The Times Australia
The Times World News

.
The Times Real Estate

.

axing the 'business investment' visa would save Australia $119 billion over three decades

  • Written by Brendan Coates, Program Director, Economic Policy, Grattan Institute
axing the 'business investment' visa would save Australia $119 billion over three decades

This article is part of The Conversation’s series looking at Labor’s jobs summit. Read the other articles in the series here[1].

With the Albanese government facing difficult challenges on many fronts in the lead-up to the summit, one decision should be straightforward.

It’s axing the so-called Business Investment and Innovation Program, which offers permanent visas to migrants that establish businesses or invest in Australia.

The Business Investment and Innovation Program is one of a number of programs offered in the skilled stream, along with employer-sponsored visas, skilled independent visas, state and territory nominated visas, and global talent and distinguished talent visas.

It accounted for one in seven[2] of the 79,620 skilled visas issued during 2021-22.

Investment is a visa condition

To be accepted, an applicant needs to meet conditions[3] including a minimum level of wealth and a desire to invest in Australia, including by managing a business you own.

Yet we find few of these people finance projects that would not otherwise occur, or provide entrepreneurial acumen that would not otherwise be available.

Instead, the Grattan Institute[4] finds people who get a business investment visa tend to earn very low incomes in Australia, costing the government more in payments and public services than they pay it in taxes.

Residents in Australia in 2016 who arrived on a permanent visa between 2012-2016. Visa class is the first permanent visa granted. Overseas visitors are excluded, as are residents with an invalid year of arrival in Australia. ABS Australian Census and Migrants Integrated Dataset (2016)[5]

They tend to be older, which means they spend fewer years in the workforce (or in business) before they retire, and therefore pay tax for fewer years before they begin to draw heavily on government-provided services.

Residents in Australia in 2016 who arrived on a permanent visa between 2012-2016. Visa class is the first permanent visa granted. Incumbents are residents born in Australia or those who arrived before 2000. Residents with an invalid year of arrival in Australia are. excluded. ABS Census (2016); ABS Australian Census and Migrants Integrated Dataset (2016).

Australian Treasury calculations[6] suggest a business investment visa holder will cost Australian taxpayers $120,000 more in public services than they pay in taxes over their lifetimes.

That compares to an average positive dividend of $198,000 over the lifetime of other skilled migrants.

Primary applicants only. Treasury model

Only one in ten hold a postgraduate qualification, compared to one in three other recent skilled visa holders. Less than half have a university degree, compared to 80% of other skilled visa holders.

And they generally have lower proficiency in English, which makes it difficult for them to play meaningful managerial roles in growing businesses in Australia.

Little investment

While investment is important for economic growth, there is little sign these visa holders finance projects that would not otherwise occur.

Most business investment visas are not allocated under the “significant investor” stream which requires visa holders to invest at least A$5 million in Australia. Instead, seven out of ten are issued under the “innovation” stream[7] that requires personal wealth of at least $1.25 million and owning a stake in a business with annual turnover of $750,000.

These assets are typically small businesses in retail and accommodation and food services, industries that not likely to assist the stated goal of the program, which is to boost innovation.

Little innovation

The cost of allocating scarce permanent skilled visas to business investment applicants is high: each visa granted through the business investment program is one less visa granted to a skilled worker who could typically be expected to make a larger contribution to the Australian community over their lifetime.

Abolishing the business visa, and reallocating its places to other skilled worker applicants would on our estimate boost the fiscal dividend from Australia’s skilled migration program by A$3 billion over the next decade, and by $119 billion (in today’s dollars) over the next 30 years.

Model projects migrant lifetime wages using wage-age paths from ABS 2016 Survey of Income and Housing; assumes 9,500 BIIP visa places are allocated to independent points tested visa. Tax model includes Stage 3 tax cuts, indexes tax brackets using a 3.5% income growth assumption, and indexes the Medicare levy threshold using a 2.5% CPI assumption. All cash flows deflated using CPI of 2.5%. Assumes three in four points-tested visas visas come from temporary visa holders, one third of which would have left Australia each year in absence of a permanent visa. Grattan analysis of Department of Home Affairs Continuous Survey of Australia’s Migrants and ABS survey of income and housing

The growing saving is driven by the fact that business investment visa holders retire up to 20 years earlier than other skilled migrants and pay less tax and draw on more health, aged care and pension benefits.

Unlike most other changes that would boost the budget bottom line, axing the business investment visa would not require legislation.

The government should act soon. There’s already a wait list of over 30,000[8] for the business visa. Just clearing it would cost budgets $38 billion in today’s dollars over three decades.

Economists are fond of saying there’s no such thing as a free lunch. We reckon abolishing the business investment visa is a $119 billion free lunch, waiting for the government to tuck into it.

References

  1. ^ here (theconversation.com)
  2. ^ one in seven (immi.homeaffairs.gov.au)
  3. ^ conditions (www.bdo.com.au)
  4. ^ Grattan Institute (grattan.edu.au)
  5. ^ ABS Australian Census and Migrants Integrated Dataset (2016) (www.abs.gov.au)
  6. ^ Australian Treasury calculations (treasury.gov.au)
  7. ^ “innovation” stream (immi.homeaffairs.gov.au)
  8. ^ 30,000 (www.homeaffairs.gov.au)

Read more https://theconversation.com/an-idea-for-the-jobs-summit-axing-the-business-investment-visa-would-save-australia-119-billion-over-three-decades-188836

The Times Features

Best Deals on Home Furniture Online

Key Highlights Discover the best deals on high-quality outdoor furniture online. Transform your outdoor space into a stylish and comfortable oasis. Explore a wide range of d...

Discover the Best Women's Jumpers for Every Season

Key Highlights Explore lightweight jumpers for spring and summer, ensuring breathability and ease. Wrap up warm with cozy wool jumpers for the chilly autumn and winter season...

Uncover the Elegance of Gorgeous Diamond Tennis Necklaces

Key Highlights Diamond tennis necklaces are a timeless piece of jewelry that exudes elegance and sophistication. They feature a continuous line of brilliant-cut diamonds, cre...

Dental Implants vs. Dentures: Which Is Better for You?

When it comes to replacing missing teeth, two of the most common options are dental implants and dentures. Both have their advantages and disadvantages, so choosing between them ...

What Neck Pain Really Means (And Why It’s More Than Just Poor Posture)

Neck pain is often brushed off as something temporary — a tight spot after a long day at the desk or a poor night’s sleep. But when the discomfort keeps returning, it could be a ...

The Work of Gosha Rubchinskiy: Fashion, Culture, and Youth

From Designer to Cultural Architect Gosha Rubchinskiy is not just a fashion designer—he's a cultural force. Born in Moscow in 1984, Rubchinskiy began his career in fashion in t...

Times Magazine

The Essential Guide to Transforming Office Spaces for Maximum Efficiency

Why Office Fitouts MatterA well-designed office can make all the difference in productivity, employee satisfaction, and client impressions. Businesses of all sizes are investing in updated office spaces to create environments that foster collaborat...

The A/B Testing Revolution: How AI Optimized Landing Pages Without Human Input

A/B testing was always integral to the web-based marketing world. Was there a button that converted better? Marketing could pit one against the other and see which option worked better. This was always through human observation, and over time, as d...

Using Countdown Timers in Email: Do They Really Increase Conversions?

In a world that's always on, where marketers are attempting to entice a subscriber and get them to convert on the same screen with one email, the power of urgency is sometimes the essential element needed. One of the most popular ways to create urg...

Types of Software Consultants

In today's technology-driven world, businesses often seek the expertise of software consultants to navigate complex software needs. There are several types of software consultants, including solution architects, project managers, and user experienc...

CWU Assistive Tech Hub is Changing Lives: Win a Free Rollator Walker This Easter!

🌟 Mobility. Independence. Community. All in One. This Easter, the CWU Assistive Tech Hub is pleased to support the Banyule community by giving away a rollator walker. The giveaway will take place during the Macleod Village Easter Egg Hunt & Ma...

"Eternal Nurture" by Cara Barilla: A Timeless Collection of Wisdom and Healing

Renowned Sydney-born author and educator Cara Barilla has released her latest book, Eternal Nurture, a profound collection of inspirational quotes designed to support mindfulness, emotional healing, and personal growth. With a deep commitment to ...

LayBy Shopping