The Government is narrowing the types of investments it wants cashed-up foreigners seeking residence in New Zealand to invest in.
It is committing to creating a new "Active Investor Plus" visa category to replace the existing "Investor 1" and "Investor 2" visa categories.
The new category will significantly change, if not tighten, immigration settings.
It will reward applicants who commit to investing directly in New Zealand companies with high-growth potential. These companies will need to be "okayed" by New Zealand Trade and Enterprise (NZTE).
The new category will make it harder for applicants to gain residence by committing to investing in equities listed on the NZX, private investment funds and charities.
It will also completely remove the ability for foreigners to gain residence by investing in bonds and property.
Economic and Regional Development Minister Stuart Nash said the aim of the change is to "attract active and high-value migrants who will bring their international expertise to help New Zealand businesses to grow".
The existing visa categories have attracted more than $12 billion to New Zealand over the past decade. However, Nash said over half of the investment made has been in New Zealand government or corporate bonds.
He said this made for a "missed opportunity" to attract "more active investors who can deliver real benefits to our economy over a long period of time".
The new visa category, which will open on September 19, will mean those who make direct investments will be able to commit to investing smaller amounts than those who make indirect investments.
Those who make NZTE-approved direct investments will only have to invest $5 million. Those who invest in private equity, venture capital funds, listed equities and philanthropy will have to invest at least $15m.
The investments can be made over a three-year period. Investors have to maintain their investments up to the end of the fourth year.
The existing investor visa categories require initial up-front investments. However, they also give visa applicants the ability to invest smaller amounts of money – ie as little as $2.5m if they physically spend more time in New Zealand (438 days over four years).
The new category requires investors to spend at least 117 days in New Zealand over the four-year investment period. This is less time than the existing Investor 2 category mentioned above, and more time than the existing Investor 1 category (88 days over three years).
Immigration Minister Michael Wood said requiring migrants to spend more time in New Zealand will provide more opportunities for them to become involved in the businesses they've invested in, "further sharing their expertise and connections".
"Spending time here also increases the likelihood of further active investment," Wood said.
National Party Immigration spokeswoman Erica Stanford questioned why the Government was trying to fix something that wasn't broken, especially at a time she believed the priority should be changing settings to bring in more nurses.
Stanford pointed to Productivity Commission research that suggested migrants use investments in lower-risk assets like bonds and equities as a gateway to the sorts of direct investment in companies the Government wants to see more of.
She accused Nash of making the change on a "hunch" that migrants who start off investing passively don't go on to contributing to the economy in more meaningful ways.
She said Immigration New Zealand should've surveyed migrants who used the existing investor visa categories to see what else they ended up investing in before making the change.
Malcolm Pacific Immigration chief executive David Cooper agreed there was a lack of data, saying the new visa category will likely attract a different group of people – those with higher-risk tolerances.
He was sceptical about whether New Zealand could attract many migrants with $15m to meet the more passive investment test.
He also said a requirement for migrants to meet an English language test would exclude a large portion of applicants. Currently, there's only an English language requirement for one of the two investor categories.
Stanford feared the inclusion of this test would affect Chinese investors in particular.
"If you have that much money to invest, you have money for a translator," she argued.
Overall, Cooper believed the change was workable and would require Government to rely more on businesses, with the help of NZTE, to promote themselves.
As for NZTE being given the task of approving "direct investment" bids, he said the devil would be in the detail of that yet-to-be-determined criteria.
Nash said NZTE already engages with 1400 firms, which would likely all be okayed, in addition to others.
Cooper supported NZTE taking on this role, saying Immigration New Zealand couldn't be both the "salesperson" and the "police officer".
He did however question why those wanting to apply for an investor visa under the existing categories will only have until July 27 to do so. He believed removing existing categories so quickly was bad for New Zealand's credibility.
However, Nash feared a longer phase-out period would cause a rush of applications from those who wouldn't qualify under the new, more desirable (in his view), criteria.
He gave an assurance that the 700-plus applications for existing investor visa categories, currently in the pipeline, will still be processed.