SYDNEY: The Australian Investment Council is disappointed in tonight’s
Federal Budget measures which will adversely impact Australia’s ability to
future attract foreign investment but cautiously welcomes other measures
aimed at enhancing Australia’s innovation and manufacturing landscape, and
in deploying skills within the domestic economy.
Foreign Investment
The private capital industry is disappointed the Government has not heard
the loud call to enhance Australia’s collective investment vehicle regime
by scrapping the Limited Partnership Collective Investment vehicle (LP CIV)
announced in the 2016 Federal Budget and promised as part of Australia’s
adoption of an Asian Region Funds Passport regime.
Tonight’s announcement that changes to Australia’s thin capitalisation
rules will include abolishing the worldwide gearing test and arm’s length
debt test for related investors, as well and not providing any
grandfathering for existing investments is surprising and disappointing.
However, the Council welcomes the retention of the arm’s length test for
third party lenders.
As a net importer of capital, Australia’s economy relies on a dependable
and steady flow of foreign investment to drive economic growth and job
creation. The scrapping of the LP CIV and the thin capitalisation changes,
together with the doubling of FIRB application fees send a negative signal
to international investors that Australia is not open for business at a
time when other countries, like Singapore, are doing their best to attract
foreign investors to their shores.
More Permanent Migration Visas
Australian jobs rely on a steady flow of domestic and offshore capital to
support investment into growing businesses across all industries and
regions within our nation. Reallocating the visa mix to ensure regional
areas are well supported to ensure there are sufficient skilled workers is
a critical step for sustaining these local economies over the short to
medium term.
The Council welcomes the increase in permanent migration visas from
160,000 to 195,000 in 2022-23 and the increased allocation of resources to
free the backlog of visa applications in the months ahead.
We look forward to working constructively with the government on the
review of Australia’s immigration system.
National Reconstruction Fund
The Council supports the National Reconstruction Fund for key industries
where Australia already is or could be world leaders.
The Council is disappointed that the establishment of the National
Reconstruction Fund has come at a cost of previously strategies including
the Modern Manufacturing Strategy and the Entrepreneurs program.
More TAFE and university places
The Council welcomes the 480,000 fee free TAFE places and 20,000 new
university places to indigenous Australians and socially disadvantaged
groups recognising higher education's long term social and economic impact,
as well as the importance of reskilling Australians for a future
technology-based economy.
Upgraded NBN
The Australian Investment Council has advocated for the NBN to be upgraded
from FTTC and HFC to FTTP as more people work from home. Building a digital
future will require further investment in technological infrastructure to
ensure businesses and individuals have access facilities that are world
class. Upgrading the NBN to a gold and future-proof FTTP standard and
building 5G and future 6G capabilities will be integral to this process.
Cost of living
We welcome the Government’s recognition that cost of living pressures are
affecting many Australians by expanding the childcare subsidy to cover 90%
of the cost of most working Australians. The private capital industry
welcomes measures that enhance Australia’s productivity by supporting
working parents at a time when childcare is becoming more expensive.
The Council also supports the move by Government to provide parental leave
funding to 26 weeks.
Building Affordable Housing
The Council has been a long-term supporter of Federal and State
governments working together to achieve very targeted programs for
affordable housing which do not place additional pressure on existing
housing prices. We welcome the use of long-term socially responsible
capital through public and private investment to help solve the nation’s
chronic shortage of affordable housing. The Council looks forward to
participating in the Treasurer’s Roundtable to continue the dialogue on how
governments can work with private capital on this key area.
For further information, please contact:
Robyn Tolhurst
Public Affairs Manager
Australian Investment Council
E: [email protected] | M: +61 436 388 919
About the Australian Investment Council
The Australian Investment Council is the voice of private capital
in Australia. Private capital investment has played a central role
in the growth and expansion of thousands of businesses, which when
combined represents a multi-billion dollar contribution to the
Australian economy. Our members are the standard-bearers of
professional investment and include: private equity, venture
capital and private credit funds, alongside institutional investors
such as superannuation and sovereign wealth funds, as well as
leading financial, legal and operational advisers.
The Australian Investment Council requests its name always
appear in full and not abbreviated or as an acronym.