Tens of thousands of Chinese and Asian citizens may have to find a new destination for their wealth after the Canadian government announced its intention to end its immigrant investor programme.

The Canadian federal Immigrant Investor Program provided limited economic benefit to the country, according to a news release on the website of the Canadian embassy in Beijing.

Research shows that immigrant investors pay less in taxes than other economic immigrants, are less likely to stay in Canada over the medium- to long-term and often lack the skills, including official language proficiency, to integrate as well as other immigrants from the same countries, it said.

“Our government is focused on attracting experienced business people and raising investment capital that will contribute to our economic success over the long term,” said Chris Alexander, Canada’s Citizenship and Immigration Minister. “Our government will continue to focus on economic immigration programs that make sense for Canada by ensuring our economic and labour market needs are being met now and into the future.”

The immigrant investor programme, which granted permanent residency to those who committed C$800,000 to a five-year zero-interest loan, was very popular among wealthy Chinese people.

The programme will be replaced with a new Immigrant Investor Venture Capital Fund, which will require immigrants to invest money, rather than just loan it.

Hong Kong media reported that Citizenship and Immigration Canada said that the investor queue stood at 65,000, and 70 per cent of the backlog as of January 2013 was Chinese, suggesting about 45,500 mainlanders will have their applications scrapped.

Canada has been a popular country for Chinese migrants since Ottawa largely opened its immigration policy to people from the Chinese mainland in 1996, and China has became the largest source of immigrants and international students in Canada, according to a report by the Center for China and Globalization released in late January.

The number of Chinese migrants globally was more than 9.3 million in 2013, nearly 2.3 times the figure 23 years ago, it reported.

However, Canada’s immigration policy changes have caused a lot of Chinese to lose their interest in the country.

“We have closed our Canadian sector, as it (the Canadian government) has cancelled or suspended some investment programs for immigration in the past two years,” said Gao Jia, a counselor with Globevisa, a Beijing-based immigration agency.

Wu Hongjie, a property specialist from Kingston Property Consulting in Beijing, said the new rule would not have much impact on Chinese purchasing Canadian properties, according to a report in Singapore.

“Chinese citizens are able to gain a 10-year multiple-entry visa to Canada, so citizenship is not that important as travel is very flexible between the two countries. Many Chinese clients are interested in small apartments in Canada as accommodation for their work, or for their children’s Canadian education, which will not be influenced much by immigration policies,” she said.

One of the budget items that received little attention was the termination of the 25-year-old Immigrant Investor Program (IIP). It was the flagship immigration tool that specifically focused on attracting global entrepreneurs and investors to Canada.

The program was “suspended” some two years ago for study. Many, myself included, were thus hoping for the program’s resurrection, as a more effective and strengthened version. Instead, the budget announced its obituary.

I believe this decision was a missed opportunity, and this view should not be seen as partisan concern. After all, the IIP was established by the Mulroney Conservative administration and under the Chrétien government, during which time I served as Minister of Citizenship and Immigration, we further developed the program.

No, my regret is about squandering our leadership in this sector.

We were the very first country to establish such a program. Now, more than 20 countries have copied and adopted our model, and the list will continue to grow, since the economy growth is the priority-one issue for all governments and the labour market continues to be increasingly mobile. Just when this concept is really taking off globally, and when demand has never been higher, our government abandons this policy ground. Why give up on competing for investors who can add to our economic vitality?

It is not as if our intake of immigrants is being overwhelmed by the investor class. At best, the number of investors represents only 2-3 per cent of the roughly 250,000 immigrants that annually enter our country.

Apparently, the government’s rationale was about ending “abuse.” If there were shortcomings, it is incumbent to fix the problems and tighten the criteria. Absolutely no disagreements here. But why throw the baby out with the bath water? Moreover, if ending programs is the way to address government abuse, then how many federal programs would have to be axed?

If the government had concerns, then it should have consulted extensively, in an effort to address these problem areas, and seek out better ideas and practices. But there was no meaningful dialogue. The government failed to recognize that in developing sound public policy, how you do it is as important as what you do.

I fully admit that the IIP was not perfect (what program is?) But if the government thought the investment amount was too low, then they could have proposed an increase. Most stakeholders were actually anticipating and supportive of a higher threshold. Indeed, Canada would be worth every extra penny!

In addition, if they thought that residency was being undervalued, then deepen the commitments.

If they wanted the program to deliver additional economic heft, then introduce innovations to target new national or regional economic priorities.

Rather than refocusing and reinvigorating the program, it was turfed, all without providing any economic analysis. Did the ministers of Finance and Immigration, for example, examine and quantify the impact of the collective investments; or tabulate the additional consumer expenditures that these high net worth individuals made, or the contributions that their children are making to our nation? In the budget document, the Finance Minister took less than one page to explain his decision, with reasoning that is rather weak and speculative.

And to add insult to injury, the budget purports to replace the IIP with an undefined “pilot” project. Talk about ending with a bang and restarting with a whimper.

The truth is that Harper government, for whatever reasons, was never comfortable with this program. Perhaps they found it easier to pit a few well-to-do immigrant investors with a “jumping the line” argument, against the many more modest independent or family class immigrants. They don’t worry about other provinces now aiming for Quebec, which was allowed to continue its unique investor program. And when you examine the new Citizenship Bill they introduced, the government clearly devalues the standing of Canadians living abroad, some 3 million strong, and thus pits them against fellow citizens living at home.

Perhaps we should not be too surprised. Wedge, populist politics has been a main staple of the Harper school of governance, but it is a divisive and unhealthy way of running a country.

Trying to attract global investors and talent is a highly competitive game, and Canada needs to play in the big leagues. This budget decision should have been about enhancing economics and not advancing Tea Party politics. Pity.

Sergio Marchi served as Minister of Citizenship and Immigration from 1994 to 1996 in the government of Jean Chrétien.