Policy and Research Update | April 2021

Welcome to the Australian Investment Council’s first Policy and Research update for 2021.

The start of 2021 has seen the ongoing development and implementation of a range of policy and legislative matters with material implications for our industry. These include the implementation of the foreign investment regime on 1 January 2021 and the ongoing development of the Your Future, Your Super reforms.

The Council continues to actively represented the industry through meetings with Government and Opposition Ministers in addition to various submissions and engagements with regulators and government departments.

Foreign Investment Review Regime changes

The new foreign investment review regime came into effect on 1 January 2021 with early experience from the industry being mixed. The Council continues to monitor implementation of the new regime and invites ongoing industry feedback.

In March, the Council initiated an industry roundtable where members were able to engage directly with the FIRB team within the Department of Treasury. Participants gained an insight into the inner workings of the FIRB approval process and some of key areas of focus within the new regime.

The related Security Legislation Amendment (Critical Infrastructure) Bill 2020 was referred to the Parliamentary Joint Committee on Intelligence and Security on 1 December 2020 and subsequently was considered by the Senate Standing Committee for the Scrutiny of Bills. The Senate Standing Committee requested an addendum to the explanatory memorandum be tabled to parliament. The proposed changes could materially broaden the reach of the SOCI Act and the FIRB. The Council continues to closely monitor these proposed changes, including the development of sector specific guidance.

Your Future, Your Super

The government’s proposed changes to changes to Australia’s superannuation system, the Your Future, Your Super reforms continue to be developed. These reforms present material risk to the industry and have been referred to the Senate Economics Legislation Committee, to which the Council made a submission. The Committee is due to report on 22 March and draft regulation are expected to be released soon. The Council continues to engage directly with Government Ministers and advisors, and is closely monitoring industry developments.

Research and industry knowledge building

Supporting these advocacy efforts is a stream of research and knowledge building activities. In March, the Council launched its inaugural Future Jobs Barometer – an analysis of the job creating capability of our VC sector with almost 1500 active jobs identified at 8 VC funds’ portfolio companies. Work is also underway to develop the 2021 Preqin and Australian Investment Council Yearbook and an updated analysis of the private capital industry’s economic contribution. GPs will receive an email from our research partner EY Sweeney in the coming weeks requesting their insights to assist our analysis.

The Council has also presented a range of knowledge series events including:

For more detail, including upcoming activities, please find below a list of our main submissions, engagements and research from late December 2020 through to March 2021.

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


Pre-Budget Submission January 2021

The FY21-22 Federal Budget will be handed down on 11 May 2021. The Council made a submission to Federal Treasury which made 13 recommendations including expediting the implementation of outstanding policies such as technical amendments to the ESVCLP and VCLP framework, the introduction of the LP CIV, introducing a co-investment fund, attracting talent and skills aligned to core, future industries and removing tax uncertainties for private capital.


Review of the Security Legislation Amendment (Critical Infrastructure) Bill 2020

The proposed changes to the Security of Critical Infrastructure Act 2018 (SOCI Act) risk impeding the market efficiency of business investment activity within our domestic economy both now and in the future.

In its submission to the Parliamentary Joint Committee on Intelligence and Security, the Council highlighted that of the Australian private equity and venture capital deals between 2010 and August 2020, the number of deals potentially brought within scope of an expanded SOCI Act would:

  • Increase from 1.8% and 55.1% for private equity; and
  • Increase from 3.3% and 56.8% for venture capital.

Private Equity and Venture Capital deals currently and potentially captured by (expanded) SOCI Act
deals from 2010 to August 2020

Sources: Preqin and Australian Investment Council, 2020

Complying Investment Framework for the Business Innovation and Investment Program

The Council’s submission to the Department of Home Affairs consultation on the Complying Investment Framework for the Business Innovation and Investment Program. focused on increasing the allocation to VC/PE from 10% to 20% for Significant Investor and Investor Visa holders and in making amendments to the current framework to provide clarity on investment processes and to ensure investments are allocated to assets that will boost innovation, employment and economic growth to meet the aims of the program.


Inquiry into Australia’s skilled migration program – Terms of Reference 1 (a) and 2

Australia’s skilled migration approach can form part of government’s policy initiatives to drive our future economic growth and prosperity. The Australian Investment Council’s submission to the Joint Standing Committee on Migration’s Inquiry into Australia’s skilled migration program focused on aligning the current regime with raising Australia’s position as an attractive destination for attracting entrepreneurs and highly-skilled migrants who can make a positive contribution to the Australian economy in the short to medium-term.

Inquiry into Treasury Laws Amendment (Your Future, Your Super) Bill 2021 [Provisions]

The Council’s submission to the Senate Standing Committees on Economics was supportive of adopting the current proposal which would see unlisted private capital investments benchmarked against listed equities. The submission highlighted how the private capital investment asset class has delivered investors an average net return after fees of 12.5 and 12% per annum, over the past 10 and 20 years, respectively.[1] This strong performance has provided Australian superannuation funds with superior returns and valuable diversification. In response, Australian superannuation funds have increased their investment into and alongside private capital funds.

Annual Net Returns to Limited Partners (%)
20 Year average*

* 15-year average for March and June 2018 Source: Cambridge Associates Benchmark Data

Future events

Your Future, Your Super

The Senate Economics Legislation Committee’s report on the proposed Your Future, Your Super reforms is due to be released on 22 March. Draft regulations are expected to be released beforehand.

Federal Budget

The Federal Government’s budget is due to be handed down on 11 May 2021. The government will need to balance continuing economic support with returning to a more normal fiscal setting and targeted support for a subset of industries.

The Council has engaged directly with a range of Government and Opposition Ministers and their advisors to highlight a variety of policy initiatives to drive economic growth and innovation.

1 Cambridge Associates, Australia Private Equity & Venture Capital Index and Selected Benchmark Statistics (Q2 2020)


Australian Private Equity and Venture Capital – Strong Performance as the Global Pandemic Endures

Cambridge Associates local and regional experts provided an analysis of the Australian private equity and venture capital industry’s strong performance over the year to June 2020. This analysis included a number of domestic, international and industry measures.


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

The Council hosted 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.


Attracting top-tier businesses and exceptional talent to Australia

Peter Verwer, A.O., who leads that Government’s Global Business and Talent Attraction Taskforce as the Prime Minister’s Special Envoy on Global Business and Talent Attraction, provided insights into the Taskforce’s priorities and goals in a blog written specifically for the Council.

Australian Private Equity and Venture Capital – Robust Recovery from the Global Pandemic

Cambridge Associates local and regional experts provided an in-depth assessment of the performance of Australia’s private equity and venture capital industry. The analysis highlighted that the Australian private equity and venture capital industry continues to demonstrate strong long-term net of fees performance for investors, outpacing the ASX 300 and the ASX Small Ordinaries for the 5, 10, and 20-year periods.

Political Insights Series | The Year Ahead: Setting the Scene for the Nation

Steve Lewis from Newgate Australia provided insights into how the Morrison government may tackle the challenges of 2021 and the implications for Australia’s private capital industry.


Australian Investment Council’s Future Jobs Barometer

The Australian Investment Council analysed job vacancies in over 170 portfolio companies of 8 of the largest VC funds to produce the inaugural Future Jobs Barometer. This analysis found over 1500 job vacancies in the portfolio companies analysed. 25% of these vacancies were in IT and SaaS. Graphic design and marketing, followed by health and medical were the next largest vacancy groups with 18% and 15% respectively.

The analysis will be developed into a report that will be updated every six months.

Global Economic Update with Westpac's Global Head of Economics, Bill Evans

On 4 March 2021, Westpac's Global Head of Economics, Bill Evans provided a member only Global Economic Update. Bill provided analysis of the global economic environment, the drivers of the current volatility in markets, and what the disrupted globalised trade environment means for Australian businesses.

Future events

Benchmark Report – Q4 2020

The Q4 2020 Cambridge Associates benchmark reports are expected to be released in May 2021. This update will likely show how the Australia’s private capital industry performed well in 2020, reflecting fund managers’ ability to pivot and evolve to changing market and economic conditions.

2021 Preqin and Australian Investment Council Yearbook

The Council’s flagship research publication is due to be released in May 2021. Similar to the 2020 Yearbook, the 2021 Yearbook will analyse the key trends in Australia’s private capital industry across private equity, venture capital, private credit, private infrastructure and private real estate.

Australian Private Capital Industry Economic Contribution

June will see the release of the Council’s updated analysis of the industry’s contribution to the Australian economy. For this update, the Council has joined with EY Sweeney and will assess private equity, venture capital and private credit.

The Council’s previous report, published in 2018 in conjunctions with Deloitte Access Economics, highlighted a number of key outcomes for the private equity industry including that:

- One in nine new Australian jobs are created by private capital backed Australian businesses;

- Private capital backed businesses’ workforces grew by 24% in 2017, compared to the national average of 0.3%;

- The private capital industry generates 2.6% of Australia’s GDP, with $43 billion in total value add; and

- The sector directly employs 172,000 FTE and supports another 155,000 workers in related firms.

Introduction to Private Capital Series

The Council’s inaugural Introduction to Private Capital Series has been released. The first document provides key information on investment strategies in private credit, sources of funding and growth of the sector.

On behalf of ASIC, Deloitte Access Economics released its interim report into competition in managed funds. The report, released on 5 March, did not find significant evidence to suggest that competition is not effective in the managed funds industry. However, it did identify some areas where concerns have been raised, or where outcomes might be improved.

A number of questions are raised in the interim report to which interested parties can respond by emailing Deloitte Access Economics at: [email protected].

The final report is expected to be provided to ASIC in June.