.
  • Self-employed persons (SE) Class: The objective of the SE class is to attract self-employed persons who have the intention and ability to create their own employment in Canada. They are expected to make a significant contribution to specified economic activities in Canada (that is, the cultural or athletic life of Canada, or intend to purchase and manage a farm in Canada).
  • Investor (IN) Class: The objective of the IN class is to attract experienced business persons and capital to Canada. To be eligible for immigration as an investor, the applicant must have business experience, a minimum personal net worth, and make a one-time investment into the Canadian economy, which is redistributed to participating provinces and territories for economic development.

The program resulted in 12,402 principal applicants being admitted to Canada under the BIP between 2007 and 2011, an annual average of 2,480 principal applicants. Over this time period, 12.6% of federal BIs were admitted under the EN class, 5.3% under the SE class, and 82.1% under the IN class. Annual federal costs for the BIP ranged from $10.85M to $17.67M per fiscal year during the time period under review (2007 to 2011), with an annual average of $13.55M.

[In early 2014, the Federal Government announced significant changes to the BIP - the termination of the federal immigrant investor and entrepreneur programs and the elimination of their associated backlogs of applications.]

Methodology

The scope of the evaluation covered BIP program delivery from 2007 to 2011. The evaluation examined the relevance, performance (effectiveness, design and delivery), efficiency and economy of the Business Immigration Program in accordance with the Treasury Board Policy on Evaluation and Directive.

This evaluation included six lines of evidence, including both qualitative and quantitative methods, drawing from primary and secondary data sources:

  • A literature and document review;
  • Key informant interviews with CIC (NHQ, Regions), Provincial/Territorial representatives, financial institution facilitators, immigration advisors, and other country representatives;
  • Case study visits to visa offices in Hong Kong, London and Paris;
  • A telephone survey conducted with BIP immigrants admitted to Canada between 2007 and 2011;
  • Analysis of program administrative data; and
  • A financial and cost-effectiveness analysis.

Limitations and Considerations

Although the evaluation contained a balance of qualitative and quantitative lines of evidence, there were four notable limitations that should be considered when reading this report. Mitigation strategies were used to address the limitations and, along with the triangulation of multiple lines of evidence, were considered sufficient to ensure evaluation findings can be used with confidence.

  • Gaps in literature and document review: Although CIC has a good collection of documentation on the BIP, there is a lack of academic literature focused on the economic activities of BIs; rather, the available literature examines more generally the self-employment activities of immigrants, with no distinction made about the class under which they were admitted to Canada.
  • Representativeness of survey respondents: The survey sample obtained through the informed consent process differed from the total BI population admitted between 2007 and 2011, with ENs being over-represented and INs being under-represented. Additionally, there was an under-representation in the survey sample of respondents from Asia. However, the survey results were weighted to address these imbalances identified in order to ensure that the survey results were representative of the total BIP population. It is also possible that the results of telephone survey of BIs could have been positively skewed by those respondents more compliant with the terms and conditions of the EN program.
  • A gap in administrative data: The evaluation was not able to use information from the Entrepreneurship Monitoring Information System (EMIS) and the Investment Monitoring Information System (IMIS) to assess the economic activities and compliance of BIs due to a high rate of missing values in the system.
  • Definition and interpretation on economic performance: Economic establishment and performance are concepts difficult to define. Once defined their operationalization and interpretation also poses challenges. Given the nature of the business activities that BIs are likely to undertake in Canada and of the Canadian tax system (such as deductions that can be obtained), the extent of BIs economic performance is difficult to fully assess.
  • Gaps in financial data: In CIC's Cost Management Model (CMM), federal and Quebec business immigrant financial data are captured in the aggregate form. This limited the Evaluation's analysis to an examination of annual costs that included both Quebec and federal BIP. Additionally, the scope of the financial information available was limited due to the absence of data in the CIC's CMM for the 2008/09 fiscal year.

Expected outcomes

This evaluation assesses the extent to which immediate and intermediate outcomes of the program have been achieved.

The first immediate outcome of the BIP is to have a selection process that is consistent, objective, and efficient. Second, the admission of entrepreneur immigrants is expected to contribute to new business start-ups, job creation and job retention in accordance with the conditions for this economic class. Thirdly, investors' funds are expected to generate additional provincial investment in economic development.

The following intermediate outcomes are anticipated to occur in the longer-term as a result of the three above-mentioned immediate outcomes:

  • Selected and admitted BI class immigrants are economically established in Canada
  • Additional job opportunities for all Canadians
  • Benefits of expanded economic development activities are shared across Canada

Ultimately, the BIP is intended to contribute to the migration of permanent residents that strengthens Canada's economy.

Evaluation Findings

Relevance

  • Based on the documents reviewed and the key informant interviews, the evaluation found that there is a continuing need to facilitate the migration of business immigrants to Canada in order to contribute directly to the creation of jobs and businesses in Canada. The majority of key informants felt that Canada needs a program like the BIP; however, some were critical of the ability of the BIP, as it was designed, to achieve its objectives.
  • As an economic immigration class, the BIP is broadly aligned with GoC and CIC objectives with respect to strengthening the Canadian economy. However, the BIP had become less aligned over time with current CIC and GoC priorities emphasizing innovation.
  • The BIP is aligned with roles and responsibilities outlined for the Federal government in federal legislation. The majority of key informants felt that the federal lead on business immigration was appropriate, and some noted that there was also a role for P/Ts to play, through PNPs, for example.

Management outcomes

  • CIC successfully managed the number of BIs accepted into Canada within the upper and lower levels target for three of the five years under review. However, in the face of the high number of applications and a low immigration level allocation, CIC did not succeed in managing the intake of BIP applications and preventing a large inventory from building up.
  • From a client service perspective, BIP applications took longer to process compared to FSWP and PNP, from the time of application to a final decision. Entrepreneur and self-employed persons applications took significantly longer to process than investor, FSW and PNP files.
  • Program delivery coordination across the business program was generally effective. In particular, coordination between NHQ and CVOA and within any given CVOA was rated very highly by key informants.
  • BIP met immigration levels target with a high degree of objectivity and consistency in application processing. BIP selection criteria were found to be objective while still allowing for some flexibility. While there is a high level of consistency in the processing of BIP applications within CVOA, processing practices vary somewhat between CVOA due to country-specific differences and operational realities.
  • During the time period under review, limited monitoring was conducted by CIC on entrepreneur terms and conditions. Reasons for this mentioned by CIC key informants were that monitoring was time-consuming and costly, that terms and conditions were difficult to enforce and that limited training was provided on how to monitor ENs. As a result there was insufficient data for CIC to assess whether entrepreneurs' terms and conditions were met.

Program Outcomes

Economic outcomes

As one of the expected outcomes of the BIP is for business immigrants to become economically established in Canada, the expectation is not only for them to be self-sufficient, but also that they contribute, as other economic class immigrants, to the Canadian labour market and economy. As such, this evaluation assessed more broadly the economic performance of BIs in Canada and their economic activities undertaken in the country.

However, the economic performance of BIs is difficult to evaluate. The evaluation used a multi-faceted approach to understand the economic performance of BIs that provides a conservative estimate of their performance in Canada.

The evaluation not only considered the incidence of social assistance among BIs, but also included indicators on self-employment and investment activities undertaken in Canada, other income obtained in Canada (such as employment income), taxable income (and taxes paid), as well as the composition of income by different sources to assess the extent to which BIs are becoming economically established in Canada.

  • When considering together the indicators of self-employment income, investment activities, employment income, taxable income (and taxes paid), and social assistance reliance, business immigrants demonstrated some level of economic establishment in Canada. However, their economic performance and extent to which BIs had economically established is low compared to other economic classes considered (FSWs and PNs).
  • BIs admitted between 2007 and 2011 established businesses and created jobs in Canada through the EN class (for which this is a requirement to maintain permanent residence). Additional businesses and jobs were created through the IN and SE classes, although to a lesser degree. These businesses were related mainly to real estate and rental leasing and the sales and service industry (retail and wholesale trade).
  • IIP investment funds allowed for limited investments in economic development; about 30% of the funds were actively invested by P/Ts.
  • In addition to the IIP funds provided to P/Ts for economic development through the investor stream, many BIs have undertaken additional investment activities in Canada.
  • As expected, BIs have lower incidence of employment income and declare on average lower amounts than their FSW and PN counterparts.
  • BIs declare considerably lower personal taxable incomeFootnote 1 than FSWs and PNs, and as such paid substantially less personal income taxes.
  • BIs have low incidence of declaring EI and SA benefits and their rates are lower than for FSWs and PNs.
  • Most BIs have incomes from one or more sources, and many have self-employment or investment as their main type of income.

Interprovincial mobility and out-migration

  • The majority of federally selected BIs reside in their province of intended destination, with little interprovincial mobility occurring. In terms of out-migration, INs have the highest out-migration rates after 10 years in the country among economic immigrants considered, but similar out-migration rates to FSWs and other BI classes in the first five years following admission to Canada.
  • Investment funds are not distributed equitably across Canada. Among the federal fundsFootnote 2, Ontario and British Columbia receive the highest share. Ontario and British Columbia are also benefitting the most from the economic activities BIs engage in (such as business and job creation) as most of the BIs settle in those provinces.

Unintended impacts

  • In terms of unexpected results, there were two main program issues identified by interviewees and supported by the IMDB analysis, which related to residency: BI principal applicants not residing in Canada, and BIs selected by Quebec settling in other P/Ts in high numbers. Although this last issue is not about the federal BIP per se, it has impacts on the federal program. The first is on the levels allocation available for federal BIs. As Quebec is taking up a large share in the levels allocated to business immigration, the federal program is limited in the number of business immigrants it can admit in order to keep within the levels set by parliament. This subsequently has an impact on the federal IIP funds available to participating P/Ts, resulting from the number of federal BIP admissions.

Efficiency and economy

  • During the time period considered, and based on CIC cost-management dataFootnote 3, the average cost to process a BIP application was $2,654, which was 2.5 times the average cost for FSW and PNP. As such, the FSW program and the PNP are considerably less costly than BIP, as BIP applications are more complicated and take longer to assess. Cost per application, however, varied for the different classes under the BIP.
  • Through interviews and the document review, a variety of alternative approaches to program delivery were identified as ways to potentially improve efficiency and economy, including changes to the language requirements, business experience, investment capital and third party involvement.

Conclusions and Recommendations

Based on the evaluation evidence and findings presented in this report, the following recommendation is put forward.

Given the current context where the GoC announced in early 2014 its intention to terminate the federal entrepreneur and investor programs, and that the findings indicate that the program could benefit from major adjustments, CIC should seize the opportunity, building from the evaluation's lessons learned, to inform the design and implementation of new federal business immigration programming. The following recommendation should be considered in the design and implementation of any program on business immigration (including the Start-Up Visa Pilot, any future investor pilot or any review of the current SE class).

Recommendation: In future business immigration program design and implementation, CIC should consider the following, as applicable, with a view to ensuring improved monitoring and reporting and increasing economic benefits:

  • Developing a strategy to maximize the benefits of business immigrant investments for Canada (related both to the investment required as well as to how the funds are used);
  • Using a phased approach to permanent residence;
  • Leveraging third-party expertise in the assessment and validation of some aspects of applications;
  • Improving the management of BI application intake to prevent the creation of an inventory; and
  • Ensuring appropriate data is available to support performance measurement strategies.

These recommendation components are elaborated in Section 7.4.

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