The Significant Investment Visa: Early Indications of a New Direction for Complying Investments

October, 2014

By Warwick Painter, Partner and Jacqueline McStay, Senior Associate

A little over a week ago, we reported on the release by the Federal Government of its Industry Innovation and Competitiveness Agenda.

One important initiative under the Agenda is a reform of the “complying investment” criteria under the Significant Investor Visa (SIV) programme as well as encouraging higher levels of investment through a new Premium Investor Visa (PIV) programme.

In releasing the Agenda, the Government indicated it’s intention to work through Austrade over the course of 2014/ 2015 with a view to amending the complying investments under the SIV programme, so that there would be a greater emphasis on investment directed at key growth industries for the national economy.

If you were waiting eagerly for the first indications of the direction the reforms would take, then you haven’t had to wait very long. On Sunday, the Australian newspaper included an opinion piece by none other than Andrew Robb, Minister for Trade and Investment, which included, among other observations, the Minister’s views that:

The Minister went on to express his view that attracting SIV investment into big mining companies, big banks and utilities, commercial or industrial real estate, or even ports and electricity networks, is “a shortcoming of the existing SIV scheme”.

As an early indication of the direction the proposed reforms could take, this is not merely a whisper on the breeze. It is more like the roar of a thousand waves rolling onto the beach. When the Minister responsible for Austrade and the proposed reforms expresses views such as the above, expect changes which are more than just minor.

Under the reform proposals, Austrade will be involved in determining the investment eligibility criteria and will be added as a nominating entity for the Significant Investor Visa (in addition to the current State and Territory governments’ role as nominators). Austrade will also be the sole nominating entity for the new Premium Investor Visa.

What remains to be seen is the proportion of an SIV applicant’s complying investments to be applied in this manner. The reforms probably still have a way to go before they are finalised and in announcing the Agenda the Government indicated that the revised investment eligibility criteria would be determined by Austrade “in consultation with key economic and industry portfolios”.

It is still possible that the type of investments flagged by the Minister may be more the target of the higher net worth “Premium Investor Visa” category – however having regard to the Minister’s comments we would expect that the existing SIV programme will also be affected.

As we indicated in our earlier bulletin, if these changes are made, the operators of managed investment funds through which the SIV investments are currently channelled will probably need to be more engaged with the Government in order to align their investment mandates with the targeted areas of priority investment. In some cases this may require structural reform to existing investment platforms and new governance and administration measures being put in place by the trustees for those funds.

The Corporate Advisory team at Mills Oakley act for a number of local and international fund managers, trustees and custodians and have extensive experience in the structuring, implementation and maintenance of managed funds that are compliant with the Significant Investor Visa programme.  Should you have any questions or wish to discuss how the proposed changes to Australia’s investment visa regime could affect you, please contact one of the members of our Sydney team – Warwick Painter, Partner or Jacqueline McStay, Senior Associate or our Melbourne team – Mark Bland, Partner or Venn King, Special Counsel.

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