Province pockets millions

Hike in defaulted PNP deposits, interest and program fees mean increased revenue

The Prince Edward Island government pocketed more than $27.2 million from the Provincial Nominee Program last year, with the lion’s share of this amount - $18 million - coming from immigrant nominees who defaulted on their deposits.

The deposits are monies held in escrow by the provincial Crown corporation, Island Investment Development Inc. (IIDI), until immigrant nominees meet the terms of their escrow agreement with the province.

A total of 177 immigrants who came to P.E.I. though the business impact stream failed to meet the terms of their agreements last year and forfeited their deposit amounts of between $100,000 and $150,000.

Economic Development Minister Heath MacDonald says the biggest cause for these defaults is that they did not open a business in P.E.I.

“Their escrows were based on an obligation for them to start a business,” he said.

But when asked why did they not go through with their entrepreneurship plans in P.E.I., MacDonald did not have a clear answer.

“There could be any number of reasons. I’d have to check on exactly what 177 might (say).”

The defaults from 2016-17 represent a significant increase in defaults over the previous year. In 2015-16, 45 immigrants defaulted on their escrow deposits, totalling over $5 million in revenue for the province.

MacDonald stressed that 98 per cent of those who defaulted did earn back their residency deposit of $50,000.

To receive this, nominees must maintain a residence in P.E.I. for at least 12 consecutive months and provide proof of residency, including tax returns, utility bills, bank and credit card statements and copies of passports.

“They didn’t open a business, they lost their deposit, but they’re actually staying in Prince Edward Island,” MacDonald said.

“That’s a key. We’re seeing it in the schools, we’re seeing it just about everywhere.”

Retention of immigrant nominees has long been a challenge for P.E.I., but MacDonald says the limited data that is available shows improvement.

Official retention numbers are based on tax filer data provided by the federal government. The most recent year available is 2013. This shows 66 per cent of immigrants who landed in P.E.I. in 2013 filed their tax returns in P.E.I. one year later.

This has improved from 35 per cent in 2011.

MacDonald does acknowledge a number of immigrant nominees simply leave P.E.I. every year for bigger centres.

That’s why changes are being made to the program to try to better match nominees to P.E.I.’s business and demographic needs, including more focus on recruiting immigrants to rural areas of the province.

But Opposition immigration critic Brad Trivers believes there should be a wholesale review of the PNP.

“When you have two-thirds of the people who are defaulting and not opening a business, I’m not sure it’s actually speaking to achieving the intent of the Provincial Nominee Program, and that’s a problem,” Trivers says.

“It speaks to, perhaps, the government taking advantage of the program to keep the revenue for themselves. You’ve got to wonder, with huge numbers of defaults, if perhaps the government is saying, ‘This is a revenue source for us to help us with our budgeting.’”

MacDonald rejected this notion, stressing the province’s commitment to growing the population through immigration.

Regardless, the PNP did provide a significant source of income for the province in 2016-17.

In addition to the $18 million in defaults, the province also earned over $5.6 million in interest in part from the more than $208 million it held in deposits last year and earned a further $3.6 million in program fees.