El-Ansary Yasser

With today’s federal budget framed against the backdrop of an upcoming federal election campaign and a higher inflationary environment, the Australian Investment Council will be looking closely at how the Government plans to create a stronger economy that builds on the foundations of innovation, skills and talent, as well as trade and investment.

As the industry body for private capital investment, the Australian Investment Council would like to see initiatives included in the federal budget that accelerate our transition towards a more innovative and knowledge-based economy.

“The federal budget provides an opportunity to continue to build on the significant gains in technology and digitisation that have resulted from the lockdowns and challenges presented by the COVID-19 pandemic over the past two years,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“All Australian businesses need to build a strong digital capability to increase their productivity and competitiveness in both domestic and international markets.

“This includes upgrading the NBN from FTTC and HFC to FTTP to support the ‘working from home’ economy and providing incentives like a simpler direct additional tax credit to encourage Australian companies to re-tool through investment in software and other digital capabilities,” Mr El-Ansary said.

The Australian Investment Council put forward recommendations in a federal budget submission which focus on regenerating growth across every sector of the Australian economy through new jobs, faster innovation, increases in productivity, and growing the pipeline of inbound foreign and domestic investment capital.

“These are recommendations that will ultimately drive transformational changes that will re-calibrate Australia onto a path of higher wages for workers, rising living standards, and  new investment opportunities that help us to better compete with similar jurisdictions around the world,” Mr El-Ansary said.

Employee share schemes

For many years, the Council has advocated for an employee share scheme framework that is more competitive with other jurisdictions.

According to Mr El-Ansary: “More than ever, Australia is competing with other countries for talent and skills in the innovation ecosystem.  Employee share schemes can be an important component for attracting and retaining staff  for start-up companies who are often faced with limited resources during their early stages of development despite their potential to grow into large and sustainable businesses.”

Skills and talent

Addressing skills shortages are amongst key priorities for the private capital sector as companies in the innovation economy are faced with skills and labour shortages which are needed to underpin their future growth.

“Australia’s economy relies on a dependable and steady flow of non-citizen skilled migrants, tourists and students to drive economic growth, consumer spending, and job creation, so it is critical that visas and skills lists focus on expediting immigration that will fill skills and jobs gaps where they are most needed.

“Introducing visas for foreign students who graduate from Australian universities in disciplines where there are skills shortages and which allow them to stay and work in Australia, would make a meaningful contribution to the development of Australia’s post-pandemic knowledge-based economy,” Mr El-Ansary said.

Supporting manufacturing in Australia

“The Council supports government’s focus on advanced manufacturing in industries where we already are, or could be, world leaders and ‘going narrow and deep’ in developing them further,” Mr El-Ansary said.

“It is vitally important for our economic recovery and Australian jobs that our manufacturing capability can effectively and confidently grow and attract investment for the future. It is an important step towards supporting the rebuilding of business activity across the Australian economy and in sending a global message that Australia is open for business.”

The Australian Investment Council will be participating in tomorrow’s federal budget lock-up in Canberra on behalf of the private capital industry.

Read the Council’s 2022-23 Pre-Budget submission.

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Yasser El-Ansary

Restoring borders to pre-pandemic settings and maintaining a flow of migration to fill jobs and skills gaps are among recommendations in the Australian Investment Council’s 2022-23 Pre-Budget submission.

“Australia’s economy relies on a dependable and steady flow of non-citizen skilled migrants, tourists and students to drive economic growth, consumer spending and job creation so it is critical that visas and skills lists focus on expediting immigration that will fill skills and jobs gaps where they are most needed,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council. 

“Introducing visas for foreign students who graduate from Australian universities in disciplines where there are skills shortages and which allow them to stay and work in Australia, would make a meaningful contribution to the development of Australia’s post-pandemic knowledge-based economy,” Mr El-Ansary said.

Growing digital capability is another policy priority in the Council’s submission.

 “All Australian businesses need to build a strong digital capability to increase their productivity and competitiveness in both domestic and international markets. We are recommending a simpler direct additional tax credit is introduced to enable Australian companies to retool through investment in software and other digital capabilities,” Mr El-Ansary said.

Recommendations put forward in the Australian Investment Council’s submission focus on regenerating growth across every sector of the Australian economy through creating jobs, driving innovation, increasing productivity and maintaining a stable flow of foreign and domestic investment capital.

Key recommendations in the Council’s submission are outlined below.

Ensure a stable future economy

• Maintain housing pricing growth that is sustainable and in line with real wages growth.
• Assist first home owners bridge the funding gap on their first home deposits.
• Work with State Governments to identify impediments to new housing creation and on targeted programs which don’t place additional pressure on existing housing prices.

Keep borders open

• Consider the flow of non-citizen skilled migrants, tourists and students as critical to Australia’s economic recovery and take steps to restore Australia’s border controls to pre-pandemic settings as soon as possible.
• Extend visas for foreign students who graduate from Australian universities in disciplines where there are skills shortages, allowing them to stay and work in Australia to build a pipeline for a new, knowledge-based economy.

Grow digital capability

• Introduce a simpler direct additional tax credit to enable Australian companies to retool by investing in software and other digital capabilities.
• Support the working from home economy through investment into further NBN upgrading of premises from FTTC and HFC to FTTN.

Support innovation

• Introduce matching grants for R&D to boost innovation and growth.
• Implement a ’gold standard’ patent box to support the innovation economy.
• Continue to work with industry and government to develop closer collaboration between industry and universities to accelerate research commercialisation.
• Fast-track the commitment outlined in the Statement of Principles for Australian Innovation Precincts, Report recommendations to create a future where innovation precincts are an integral part of the broader national innovation system by 2030.

Maintain a steady flow of investment capital

• Fast-track the implementation of the new Limited Partnership Collective Investment Vehicle regime as the main outstanding component of a globally competitive fund vehicle regime.
• Consider recommendations for the improvement of the operation of the Foreign Investment Review Board approval regime to enhance decision turn-around times.
• improve existing VCLP and ESVCLP vehicles – The Council recommends the technical and interpretative issues in the ESVCLP and VCLP regimes be adopted and implemented as a priority.
• Work with industry to reduce the uncertainties in the tax treatment of private capital investment into Australian businesses.

Remove tax inefficiencies

• Consider further reductions to the Australian corporate and individual tax rates in line with global trends and in order to attract talent to Australia.
• Work with State and Territory governments to remove inefficient taxes such as payroll tax and stamp duty.

Build better retirement outcomes

• Provide ASIC with a mandate to conduct a post implementation review of the RG97 regime to enable any market-facing issues to be identified and resolved.

Work towards Net-Zero

• Reduce red tape for businesses investing in new technologies to support the transition to clean energy.
• support clean energy initiatives for businesses and households.

Secure supply chains

• Continue to invest into national infrastructure to reduce bottlenecks and ensure goods can flow through domestic ports, rail and road networks safely, quickly and efficiently.
• Fast-track digital transformation to gain more visibility over supply chain data.
• Invest in Australian manufacturing and component sourcing capability in essential products which may be susceptible to global supply chain disruption.

Protect the economy

• Consider a tax credit or instant asset write-off for expenditure on enhancing cyber-security capability.

Preparing for future pandemics and disruption

• Create a new Commonwealth agency to specifically deal with future human biohazards, similar to the US Centre for Diseases Control and Prevention, to provide a uniform approach across the country, and to provide national tracking and tracing capability for infections.
• Build additional, dedicated quarantine facilities in close proximity to all major international airports and health facilities to deal with any future variants of COVID19 or any other infectious diseases that may emerge in the future.

Read the full submission. 

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Yasser El-Ansary

The release of latest economic data confirming that Australia is now officially in a COVID-19 induced economic recession should serve as an important catalyst to roll-out a comprehensive growth plan to turn things around in the coming months and years, according to the Australian Investment Council.

“As we rebound out of the COVID-19 downturn, we must ensure that the economic recovery is underwritten by big gains in innovation and technology to drive increased productivity. To make that happen, we have to boost our global competitive standing and attract new domestic and offshore investment capital to our market,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“The Federal Government must continue to work with all States and Territories through the National Cabinet to support the business sector in regaining the economic momentum that has been lost through the impact of the global pandemic. Now is the right time for all jurisdictions to work together to rebuild Australia’s strong economic foundations.

“There is hard work that needs to be done in areas such as taxation reform, market deregulation and red tape, industrial relations, as well as innovation and technology, and infrastructure investment.

“Our members tell us every day that their businesses stand ready to do the heavy lifting on creating new economic activity and new jobs, but key policy frameworks across the economy must be strengthened in order to unlock the unique ‘first-mover’ opportunity that Australia has in its grips right now.

“COVID-19 lockdowns have demonstrated the importance of investment in technology that enables Australian businesses to innovate and lift their productivity through digital go-to-market channels across every sector of the market. We have to double-down our investment in technology now, and recognise that technology will play a critically important role in our economic recovery over the months and years ahead,” said Mr El-Ansary.

He added that a stronger technology capability would represent a significant new building block in designing a future-proof Australia that generates sustainable economic and incomes growth for all, and positions our market with a competitive edge against other developed economies around the world.

In June 2020 the Australian Investment Council released a comprehensive plan outlining the views of private capital investment leaders about the priority policy reforms necessary to guide the economy back to growth. Roadmap to Recovery – Creating a Stronger and More Dynamic Economy sets out priorities which span a mixture of short-term and longer-term reforms that will underwrite the next wave of economic growth.

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Yasser El-Ansary

The Australian Investment Council has called on the government to permanently increase JobSeeker and other income support payments to allow recipients to cover their day-to-day needs.

The Council has made this request alongside the Business Council of Australia, the Council of Small Business Organisations of Australia, Australian Industry Group and the Australian Small Business and Family Enterprise Ombudsman.

“We are living in extraordinary times where 824,000 people have lost their jobs due to the COVID-19 pandemic and 1.6 million people now receiving unemployment payments,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“In the months ahead, more Australians will need financial assistance to cover their basic needs as the flow-on effects of the pandemic filter through the economy.

“We know that low-income households have been supporting the economy in recent months so cutting income support back to $40 a day would have devastating consequences for those people and the economy. To boost employment, we must ensure everyone has enough to cover the basics like food, housing and transport.

“The best advice in front of us suggests that the impact of COVID-19 will continue for some time, and that means that the Government should be prepared to put in place a series of further economic responses that cover short, medium and long-term strategies to support the domestic economy as events unfold.

“A permanent, adequate increase to Jobseeker, Youth Allowance and other income support payments is essential to support Australians and the economy, especially during these times,” Mr El-Ansary said.

He added that more should be done over the period ahead to ensure that businesses continue to invest in areas such as innovation and growth, which we know from past economic downturns is a vital ingredient in enabling the domestic economy to swing back into full momentum quickly once the immediate health crisis subsides.

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Yasser El-Ansary

The government’s announcement today that it will establish a targeted regime aimed at attracting skilled migrants and entrepreneurs from Hong Kong will provide a critical boost to bridging the talent gap in Australia’s fast growth companies, according to the Australian Investment Council.

“Australia currently has skills and talent gaps that need to be filled as a priority to help accelerate our economic recovery,” said Yasser El-Ansary, chief executive of the Australian Investment Council.

“In the private capital sector specifically, talent and skills gaps exist in a multitude of areas such as C-suite leadership roles, as well as technical and specialist roles in engineering, medical research and product management.

‘’The government’s announcement today of a new regime to attract entrepreneurs and skills from Hong Kong and to extend visas for completing tertiary education courses in Australia is a positive step towards developing the skills we require for the long-term,” Mr El-Ansary said.

The Australian Investment Council is engaging with government on the need for this type of targeted talent acquisition initiative to be rolled out across other jurisdictions, in parallel with encouraging Australians skilled in technology and innovation ecosystems who are currently based overseas, to return home.

Mr El-Ansary added: “To be internationally competitive, Australian businesses need access to the world’s best talent. Where local companies cannot access the necessary talent, they can be forced to relocate overseas, taking with them jobs and revenue.

“Australia has an opportunity to emerge from the COVID-19 pandemic as a more competitive nation in the global marketplace.”

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Yasser El-Ansary

Australia’s $33 billion private capital industry ranks tax reform as the number one priority to reignite Australia’s economy in the months and years ahead, according to a new report released by the Australian Investment Council.

The Council conducted a comprehensive member survey in May 2020 to acquire insights into the impact of the COVID-19 pandemic on private capital investments across the economy, and to identify the key policy priorities considered essential to Australia’s economic recovery and the outlook for growth.

The outcomes of the member insights survey form the basis for the Council’s policy statement – Roadmap to Recovery: Creating a Stronger and More Dynamic Economy. The report identifies seven key reform policy priorities spanning taxation, industrial relations, market deregulation, international competitiveness and innovation, technology and skills, and superannuation.

“Australia’s taxation system has been the subject of numerous reviews over the past decade with many of the most significant recommendations set out in the reviews remaining relevant today,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“A more competitive taxation system that rebalances the mix between direct and indirect taxes, and which is less reliant on corporate and personal tax revenue is essential for our nation’s future prosperity,” he said.

International competitiveness was also high on the list of priority reforms for the Council’s members.

Mr El-Ansary also said: “Australia has an opportunity to emerge from the COVID-19 pandemic as a more competitive nation in the global marketplace.

“One of the key drivers of our success will be to focus on industries where we already are, or could be, world leaders and going narrow and deep in developing them further. These industries should be underpinned by enabling technology to help propel the productivity gains and lift in competitiveness we need to see.”

“As part of the ‘first-mover’ group of nations emerging from the crisis, there is a unique opportunity to reshape Australia’s economy for the future by implementing a visionary plan which serves as the foundation for the next phase of prosperity and growth for our nation.

“Private capital can play a central role as an important investment and efficiency driver for Australian industries and businesses and in lifting business productivity, competitiveness and growth as part of the national effort to re-start activity across our economy,” Mr El-Ansary said.

Please find attached our Roadmap to Recovery: Creating a stronger and more dynamic economy policy statement which is the outcome of a comprehensive member survey conducted by the Australian Investment Council in recent weeks to gain insights into the impact of the COVID-19 pandemic on the private capital industry and the policy priorities essential to Australia’s economic recovery and future growth.

This latest report from the Council brings together the collective insights of our members from the survey, coupled with our extensive body of research and advocacy work compiled from the industry over many years. The policy statement identifies seven key reform priorities that the industry believes will create the most significant opportunities for the growth of businesses and employment over the short, medium and longer-term.

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Yasser El-Ansary

The size of the economic and social challenges that lie ahead should form the basis for a broad-ranging policy summit to develop the nation’s roadmap to recovery, the Australian Investment Council said yesterday.

“As the impact of COVID-19 on all Australian businesses and all Australian workers has been significant and unlike anything we have ever seen before, the approach that we take to navigating our way out of the COVID-19 crisis will be critically important to the speed and sustainability of our economic rebound. Ensuring that all corners of our business and social services sectors share ideas and contribute to the development of the nation’s economic recovery plan is vitally important,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“The government’s strategy of taking a measured approach to getting things back to normal so that all Australians can resume work in COVID-safe environments in the period ahead is absolutely the right way forward.

“All sectors of the economy have been impacted by unique domestic and global factors that will make the recovery phase out of this pandemic highly complex – a one size fits all approach to re-building our economy simply won’t work.

“The Treasurer’s speech to the National Press Club this week reminded us all of the size of the task at hand in turning our economy around and re-gaining the momentum that has been lost as a result of widespread shutdowns.

“There’s no doubt that the recovery phase ahead of us will represent an enormous undertaking for all Australians. But with the united support of our national political leaders, and all corners of our business and social services sectors, we can once again secure a strong economy that retains its place as a competitive global market and an attractive destination for domestic and international investment,” Mr El-Ansary said.

The Australian Investment Council calls on the National COVID-19 Coordination Commission to accurately assess the impact of the pandemic on demand and capacity, resourcing and labour, and supply chains across all sectors of the economy over the weeks ahead. That information should then be used as a foundation for a broad-ranging economic and social policy summit that brings together thought leaders, the business and social services sectors, along with policy makers from central agencies, to jointly develop a comprehensive plan for the nation’s economic recovery over the months and years ahead.

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Yasser El-Ansary

The Australian private capital industry reached a record $68 billion in assets under management (AUM) at June 2019, up from $60 billion the previous year, according to the Preqin & Australian Investment Council Yearbook 2020.

Significantly, Australia stands out as an appealing investment destination, with the private capital market continuing to display one of the most attractive risk/return profiles in the world, demonstrating its potential for long-term, stable returns for investors.

Private equity (PE) and venture capital (VC) also followed the trend for increased AUM in 2019, rising to a new record high of $33 billion, an increase of 16% on 2018.

PE deal activity was robust in the food and healthcare sectors, with consumer discretionary representing the largest share (52%) of aggregate buyout deal value in 2019, up from 11% in 2018, while healthcare accounted for 37%, a 30% increase on the prior year. Buyout deals involving Healthscope, Navitas and Arnott’s Biscuits Limited headlined the volume of activity in these sectors.

Meanwhile, VC funds raised a total of $632 million for investment in Australia which represents the second-highest annual total in the past decade. The IT sector continued to dominate in terms of aggregate venture capital deal value (51%) and number of transactions (59%).

“The industry is well-placed to withstand the ongoing disruptions arising from COVID-19, with dry powder levels for private equity and venture capital now totalling $13 billion. Current investments in healthcare, technology and agriculture, are likely to respond well in the post-COVID-19 market rebound which will be vitally important to the nation’s overall economic recovery,” said Australian Investment Council Chief Executive, Yasser El-Ansary.

“The period ahead will present a unique opportunity for Australia to redesign its economy on the back of this current crisis. The role that private capital investment can play in structurally transforming industry sectors and driving new innovation, and at the same time accelerating productivity and business competitiveness, is very significant,” he added.

The Yearbook data confirms that in the decade to June 2019, the industry experienced a significant (119%) increase in combined Australian-focused private capital investment across the PE, VC, private debt, real estate, agriculture and infrastructure sectors.

“While at a macro level, Australia is recognised for its natural resources, private capital is going from strength to strength with some of the largest deals recorded in the healthcare and consumer discretionary sectors,” said Mark O’Hare, Chief Executive at Preqin. “The private equity and venture capital spaces have seen a significant uptick in activity, and investors are increasingly seeing Australia as a growth market with significant potential.

“Looking ahead, Australia is well-positioned to be at the forefront of the future of private capital. It is home to almost half of the APAC signatories to the UN’s ESG framework. Investors in the country are pursuing diverse and flexible investment strategies to take advantage of emerging sectors. The economy is fundamentally strong, and seems ideally placed to recover from the current volatility. With some of the largest institutional investors and pension funds in the world, Australia will be an exciting market to watch on the world stage.”

The Yearbook uses figures compiled by leading international alternative assets data provider Preqin, and looks at fundraising, investments and exits across the Australian private capital industry.

Key highlights

• Australian private equity and venture capital firms had a combined $33 billion in assets under management ($25 billion PE and $8 billion VC) as of June 2019
• The aggregate value of private equity-backed buyout deals in Australia in 2019 was $16 billion
• Public-to-private transactions accounted for 53% of total Australian buyout deal value in 2019
• Australia-focused PE AUM recorded a third consecutive year of growth reaching a new high of $25 billion at June 2019
• Australia-focused funds with 2010-2017 vintages, generated the highest median net IRR of 15.0% and lowest median risk at 7.7% standard deviation of net IRR compared to America which had the highest risk at 15.5% and a return of 13.2%
• 60% of Australian private debt-backed deals in 2019 focused on senior debt
• Superannuation funds represent the largest proportion (47%) of domestic investors in private capital
• 150 of Asia-Pacific’s 378 signatories to the UN Principles for Responsible Investment are located in Australia. Superannuation funds account for 60% of the 150 signatories.

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All currency units are in Australian dollars unless otherwise stated.

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Yasser El-Ansary

“The Federal Government’s economic stimulus plan outlined today will play a critically important role in dampening the most significant downside risks confronting the Australian economy right now,” according to Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“Delivering an immediate cash payment to social security recipients to help lift consumer spending straight away is the right policy approach to supporting business activity at the front-line of a number of the key sectors hit hardest by the impact of COVID-19,” added Mr El-Ansary.

“The expansion of the instant asset write-off and accelerated depreciation changes, along with cash payments to SMEs and wage subsidies for apprentices will also play an important role in incentivising businesses to get-on with things and invest in upgrades to plant and equipment, helping to drive economic activity in the short and medium-term.

“Australia’s tourism and education sectors have been significantly impacted by COVID-19, and the Government’s commitment to roll-out a $1BN regional assistance package is a positive for businesses struggling in those sectors.

“More should be done over the period ahead to ensure that businesses continue to invest in areas such as innovation and growth, which we know from past economic downturns is a vital ingredient in enabling the domestic economy to swing back into full momentum quickly once the immediate health crisis subsides,” Mr El-Ansary said.

Last week, the Australian Investment Council called on the Federal Government to abandon current plans to cut access to the world-class research and development investment program, to deliver a lift in the rate of the Newstart and other related allowances, and to work with industry to develop a strategy to position Australia as an attractive destination for offshore investment amidst the global uncertainty which exists right now.

“The best advice in front of us suggests that the impact of COVID-19 will continue for some time, and that means that the Government should be prepared to put in place a series of further economic responses that cover short, medium and long-term strategies to support the domestic economy as events unfold,” according to Mr El-Ansary.

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Yasser El-Ansary

The Federal Government should immediately move to abandon plans to tighten access to Australia’s world-class research and development investment program, boost consumer spending through an increase in the rate of Newstart and other related allowances, and put in place an active strategy to attract investment from offshore amidst the global economic challenges ahead of us, according to the Australian Investment Council.

“The Australian economy is facing some very significant risks on the back of a sustained downturn in consumer confidence and business investment, which will now be further exacerbated by the impact of COVID-19 domestically and globally,” said the Council’s Chief Executive, Yasser El-Ansary.

“Right now, the Government should be looking at all options to help maintain growth across the economy, which is critically important to minimising downside risks in relation to consumer spending, employment, productivity and investment in innovation.

“Introducing changes to Australia’s research and development investment program at this point in time would be wrong – given the situation we now find ourselves in, we should be moving the other way and incentivising our SME business market to expand their investment in R&D which will lead directly to productivity and employment growth^[1],” added Mr El-Ansary.

“The disruption facing many developed economies around the world creates a unique opportunity for Australia to position itself as a stable and attractive destination for offshore investors in the period ahead. Australia has an enviable track record of economic growth and policy stability, and Government should ensure that the upcoming economic stimulus package creates positive opportunities out of the challenges that are in front of us.

“We should be sending a signal to investors all of over the world that Australia is ‘open for business’, and that we will do everything possible to attract investment into our economy,” said Mr El-Ansary.

“The Australian Investment Council is also joining calls by other community and business groups around Australia to immediately deliver a rise in the rate of Newstart, Youth Allowance and other related payments to ensure greater social equality for the most vulnerable in our communities, and at the same time, deliver an immediate boost to consumer spending at a time when the economy needs it the most,” according to Mr El-Ansary.

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[1] The Government has put forward legislation to the Parliament to tighten access to the Research and Development Tax Incentive by introducing caps on access to refundable credits for smaller and more innovative businesses, and restricting access to the program for larger businesses. The changes, contained in Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019, are the subject of a new inquiry recently initiated by the Senate Economics Legislation Committee.

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