Welcome to the Australian Investment Council’s fourth Policy and Research
update for 2020.
A number of major policy announcements have dominated the Council’s policy
work over the previous quarter, namely Your Future, Your Super
reforms and Foreign Investment Review Regime changes. The Council has
worked closely with members while engaging directly with government and
Ministers to represent industry’s concerns and recommendations.
Over the previous quarter, the Federal Government’s Budget included the
abandonment of the changes to R&D Tax Incentives. This is a positive
development for the industry and an outcome we have advocated for over
previous years.
The Council has been busy with a wide range of advocacy, research and
knowledge sharing projects. These include:
- Australian Investment Council’s CEO, Yasser El-Ansary co-hosting a
webinar with Preqin’s CEO, Mark O’Hare,
Fundraising Globally: Insights for Australia
- Hosting Cambridge Associates for a webinar with insights into how private
investments outperform in a crisis,
Private Investments amid times of crisis; and
- Hosting AustCyber’s CEO, Michelle Price and local industry experts, Mike
Zimmerman from Main Sequence Ventures and Sam Crowther from Kasada to
explore,
Investing In Australian Cyber Security – Why it’s important for
Building Digital Trust.
For more detail, including upcoming activities, please find below a list of
our main submissions, engagements and research from September 2020 through
to December 2020.
If you have any policy or research questions or issues you would like to
discuss, please contact us.
Submissions, hearings and government meetings
September
Protecting Critical Infrastructure and Systems of National Significance
Related to the now legislated changes to Australia’s Foreign Investment
Review Regime (see below), the Council made a
submission
to the Department of Home Affairs regarding the proposed changes Security
of Critical Infrastructure Act 2018 (SOCI Act). The proposed legislation is
expected to pass Parliament in the coming weeks with industry specific
guidance expected in H1 2021.
R&D Tax Incentive: draft refreshed Guide to Interpretation
The Council recently made a
submission
to the Department of Industry, Science and Technology’s consultation on the
R&D Tax Incentive draft refreshed Guide to Interpretation outlining the
need to make the guide more consumer friendly using plain English content,
provide examples of eligible activities and give information that is
aligned with recent Federal Court and Administrative Appeals Tribunal
decisions.
The updated guidance has since been released. Notable changes include a new
definition of a hypothesis as 'an idea or proposed explanation for how you
could achieve a particular result and why that result may or may not be
achievable‘, along with more clarity on new knowledge which is defined as
being a ‘new or improved material, device, product, process or service and
a new practical or theoretical understanding of a subject’.
October
Digital Services Platforms Inquiry into App Marketplaces
The Australian Competition and Consumer Commission is conducting a Digital
Platform Services Inquiry over 5 years to 2025. In October, the Council
made a
submission
on the App Marketplaces phase of the inquiry which covered key areas of
concern for app developers such as lack of platform choice, commission
structures, uncompetitive privacy protection practices and in store app
promotion that favours the market duopoly.
National Priorities and Industry Linkage Fund
The Department of Education, Skills and Employment held a consultation on
National Priorities and Linkage Fund. The Council’s
submission
covered three core policy initiatives aimed at regaining investment
momentum, creating jobs and stimulating economic growth. Broadly, these
were to fill skills and talent gaps; foster a culture of entrepreneurship
and build more robust collaboration between the university and private
sector.
November
Modern Manufacturing Strategy road maps
The Australian Investment Council made a
submission
to the Department of Industry, Science, Energy & Resources for its
consultation on Modern Manufacturing Strategy road maps. This followed an
announcement in the FY21 Federal Budget, where government outlined six
national manufacturing priorities of resources technology and critical
minerals processing, food and beverage, medical products, recycling and
clean energy, defence and space as part of its Modern Manufacturing
Strategy.
Exposure Draft Security Legislation Amendment (Critical Infrastructure)
Bill 2020
Reiterating the concerns raised directly with the Department of Home
Affairs and Treasury, the Council made a
submission
regarding the impacts of the proposed legislative changes on the private
capital industry, including via legislation relating to the Foreign
Investment Review Board.
December
Further submission to Inquiry into Financial Technology and Regulatory
Technology
The Council has made a further
submission
to the Senate Select Committee on FinTech and RegTech. The Council’s
submission makes 13 recommendations across tax issues, R&D, CIVs, Data
Security and, Skills and Talent.
Future events
Your Future, Your Super
Following engaging directly with various Ministers and government
departments, including authoring a letter to the Treasurer, the Council
will respond to the formal consultation on the Your Future, Your Super draft legislation. Submissions are due 24
December 2020 with further industry engagement expected in 2021.
Pre-Budget Submission
The Federal Government has called for pre-budget submission by the end of
January 2021. This provides an additional opportunity for the private
capital industry to put forward productive policy initiatives to drive job
and business growth.
Research and Knowledge Sharing
October
Webinar: AustCyber – Investing in Australian Cyber Security – Why it’s
important for Building Digital Trust
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.
November
University of Sydney collaboration
The Council and the University of Sydney have completed a collaboration
with a group of Master of Management students to explore the implications
of enduring changes to consumer behaviour as a result of the COVID-19
pandemic. The project’s report, COVID-19 and the New Normal: Life Beyond the Pandemic, is
available from our
research staff
.
Webinar:
US Presidential Election: Implications for Private Capital
Joe Hockey and Steve Okun
discuss the outcome of the 2020 US Presidential Election and its
implications for Australia’s private capital industry
Webinar:
ESG Policy Standards and Guidance Workshop
Steve Okun
explores how boutique and mid-market members can develop their own in-house
ESG policies.
December
Webinar: Cambridge Associated – Private Investment Amid Times of Crisis
Cambridge Associates webinar, Private Investments Amid Times of Crisis
and the associated article,
Australian Private Equity and Venture Capital: 'A Portfolio Vaccine
Amid Early Days of the Global Pandemic
Benchmark Report – Q2, 2020
In association with Cambridge Associates, the AIC released the
Q2 2020 Australia 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 are restricted to members that contribute
directly to the reports. If you currently do not have but would like access
to these reports please contact Council’s research team.
An article by Cambridge Associates, diving deeper into the implications for
private capital industry and providing a comparison against other developed
economies and relevant indices will be released later this week.
Webinar:
VC ESG Policy Standards and Guidance Workshop
Steve Okun
again explores ESG policies, this time focusing on how VC members can
develop their own in-house ESG policies.
Future events
Benchmark Report – Q3 2020
The Q3 2020 Cambridge Associates benchmark reports are expected to be
released in February 2021.
Knowledge Series
The Australian Investment Council will continue to provide a range of
interesting and informative knowledge series events in 2021. These are
likely to include:
- Global Economic Update
- ESG Policy Series
- Greenhouse Gas Emissions Survey Outcomes
- Regulatory update
- Exit Strategies for Fund Managers
- Political Update
Keep an eye out for your invitation or contact [email protected].
Other Government announcements
September
Changes to Australia’s insolvency framework
The government announced major reforms to Australia’s insolvency framework
which will be enacted from 1 January 2021. This follows the government’s
announcements earlier in the year to offer relief to small businesses
facing financial stress due to COVID-19.
While the reforms focus on small business, there may be implications for
some private capital members, particularly private credit, in areas of debt
restructuring and distressed debt investing.
The package of reforms features three key elements:
1. A new formal debt restructuring process for small businesses (based on
Chapter 11 in the US) to provide a faster and less complex mechanism for
financially distressed but viable firms to restructure their existing
debts, maximising the chance of them surviving and contributing to economic
and jobs growth.
2. A new, simplified liquidation pathway for small businesses to allow
faster and lower-cost liquidation, increasing returns for creditors and
employees.
3. Complementary measures to ensure the insolvency sector can respond
effectively both in the short and long term to increased demand and to the
needs of small business.
October
New Payment Times Reporting Scheme
The Department of Industry, Science, Energy and Resources announced a new
reporting scheme for large businesses and large government enterprises to
report their small business payment terms and times. The Australian
Government will publish the reports twice a year on a public register. The
Payment Times Reporting Scheme will start on 1 January 2021. The scheme
will:
- increase transparency around large business’ payment performance;
- help small businesses decide who to do business with;
- create incentives for improved payment times and practices; and
- help the general public make decisions about the large businesses they
buy from.
Further information is available via
www.industry.gov.au
under Payment Times Reporting and
[email protected].
November
ASIC: Derivative Transaction Rules
ASIC released its first consultation paper on proposals to update the ASIC Derivative Transaction Rules (Reporting)
2013 (see
ASIC Consultation Paper 334
for the consultation materials and
Upcoming Rules and Exemptions changes
for information about the overall consultation program).
ASIC is open to discussions and direct engagement with interested
stakeholders, which may be on a one-on-one or sectoral/association basis or
otherwise. If you would like to contact ASIC on this matter please write to [email protected]. If there are
industry matter you would like to raise, please write to our research team
at [email protected].
ASIC: Managing conduct risk during LIBOR transition
ASIC has published Information Sheet 252: Managing conduct risk during
LIBOR transition (INFO 252) on practical guidance that both buy-side and
sell-side entities can adopt to manage conduct risk during LIBOR
transition.
Further information is available via:
INFO 252: Managing conduct risk during LIBOR transition
and
20-304MR ASIC issues information sheet on managing conduct risk during
LIBOR transition
December
Changes to Export Market Development Grants
Significant changes to the export market development grant scheme (EMDG)
were passed by the Senate in the final sitting days of Parliament for 2020.
These changes transform the program into a more traditional
entitlement-based grant scheme rather than the current ‘paid after the
fact’ model.
The legislation also tightens eligibility for the scheme, reducing the
annual turnover threshold from $50 million to $20 million, and introduces
three tiers of support covering eligible export promotion expenses for
Australian businesses. The changes come following a significant funding
increase for the EMDG, with more than $110 million provided to the scheme
in recent years.