Money raised by the Federal Government’s overhaul of the significant investor program, which was flagged in the competitive agenda this month, could be filtered into riskier investments and startups – something Australia’s venture capitalists are particularly happy about.
Trade and Investment Minister Andrew Robb said the Government plans to allocate the billions of dollars it hopes the scheme will raise away from low risk government bonds and into areas such as venture capital and smaller companies, The Australian reported.
Under the changes which come into effect from July 2015, for $15 million you can become a permanent Australian resident in one year. The program is meant to encourage more high net worth individuals to make Australia home. More on that here.
The previous scheme saw close to $2 billion allocated to government bonds and blue-chip companies but Robb said that hasn’t had a big impact on Australia’s economic growth.
“If (the funds) are going to government bonds, which could be sold anytime and anywhere at a good price, Australia is getting nothing out of it,” Robb told The Australian.
“They just park money there for four years and get citizenship. It does not make a lot of sense to me from a public policy point view.
“My view is that we should channel investment into areas of relatively higher risk.”
If the changes come into play it means rich people seeking an Australian visa will in some cases be faced with having to tip money into slightly riskier investments as opposed to playing it safe with established companies.
The Australian Private Equity and Venture Capital Association (AVCAL) welcomed the new premium investor scheme which will see money from primarily Chinese investors tipped into startups across prioritised industries including oil and gas, mining technology, medical technology, food and agribusiness and advanced manufacturing.
“Australian early-stage companies have, for many years now, been increasingly squeezed for capital owing to many traditional institutional investors decreasing their exposures to higher-risk ventures over time,” AVCAL’s head of Policy and Research Kar Mei Tang said.
“Every year, Australian venture capital and private equity managers see a strong pipeline of startups, research-driven ventures and innovative small businesses that have the potential to be our future economic drivers.
“But many of these promising businesses and entrepreneurs struggle to secure funding because that kind of risk capital is in such short supply here in Australia.”
For some time now, AVCAL and the startup sector have urged the Government to assist with the commercialisation of ideas. In its recent National Industry Investment and Competitiveness Agenda, the government flagged a bunch of changes which it hoped would improve Australia’s investment environment.
There’s more here.