Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Business migration is a vital part of our economy and society. I wish to highlight the effects of recent changes to the complying investment framework for the Significant Investor Visa Program, which came into effect on 1 July 2015. The changes excluded a number of eligible investment categories for business migrants who bring in a minimum of $5 million under the visa, including investment in proprietary limited companies, government bonds and property development projects. In their place, higher risk investments into venture capital and complying funds have been mandated.

The rationale behind the measure is that the government sought to redirect capital brought into Australia by holders of Significant Investor Visas into more productive sectors of the economy with existing thin capital flows such as venture capital, start-ups, technology, research and development, and operating businesses, which create employment rather than the passive investments in government bonds and real estate, which do little to stimulate the economy. Whilst the government's efforts in promoting greater investment in venture capital and other higher risk funds being included as part of the complying investment framework are positive measures, the decision to exclude investment in proprietary limited companies and property development projects has proved problematic in practice.

As evidence of the situation, in the year leading up to the change which occurred on 1 July 2015, 590 SIV visa applications were approved, equating to over $2.95 billion of investment capital flowing into Australia. As a benchmark, during this period the SIV program was achieving more than 128 applications per month on average. However, since the changes were implemented, this number has dramatically fallen to an average of only eight applications per month, representing about six per cent of the original volumes. This is very serious, and as a nation we could be forgoing up to $7.2 billion in investment through the business migration program per year due to the recent changes in the program. That is without factoring in the major downstream flow-on effects on job creation and new business start-ups in our economy.

Of the 2,573 SIV applications lodged since 2012, 1,544 applications—equating to more than 60 per cent of the total applications—were lodged in the 12 months leading up to the change on 1 July. This indicates that there was a major ramp-up of awareness and interest in this program just before the change, which appears to have caused a major drop in the program numbers. Given that over 90 per cent of SIV applications were from China and Hong Kong, such changes would most likely cause a decline in the inflow of capital. According to Mr James Clarke from the WA Branch of the Australia China Business Council, from his professional experience with Chinese clients, he believed that they are generally risk averse, conservative investors who prefer investment in proprietary companies in which they can directly participate in management decision making. They also have a preference for bricks and mortar property development projects.

The industry is advocating for the reinstatement of the previously permitted complying investment options to be restored to the SIV program, including investment in proprietary limited companies and property development projects. Investment in property development projects should be differentiated from real estate investment, as new mixed-use business developments create construction jobs and downstream demand in other sectors of the economy, as well as increasing the supply of dwellings for the domestic market, increasing housing affordability.

I make the case for a ministerial review of the recent changes to the complying investment framework for the SIV program, with a view to providing an adequate response by the government to the decline in investment through the SIV business migration program.

Question agreed to.

Federation Chamber adjourned at 13:00.