At the same time as announcing the reopening of the Skilled Migrant Category (SMC) last week, an even more neglected policy has also been signalled to come back into the frame: the Parent Residence Category. The rationale for reintroducing the policy is that it will help to attract highly skilled migrants to New Zealand if there is an option for their parents to also be able to migrate with them, but does the reopening of the Category create a reliable pathway to facilitate that outcome?
Memory lane
The Category has been closed since 2016, a decision that was based generally on data from Australia at the time indicating that their similar policy created a huge fiscal loss when looking at tax contributions of parents as compared to their medical treatment needs. This crude financial analysis indicated a conservative “loss” to the country of around AUD400,000 per parent. Even though that finding neglected to offset the benefit these parents provided to new skilled migrants to the country both in terms of childcare to assist working parents (and long-term settlement outcomes for families), that figure created enough panic to close things off until a more thorough review could be undertaken.
For such a difficult task, it is no wonder this “can” has been kicked down the road for so long. Throw a pandemic into the mix and it helps to explain why over five years have passed since this has been picked up in a meaningful way.
While INZ appears to be trying to repackage this Category reopening as more favourable than the previous iteration, in our view the comparison benefits are not material. However, having such a policy in place is positive and indicates that an holistic assessment of the benefit parents can provide has been undertaken. Those benefits include allowing highly skilled migrants to settle and contribute (in the long term) to a sufficient level to cover the costs of providing health treatment to their parents, in a jurisdiction where the tax those parents have paid for their future healthcare have not been paid to the country picking up the bill for such treatment.
What has changed
Firstly, the number of visas Immigration New Zealand (INZ) is granting under this Category. The cap has increased from 1,000 to 2,500 per annum. This is not a dramatic increase, as the quota before the Category closed in 2016 was 5,500 per annum. While this is more than double the previous quota, it remains less than half of the original quota.
Another big change, and a more positive one, is the decrease in income thresholds for sponsoring children. When the Category (briefly) reopened in February 2020, the income threshold was changed to twice the median salary, for one sponsor to bring in one parent. Now, it needs to be 1.5 times the New Zealand median wage, with an increase in half the median wage for each joint sponsor or additional parent to be sponsored. Tables of the minimum income requirements are as follows (all figures are in NZD):
One sponsor
| Applicable start date | Median wage | 1 parent | 2 Parents | 3 parents | 4 parents |
|---|---|---|---|---|---|
| January 2022 and onwards | $57,740 | $86,611.20 | $115,481.60 | $144,352 | $173,222.40 |
| January 2021 – December 2021 | $56,160 | $84,240 | $112,320 | $140,400 | $168,480 |
| January 2020 – December 2020 | $53,040 | $79,560 | $106,080 | $132,600 | $159,120 |
Two sponsors
| Applicable start date | Median wage | 1 parent | 2 Parents | 3 parents | 4 parents |
|---|---|---|---|---|---|
| January 2022 and onwards | $57,740 | $115,481.60 | $144,352 | $173,222.40 | $202,092.80 |
| January 2021 – December 2021 | $56,160 | $112,320 | $140,400 | $168,480 | $196,560 |
| January 2020 – December 2020 | $53,040 | $106,080 | $132,600 | $159,120 | $185,640 |
There is also an innovative (and reasonable) addition where two adult children can now jointly sponsor their parents, rather than just the child and partner combination used in all previous policies. However, you cannot mix and match sponsors. This means that:
- you can sponsor the parent yourself;
- you and your partner can sponsor; or
- you and your sibling who also has a parent included in the application can elect to be sponsors.
A sponsor can therefore sponsor two parents (a couple) with either their biological sibling or step sibling if the sibling in question also has at least one parent included in the application.
Note here that sibling sponsors must be adults, and they must also meet the same sponsorship requirements (i.e., be a NZ citizen or resident here for a minimum of three years prior).
These changes apply to all current Expressions of Interest (EOI) that remain in the selection pool, as well as new ones which are submitted for consideration from 12 October 2022.
Another big adaption that will significantly change the game is the way EOI will be selected from the pool. Previously, EOI were selected based on chronological order (the date that they were entered into the pool). This method will remain for current EOI that were submitted before 12 October 2022. Post this date, it will be a random ballot system, which will be more equitable for applicants moving forward, but frustrating for those who have been waiting years for the Category to reopen as 20% of those being selected and invited to apply for residency will be “new” to the pool.
Technical challenges remain
Despite the big changes INZ have introduced to this newly reopened Category, much of it remains the same. This Category remains as difficult to reach as the previous iteration for many parents who have children residing here that are not earning a high income.
The issues we had identified in the previous version have now been clarified, and it is as we expected. Sponsors may need to think about choosing one parent to sponsor if they cannot meet the threshold for both, so that will be hard. Sponsors will also need to have a further half the median wage amount for each additional parent they wish to sponsor. A couple (or two adult siblings) wishing to sponsor all four parents will need a combined income of NZD$202,092.80 from January 2022.
The way income is measured also remains unchanged, meaning that sponsors will need to provide proof (via IRD tax statements) that they have met at least two of the three income years immediately prior to submission of the application, meaning that it is not just the income at the time of the EOI being submitted. It is also important that the income level is maintained based on the applicable median rate when the EOI is selected from the pool and the application is then made, so life changes will also unfortunately catch some out.
Conclusion
Having this Category return will be a relief for many migrant families who have been in limbo for several years to try to settle their parents here. For those already in the EOI pool pre-12 October, they now have more certainty and a rough timeframe to close out, if they can meet the new requirements when their EOI is selected and their application submitted, in either year one, two or three post reopening.
In addition, 500 new EOI entering the pool each year will win the “Parent Bingo” and even though it may appear to be a low number, it is reasonable in our view based on the number who will be able to qualify post clearing of the backlog, as such, it may ultimately assist with highly skilled migrant attraction.
Over time with a well-balanced policy, relative certainty of outcome could be created both in terms of eligibility and timing for the issue of residency, assuming the policy will be tweaked to avoid the build-up of excess applications and the math that has taken 5+ years to work though is accurate. For this, only time will tell. We will either end up with a policy where parents can migrate quickly if they have high contributing skilled migrants as sponsors, or the settings are not right. That may result in a growing number of EOI, making Parent Bingo a reality in the long term because the quota allocated is too small.
That would not assist with skilled migrant attraction, so we hope the bingo element is a true (mere) transition into a limited residence pathway for some who have children residing here and who will contribute enough tax revenue to pay for their needs and the needs of the parents they are sponsoring into the country.
