BLOG: Setting the agenda for 2017
2nd Feb 17
Author: Christian Gergis, Head of Policy and Research, AVCAL
AVCAL’s Budget submission addresses key industry issues including tax reform and foreign investment
With the Turnbull government set to deliver its first budget since the 2016 election, all eyes will soon be turning on Treasurer, Scott Morrison, as he prepares the Coalition’s economic plan for the 2017-18 financial year. AVCAL, along with a host of other industry and community stakeholders, has recently submitted its submissions to the Treasury, setting out a number of areas for reform. With Australia facing difficult economic headwinds, and global political uncertainty set to persist, it is all the more important that Australia has in a place a robust plan that supports investment and job growth across the country.
AVCAL’s Budget submission focused on the following key issues currently facing the private equity and venture capital sector including:
1. Foreign investment: advocating for a more streamlined approvals process for non-sensitive, routine transactions involving foreign investor-backed private equity funds;
2. R&D: in response to the Fraser-Ferris-Fraser review of the R&D scheme, recommending that any cap on the refundable component of the program (available to eligible companies with revenue below $20m) be set at $5m, with a carve-out for clinical trials;
3. VCLP/ESVCLP: putting forward a package of reforms to the Early Stage Venture Capital Limited Partnership and Venture Capital Limited Partnership framework aimed at improving its efficacy, and ironing out its regulatory wrinkles;
4. Tax reform: asking for policy certainty from government on tax settings relevant to the sector, including ‘thin capitalisation rules’ and the proposed diverted profits tax;
5. Investment structures: calling for a world-best practice limited partnership vehicle (the typical conduit for private equity and venture capital investment) that would help catalyse greater investment into high growth potential SMEs and other businesses;
6. Portfolio holdings disclosure: requesting clarification from the Government regarding when these reforms might go ahead, with the previous bill having lapsed due to the calling of the 2016 election.
While the Government has a host of priorities across many portfolios, ensuring that Australia has an internationally competitive policy environment is crucial if we are to continue to enjoy an enviable record of economic growth and capitalise on the rapid technological changes sweeping the globe. In particular, we believe that the next wave of National Innovation & Science Agenda reforms should focus on the above areas, as Government looks to put in place the policy architecture necessary to support the ‘scaling-up’ Australian businesses that will drive new job creation. With business investment remaining fragile across the economy, it is vital that the private capital model be allowed to flourish, supporting Australia’s transition towards a knowledge-based, value-added economy.
Against a fluid political and economic background, AVCAL looks forward to working with its members towards better policy and regulatory outcomes for our industry, and the broader Australian economy, over the year ahead.
AVCAL's Pre-Budget Submission can be accessed here.
Author: Yasser El-Ansary, Chief Executive, AVCAL