Welcome to the Australian Investment Council’s second Policy and Research
update for 2020.
Regulatory change and risks have increased significantly over recent months
with governments at all levels looking to respond quickly to the health and
economic pressures of COVID-19. As the private capital industry touches
almost every sectors of the economy, many of these changes impact on our
industry.
In response to the unprecedented volume of legal and regulatory change, the
Australian Investment Council has:
- Developed a
content hub, tracking key government initiatives and developments;
- Engaged closely with private capital investment firms and key advisors;
- Written to and held discussions with various ministers and government
agencies;change
- Conducted member surveys; and
- Continued our various streams of business-as-usual research and policy
work.
There has been a lot of activity over the previous few months. Some of the
main items include:
- Representing the industry regarding changes to the foreign investment policy framework;
- Engaging with the Government on the JobKeeper Program;
- Publishing the
Preqin & Australian Investment Council Yearbook 2020; and
- Initiating
call for a policy summit
to develop the nation’s roadmap to recovery.
For more detail, including upcoming activities, please find below a list of
our main submissions, engagements and research from February 2020 through
to May 2020.
If you have any policy or research questions or issues you would like to
discuss, please contact us.
Submissions, hearings and government meetings
February
Retirement Income Review
Following recommendations in the Productivity Commission's report into the
Efficiency and Competitiveness of Superannuation, the government
commissioned an independent Retirement Income Review. The Council made a
submission
to the
Treasury consultation, highlighting the importance of having a world class superannuation
system, including:
- The lost opportunity of focussing on fees and cost rather than fund
performance; and,
- The role of alternative assets is superannuation funds’ asset allocation
and performance.
Business Innovation and Investment Program: Getting a better deal for
Australia
The Australian Investment Council lodged a
submission
to the Department of Home Affairs on the Business Innovation and Investment
Program to see how the benefits of the Significant Investor Visa can be
maximised for Australian Businesses. The Council’s submission recommended
no change to the SIV investment threshold. However, if the SIV threshold is
increased, we recommended a moderate increase to $6 million, with a 2 to
3-year transition period.
March
Treasury Laws Amendment (Research and Development Tax Incentive) Bill
2019
The Australian Investment Council made a
submission
to the Senate Standing Committee on Economics in relation to the Treasury
Laws Amendment (Research and Development Tax Incentive) Bill 2019.
This is the latest consultation on this issue, with consultations dates
back over a number of years. Our submission reinforced our previous
submissions in that measures should only be implemented that support
Australia’s R&D ecosystem – something which is particularly important
given the current economic conditions.
RG97 - ASIC Roundtable
The Australian Investment Council recently attended an ASIC industry
roundtable on the requirements of updated Regulatory Guide 97. The
presentation from the roundtable are available from ASIC’s
website.
Consultation regarding RG97 have been ongoing for many years. From the
private capital industry’s point of view, the final regulatory guide is
much more favourable than the initial proposals. However, the guidance
continues to have a greater focus on fees rather than net returns. The
focus on fees, particularly for MySuper, has been strongly
supported by parts of government and a number of regulatory agencies.
Wherever possible, the Council continues to highlight the shortfalls of
myopically focusing on fees and argues for a balanced approach which, we
feel, would ultimately lead to better retirement outcomes for Australians.
April
Initial public offers: Relief for voluntary escrow arrangements and
pre-prospectus communications
The Council made a
submission
to ASIC’s Consultation Paper 328 –
Initial public offers: Relief for voluntary escrow arrangements and
pre-prospectus communications
. Our submission made nine recommendations where we highlighted the
implications of the proposals on the private capital industry, calling on a
range of international examples
Changes to Australia’s Foreign Policy Investment Framework
In response to changes implemented by the Federal Government, the
Australian Investment Council undertook a range lobbying activities,
including writing to the Federal Treasurer, to ensure our industry’s
concerns were heard. For a summary of the implications of these changes and
our actions, please see the write up on our
website or our short policy update video.
May
Private capital access to the JobKeeper program
The Australian Investment Council undertook a range lobbying activities in
response to some private capital-backed Australian businesses being
ineligible for the Federal Government’s JobKeeper program. For a summary of
this issue and our actions, please see the write up on our website or our short policy update video.
Calls for a national economic and social policy summit
The Australian Investment Council has
led the call
to government to establish a national policy summit to develop the nation’s
roadmap to recovery. We have promoted this initiative on various platforms,
including in writing directly to the Federal Government. The Council’s
initiative has been picked up by a number of media outlets with other
associations and commentators now also calling for a summit.
Negative Control
Over the previous months, the Council has continued its direct engagement
with the ATO. While the ATO has highlighted that it has shifted its
resources towards the numerous COVID-19 related government initiatives and
deadlines may shift, its work regarding ‘negative control’ continues.
The Legal and Tax Advisory Committee approved an engagement strategy and
established a Negative Control Working Group. This group has been focusing
on the more technical aspects of engaging with the ATO on this
long-standing issue and includes representatives from many of the industry
legal and tax advisory firms.
For more detail on our work in this areas, please
contact us.
Future events
A number of regulators, such as APRA, ASIC and the ATO have delayed a wide
range of projects and consultations. As economic conditions improve and
government resources focusing on COVID-19 related policy development and/or
implementation are reduced, we expect work on these delayed projects to
increase.
Coupled with a new raft of new government initiatives to support our
economic recovery and the winding back of existing initiatives, we expect
an
ongoing environment of elevated regulatory and legal risks facing the
industry
in the second half of 2020.
Research
February
PE and VC Benchmark Report – Q3, 2019
In association with Cambridge Associates, we released the
Q3 2019 Australian 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 is restricted. If you currently do not have but
would like access to these reports please contact us.
April
Preqin & Australian Investment Council Yearbook 2020
Amongst the many insights in the report, analysis confirms that Australia
continues to be a stand-out destination for private capital investment over
the past year – displaying one of the most attractive risk/return profiles
in the world, and delivering stable long-term returns for investors. The
private equity and venture capital segments followed the global pace with a
significant increase in assets under management in 2019, rising to a
new record high of $33 billion, up 16% on 2018 levels. The report is available on our website. For an
overview, please see an short presentation of the key insights available
here.
Political Insight Series: COVID-19 - fuelling the rise of China and
Fortress Australia
Steve Lewis, Senior Adviser at Newgate Australia, shares his
thought-provoking look inside how China could use COVID-19 to change its
geopolitical goals and its relationship with Australia, in our latest
instalment in our
Political Insight Series. Lewis also looks into the rise of the ‘Fortress Australia’ argument, and
how this may change domestic industry for the next decade and beyond.
Member only interactive webinar with NAB’s Global Head of Research
In conjunction with AIC corporate partner firm NAB, the Council hosted a members-only interactive webinar with NAB's Global Head of Research, Markets, Ivan Colhoun. Ivan shared his expert views on the global and Australian economic and financial outlook, including NAB’s prediction that unemployment could reach a record-high 12% in the period ahead. The presentation slides from that webinar are available on our website (members only).
Future events
Benchmark Report – Q4, 2019
The Q4 2019 benchmark reports are expected to be released in June 2020.
Industry Factsheet
The Australian Investment Council is updating its industry factsheets which
will be available on our website.