Significant Investor Visa Helping Boost The Australian Economy
In 2012, Australia launched its Significant Investor Visa (SIV), which has helped generate over AUD 10 billion into the Australian economy to date. The SIV is a Department of Home Affairs initiative, which coincides with its Business Innovation and Investment Program (BIIP).
In 2019, the ‘Impact of the Significant Investor Visa Program’ report conducted by Deloitte found that there were over 2,000 residents in Australia on an SIV, helping to generate both innovation and economic growth within the country.
With Australia’s economy taking a hit in 2020, as well as reduced immigration levels due to COVID-19, SIV could begin to take precedence in Australian immigration in a bid to reach pre-pandemic levels of economic strength.
What is a Significant Investor Visa?
An SIV allows up to a four-year permanent residency in Australia to high net worth individuals looking to make substantial investments in the Australian economy.
The SIV differs from the Investor Visa, which requires an investment of AUD 1.5 million and the Business Innovation Visa, which allows immigrants with AUD 800,000 in liquid assets to start a business in Australia.
How to apply for a Significant Investor Visa
Individuals must be invited to apply for an SIV within Australia or nominated by a State or Territory government agency or Austrade (the Australian Trade and Investment Commission). Applicants must invest at least AUD 5 million in Australia’s economy and be able to hold that investment for at least for four years.
If nominated by a state or territory, applicants must have genuine intentions to live within that particular area. Austrade nominated applicants must pay a nomination fee of AUD 1,000, whilst states and territories charge a less expensive fee or do not charge a fee at all.
What are the economic benefits of a Significant Investor Visa in Australia?
The SIV aims to boost the following areas within Australia’s economy:
- Production of goods and services
- Export of goods
- Commercial activity
Investments by SIV holders can be categorised into direct and indirect investments. Direct investments refer to assets intended to acquire a controlling interest with a minimum 10% stake, whilst indirect investments refer to passive portfolio investments such as bonds and shares.
Indirect investments help to advance domestic equity markets, with foreign investors increasing available capital for Australian firms. Direct investments, however, help to underpin broader economic growth and development.
Based on 75 respondents, the most significant areas of foreign investment amongst SIV holders was purchasing residential real estate, purchasing commercial real estate and purchasing a financial asset, such as shares and corporate bonds.
Foreign investment, in particular, can help businesses expand by opening up global supply chains, entering into international markets, as well as introducing companies to new technology.
Deloitte’s report on the significant investor programme found that a 10% rise in foreign investment could raise Australia’s GDP by 1.2%, increase wages by just over 1%, and elevate employment by approximately 0.3%.
What are the criticisms of a Significant Investor Visa?
In 2016, the Australian Government’s Productivity Commission called for the abolishment of the SIV, believing it to be insufficient for the following reasons:
- The ability to retain an SIV is uncertain
- Lack of English language requirements could impose further costs on Australian society
- The potential for the SIV to encourage fraud and money laundering
Austrade and the Australian Private Equity & Venture Capital Association Limited (AVCAL) have argued against the Productivity Commission’s review, stating that the concerns are a narrow-minded view of the SIV. Both institutions confirmed that it is difficult to predict the long-term economic benefits of the SIV, given that it was only introduced in 2012.
Significant Investor Visas in 2021
2021 will see a variety of changes within Australian immigration, particularly limitations on certain types of visas.
Whilst some Australian visas such as the General Skilled Migration and Skilled Independent Visa will see a significant reduction, investor-related visas are set to increase. These visas will take priority in 2021 in a bid to provide post-COVID support to the Australian economy as it’s revealed that places will almost double from 6,862 to 13,500. The criteria for investor visas could also potentially be revised next year, with plans on increasing application fees by up to 12%.
It will be interesting to see if the new focus placed on investor visas in 2021 will help to stimulate economic recovery post-pandemic.