888 visa scheme gets a re-boot
The biggest potential policy game changer for the Australian start-up sector is about to get a reboot.
In a landmark speech on Monday, Immigration Minister Scott Morrison said Australia’s Significant Investor Visa (SIV) program will be redesigned to make more capital available small to medium-sized businesses, including entrepreneurial start-ups.
The program already held the promise of bringing hundreds of millions of dollars of new money into the innovation sector over the next several years, but the targeted changed flagged this week provide additional incentive to ensure that happens.
Morrison said the current investment rules attached to the so-called 888 Visa program are clumsy and poorly targeted, and processing times for applicants too slow.
The SIV program is a special subclass of business migration visa available to high net worth individuals willing to invest $5 million into Australia.
The program – which has already attracted a potential pipeline of more than $2 billion – was introduced by the Gillard Government in November last year and was supported by the then Opposition.
Assistant Immigration Minister Michaelia Cash, the senator from Western Australia, has been charged with “rebooting” the investment criteria for the program and overhauling the way the department assesses applications.
Details are in short supply, but broadly Morrison says the investment rules need to be changed to create more incentive for applicants to get involved in Australian businesses for the long term.
The 888 investment visa program, with some tweaking, carries enormous potential for the Australian innovation sector. Importantly, he says the changed rules will give SME’s and start-ups a higher profile.
“We will look to review the investment criteria for the programme, with a view to having a more flexible approach that could see more of the investment capital attracted under the program being made available to more small and medium-sized businesses, including entrepreneurial start-ups,” he said.
This is a statement of direction, of course, and the proof will be in the eating, and we will wait to see how Senator Cash plans to make it happen. It is a complicated policy goal, and trying to direct investment flows through regulation is fraught.
But it is an opportunity for the start-up sector looking for new sources of capital. More importantly, it is an opportunity for the sector to engage with markets in Asia. The Significant Investor Visa program has attracted predominantly Asian applicants. Overwhelmingly, this money is coming from China.
There is an opportunity here for Australian companies to build global products with Chinese money and an Asian footprint.
But the local industry needs to get organised. It needs better representation with government, and much, much better understanding of and engagement with the ICT innovation industries in China, India, Indonesia, and Malaysia (in no particular order.)
The indigenous industry needs to get serious about how it wants to grow. A good start would be to move away from wallpaper and window dressing (I have in mind the dreadful Google-inspired Start-upAus) and get away from industry groups that are drowned by overwhelming self-interest of their dominant multinational membership.
The changes that have been flagged to the SIV program should be an opportunity for the indigenous community to have some input into developing the new policy to the advantage of all.
If only we could find a strong voice of industry representation!
The current investment criteria for the scheme are confusing and are open to exploitation – particularly in vehicles where money is simply parked in a managed fund, for no particular gain to community beyond the enrichment of the wealth managers. There is also a real danger in the current scheme that sections of the real estate market become distorted.
But Scott Morrison is quite right to say it needs work, and quite right also when he argues the immigrant attached to the $5 million initial investment is more important than the money itself.
The $5 million was merely an “appropriate hurdle for someone wanting to access the scheme,” he said, but “should be the first of hundreds of millions that would flow from someone making this decision to come and live and settle and become part of our community and an Australian citizen.”
“If we only look at it from the short term perspective of that initial investment then I think we have missed the point of the opportunity of the program,” he said.
And this is a long term game.
The Australian tech industry needs a voice in this. Immigration is a hugely important portfolio for the industry. In the case of the 888 visa program, it runs a program that should provide a significant new source of capital. But the portfolio is also key to enabling ready access to skills.
The immigration portfolio is also critically important to Australia’s education exports. And given the majority of our tertiary technology students – the physics, mathematics, computer science undergraduates – are international students, the industry needs a voice at this table.
Scott Morrison says his department is working with Trade and Investment minister Andrew Robb on the development of new rules for the Significant Investor Visa program. And that he is working with Education Minister Chris Pyne on new rules for international student visas.
This is important. But the Australian tech sector leadership needs to put its hand up and get engaged in policy development while it still has a chance of making a difference; which is right now.
This article first appeared in Technology Spectator.