Explainer: Business innovation and investment visas reportedly slashed

The federal government has reportedly closed the Business Innovation and Investment Program (BIIP) to new applicants, shuttering a widely-used visa scheme as it attempts to rework Australia’s migration system. In an exclusive report, The Australian states the BIIP scheme has informally closed to fresh applicants. In doing so, the federal government has cut access to a program intended to welcome entrepreneurs and their business ideas into the Australian market. Here’s what business owners and prospective applicants should know about the change. What is the Business Innovation and Investment Program? Launched in 2012 by then-Minister for Immigration and Citizenship Chris Bowen, the BIIP was intended to lure successful entrepreneurs and investors into Australia. It is split into two broad categories: the Business Innovation Stream, and investor streams. The Business Innovation Stream was targeted at those with significant assets and plans to operate a new or existing business in Australia. “This is an important part of Australia’s skilled migration program because it targets migrants who have a demonstrated history of innovation and success in business,” Bowen said at the time. The Investor and Significant Investor streams were open to those who invest $2.5 million or $5 million in qualifying Australian investments, respectively. The BIIP arrived with more generous standards around the time applicants were required to spend in Australia and their English-language skills. These “concessions” on visa requirements came in recognition of the applicants’ “meaningful investment contribution,” Bowen said. BIIP applications have proven popular with prospective migrants. A 2023 review of the migration system, conducted by esteemed former public servant Martin Parkinson, found that 28% of visa applications in 2021-2022 came under the BIIP umbrella. Why has it been cut? The current Labor government has committed to an overhaul of the migration system, which it says has become increasingly complex, costly, and difficult to administrate over the past decade. Commissioning the Parkinson review was a major step in that process. It found the BIIP is underperforming in terms of economic benefits to Australia, compared to other migration streams focused on skilled and employee-sponsored workers. Primary migrants under BIIP make lower economic and fiscal contributions than the average Australian, the report added. Those figures are “reflecting an older cohort who earn lower incomes (mostly from capital returns) despite their relatively high wealth,” the review found. Additionally, investments made by migrants under the scheme were largely “invested passively or into low productivity businesses such as retail and food services”. Migrants participating in the Business Innovation Stream largely own and operate businesses in “lower productivity sectors”. The BIIP scheme, particularly the Significant Investor stream, also garnered the moniker of a ‘golden visa’, or an entryway into Australia for those with deep enough pockets. Was the decision unexpected? Not entirely. The former Morrison government reduced the BIIP scheme from 13,500 visas in the 2020-21 annual migration program to 9,500 in 2022-2023. Experts called for even greater scrutiny. “It should be abolished,” said migration expert and Grattan Institute fellow Henry Sherrell in April 2022. “Few investors are financing projects that would not otherwise occur.” The Australian Financial Review reported in April 2023 that the BIIP scheme was one of several under close scrutiny by the Department of Home Affairs. Extra signs came via the 2023-2024 federal budget, which saw the Labor government hike visa application charges for BIIP by 40%. Applicants also complained of delays to BIIP visa applications through subclass 888, leading to vocal protests on the streets of Melbourne and Sydney. While the BIIP scheme has reportedly closed to new applicants, the Department of Home Affairs website now posits wait times of up to 41 months. What is the response? Close observers are not treating the report as a total shock, and are looking forward to new developments in Australia’s immigration program targeted at entrepreneurs. Mark Wright, national leader of KPMG’s immigration team, said he predicted the end of the Significant Investor Program as early as September 2022. “The changing labour market landscape following the reopening of international borders, coupled with acute talent shortages meant that the government needed to adjust the migration program to meet the emerging needs of business and the wider economy,” Wright wrote on social media Monday morning. KPMG previously told the government’s Migration Strategy Review there was an opportunity to “reconsider the focus” of the BIIP “to better target offshore skills in critical areas such as manufacturing, energy transition, and cyber technology to leverage the attractiveness of Australia as a destination to build future-ready industries.” What comes now? The reported cuts come as the federal government tailors the immigration scheme to be more welcoming to skilled workers. This includes accelerated pathways to permanent residency for those under the Temporary Skill Shortage subclass 482 visa system. Simultaneously, the federal government wants to crack down on the misuse of student and graduate visas. Torrents of research show the entrepreneurial drive of migrants to Australia. The Australian Small Business and Family Enterprise Ombudsman research shows that 34% of small business owners were born outside of Australia, which is a greater proportion than the 29% of the general population who were born overseas. The federal government would be repurposing the visa spots cut from the BIIP could help drive more suitable outcomes for migrants — and the nation’s entrepreneurial landscape.