Robb flags revamp of investor visa schemes

THE federal government has signalled a major overhaul to the significant investor visa program.

THE federal government has signalled a major overhaul to the significant investor visa program as it looks to divert the billions of dollars raised from the scheme away from low-risk investments such as government bonds into areas such as venture capital and small-cap companies.

The Abbott government also plans to tighten scrutiny surrounding the visa program, as well as the newly announced $15 million premium investor visa scheme, amid concerns some ­people with criminal links and corrupt officials could be exploiting the program to fasttrack their entry into Australia.

Since the significant investor visa program was launched two years ago, close to $2 billion has poured into mostly ultra-safe government bonds, an ASIC-regulated managed fund or shares in blue-chip companies.

But Trade and Investment Minister Andrew Robb believes the money going into low-risk bonds makes no real contribution to 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,” Mr Robb told The Australian. “They just park money there for four years and got citizenship. It does not make a lot of sense to me from a public policy point view.”

Instead, the government wants to channel these new funds from wealthy investors — mostly Chinese nationals — into areas where companies are starved of capital such as start-ups, small-cap companies and early-stage exploration companies.

“My view is that we should channel investment into areas of relatively higher risk,” he said.

“In those areas, the few hundred million additional dollars ­invested into venture capital space, for instance, would be transformational. It could make a real difference.”

The new premium investor visa program, which offers fast-tracked Australian citizenship in 12 months, requires investors to put at least $15m into the economy. So-called sponsorship of the visa applicant becomes the responsibility of the state or territory governments.

Mr Robb said Australian citizenship was highly prized among international investors and the additional risks that they must carry warranted the benefits of becoming an Australian citizen.

“I think what is being offered is a very valuable thing in terms of fast-tracked citizenship,” he said.

“I do feel this warrants investment that makes a material difference to Australia, not just sitting in low-risk accounts for four years, not making any contribution to the country.”

It is the government’s intention to channel investor money into these new areas through existing vehicles that have been tried and tested over time, such as the Early Stage Venture Capital Limited Partnership, which is registered with the Department of Industry as well as the ATO.

“We feel this SIV and PIV could make a very material contribution in terms of lowering costs and getting ventures off the ground,” he said.

Of the 436 people awarded significant investor visas as of last month, 88 per cent were Chinese.

Australia’s investor visa program has been under the spotlight due to its alleged connection to money-laundering as well as potential exploitation by Chinese ­officials amid a crackdown by Beijing on corruption.

Australian Federal Police has recently announced an unprecedented co-operation with the Chinese law enforcement authorities in tracking down economic fugitives as well as seizing ill-­gotten goods and property in ­Australia. Mr Robb defended the overall integrity of the visa programs, which are administered by the Department of Immigration, saying there had not been a problem with SIV to his knowledge.

“There is co-operation between our two police authorities to try to flush out some of these corrupt officials,” he said.

“We are re-assessing integrity measures.”

The minister also said that the Australian immigration authority would refer cases to Chinese police if any improprieties were discovered during the mandatory security and character screening process.

“If there is any suggestion that a person has accumulated wealth through illegitimate means, all materials are referred to local authorities in the source countries and in the case of China, to the Chinese police,” he said.

The Australian this week reported that one of China’s most wanted officials, Gao Yan, the former head of the nation’s State Grid Corporation and a former senior party official, is thought to be hiding in Australia.

Business Spectator