Regulations Amending the Immigration and Refugee Protection Regulations (Immigration Loans Program): SOR/2024-127

Canada Gazette, Part II, Volume 158, Number 13

Registration
SOR/2024-127 June 10, 2024

IMMIGRATION AND REFUGEE PROTECTION ACT

P.C. 2024-660 June 10, 2024

Her Excellency the Governor General in Council, on the recommendation of the Minister of Citizenship and Immigration, makes the annexed Regulations Amending the Immigration and Refugee Protection Regulations (Immigration Loans Program) under subsections 5(1) and 88(2) of the Immigration and Refugee Protection Act footnote a.

Regulations Amending the Immigration and Refugee Protection Regulations (Immigration Loans Program)

Amendment

1 Subsection 290(1) of the Immigration and Refugee Protection Regulations footnote 1 is replaced by the following:

Maximum amount

290 (1) The maximum amount of advances that may be made under subsection 88(1) of the Act is $400 million.

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Immigration Loans Program provides eligible immigrants with access to funding for costs related to transportation and for assistance with initial settlement in Canada. Funding for the Immigration Loans Program is provided through an advance from the Consolidated Revenue Fund (CRF), and the maximum advance is defined in the Immigration and Refugee Protection Regulations (the Regulations).

According to forecasts, the current maximum defined in the Regulations will be reached within fiscal year 2024–2025, necessitating that a higher maximum amount be defined. Amendments to the Regulations are required to set the new maximum amount of the advances.

Background

The Immigration Loans Program, originally known as the Assisted Passage Loan Scheme, was created in 1951 to financially assist immigrants from Europe whose services were urgently needed in Canada and who could not afford their own transportation. Over time, eligibility for the program expanded to include immigrants from all countries and other immigration classes, and additional regulations were made governing interest and repayment terms.

While the Immigration Loans Program makes loans available to all permanent resident classes, including individuals arriving to Canada under humanitarian initiatives, historically, resettled refugees have constituted 98% of Immigration Loans Program users. Individuals who are approved for resettlement through this program typically use the Immigration Loans Program as the funding source that allows them to travel to Canada (transportation loans).

Resettled refugees are selected based on their vulnerability, rather than their ability to establish in Canada, and have higher settlement needs than other classes of new immigrants. Immigration loans are designed to minimize the burden on newcomers as they settle in Canada. Loans are interest-free with repayment periods of up to 8 years, and repayment begins one year after the recipient arrives in Canada.

Growth in the Immigration Loans Program financial portfolio is driven principally by increases in refugee resettlement targets, as established each year through the Multi-Year Immigration Levels Plan. It is also impacted by several other factors including inflation, transportation costs, borrower behaviour, and defaults. The maximum amount prescribed in the Regulations was increased in February 2018, June 2022, and December 2023.

The process for issuing loans begins during eligibility interviews, where migration officers counsel refugees on the availability and terms and conditions of transportation loans to cover costs associated with the transportation of individuals and their beneficiaries from their point of origin to their destination in Canada. Assistance loans may also be issued by designated officers after individuals arrive in Canada to cover costs associated with initial settlement, such as first and last months’ rent and utilities. However, assistance loans are typically an option of last resort, as resettled refugees are frequently supported either by the Government of Canada or a private sponsor in their initial settlement period. Historically, assistance loans represent only 7% of total immigration loans, while transportation loans represent the rest. Loans may also be used to pay for the Right of Permanent Residence Fee.

Objective

The objective of this amendment is to ensure that the regulatory limit will not prevent foreign nationals, permanent residents, and their beneficiaries from receiving financial assistance by increasing the maximum amount of loans from $300 million to $400 million.

Description

The Regulations are amended to set the maximum amount of advances from the CRF for the Immigration Loans Program at $400 million.

Regulatory development

Consultation

The regulatory amendment relates to an internal process to ensure the continued operation of the Immigration Loans Program and does not change the scope and parameters of the program. No external consultations were conducted.

A prepublication comment period in the Canada Gazette, Part I, was not undertaken due to the time sensitivity of the amendment.

Modern treaty obligations and Indigenous engagement and consultation

No modern treaty implications are anticipated because Indigenous peoples in Canada are not impacted by the proposal.

Instrument choice

The maximum amount of loans that can be advanced is prescribed in the Regulations; therefore, amending the Regulations to set a new maximum amount is the only option.

Regulatory analysis

Benefits and costs

An important first step in developing a cost benefit methodology is establishing a baseline scenario against which options may be measured. For this analysis, the baseline scenario is one where the Government of Canada would not be able to provide loans through the Immigration Loans Program beyond the $300 million maximum amount. In this scenario, once the maximum amount is reached, any additional loans issued would be as a result of repayments replenishing the fund. This would result in only a small number of loans being available to eligible clients. The regulatory scenario is one where the Government of Canada would be able to lend up to $400 million.

Although funds become available as loan repayments are made, increases over the past several years in transportation costs have increased the average loan amount per person. Increases in immigration levels and new humanitarian commitments have also increased the number of loan users to record levels. Furthermore, regulatory changes to the Immigration Loans Program in 2018 removed interest, extended the repayment start date from 30 days to one year after arrival, and extended all repayment periods by two years. Loan collection activities were paused from March 2020 to September 2023 due to the COVID-19 pandemic. These factors have resulted in a slower replenishment of available loan funds.

This analysis examines the impacts of the amendment for 10 periods of 12 months starting the year that the regulatory amendment comes into force. For further details regarding the methodology, a detailed cost-benefit analysis report is available upon request at the following email address: IRCC.RASO-ILP-PPI-OSRA.IRCC@cic.gc.ca

Government costs

The amendment will result in total costs of $8,071,665 Present Value (PV) to the Government of Canada. This includes one-time implementation costs, ongoing administrative costs, and the costs associated with the risk of default.

Implementation and loan administration costs

Minor transition costs are anticipated for the development of communications materials and updates to Immigration, Refugees, and Citizenship Canada’s (IRCC) webpage. These one-time transition costs are estimated to be $685 PV and will be incurred within the first period.

There will also be ongoing costs to administer the additional volume of loans. These costs include incremental labour hours required to administer the program, including creating loan files, and collecting payments, as well as the costs of sending monthly statements to loan recipients. The total ongoing costs are estimated to be $6,191,208 PV, and they include $5,226,836 PV for processing and file management costs and $964,371 PV in monthly statements expenses.

Costs related to the creation of a loan file would be incurred in the period when the loan is issued; however, repayments and associated collection and administration costs would begin 12 months after issuance (i.e. one period later) and would be ongoing until the loan is due in full. For this reason, there are no costs for collection activities or monthly statements delivery in period 1.

Default costs

IRCC invests in resources to encourage repayment, including collection activities. Collection activities begin only after a client has not made three sequential payments and include direct telephone contact to ascertain the nature of the problem and to seek a viable resolution to resuming repayment. Where repayment would cause financial hardship, IRCC may also adjust the repayment terms. Based on historical and current data, it is estimated that the recovery rate for loans is 97.6%, with a corresponding default rate of 2.4%. For this analysis, uncollectible loans are considered costs to the Government of Canada.

Loans are repaid as follows:

The period when a loan would be considered uncollectible is subject to its term length. For example, a 3-year loan issued in period 1 would be repayable 12 months after its issuance (i.e. in period 2). After these 12 months, the recipient has 3 years to repay. Therefore, a 3-year loan that was issued in period 1 could be deemed uncollectible only after period 5. For this reason, costs of defaults for this analysis begin in period 5, when 3-year loans must be paid in full.

The increase to the maximum loan amount is expected to result in the risk of defaults amounting to $1,879,772 PV over 10 periods.

Benefits

The increase of available funds will support the Government of Canada’s objective to facilitate the arrival and successful integration of refugees and other newcomers arriving under humanitarian initiatives. This will in turn support the achievement of Canada’s overall immigration targets. Increasing the maximum amount will support vulnerable newcomers by providing an accessible and affordable loans program, rather than requiring newcomers to find financial solutions elsewhere - for instance, through commercial banks. Given the financial situation of those who typically benefit from the loan program, alternate lending sources would likely not be available to them, or would be available at significant additional cost, making their immigration to Canada challenging and, in some cases, impossible.

Cost-benefit statement
Monetized costs
Impacted stakeholder Description of cost Base year (period 1) Other relevant year (period 7) Final year (period 10) Total (present value) Annualized value
Government Transition costs $685 $0 $0 $685 $98
Processing and account management $145,624 $972,324 $1,060,090 $5,226,836 $744,184
Sending loan statements $0 $191,591 $208,824 $964,371 $137,305
Loan defaults $0 $459,010 $1,611,907 $1,879,772 $267,637
Total costs $146,309 $1,622,924 $2,880,822 $8,071,665 $1,149,223
Quantified (non-monetized) and qualitative impacts

Positive impacts

Small business lens

Analysis under the small business lens concluded that the proposed regulation will not impact Canadian small businesses.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on business and no regulatory titles are repealed or introduced.

Regulatory cooperation and alignment

This proposal is to amend the maximum amount that the Government of Canada can advance from the CRF to loan to incoming or recently admitted permanent residents to Canada. As such, it does not offer opportunities for regulatory cooperation with other jurisdictions.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

Resettled refugees are mostly racialized individuals. The top five countries of birth for resettled refugee admissions between 2018 and 2023 were Afghanistan, Syria, Eritrea, Iraq, and Somalia. Only a small proportion of resettled refugees speak English or French on arrival. Refugees often have lower levels of education and transferable work experience and may face additional challenges establishing themselves in Canada.

Applicants of all genders would be positively affected by the proposal, as more funds would be available to issue interest-free immigration loans. Adults would benefit the most from the proposal; based on an analysis of refugee admissions processed in 2018–2023, minor children aged 17 and under accounted for 38% and adults accounted for 62% of refugees resettled in Canada. The loans issued under the Immigration Loans Program are available to cover resettlement costs for individuals of all ages.

Implementation, compliance and enforcement, and service standards

This regulatory amendment comes into force on the day on which it is registered. IRCC will continue to monitor the repayment rate of loans and to monitor the total balance of loans outstanding.

Contact

Faith Woods
Assistant Director
Resettlement Program Branch
Immigration, Refugees, and Citizenship Canada
365 Laurier Avenue West
Ottawa, Ontario
K1A 1L1
Email: IRCC.RASO-ILP-PPI-OSRA.IRCC@cic.gc.ca