Policy

Policy and Research Update | December 2020

Welcome to the Australian Investment Council’s fourth Policy and Research update for 2020.

A number of major policy announcements have dominated the Council’s policy work over the previous quarter, namely Your Future, Your Super reforms and Foreign Investment Review Regime changes. The Council has worked closely with members while engaging directly with government and Ministers to represent industry’s concerns and recommendations.

Over the previous quarter, the Federal Government’s Budget included the abandonment of the changes to R&D Tax Incentives. This is a positive development for the industry and an outcome we have advocated for over previous years.

The Council has been busy with a wide range of advocacy, research and knowledge sharing projects. These include:

- Australian Investment Council’s CEO, Yasser El-Ansary co-hosting a webinar with Preqin’s CEO, Mark O’Hare, Fundraising Globally: Insights for Australia

- Hosting Cambridge Associates for a webinar with insights into how private investments outperform in a crisis, Private Investments amid times of crisis; and

- Hosting AustCyber’s CEO, Michelle Price and local industry experts, Mike Zimmerman from Main Sequence Ventures and Sam Crowther from Kasada to explore, Investing In Australian Cyber Security – Why it’s important for Building Digital Trust.

For more detail, including upcoming activities, please find below a list of our main submissions, engagements and research from September 2020 through to December 2020.

If you have any policy or research questions or issues you would like to discuss, please contact us.


Submissions, hearings and government meetings

 

September

Protecting Critical Infrastructure and Systems of National Significance

Related to the now legislated changes to Australia’s Foreign Investment Review Regime (see below), the Council made a submission to the Department of Home Affairs regarding the proposed changes Security of Critical Infrastructure Act 2018 (SOCI Act). The proposed legislation is expected to pass Parliament in the coming weeks with industry specific guidance expected in H1 2021.

R&D Tax Incentive: draft refreshed Guide to Interpretation

The Council recently made a submission to the Department of Industry, Science and Technology’s consultation on the R&D Tax Incentive draft refreshed Guide to Interpretation outlining the need to make the guide more consumer friendly using plain English content, provide examples of eligible activities and give information that is aligned with recent Federal Court and Administrative Appeals Tribunal decisions.

The updated guidance has since been released. Notable changes include a new definition of a hypothesis as 'an idea or proposed explanation for how you could achieve a particular result and why that result may or may not be achievable‘, along with more clarity on new knowledge which is defined as being a ‘new or improved material, device, product, process or service and a new practical or theoretical understanding of a subject’.

October

Digital Services Platforms Inquiry into App Marketplaces

The Australian Competition and Consumer Commission is conducting a Digital Platform Services Inquiry over 5 years to 2025. In October, the Council made a submission on the App Marketplaces phase of the inquiry which covered key areas of concern for app developers such as lack of platform choice, commission structures, uncompetitive privacy protection practices and in store app promotion that favours the market duopoly.

National Priorities and Industry Linkage Fund

The Department of Education, Skills and Employment held a consultation on National Priorities and Linkage Fund. The Council’s submission covered three core policy initiatives aimed at regaining investment momentum, creating jobs and stimulating economic growth. Broadly, these were to fill skills and talent gaps; foster a culture of entrepreneurship and build more robust collaboration between the university and private sector.

National Priorities and Industry Linkage Fund

The Department of Education, Skills and Employment held a consultation on National Priorities and Linkage Fund. The Council’s submission covered three core policy initiatives aimed at regaining investment momentum, creating jobs and stimulating economic growth. Broadly, these were to fill skills and talent gaps; foster a culture of entrepreneurship and build more robust collaboration between the university and private sector.

November

Modern Manufacturing Strategy road maps

The Australian Investment Council made a submission to the Department of Industry, Science, Energy & Resources for its consultation on Modern Manufacturing Strategy road maps. This followed an announcement in the FY21 Federal Budget, where government outlined six national manufacturing priorities of resources technology and critical minerals processing, food and beverage, medical products, recycling and clean energy, defence and space as part of its Modern Manufacturing Strategy.

Exposure Draft Security Legislation Amendment (Critical Infrastructure) Bill 2020

Reiterating the concerns raised directly with the Department of Home Affairs and Treasury, the Council made a submission regarding the impacts of the proposed legislative changes on the private capital industry, including via legislation relating to the Foreign Investment Review Board.

December

Further submission to Inquiry into Financial Technology and Regulatory Technology

The Council has made a further submission to the Senate Select Committee on FinTech and RegTech. The Council’s submission makes 13 recommendations across tax issues, R&D, CIVs, Data Security and, Skills and Talent.

Future events

Your Future, Your Super

Following engaging directly with various Ministers and government departments, including authoring a letter to the Treasurer, the Council will respond to the formal consultation on the Your Future, Your Super draft legislation. Submissions are due 24 December 2020 with further industry engagement expected in 2021.

Pre-Budget Submission

The Federal Government has called for pre-budget submission by the end of January 2021. This provides an additional opportunity for the private capital industry to put forward productive policy initiatives to drive job and business growth.


Research and Knowledge Sharing

 

October

Webinar: AustCyber – Investing in Australian Cyber Security – Why it’s important for Building Digital Trust

A webinar on Investing In Australian Cyber Security – Why it’s important for Building Digital Trust , featuring AustCyber’s CEO, Michelle Price and local industry experts, Mike Zimmerman from Main Sequence Ventures and Sam Crowther from Kasada.

November

University of Sydney collaboration

The Council and the University of Sydney have completed a collaboration with a group of Master of Management students to explore the implications of enduring changes to consumer behaviour as a result of the COVID-19 pandemic. The project’s report, COVID-19 and the New Normal: Life Beyond the Pandemic, is available from our research staff .

Webinar: US Presidential Election: Implications for Private Capital

Joe Hockey and Steve Okun discuss the outcome of the 2020 US Presidential Election and its implications for Australia’s private capital industry

Webinar: ESG Policy Standards and Guidance Workshop

Steve Okun explores how boutique and mid-market members can develop their own in-house ESG policies.

December

Webinar: Cambridge Associated – Private Investment Amid Times of Crisis

Cambridge Associates webinar, Private Investments Amid Times of Crisis and the associated article, Australian Private Equity and Venture Capital: 'A Portfolio Vaccine Amid Early Days of the Global Pandemic

Benchmark Report – Q2, 2020

In association with Cambridge Associates, the AIC released the Q2 2020 Australia Private Equity and Venture Capital index and benchmark statistics . The overview report is available to all members while access to the PE and VC specific benchmarks are restricted to members that contribute directly to the reports. If you currently do not have but would like access to these reports please contact Council’s research team.

An article by Cambridge Associates, diving deeper into the implications for private capital industry and providing a comparison against other developed economies and relevant indices will be released later this week.

Webinar: VC ESG Policy Standards and Guidance Workshop

Steve Okun again explores ESG policies, this time focusing on how VC members can develop their own in-house ESG policies.

Future events

Benchmark Report – Q3 2020

The Q3 2020 Cambridge Associates benchmark reports are expected to be released in February 2021.

Knowledge Series

The Australian Investment Council will continue to provide a range of interesting and informative knowledge series events in 2021. These are likely to include:

- Global Economic Update
- ESG Policy Series
- Greenhouse Gas Emissions Survey Outcomes
- Regulatory update
- Exit Strategies for Fund Managers
- Political Update

Keep an eye out for your invitation or contact members@aic.co.


Other Government announcements

 

September

Changes to Australia’s insolvency framework

The government announced major reforms to Australia’s insolvency framework which will be enacted from 1 January 2021. This follows the government’s announcements earlier in the year to offer relief to small businesses facing financial stress due to COVID-19.

While the reforms focus on small business, there may be implications for some private capital members, particularly private credit, in areas of debt restructuring and distressed debt investing.

The package of reforms features three key elements:

1. A new formal debt restructuring process for small businesses (based on Chapter 11 in the US) to provide a faster and less complex mechanism for financially distressed but viable firms to restructure their existing debts, maximising the chance of them surviving and contributing to economic and jobs growth.

2. A new, simplified liquidation pathway for small businesses to allow faster and lower-cost liquidation, increasing returns for creditors and employees.

3. Complementary measures to ensure the insolvency sector can respond effectively both in the short and long term to increased demand and to the needs of small business.

October

New Payment Times Reporting Scheme

The Department of Industry, Science, Energy and Resources announced a new reporting scheme for large businesses and large government enterprises to report their small business payment terms and times. The Australian Government will publish the reports twice a year on a public register. The Payment Times Reporting Scheme will start on 1 January 2021. The scheme will:

- increase transparency around large business’ payment performance;

- help small businesses decide who to do business with;

- create incentives for improved payment times and practices; and

- help the general public make decisions about the large businesses they buy from.

Further information is available via www.industry.gov.au under Payment Times Reporting and Paymenttimesreporting@industry.gov.au.

November

ASIC: Derivative Transaction Rules

ASIC released its first consultation paper on proposals to update the ASIC Derivative Transaction Rules (Reporting) 2013 (see ASIC Consultation Paper 334 for the consultation materials and Upcoming Rules and Exemptions changes for information about the overall consultation program).

ASIC is open to discussions and direct engagement with interested stakeholders, which may be on a one-on-one or sectoral/association basis or otherwise. If you would like to contact ASIC on this matter please write to otcd@asic.gov.au. If there are industry matter you would like to raise, please write to our research team at research@aic.co.

ASIC: Managing conduct risk during LIBOR transition

ASIC has published Information Sheet 252: Managing conduct risk during LIBOR transition (INFO 252) on practical guidance that both buy-side and sell-side entities can adopt to manage conduct risk during LIBOR transition.

Further information is available via: INFO 252: Managing conduct risk during LIBOR transition and 20-304MR ASIC issues information sheet on managing conduct risk during LIBOR transition

December

Changes to Export Market Development Grants

Significant changes to the export market development grant scheme (EMDG) were passed by the Senate in the final sitting days of Parliament for 2020. These changes transform the program into a more traditional entitlement-based grant scheme rather than the current ‘paid after the fact’ model.

The legislation also tightens eligibility for the scheme, reducing the annual turnover threshold from $50 million to $20 million, and introduces three tiers of support covering eligible export promotion expenses for Australian businesses. The changes come following a significant funding increase for the EMDG, with more than $110 million provided to the scheme in recent years.