The Permanent in Permanent Residence
What does Permanent Residence actually mean in the NZ context and is it time for a change.
Earlier this week, the ACT party announced that it wants to fundamentally reshape New Zealand’s residence system by removing the Permanent Resident Visa and replacing it with an ongoing requirement for residents to keep proving their connection to New Zealand. At first glance, there is a certain neatness to the idea. Permanent residents should permanently reside here - as the name suggests. Put the “reside” back into “resident”, as ACT puts it. It is a good slogan and it fits comfortably on a press release and plays well on social media. The problem is that immigration policy usually requires a little more thought than politicians have time for - particularly in an election year.
New Zealand’s current system makes an important distinction between a Resident Visa and a Permanent Resident Visa. A Resident Visa gives someone the right to live, work and study in New Zealand indefinitely while they remain here, but their ability to leave and return is governed by travel conditions. A Permanent Resident Visa removes those travel conditions and provides an indefinite right to leave and return to New Zealand. That permanent right of return is hard-earned and places us in a somewhat unique position in terms of the competition for talent and investment.
For most applicants, permanent residence (PR) comes after holding residence for at least two years, meeting any conditions imposed on the original visa, satisfying character requirements and demonstrating a commitment to New Zealand. That commitment can be demonstrated in several ways, including spending at least 184 days here in each of the two years immediately before applying for PR, establishing tax residence, maintaining significant investment here, operating a New Zealand business, or establishing a genuine base in this country. In other words, we already test the connection.
What ACT is proposing is that, having tested that connection and granted someone permanent status, we should then continue testing it indefinitely. That is a very different proposition and to this adviser feels a lot more like some political attention seeking than a proposal aiming to fix an obvious problem.
How It Works
One of the problems with the current political discussion is that “permanent residence” is being treated as though it is a single immigration product handed out in identical circumstances, when anyone with a clue as to how the system works would realise is not the case.
Take the Skilled Migrant Category. A successful applicant receives a Resident Visa, normally with travel conditions allowing multiple entry for two years. During that period they can live, work and study here indefinitely. Once they have held residence for the necessary period and demonstrated the required commitment to New Zealand through one of five mechanisms, they can move to permanent residence. That is not particularly generous. It is a staged process. Residence first, compliance second, permanent travel rights later.
The Mechanics of PR
We already test commitment through our existing permanent residence criteria, and for many migrants, PR is the culmination of many years spent in New Zealand already.
Family residence can work differently again. A person granted residence through partnership will generally receive travel conditions for two years before becoming eligible for permanent residence.
Yet somebody who has lived overseas for at least five years with their New Zealand citizen partner may, in the right circumstances, be granted permanent residence directly. That is because immigration policy already recognises that genuine connections to New Zealand cannot always be reduced to days spent standing physically inside our borders. Parents are different again. Parent Resident Visa holders currently receive travel conditions lasting ten years and generally cannot apply for permanent residence until they have held that visa for ten years. They are also subject to long-term sponsorship requirements. Investors provide an even clearer example of why the system has different rules for different migrants.
Under the Active Investor Plus regime, applicants commit at least $5 million under the Growth category or $10 million under the Balanced category. The investment periods are three and five years respectively, with specific investment, monitoring and physical presence requirements. Once those conditions have been satisfied, applicants can move to permanent residence.
Legacy Investor 1 and Investor 2 applicants had their own investment periods, travel conditions and physical presence requirements. Again, the bargain was fairly obvious. New Zealand imposed conditions at the front end. If those conditions were satisfied, permanent residence eventually delivered certainty at the back end.
Then there are the people who do not qualify for permanent residence when their travel conditions expire. The system already provides mechanisms for extending travel conditions, including one or two-year variations in appropriate cases, and in some circumstances shorter extensions. Former residents whose visas have expired while they were overseas may also qualify for a Second or Subsequent Resident Visa, depending on their circumstances and what they were entitled to when their previous residence expired. It is complicated, certainly. Immigration policy has never suffered from an excess of simplicity.
But there is a logic to it. Different residence categories impose different obligations. Applicants satisfy those obligations. Permanent residence then provides something genuinely valuable in return - certainty.
That certainty is part of the product New Zealand is selling and yet here again we have a political party oblivious to the fact that what we sell has to be competitive, and offer some sort of difference or advantage to the other countries hunting for the same talent and investment.
Proposal For Change
ACT’s proposal, announced on 1 September, would remove the Permanent Resident Visa altogether. Instead, Resident Visa holders would receive a five-year travel facility. To retain it, they would need to have spent at least 730 days in New Zealand during a rolling five-year period.
The days would not need to be consecutive. ACT has also proposed exemptions for certain people working overseas for New Zealand employers, accompanying family members, military personnel, people with New Zealand citizen spouses, compelling humanitarian circumstances and Active Investor Plus Visa holders. Existing Permanent Resident Visa holders would not be affected retrospectively.
Changing Direction?
A change as significant as that which ACT is proposing needs a reason…a problem to be solved. So far, I can’t see it, unless of course you count voter numbers in that equation.
There are international precedents for this. Canada requires permanent residents to meet a 730-day residency obligation over a five-year period, subject to rules allowing some time overseas to count. Australia generally attaches finite travel facilities to permanent visas and uses Resident Return Visas to manage ongoing return rights, with a five-year facility available where the residence requirement is met. Singapore requires permanent residents travelling overseas to maintain a valid Re-Entry Permit.
So ACT has not invented something bizarre and equally they haven’t come up with anything uniquely innovative or new. One might suggest they have simply borrowed from policy that exists in other jurisdictions. The more important question is why New Zealand would need to copy it.
Our immigration system currently says that if you meet the requirements for residence, comply with the conditions imposed on you and subsequently demonstrate a sufficient commitment to New Zealand, we will give you the certainty of an indefinite right of return. ACT wants to convert that certainty into something closer to a renewable subscription. Every five years, keep proving you belong.
That might align us with Australia or Canada, but “other countries do it” is not really a policy justification or a reason for removing what has become a significant competitive advantage for New Zealand. Other countries also have stamp duty, inheritance taxes and substantially worse rugby teams. We are allowed to make different choices. More importantly, ACT’s announcement does not identify the harm the current policy is supposedly causing, beyond some very vague desire to measure commitment through a person’s geographical location.
Where is the evidence that former migrants retaining permanent residence while living overseas is creating a material economic, fiscal or social problem for New Zealand? The press release talks about commitment, fairness and creating a clearer distinction between permanent residence and citizenship. Those are political arguments, but they do not identify a measurable problem that needs fixing.
Permanent residence and citizenship are also not the same thing simply because both provide long-term security. Citizenship carries rights and obligations that residence does not. The answer to making citizenship meaningful is not necessarily to make permanent residence less secure.
There is also a rather obvious tension sitting inside ACT’s own proposal. Active Investor Plus Visa holders are specifically exempt. That exemption makes commercial sense. New Zealand has spent considerable effort making its investor settings more attractive. The ability to obtain permanent residence without being required to spend most of your life in New Zealand is an important feature for internationally mobile investors. If somebody is deploying $5 million or $10 million into New Zealand investments, requiring them to rearrange their global business and family lives around an immigration day-count would make us less competitive. ACT apparently agrees with this.
Which leaves us in the slightly awkward position of arguing that permanent residents must continuously demonstrate their physical commitment to New Zealand, unless their investment portfolio is sufficiently impressive. It also potentially could “spook” that market, because if ACT can rewrite the permanent resident requirements today, leaving investors safe for now…what might happen in a year or two. The exemption for investors also takes some of the philosophical shine off the entire argument. It also reinforces the broader point - that flexibility has value.
That applies not only to wealthy investors. Families change. Careers change. Children study overseas. Parents become ill. Businesses expand internationally. New Zealand residents accept offshore postings. Couples spend periods caring for family members overseas. Some migrants leave New Zealand for several years and later return with capital, skills, international networks and children who consider New Zealand home. In a hyper-connected world where New Zealand is desperately trying to be as connected and as visible as possible, ACT’s solution is to shackle the skills and investment we manage to attract to the local town hall.
Despite the sentiment behind the proposal, the question remains, why exactly should we want to close that door?
If It Ain’t Broke…
There are plenty of genuine problems in New Zealand immigration policy. We have residence settings that change with exhausting regularity. Employers struggle with workforce planning. Families spend years navigating residence pathways. Immigration New Zealand is expected to balance speed, risk, economic need and political pressure, frequently while the policy underneath it is moving.
The fact that somebody who has already earned permanent residence can live overseas for a while and still come home does not strike me as being particularly high on that list of problems. In fact, it is one of the features that makes New Zealand residence attractive.
We are a small country competing for skilled migrants, entrepreneurs, investors and their families. Geography is not always our strongest point, salaries are not always our USP, and housing costs occasionally add the jitters to those looking to make the move. We need to ensure that our immigration offering not only makes sense, but competes against other attractive destinations that the skilled and wealthy might choose.
Certainty is something we can and do already offer. Permanent residence tells people that if they make the move, meet the requirements, comply with the rules and establish the necessary connection to New Zealand, they will eventually have a permanent right to come back. That has enormous value.
And importantly, there is no obvious corresponding loss to New Zealand simply because somebody holding that right happens to spend several years elsewhere. The right to return is not the same thing as permanently consuming taxpayer-funded services while sitting in London, Singapore or Sydney. What New Zealand retains is a connection to somebody who has already qualified for residence and who may ultimately bring themselves, their family, their skills, their experience and their capital back here. Why would we voluntarily make that proposition less attractive or rather make those people potentially have to reapply in the future.
ACT’s policy will probably sound appealing to people who hear the words “permanent resident” and quite reasonably assume that permanent residents should be permanently standing on our shores. But immigration status is far more complicated than its label.
The current system already requires migrants to earn that permanent residence status and for some that process involves years spent working here on temporary visas, before they even get to the first residence gate. It already tests commitment. It already imposes different conditions on skilled migrants, partners, parents and investors. It already provides mechanisms for people whose travel rights expire. And when all of that has been satisfied, it gives people something valuable in return.
There could be some merit in reviewing those settings, and even questioning whether that two year period for most migrants is enough. However abandoning the current option to secure permanent residence is not an issue we need to grappling with right now (or ever in my view). Permanence. We should be very cautious about removing that simply because another system sounds politically more appealing or might snap up a few extra votes.
Good politics often begins with a good slogan, yet good immigration policy usually needs a much better reason.
Until next week.
