Start Up Australia has welcomed a new proposal to try and boost innovation and entrepreneurialism by changing the residency rules for wealthy Chinese investors, but called for more details on the plan.
Trade Minister Andrew Robb wants to ensure that venture capital funds receive up to $500 million a year from users of the Significant Investor Visa, a scheme that provides passports to those willing to put $5 million into a qualifying investment.
The scheme was brought in by the former Labor government and has proved popular with wealthy Chinese. However, most have invested in low-risk bonds that Mr Robb has said do “nothing for us”. There is little engagement with higher-risk equity or venture capital investments.
Mr Robb is reported in the Australian Financial Review this week as saying the investment should be geared towards commercialising early-stage technology and drive innovation.
“If we can put half a billion a year into some of these areas, it will really fire up innovation,” he said. “In my view if someone wants the fast track (to permanent residency), they need to have some skin in the game.”
Co-founder of Start Up Australia, Brian Sher, told Dynamic Business the effectiveness of the idea would come down to execution and suggested the government take a more hands-on approach to shaking up the start-up ecosystem.
“There’s a lot of good ideas that government have, but when it comes down to the actual filtering down, is the money going to get to where its got to go; who’s going to administer it; will it have the effect that the idea intends it to have?” he said. “In principle, it sounds like a really good idea. In practice, I’d really like to see a bit more detail in terms of how it’s going to work”.
Mr Sher questioned which venture capital funds would benefit and whether there would be safeguards to ensure that money was not simply invested in the stock-market.
He proposed the government develop a ten-year strategy to help entrepreneurs and suggested a sharp focus on educating people on how to develop their business and raise capital.
“The government thinks of small business people, they talk a great game about it, they talk about how they want to support small business and so on,” he said. “What they don’t do is they don’t really get behind it, they don’t become a Singapore Inc. If you look at what they do in Asia, governments get behind start-ups and small business and put money and resources into it and commit to a long-term strategy. We have no strategic plan whatsoever here in Australia at all”.
The Abbott government expanded the Significant Investor Visa scheme, unveiling a platinum visa which provides permanent residency within 12 months if an investment of $15 million is made.