Revenue from PNP defaults tops $17M for 2nd straight year on P.E.I.
Program stream recently axed by the province after Ottawa expressed concerns about 'potential misuse'
The P.E.I. government took in $17.6 million in revenues in 2017-18 from immigrant investors who defaulted on deposits made through the provincial nominee program (PNP).
That figure nearly matches the $18 million the province took in the previous fiscal year from participants in its PNP who failed to operate a business in P.E.I. for one year, as required in their agreements with the province.
P.E.I. announced in September it was scrapping the controversial entrepreneur stream of its PNP.
The $17.6 million in revenues in 2017-18 were supplemented by another $2.4 million in PNP program fees. The Crown corporation in charge of the PNP, Island Investment Development Inc., also reported $5.5 million in interest income, including interest from a $215 million pool of immigrant deposits held by the agency.
Defaults spark federal concerns
For years the federal government expressed concerns about the number of immigrants in P.E.I.'s PNP defaulting on their deposits to the province.
Under the entrepreneur stream of the program, participants provide the province with an escrow deposit of $200,000 and agree to live on P.E.I., either start up a business or purchase an existing one, and operate that business for one year.
But last year the province revealed most program participants who were eligible to have their deposits refunded hadn't opened a business.
This year the province said while there was only a slight drop in the number of loan defaults, there was a significant increase in the number of immigrants who had their deposits refunded.
| # of Refunds | Refund Value | # of Defaults | Default Value | Default Rate | |
| 2016-17 | 92 | $9.3M | 177 | $18M | 66% |
| 2017-18 | 188 | $21M | 166 | $17.6M | 47% |
(Source: P.E.I. Department of Economic Development & Tourism)
Federal documents obtained by CBC News through an access-to-information request show the $18 million in defaults in 2016-17 fuelled ongoing concerns in Ottawa about "potential misuse" of the program on P.E.I.
Program 'vulnerable to misuse:' Ottawa
Briefing notes prepared by staff at Immigration, Refugees and Citizenship Canada in Dec. 2017 revealed the department had "long had concerns" regarding the type of deposit-based immigration program P.E.I. was operating, where participants receive permanent Canadian resident status upon arrival, before requirements of their agreement with the province have been fulfilled.
"These programs are vulnerable to misuse by intermediaries and applicants who may not be motivated to operate a business in the province, and simply see the forfeiture of a deposit as a cost to obtain permanent residence," federal officials wrote.
With the end of its entrepreneur program, P.E.I. says in the future it will require immigrant investors establish their businesses in the province before government sponsors them for permanent resident status.
However the province says there are a further 400 candidates who were accepted through the old program still working their way through the system.