30
22 September 2016 BY ELECTRONIC SUBMISSION Department of Immigration and Border Protection Please find attached our submissions in response to the Discussion Paper: Policy Consultation Paper – Visa Simplification: Transforming Australia’s Visa System. We are pleased to provide these submissions to this review. If we can assist with policy development in this area in any other way, please do not hesitate to contact Simon Haag, Senior Associate (Government Relations) on direct line (02) 8224 8561 or by email to [email protected]. Yours faithfully Alex Paterson Teresa Liu Co-Managing Partner Co-Managing Partner Australia & New Zealand Australia & New Zealand MARN 1385851 MARN 9896488

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Page 1: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

22 September 2016

BY ELECTRONIC SUBMISSION

Department of Immigration and Border Protection

Please find attached our submissions in response to the Discussion Paper Policy Consultation Paper ndash Visa Simplification Transforming Australiarsquos Visa System

We are pleased to provide these submissions to this review If we can assist with policy development in this area in any other way please do not hesitate to contact Simon Haag Senior Associate (Government Relations) on direct line (02) 8224 8561 or by email to shaagfragomencom

Yours faithfully

Alex Paterson Teresa Liu Co-Managing Partner Co-Managing Partner Australia amp New Zealand Australia amp New Zealand MARN 1385851 MARN 9896488

Submission Response to the Policy Consultation Paper ndash Visa Simplification Transforming Australiarsquos Visa System

Presented to

Department of Immigration and Border Protection

OCTOBER 2016

Fragomen (Australia) Pty Ltd Fragomen Del Rey Bernsen amp Loewy LLP

Fragomen Global LLP wwwfragomencom

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 The Role of Migration in Attracting Talent 5

4 Simplification of Visa Infrastructure 7

5 Two Step Pathways to Permanent Residence 10

6 Proposed Framework 10

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgment of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Fragomen is well-placed to actively engage in policy development across all facets of the migration program We regularly provide submissions to the Department and the Australian Parliament in response to consultation papers discussion papers and senate committee enquiries Since the 2013 Senate Legal and Constitutional Affairs Committee inquiry into the framework and operation of subclass 457 visas Fragomen has been particularly engaged in successive reviews of the subclass 457 subclass 400 and temporary work and activity visa programs as well as specific policy settings such as the Temporary Skilled Migration Income Threshold and the introduction of labour market testing and training levy More broadly Fragomen contributes to ongoing thought leadership on migration policy through active involvement in the Committee for Economic Development of Australia (CEDA) the Trans-Tasman Business Council and the Law Council of Australia as well as forum discussions such as the 2015 Australian Financial Review Workforce Summit

14 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the simplification of Australiarsquos visa system as presented in the Policy consultation paper (lsquothe Paperrsquo) by the Department of Immigration and Border Protection (lsquothe Departmentrsquo)

22 In the consultation Paper the Department refers to Australiarsquos visa system as outdated and unnecessarily complex and expresses concerns as to its possible deterring effect to potential migrants1 Consideration of ways to modernize and simplify the migration program is timely and important to securing a pipeline of overseas talent in a cost effective and efficient manner We would also note that there are aspects of the current migration program that function effectively and are well-regarded at an international level We appreciate the sensible approach to the development of any reforms presented by the Department with a view to addressing concerns as to demand trends and management of an increasing case load without compromising either integrity or efficiency

23 We understand that one aspect of this review is reconsideration of where the components of the visa program sit between the Migration Act Migration Regulations and policy While we appreciate the complexities involved we stand ready to assist further in the development of a migration program which achieves a carefully crafted blend of law and policy with a focus on quality and consistency of decision-making through sound interpretation of law and consideration of facts within a given policy framework

24 Fragomen is supportive of both this consultation process and the current migration system which is generally regarded as having served Australia very well for a quarter of a century In our view the most effective starting point for this review is the identification of particularly complex areas of caseload management and processing that require simplification through innovations aimed at cost reduction and efficiency such as digitisation and automation

25 This submission will respond to a number of propositions raised by the Department to simplify Australiarsquos migration program framework including the role of migration in attracting talent to Australian shores the benefit of a simplified more streamlined visa system and application process as well as the development of a two-step pathway to permanent residency We then provide a response to the migration program framework proposed at the roundtables held in Sydney and Melbourne in August and September 2017

1 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2017 Policy Consultation Paper ‐Visa Simplification Transforming Australiarsquos Visa System httpwwwbordergovauTravvisa‐reformpolicy‐consultation‐paper

4

3 THE ROLE OF MIGRATION IN ATTRACTING TALENT

31 In this section we respond to the Departmentrsquos proposal to transform Australiarsquos visa system to support the status of Australia as a competitive and attractive destination for migrants2 We will look further into the role skilled migration plays in attracting the talent necessary to fill the gaps in innovation in some areas of the domestic labour market

32 Australia is an attractive destination for people seeking to work study holiday or permanently relocate Over the last 20 years Australiarsquos skilled migration programs have evolved from the recruitment of a broad spectrum of highly skilled workers with good prospects of successful settlement to a system that seeks to directly match prospective clients to specific skill shortages in the Australian labour market

33 Earlier reviews of Australiarsquos skilled migration programs have identified global migration as a ldquodefining phenomenon of the twenty-first centuryrdquo3 The global race for talent is becoming increasingly competitive as countries recognise the importance of and get smarter at recruiting the best and the brightest internationally Certainly these challenges to the continued supply of skilled migrants to Australia are coming from other traditional net-immigration countries such as Canada the United Kingdom and the United States as they reform and recalibrate their own skilled migration systems However a growing source of competition also arises from historically net-emigration countries

34 This second challenge presents itself in two ways Firstly as economies such as China and India develop and mature highly skilled individuals are increasingly less likely to seek emigration4 This narrows the flow of migration from countries that have historically been sources of skilled migration to Australia Secondly emerging economies including China are themselves developing their own skilled migration program This then diverts the stream of migrants that might otherwise flow to Australia instead flowing to the economic powerhouse of a massive and rapidly developing economy5 We are already seeing a significant increase in migration among Asian countries6 This gravitational pull also increases the permanent emigration of Australians seeking work and career opportunities abroad7 Put simply the accessibility and attractiveness of an increasing number of other immigrant-receiving countries will have a much greater effect on skilled migration to Australia over the coming decades

2 Ibid3 BirrellBHawthorne LandRichardsonS2006 Evaluation of the General Skilled Migration Categories Reportp128 httpwwwimmigovaumediapublicationsresearchgsm‐report

4 HugoG2008 lsquoTrendsinAsia thatwill InfluenceItsFuture asaSourceofSkilledMigrantsrsquoCANADIAN

DIVERSITY (6)34‐47WhiteMJ andSubediIlsquoTheDemographyofChinaand IndiaEffect onMigrationtoHigh‐IncomeCountriesthrough 2030rsquoinThe TransatlanticCouncil onMigration2009 Talent Competitiveness and Migration VerlagBertelsmannStiftung Gueterslohpp100ndash128atp104 5 lsquoAustraliarsquosbeacon statuswaningsayexpertsrsquoSpecialBroadcastingService13September2014httpwwwsbscomaunewsarticle20140912australias‐migration‐beacon‐status‐waning‐say‐experts6 HugoG2009 lsquoEmergingDemographicTrendsinAsiaandthePacificTheImplications for International MigrationrsquoinTheTransatlantic CouncilonMigration2009aboveatp61 7 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2014 The Outlook for Net Overseas Migration June 2014p7

5

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 2: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

Submission Response to the Policy Consultation Paper ndash Visa Simplification Transforming Australiarsquos Visa System

Presented to

Department of Immigration and Border Protection

OCTOBER 2016

Fragomen (Australia) Pty Ltd Fragomen Del Rey Bernsen amp Loewy LLP

Fragomen Global LLP wwwfragomencom

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 The Role of Migration in Attracting Talent 5

4 Simplification of Visa Infrastructure 7

5 Two Step Pathways to Permanent Residence 10

6 Proposed Framework 10

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgment of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Fragomen is well-placed to actively engage in policy development across all facets of the migration program We regularly provide submissions to the Department and the Australian Parliament in response to consultation papers discussion papers and senate committee enquiries Since the 2013 Senate Legal and Constitutional Affairs Committee inquiry into the framework and operation of subclass 457 visas Fragomen has been particularly engaged in successive reviews of the subclass 457 subclass 400 and temporary work and activity visa programs as well as specific policy settings such as the Temporary Skilled Migration Income Threshold and the introduction of labour market testing and training levy More broadly Fragomen contributes to ongoing thought leadership on migration policy through active involvement in the Committee for Economic Development of Australia (CEDA) the Trans-Tasman Business Council and the Law Council of Australia as well as forum discussions such as the 2015 Australian Financial Review Workforce Summit

14 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the simplification of Australiarsquos visa system as presented in the Policy consultation paper (lsquothe Paperrsquo) by the Department of Immigration and Border Protection (lsquothe Departmentrsquo)

22 In the consultation Paper the Department refers to Australiarsquos visa system as outdated and unnecessarily complex and expresses concerns as to its possible deterring effect to potential migrants1 Consideration of ways to modernize and simplify the migration program is timely and important to securing a pipeline of overseas talent in a cost effective and efficient manner We would also note that there are aspects of the current migration program that function effectively and are well-regarded at an international level We appreciate the sensible approach to the development of any reforms presented by the Department with a view to addressing concerns as to demand trends and management of an increasing case load without compromising either integrity or efficiency

23 We understand that one aspect of this review is reconsideration of where the components of the visa program sit between the Migration Act Migration Regulations and policy While we appreciate the complexities involved we stand ready to assist further in the development of a migration program which achieves a carefully crafted blend of law and policy with a focus on quality and consistency of decision-making through sound interpretation of law and consideration of facts within a given policy framework

24 Fragomen is supportive of both this consultation process and the current migration system which is generally regarded as having served Australia very well for a quarter of a century In our view the most effective starting point for this review is the identification of particularly complex areas of caseload management and processing that require simplification through innovations aimed at cost reduction and efficiency such as digitisation and automation

25 This submission will respond to a number of propositions raised by the Department to simplify Australiarsquos migration program framework including the role of migration in attracting talent to Australian shores the benefit of a simplified more streamlined visa system and application process as well as the development of a two-step pathway to permanent residency We then provide a response to the migration program framework proposed at the roundtables held in Sydney and Melbourne in August and September 2017

1 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2017 Policy Consultation Paper ‐Visa Simplification Transforming Australiarsquos Visa System httpwwwbordergovauTravvisa‐reformpolicy‐consultation‐paper

4

3 THE ROLE OF MIGRATION IN ATTRACTING TALENT

31 In this section we respond to the Departmentrsquos proposal to transform Australiarsquos visa system to support the status of Australia as a competitive and attractive destination for migrants2 We will look further into the role skilled migration plays in attracting the talent necessary to fill the gaps in innovation in some areas of the domestic labour market

32 Australia is an attractive destination for people seeking to work study holiday or permanently relocate Over the last 20 years Australiarsquos skilled migration programs have evolved from the recruitment of a broad spectrum of highly skilled workers with good prospects of successful settlement to a system that seeks to directly match prospective clients to specific skill shortages in the Australian labour market

33 Earlier reviews of Australiarsquos skilled migration programs have identified global migration as a ldquodefining phenomenon of the twenty-first centuryrdquo3 The global race for talent is becoming increasingly competitive as countries recognise the importance of and get smarter at recruiting the best and the brightest internationally Certainly these challenges to the continued supply of skilled migrants to Australia are coming from other traditional net-immigration countries such as Canada the United Kingdom and the United States as they reform and recalibrate their own skilled migration systems However a growing source of competition also arises from historically net-emigration countries

34 This second challenge presents itself in two ways Firstly as economies such as China and India develop and mature highly skilled individuals are increasingly less likely to seek emigration4 This narrows the flow of migration from countries that have historically been sources of skilled migration to Australia Secondly emerging economies including China are themselves developing their own skilled migration program This then diverts the stream of migrants that might otherwise flow to Australia instead flowing to the economic powerhouse of a massive and rapidly developing economy5 We are already seeing a significant increase in migration among Asian countries6 This gravitational pull also increases the permanent emigration of Australians seeking work and career opportunities abroad7 Put simply the accessibility and attractiveness of an increasing number of other immigrant-receiving countries will have a much greater effect on skilled migration to Australia over the coming decades

2 Ibid3 BirrellBHawthorne LandRichardsonS2006 Evaluation of the General Skilled Migration Categories Reportp128 httpwwwimmigovaumediapublicationsresearchgsm‐report

4 HugoG2008 lsquoTrendsinAsia thatwill InfluenceItsFuture asaSourceofSkilledMigrantsrsquoCANADIAN

DIVERSITY (6)34‐47WhiteMJ andSubediIlsquoTheDemographyofChinaand IndiaEffect onMigrationtoHigh‐IncomeCountriesthrough 2030rsquoinThe TransatlanticCouncil onMigration2009 Talent Competitiveness and Migration VerlagBertelsmannStiftung Gueterslohpp100ndash128atp104 5 lsquoAustraliarsquosbeacon statuswaningsayexpertsrsquoSpecialBroadcastingService13September2014httpwwwsbscomaunewsarticle20140912australias‐migration‐beacon‐status‐waning‐say‐experts6 HugoG2009 lsquoEmergingDemographicTrendsinAsiaandthePacificTheImplications for International MigrationrsquoinTheTransatlantic CouncilonMigration2009aboveatp61 7 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2014 The Outlook for Net Overseas Migration June 2014p7

5

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 3: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 The Role of Migration in Attracting Talent 5

4 Simplification of Visa Infrastructure 7

5 Two Step Pathways to Permanent Residence 10

6 Proposed Framework 10

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgment of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Fragomen is well-placed to actively engage in policy development across all facets of the migration program We regularly provide submissions to the Department and the Australian Parliament in response to consultation papers discussion papers and senate committee enquiries Since the 2013 Senate Legal and Constitutional Affairs Committee inquiry into the framework and operation of subclass 457 visas Fragomen has been particularly engaged in successive reviews of the subclass 457 subclass 400 and temporary work and activity visa programs as well as specific policy settings such as the Temporary Skilled Migration Income Threshold and the introduction of labour market testing and training levy More broadly Fragomen contributes to ongoing thought leadership on migration policy through active involvement in the Committee for Economic Development of Australia (CEDA) the Trans-Tasman Business Council and the Law Council of Australia as well as forum discussions such as the 2015 Australian Financial Review Workforce Summit

14 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the simplification of Australiarsquos visa system as presented in the Policy consultation paper (lsquothe Paperrsquo) by the Department of Immigration and Border Protection (lsquothe Departmentrsquo)

22 In the consultation Paper the Department refers to Australiarsquos visa system as outdated and unnecessarily complex and expresses concerns as to its possible deterring effect to potential migrants1 Consideration of ways to modernize and simplify the migration program is timely and important to securing a pipeline of overseas talent in a cost effective and efficient manner We would also note that there are aspects of the current migration program that function effectively and are well-regarded at an international level We appreciate the sensible approach to the development of any reforms presented by the Department with a view to addressing concerns as to demand trends and management of an increasing case load without compromising either integrity or efficiency

23 We understand that one aspect of this review is reconsideration of where the components of the visa program sit between the Migration Act Migration Regulations and policy While we appreciate the complexities involved we stand ready to assist further in the development of a migration program which achieves a carefully crafted blend of law and policy with a focus on quality and consistency of decision-making through sound interpretation of law and consideration of facts within a given policy framework

24 Fragomen is supportive of both this consultation process and the current migration system which is generally regarded as having served Australia very well for a quarter of a century In our view the most effective starting point for this review is the identification of particularly complex areas of caseload management and processing that require simplification through innovations aimed at cost reduction and efficiency such as digitisation and automation

25 This submission will respond to a number of propositions raised by the Department to simplify Australiarsquos migration program framework including the role of migration in attracting talent to Australian shores the benefit of a simplified more streamlined visa system and application process as well as the development of a two-step pathway to permanent residency We then provide a response to the migration program framework proposed at the roundtables held in Sydney and Melbourne in August and September 2017

1 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2017 Policy Consultation Paper ‐Visa Simplification Transforming Australiarsquos Visa System httpwwwbordergovauTravvisa‐reformpolicy‐consultation‐paper

4

3 THE ROLE OF MIGRATION IN ATTRACTING TALENT

31 In this section we respond to the Departmentrsquos proposal to transform Australiarsquos visa system to support the status of Australia as a competitive and attractive destination for migrants2 We will look further into the role skilled migration plays in attracting the talent necessary to fill the gaps in innovation in some areas of the domestic labour market

32 Australia is an attractive destination for people seeking to work study holiday or permanently relocate Over the last 20 years Australiarsquos skilled migration programs have evolved from the recruitment of a broad spectrum of highly skilled workers with good prospects of successful settlement to a system that seeks to directly match prospective clients to specific skill shortages in the Australian labour market

33 Earlier reviews of Australiarsquos skilled migration programs have identified global migration as a ldquodefining phenomenon of the twenty-first centuryrdquo3 The global race for talent is becoming increasingly competitive as countries recognise the importance of and get smarter at recruiting the best and the brightest internationally Certainly these challenges to the continued supply of skilled migrants to Australia are coming from other traditional net-immigration countries such as Canada the United Kingdom and the United States as they reform and recalibrate their own skilled migration systems However a growing source of competition also arises from historically net-emigration countries

34 This second challenge presents itself in two ways Firstly as economies such as China and India develop and mature highly skilled individuals are increasingly less likely to seek emigration4 This narrows the flow of migration from countries that have historically been sources of skilled migration to Australia Secondly emerging economies including China are themselves developing their own skilled migration program This then diverts the stream of migrants that might otherwise flow to Australia instead flowing to the economic powerhouse of a massive and rapidly developing economy5 We are already seeing a significant increase in migration among Asian countries6 This gravitational pull also increases the permanent emigration of Australians seeking work and career opportunities abroad7 Put simply the accessibility and attractiveness of an increasing number of other immigrant-receiving countries will have a much greater effect on skilled migration to Australia over the coming decades

2 Ibid3 BirrellBHawthorne LandRichardsonS2006 Evaluation of the General Skilled Migration Categories Reportp128 httpwwwimmigovaumediapublicationsresearchgsm‐report

4 HugoG2008 lsquoTrendsinAsia thatwill InfluenceItsFuture asaSourceofSkilledMigrantsrsquoCANADIAN

DIVERSITY (6)34‐47WhiteMJ andSubediIlsquoTheDemographyofChinaand IndiaEffect onMigrationtoHigh‐IncomeCountriesthrough 2030rsquoinThe TransatlanticCouncil onMigration2009 Talent Competitiveness and Migration VerlagBertelsmannStiftung Gueterslohpp100ndash128atp104 5 lsquoAustraliarsquosbeacon statuswaningsayexpertsrsquoSpecialBroadcastingService13September2014httpwwwsbscomaunewsarticle20140912australias‐migration‐beacon‐status‐waning‐say‐experts6 HugoG2009 lsquoEmergingDemographicTrendsinAsiaandthePacificTheImplications for International MigrationrsquoinTheTransatlantic CouncilonMigration2009aboveatp61 7 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2014 The Outlook for Net Overseas Migration June 2014p7

5

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 4: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgment of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Fragomen is well-placed to actively engage in policy development across all facets of the migration program We regularly provide submissions to the Department and the Australian Parliament in response to consultation papers discussion papers and senate committee enquiries Since the 2013 Senate Legal and Constitutional Affairs Committee inquiry into the framework and operation of subclass 457 visas Fragomen has been particularly engaged in successive reviews of the subclass 457 subclass 400 and temporary work and activity visa programs as well as specific policy settings such as the Temporary Skilled Migration Income Threshold and the introduction of labour market testing and training levy More broadly Fragomen contributes to ongoing thought leadership on migration policy through active involvement in the Committee for Economic Development of Australia (CEDA) the Trans-Tasman Business Council and the Law Council of Australia as well as forum discussions such as the 2015 Australian Financial Review Workforce Summit

14 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the simplification of Australiarsquos visa system as presented in the Policy consultation paper (lsquothe Paperrsquo) by the Department of Immigration and Border Protection (lsquothe Departmentrsquo)

22 In the consultation Paper the Department refers to Australiarsquos visa system as outdated and unnecessarily complex and expresses concerns as to its possible deterring effect to potential migrants1 Consideration of ways to modernize and simplify the migration program is timely and important to securing a pipeline of overseas talent in a cost effective and efficient manner We would also note that there are aspects of the current migration program that function effectively and are well-regarded at an international level We appreciate the sensible approach to the development of any reforms presented by the Department with a view to addressing concerns as to demand trends and management of an increasing case load without compromising either integrity or efficiency

23 We understand that one aspect of this review is reconsideration of where the components of the visa program sit between the Migration Act Migration Regulations and policy While we appreciate the complexities involved we stand ready to assist further in the development of a migration program which achieves a carefully crafted blend of law and policy with a focus on quality and consistency of decision-making through sound interpretation of law and consideration of facts within a given policy framework

24 Fragomen is supportive of both this consultation process and the current migration system which is generally regarded as having served Australia very well for a quarter of a century In our view the most effective starting point for this review is the identification of particularly complex areas of caseload management and processing that require simplification through innovations aimed at cost reduction and efficiency such as digitisation and automation

25 This submission will respond to a number of propositions raised by the Department to simplify Australiarsquos migration program framework including the role of migration in attracting talent to Australian shores the benefit of a simplified more streamlined visa system and application process as well as the development of a two-step pathway to permanent residency We then provide a response to the migration program framework proposed at the roundtables held in Sydney and Melbourne in August and September 2017

1 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2017 Policy Consultation Paper ‐Visa Simplification Transforming Australiarsquos Visa System httpwwwbordergovauTravvisa‐reformpolicy‐consultation‐paper

4

3 THE ROLE OF MIGRATION IN ATTRACTING TALENT

31 In this section we respond to the Departmentrsquos proposal to transform Australiarsquos visa system to support the status of Australia as a competitive and attractive destination for migrants2 We will look further into the role skilled migration plays in attracting the talent necessary to fill the gaps in innovation in some areas of the domestic labour market

32 Australia is an attractive destination for people seeking to work study holiday or permanently relocate Over the last 20 years Australiarsquos skilled migration programs have evolved from the recruitment of a broad spectrum of highly skilled workers with good prospects of successful settlement to a system that seeks to directly match prospective clients to specific skill shortages in the Australian labour market

33 Earlier reviews of Australiarsquos skilled migration programs have identified global migration as a ldquodefining phenomenon of the twenty-first centuryrdquo3 The global race for talent is becoming increasingly competitive as countries recognise the importance of and get smarter at recruiting the best and the brightest internationally Certainly these challenges to the continued supply of skilled migrants to Australia are coming from other traditional net-immigration countries such as Canada the United Kingdom and the United States as they reform and recalibrate their own skilled migration systems However a growing source of competition also arises from historically net-emigration countries

34 This second challenge presents itself in two ways Firstly as economies such as China and India develop and mature highly skilled individuals are increasingly less likely to seek emigration4 This narrows the flow of migration from countries that have historically been sources of skilled migration to Australia Secondly emerging economies including China are themselves developing their own skilled migration program This then diverts the stream of migrants that might otherwise flow to Australia instead flowing to the economic powerhouse of a massive and rapidly developing economy5 We are already seeing a significant increase in migration among Asian countries6 This gravitational pull also increases the permanent emigration of Australians seeking work and career opportunities abroad7 Put simply the accessibility and attractiveness of an increasing number of other immigrant-receiving countries will have a much greater effect on skilled migration to Australia over the coming decades

2 Ibid3 BirrellBHawthorne LandRichardsonS2006 Evaluation of the General Skilled Migration Categories Reportp128 httpwwwimmigovaumediapublicationsresearchgsm‐report

4 HugoG2008 lsquoTrendsinAsia thatwill InfluenceItsFuture asaSourceofSkilledMigrantsrsquoCANADIAN

DIVERSITY (6)34‐47WhiteMJ andSubediIlsquoTheDemographyofChinaand IndiaEffect onMigrationtoHigh‐IncomeCountriesthrough 2030rsquoinThe TransatlanticCouncil onMigration2009 Talent Competitiveness and Migration VerlagBertelsmannStiftung Gueterslohpp100ndash128atp104 5 lsquoAustraliarsquosbeacon statuswaningsayexpertsrsquoSpecialBroadcastingService13September2014httpwwwsbscomaunewsarticle20140912australias‐migration‐beacon‐status‐waning‐say‐experts6 HugoG2009 lsquoEmergingDemographicTrendsinAsiaandthePacificTheImplications for International MigrationrsquoinTheTransatlantic CouncilonMigration2009aboveatp61 7 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2014 The Outlook for Net Overseas Migration June 2014p7

5

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 5: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the simplification of Australiarsquos visa system as presented in the Policy consultation paper (lsquothe Paperrsquo) by the Department of Immigration and Border Protection (lsquothe Departmentrsquo)

22 In the consultation Paper the Department refers to Australiarsquos visa system as outdated and unnecessarily complex and expresses concerns as to its possible deterring effect to potential migrants1 Consideration of ways to modernize and simplify the migration program is timely and important to securing a pipeline of overseas talent in a cost effective and efficient manner We would also note that there are aspects of the current migration program that function effectively and are well-regarded at an international level We appreciate the sensible approach to the development of any reforms presented by the Department with a view to addressing concerns as to demand trends and management of an increasing case load without compromising either integrity or efficiency

23 We understand that one aspect of this review is reconsideration of where the components of the visa program sit between the Migration Act Migration Regulations and policy While we appreciate the complexities involved we stand ready to assist further in the development of a migration program which achieves a carefully crafted blend of law and policy with a focus on quality and consistency of decision-making through sound interpretation of law and consideration of facts within a given policy framework

24 Fragomen is supportive of both this consultation process and the current migration system which is generally regarded as having served Australia very well for a quarter of a century In our view the most effective starting point for this review is the identification of particularly complex areas of caseload management and processing that require simplification through innovations aimed at cost reduction and efficiency such as digitisation and automation

25 This submission will respond to a number of propositions raised by the Department to simplify Australiarsquos migration program framework including the role of migration in attracting talent to Australian shores the benefit of a simplified more streamlined visa system and application process as well as the development of a two-step pathway to permanent residency We then provide a response to the migration program framework proposed at the roundtables held in Sydney and Melbourne in August and September 2017

1 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2017 Policy Consultation Paper ‐Visa Simplification Transforming Australiarsquos Visa System httpwwwbordergovauTravvisa‐reformpolicy‐consultation‐paper

4

3 THE ROLE OF MIGRATION IN ATTRACTING TALENT

31 In this section we respond to the Departmentrsquos proposal to transform Australiarsquos visa system to support the status of Australia as a competitive and attractive destination for migrants2 We will look further into the role skilled migration plays in attracting the talent necessary to fill the gaps in innovation in some areas of the domestic labour market

32 Australia is an attractive destination for people seeking to work study holiday or permanently relocate Over the last 20 years Australiarsquos skilled migration programs have evolved from the recruitment of a broad spectrum of highly skilled workers with good prospects of successful settlement to a system that seeks to directly match prospective clients to specific skill shortages in the Australian labour market

33 Earlier reviews of Australiarsquos skilled migration programs have identified global migration as a ldquodefining phenomenon of the twenty-first centuryrdquo3 The global race for talent is becoming increasingly competitive as countries recognise the importance of and get smarter at recruiting the best and the brightest internationally Certainly these challenges to the continued supply of skilled migrants to Australia are coming from other traditional net-immigration countries such as Canada the United Kingdom and the United States as they reform and recalibrate their own skilled migration systems However a growing source of competition also arises from historically net-emigration countries

34 This second challenge presents itself in two ways Firstly as economies such as China and India develop and mature highly skilled individuals are increasingly less likely to seek emigration4 This narrows the flow of migration from countries that have historically been sources of skilled migration to Australia Secondly emerging economies including China are themselves developing their own skilled migration program This then diverts the stream of migrants that might otherwise flow to Australia instead flowing to the economic powerhouse of a massive and rapidly developing economy5 We are already seeing a significant increase in migration among Asian countries6 This gravitational pull also increases the permanent emigration of Australians seeking work and career opportunities abroad7 Put simply the accessibility and attractiveness of an increasing number of other immigrant-receiving countries will have a much greater effect on skilled migration to Australia over the coming decades

2 Ibid3 BirrellBHawthorne LandRichardsonS2006 Evaluation of the General Skilled Migration Categories Reportp128 httpwwwimmigovaumediapublicationsresearchgsm‐report

4 HugoG2008 lsquoTrendsinAsia thatwill InfluenceItsFuture asaSourceofSkilledMigrantsrsquoCANADIAN

DIVERSITY (6)34‐47WhiteMJ andSubediIlsquoTheDemographyofChinaand IndiaEffect onMigrationtoHigh‐IncomeCountriesthrough 2030rsquoinThe TransatlanticCouncil onMigration2009 Talent Competitiveness and Migration VerlagBertelsmannStiftung Gueterslohpp100ndash128atp104 5 lsquoAustraliarsquosbeacon statuswaningsayexpertsrsquoSpecialBroadcastingService13September2014httpwwwsbscomaunewsarticle20140912australias‐migration‐beacon‐status‐waning‐say‐experts6 HugoG2009 lsquoEmergingDemographicTrendsinAsiaandthePacificTheImplications for International MigrationrsquoinTheTransatlantic CouncilonMigration2009aboveatp61 7 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2014 The Outlook for Net Overseas Migration June 2014p7

5

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 6: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

3 THE ROLE OF MIGRATION IN ATTRACTING TALENT

31 In this section we respond to the Departmentrsquos proposal to transform Australiarsquos visa system to support the status of Australia as a competitive and attractive destination for migrants2 We will look further into the role skilled migration plays in attracting the talent necessary to fill the gaps in innovation in some areas of the domestic labour market

32 Australia is an attractive destination for people seeking to work study holiday or permanently relocate Over the last 20 years Australiarsquos skilled migration programs have evolved from the recruitment of a broad spectrum of highly skilled workers with good prospects of successful settlement to a system that seeks to directly match prospective clients to specific skill shortages in the Australian labour market

33 Earlier reviews of Australiarsquos skilled migration programs have identified global migration as a ldquodefining phenomenon of the twenty-first centuryrdquo3 The global race for talent is becoming increasingly competitive as countries recognise the importance of and get smarter at recruiting the best and the brightest internationally Certainly these challenges to the continued supply of skilled migrants to Australia are coming from other traditional net-immigration countries such as Canada the United Kingdom and the United States as they reform and recalibrate their own skilled migration systems However a growing source of competition also arises from historically net-emigration countries

34 This second challenge presents itself in two ways Firstly as economies such as China and India develop and mature highly skilled individuals are increasingly less likely to seek emigration4 This narrows the flow of migration from countries that have historically been sources of skilled migration to Australia Secondly emerging economies including China are themselves developing their own skilled migration program This then diverts the stream of migrants that might otherwise flow to Australia instead flowing to the economic powerhouse of a massive and rapidly developing economy5 We are already seeing a significant increase in migration among Asian countries6 This gravitational pull also increases the permanent emigration of Australians seeking work and career opportunities abroad7 Put simply the accessibility and attractiveness of an increasing number of other immigrant-receiving countries will have a much greater effect on skilled migration to Australia over the coming decades

2 Ibid3 BirrellBHawthorne LandRichardsonS2006 Evaluation of the General Skilled Migration Categories Reportp128 httpwwwimmigovaumediapublicationsresearchgsm‐report

4 HugoG2008 lsquoTrendsinAsia thatwill InfluenceItsFuture asaSourceofSkilledMigrantsrsquoCANADIAN

DIVERSITY (6)34‐47WhiteMJ andSubediIlsquoTheDemographyofChinaand IndiaEffect onMigrationtoHigh‐IncomeCountriesthrough 2030rsquoinThe TransatlanticCouncil onMigration2009 Talent Competitiveness and Migration VerlagBertelsmannStiftung Gueterslohpp100ndash128atp104 5 lsquoAustraliarsquosbeacon statuswaningsayexpertsrsquoSpecialBroadcastingService13September2014httpwwwsbscomaunewsarticle20140912australias‐migration‐beacon‐status‐waning‐say‐experts6 HugoG2009 lsquoEmergingDemographicTrendsinAsiaandthePacificTheImplications for International MigrationrsquoinTheTransatlantic CouncilonMigration2009aboveatp61 7 CommonwealthofAustraliaDepartmentofImmigrationandBorderProtection2014 The Outlook for Net Overseas Migration June 2014p7

5

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 7: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

than ever before8 Given the cultural and linguistic affinity that many in the Asian region would have with either China or India an Australian skilled migration program which is overly restrictive lsquoat the gatersquo may become self-defeating

35 Earlier reviews of the way in which skilled migration works in Australia also seem to suggest that skilled migration is a binary process the skilled person lsquoself-selectsrsquo to emigrate because of the comparative advantage that doing so would provide that person the destination state then lsquoskills selectsrsquo migrants who meet the governmentrsquos stipulated combination of criteria9 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable the selection by the migrant of destination state Implicit in historical studies of Australiarsquos skilled migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone10 However global studies of migration flows show that factors such as lifestyle and social morals are only secondary factors in the migration decision-making process The primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals11

36 In an increasingly competitive race for global talent acknowledging and understanding the selection by the migrant of which country to make their home is critical to the development of a policy framework for skilled migration for the coming decades lsquoSkills selectingrsquo only those individuals who lsquoself-selectrsquo for migration may no longer suffice as talented individuals are offered more opportunities at home and become disinclined to emigrate it is imperative that Australia is able to continue to offer advantages from immigration not only relative to other possible destinations but also to the country of origin For example temporary migrants may seek to work in Australia for longer periods taking up varied opportunities but may not have a desire to migrate and reside in Australia on a permanent basis To attract such talent to Australia it is necessary to ensure that there are several different flexible options ndash both temporary and permanent ndash with temporary pathways allowing for extended stays subject to meeting key eligibility criteria

37 The Departmentrsquos consultation paper emphasises the need for Australiarsquos visa system to be efficient particularly in facilitating the entry of skilled migrants It is in Australiarsquos interest to facilitate the entry of these skilled resources into the workforce and part of this facilitation process would involve removing any deterrents for potential migrants to select Australia as a destination In our 2016 submissions to the Department regarding the introduction of an Entrepreneur visa we discussed the imperative of visa programs that allow Australia to recruit widely for prospective and innovative talent early in their career and not just proven talent Our paper also sets out the decision-making factors that a young entrepreneur or skilled migrant consider in deciding on a migration destination country The information presented in that paper demonstrates that the applicantrsquos experience of the visa application system is a small part of the decision-making process and that the greater considerations are the potential return on the

8BirrellBHawthorneLandRichardsonS2006abovep 1289 CullyM2012abovep5 SeealsoBorjasG 1987lsquoSelf‐selectionandtheearningsofmigrantsrsquoAMERICAN ECONOMIC REVIEW77(4)pp531‐55310 BirrellBHawthorne LandRichardsonS2006abovep 1111 PapdemetriouDGSomervilleWandTanakaH2009lsquoTalentintheTwenty‐FirstCentury Economyrsquo inTheTransatlanticCouncilonMigration2009abovepp215ndash 266atp244‐245

6

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 8: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

investment they have made in their personal development through factors such as flexible work visa arrangements in the era of the lsquogigrsquo economy tax settings and incubation support We have appended our Entrepreneur visa submissions to this paper

4 SIMPLIFICATION OF VISA INFRASTRUCTURE

41 We are encouraged by the Departmentrsquos recognition in the Paper that Australiarsquos visa systems are struggling to cope with demand In our submission there are a number of achievable infrastructural reforms which would simplify and streamline the visa application process by continuing the Departmentrsquos overarching program of moving to more sophisticated technology

Digitisation enhancements

42 The development of a simplified and flexible visa system calls for several critical changes to be made to the Departmentrsquos electronic platforms Three key innovations that should be considered by the Department include enabling portals to retain and transfer a clientrsquos information across multiple application fields the incorporation of an Application Programming Interface (API) and ImmiAccount functionality improvements

43 Ideally a modern and appealing visa system would allow for the simplification of the visa application process The ability to retain and transfer an applicantrsquos data across multiple applications would provide for faster more streamlined application from the outset This simple modification could be approached by enabling portals with the option to enter a TRN or Visa Grant Number into a new application in order to pre-fill information from the application being referenced Such enhancements would be particularly appreciated by those applying for multiple Australian visas over several years The ability to pre-fill new visa applications utilising the information retained from a previous application would significantly streamline the application process Undoubtedly this would be restricted to core personal information that can be universally applied between applications such as passport data citizenship travel residency and employment history

44 Further improvements that can be made to the application stage include update to form-filling and viewing Ideally forms could be downloaded from a userrsquos ImmiAccount with automatically pre-populated data They could then be easily reviewed and updated with additional details provided as required

45 The addition of an Application Programming Interface (lsquoAPIrsquo) would be greatly beneficial for the transfer of digital information between ImmiAccounts and trusted external systems This would provide a significant level of support to organisations operating in the migration industry With the volume of applications being handled throughout organisations the capturing of information digitally is standard practice so there is substantial interest in digital information sharing APIrsquos would assist with prepopulating information such as personal data into new visa applications The incorporation of this time-efficient feature would demonstrate a more modern simplified visa application system

7

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 9: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

46 Transforming a clientrsquos experience through greater digitisation could be achieved at a fundamental level with updates to core ImmiAccount functions Simple modifications such as customised page view and the development of a reporting feature would contribute to the development of a more user-friendly service Currently you can only view a maximum of 20 applications per page within ImmiAccount The ability to set page size would be a useful functionality update with at least the inclusion of a drop-down feature to allow several viewing options ie 20 50 or 100 Additionally being able to view or report on prior application statuses and dates within ImmiAccount would be further useful innovations to the service

47 We also envisage ImmiAccount as a potential lsquoone-stop-shoprsquo through which employers visa holders and other stakeholders may interact with the Department through a singular online portal Additional features and services might include

universal online visa application forms for all subclasses online notification functions for sponsorship obligations and self-reporting of

other activities online payment of the Skilling Australians Fund levy by credit card functions to assist sponsors with self-management of their visa population

such as the ability to generate and export a list of 457 visa holders for reconciliation with the businessrsquo own records

Completion of biometric enrolment

Consolidation of visa program features

48 The digital enhancements discussed above would allow the Department to consolidate aspects of visa programs which operate separately but in similar ways and enhance the data sharing capabilities with other government agencies to simplify application processes For example a business that has already passed through a sponsorship approval process for one visa stream should not be required to separately seek approval for each other type of sponsorship Access to any and all streams could be approved though a single application process with access to additional streams obtained through a simple variation request In addition most organisations (however new to the Department) are likely to have provided information relevant to sponsorship approval to other state territory and federal government agencies The Departmentrsquos commitment to improve information-sharing with other agencies and governments and further developments of centralised government portals such as AusKey accounts should be leveraged to reduce the required documentation and simplify the sponsorship assessment process Simplifying interaction with the Department by relying on data and information already held by government would also allow a holistic approach to the monitoring and regulation of businesses that employ visa holders outside the sponsored visa classes such as the Working holiday and Student visa programs It would have the flow on effect of resource saving for the Department

49 The operation of the United Kingdomrsquos Sponsorship Management System (lsquoSMSrsquo) may provide a good model for a consolidated lsquoapproved businessrsquo framework which vets for suitability to employ visa holders12 Through a single online application organisations

12 UnitedKingdomImmigration andVisaOffice Tier 2 and 5 of the Points Based System Guidance for Sponsors

8

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 10: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

apply for a license to access SMS and select the visa streams to which access is sought The sponsorship application assesses the organisation to ensure that it is

genuine and operating lawfully in the UK honest dependable and reliable capable of carrying out sponsorship obligations and in a position to offer genuine skilled work or activity positions in relation to the

visa streams to which access is sought These integrity thresholds are reflective of the current lsquocorersquo requirements across the different classes of sponsorship currently available in Australia

410 The volume of documentation that must accompany a UK SMS licence application is limited In the case of public agencies foreign government agencies and publicly listed companies no documentation is required at all This is because all relevant information to address the sponsorship criteria is available publicly and the information has already been vetted and approved by another government agency such as the UK equivalent of the Australian Tax Office or the Australian Securities and Investments Commission Other sponsorship applicants are usually required to provide four documents depending on the nature of the organisation and the visa stream(s) sought The number of documents that need to be submitted is periodically reduced as more online verification of information becomes available to the UK Immigration and Visa Office For example organisations that are Registered Charities were previously required to provide evidence of that registration Now that registration details can be checked online this counts as one of the four pieces of evidence and the applicant organisation is not required to provide as separate documentation Similarly the UK Immigration and Visa Office accepts as one piece of evidence the fact that an organisationrsquos financial statements are available on its website13

411 Once an organisation has an SMS licence it may be later approved for access to additional visa programs by completing a shortened online application form and providing any mandatory documents that may be needed For example an organisation with a licence to sponsor Tier 2 (General) visa applications (analogous to the subclass 457 visa) that later seeks access to sponsor Tier 2 (Intra-Company Transfer) visas need only provide evidence of the relationship between the offshore and UK entity

httpswwwgovukgovernmentuploadssystemuploadsattachment_datafile371099Tier_25_Sponsor_Guidance_11‐14pdfTheSMSis also usedby UKeducationprovidersto managesponsorshipofstudentvisasandexchangeotherinformationsimilartothe operationofPRISMSThisaspectofSMSisnotdiscussed further13 UnitedKingdomImmigration andVisaOffice lsquoAppendixArsquo Tier 2 Tier 4 and Tier 5 of the Points Based System ndash Sponsor Guidancehttpswwwgovukgovernmentuploadssystemuploadsattachment_datafile317720Sponsor_Appendix_A_04‐14pdf

9

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 11: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

5 TWO STEP PATHWAYS TO PERMANENT RESIDENCE

51 The increase of temporary migration to Australia and throughout the world has been exponential in the past two decades There are approximately one million temporary migrants in Australia at any time covering four percent of the population14 Partly in response to the curtailment of other migration programs such as general skilled migration and family streams the 457 to ENS pathway has become the largest pipeline of permanent migration We note the Departmentrsquos intended policy response to decouple temporary visa programs from permanent residency and make a clear distinction between a temporary stay and a pathway to permanent residency

52 Peter Mares has made a number of important points about the burgeoning size of current temporary visa programs particularly as permanent residency eligibility criteria become more stringent in an effort to disrupt the temporary-to-permanent transition Mares introduces the notion of lsquopermanently temporaryrsquo ndash those who live in Australia long term for a legitimate purpose (working on a serial 457 visas for example) but who are never eligible to transition to permanent residency This cohort is in a precarious position because their visa status precludes them from full involvement in and access to the Australian community Examples include higher school fees no access to Medicare patchy Workcover eligibility no paid parental leave and the prospect of visa cancellation and removal from Australia if the person ever develops a serious health condition Maresrsquo view is that this cohort should be able to transition to permanent residency after eight years of residence in Australia their enduring link to the Australian community entitles them to become members of the Australian community15 This view is consistent with how permanent residency status is achieved in other countries (notably UK and USA (five years) and Japan (ten years until changes in February 2017)) but challenges the traditional Australian manner of granting permanent residency on the basis of meeting qualifying criteria as well as policy settings aimed at ensuring that temporary visa holders have a genuine reason for entry stay and do not achieve de facto long-term residence through successive temporary visas We have discussed this further below in the context of the visa program framework put forward by the Department at the Sydney and Melbourne roundtables

6 PROPOSED FRAMEWORK

61 The consultation paper proposes simplifying the number of visa subclasses from the current 99 to approximately ten We support such innovations where it is sensible to do so such as the recognition that all permanent residency visas may feasibly be consolidated into one A sensible and reasoned approach would avoid undesirable outcomes such as a small number of overly complex or convoluted visa streams andor programs which require a high level of discretionary or subjective decision-making In our view it is essential within this simplification process that objective elements are retained and discretionary elements for example consideration of lsquogenuinenessrsquo of

14 PeterMares Not Quite Australian How Temporary Migration is Changing the Nation (TheTextPublishing Company2016)5715 MaresR2016 Not Quite Australian How Temporary Migration Is Changing the Nation

10

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 12: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

claims are reduced We support a process to consolidate visa categories that incorporates simplification of the visa criteria and rules themselves Making the rules clear and simple to understand will enable the Department to pursue increased digitisation and automation in decision-making and lead to better ease and acceptability of the decisions so made

63 Our understanding of the structure the Department is looking at is depicted in the figures below Features include

consolidation of all current permanent residency visa subclasses into one on the basis that permanent residency status is identical regardless of the pathway taken to obtain it

leading to permanent residency are many different provisional pathways requiring applicants to spend time in Australia and perhaps satisfy other criteria to transition to permanent residency The idea is that the pathway from provisional to permanent is clear and that the legitimate expectations of provisional visa holders are preserved once they are on the pathway to permanent residency

Open questions include

how long the provisional visa should be whether an applicant should need to meet further criteria at permanent

residency stage and if so what those might be whether an applicant should meet high threshold requirements at provisional

stage and then transition to permanent residency without needing to meet further criteria

whether the provisional streams should have relatively low threshold requirements to attract as many applicants as possible with applicants then required to meet much higher criteria in order to transition to permanent residency

Provisional

One PR visa fits all

Resident ReturnFamily Refugee and Humanitarian MLTSSL New Zealander

CitizenshipEmployment linked Business and Innovation Others

11

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 13: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

64 Separate to the provisional-to-permanent pathway it is proposed that there be a group of temporary visas which provide a temporary stay only and do not lead to permanent residency (at least not directly) The Department is exploring the possibility of outsourcing processing of these applications to third parties in data-sharing arrangements with the Department Bridging Visas are retained as part of the universal visa system to allow persons to remain lawfully onshore

Temporary Visas Intra-corporate transfers Transit Student Visitor Medical Treatment Working Holiday Diplomatic Short Term work (400 Maritime Crew etc) Bridging Visas

Response to Proposed Framework

65 In this section we set out suggestions which respond to and elaborate the proposed model presented at the roundtable sessions

66 While the segregated permanent residency subclasses make sense in the context of the current regulatory framework the lack of distinction among the features of those subclasses means the consolidation of the various permanent residency classes into one is sensible and simplifies the current visa structure without compromise

67 In our view some of the provisional-to-permanent pathways would benefit from low threshold requirements at provisional stage For example a provisional visa that provides a pathway for prospective talent would work most effectively if it is geared to recruiting new graduates from Australian and overseas universities with little work experience but with a novel business idea or the opportunity to commercialise the fruits of their research in Australia The idea of the provisional phase would be to cast the net for potential talent widely and allow the applicant time to demonstrate their lsquovalue addrsquo to Australia to be tested at permanent residency stage The Graduate Entrepreneur visa in the United Kingdom is discussed in detail in our Entrepreneur visa submissions and provides a good example of a holistic approach to recruiting prospective and innovative talent through the combination of a visa pathway with seed funding office space mentoring and other incubation support

68 There are other provisional pathways where the applicant would have an incontrovertible claim to permanent residency once holding the provisional visa and should be able to transition to permanent residency without needing to meet further requirements except a character test and perhaps a period of residency in Australia Examples include the family refugee and humanitarian and New Zealander streams In these streams eligibility against the relevant criteria is appropriate at provisional visa stage with transition after a suitable period of residency in Australia This could happen through deeming provisions which automatically change a personrsquos status to permanent residency once time has passed subject to an electronically generated lsquoall-clearrsquo from Australian law enforcement authorities

12

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 14: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

69 There is a third group which in our view should also be able to transition to permanent residency quickly and easily those who have the skills that Australia needs The Department has worked extensively with the Departments of Education and Employment to develop the MLTSSL In that regulatory framework the permanent entry of people with skills in these occupation in demand should be uncontroversial Where the outcome of this review is the roll-out of universal provisional visa pathways preparatory to permanent residency we would encourage the Department to consider a fast-track to permanent residency for such migrants

610 Putting all of that together we propose two groups of provisional visa types The first which we have called lsquoCommunity Provisional Visasrsquo are those streams where the provisional visa acts solely as a period of residence without further testing of the applicant at permanent residency transition stage (except a character test) The second group which we have called lsquoQualifying Provisional Visasrsquo are those streams where it is appropriate for the applicant to have to demonstrate something to qualify for permanent residency For example an applicant under the Business Innovation and Investment stream who proposed to establish a business in Australia has now established a business to a certain level (turnover net assets number of Australian employees etc) Under our proposed prospective talent stream the person can transition to permanent residency once their start-up enterprise is up and running In contrast to the Community Provisional visas there is no set period of provisional status before being able to transition eligibility for permanent residency is based on the realisation of the triggering event rather than the passage of time

611 In our view there are a number of measures that are important for the inter-operation of the provisional-to-permanent streams with each other and with the temporary residency visas Firstly temporary visa holders should be able to move up into a provisional stream (assuming they meet the criteria) At the roundtable we discussed the example of a Japanese CEO who entered Australia as an intra-corporate transferee but subsequently the family decides that they want to stay permanently At that time they can switch to an appropriate provisional-to-permanent pathway as the first step towards becoming Australians

612 Where this occurs it is important to consider the period that the person may have resided in Australia already One way to recognise the duration of lawful residence in Australia might be to allow access to permanent residency directly when the person has been usually and lawfully resident in Australia for a period of eight years

and holds or qualifies for a provisional visa in any of the streams

613 This combination recognises the sustained connection that the person has developed with the Australian community and that they are (or have become) a person that Australia considers to be a suitable candidate for permanent residency Even where a person has been in Australia for many years on successive student visas if their courses have led to skilled employment or MLTSSL skills that get them in to a provisional pathway it is appropriate that their enduring connection to Australia over many years is recognised A person on serial temporary visas who never makes the transition to a provisional stream would never be eligible to proceed to permanent residency no matter how long they remain in Australia (and that stay is likely to come

13

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 15: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

to end eventually on genuineness grounds) For this to work effectively time spent on some temporary visa types such as the current Transit Border Maritime Crew Special Purpose or Diplomatic visas should not count towards the eight years It would also be appropriate that the eight years need not be consecutive but do need to have accumulated within a certain maximum period of time to avoid qualification despite long periods overseas Allowing cumulative periods of time recognises the likelihood that newly arrived prospective migrants with a genuine interest in permanent migration Australia are nonetheless likely to have a continued need to travel overseas regularly due to work family business or other commitments In our view it is an appropriate balance with the eight year period of residence we are proposing which is longer than some other jurisdictions and would serve as an important differentiator from those jurisdictions which recognises the value to Australia of those enduring connections with overseas markets and communities

614 Finally the requirements for transition to permanent residency that apply to a person should be those in force at the time they applied for the provisional visa

615 At the Sydney roundtable there was also discussion of a holistic way of assessing visa candidates against the criteria of multiple streams to allow a pathway for candidates who do not quite meet the requirements of any individual stream but have a strong claim in multiple different streams which collectively amount to a person that Australia would consider to be a suitable candidate for permanent residency Such a pathway would need to be carefully designed so that the points test factors are objective and quantifiable to avoid complexity and ambiguity

14

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 16: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

Provisional Transition

One PR visa fits all

Community Provisional Family Refugee and Humanitarian MLTSSL New Zealander

After 12 months on provisional visa

Qualifying Provisional After qualifying period or event

Employment linked Three years in role on provisional visa

Business and Innovation Business meets threshold measures of success

Prospective Talent Start up is up and running Direct to PR if hold a provisional visa and have been lawfully in Australia for 8 years (including temporary visas)

Facility for temporary visa holders to lsquojump tracksrsquo up into the provisional to PR pathways

Temporary Visas auto-grant outsourced

process no PR pathway Student Visitor Working Holiday Diplomatic 400 Maritime Crew Medical treatment

Bridging Visas

We would welcome the opportunity to contribute to the further development of the proposed framework

15

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 17: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

APPENDIX

SUBMISSIONS ENTREPRENEUR VISA

Level 19 201 Elizabeth St S y d n e y N S W 2 0 0 0

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 18: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

CONTENTS

1 About Fragomen 3

2 Introduction 4

3 Recommendations 5

4 What entrepreneurs need 6

Clusters7

Infrastructure 8

Capital8

5 International Comparison 9

6 Entrepreneur Pathwy for Australia 11

7 Responses to consultation questions 12

2

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 19: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

1 ABOUT FRAGOMEN

11 Fragomen is one of the worlds leading global immigration law firms providing comprehensive immigration solutions to our clients Operating from over 40 offices in 19 countries (with capabilities in more than 160 countries) Fragomen provides services in the preparation and processing of applications for visas work and resident permits worldwide and delivers strategic advice to clients on immigration policy and compliance

12 In Australia Fragomen is the largest immigration law firm with over 175 professionals and support staff nationally including qualified lawyers Registered Migration Agents Accredited Specialists in Immigration Law and other immigration professionals With offices in Brisbane Melbourne Perth and Sydney Fragomen assists clients with a broad range of Australian immigration services from corporate visa assistance immigration legal advice audit and compliance services litigation and individual migration and citizenship applications In the 2014-2015 financial year we assisted clients with lodgement of more than 10000 applications to the Department of Immigration and Border Protection (Department)

13 Further information about Fragomen both in Australia and globally is available at wwwfragomencom

3

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 20: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

2 INTRODUCTION

21 We are pleased to provide these responses to the proposed policy settings and consultation questions regarding the planned entrepreneur visa stream within the Business Innovation and Investment Programme (BIIP)

22 Building an industrious innovative and competitive economy involves the creation of an environment that is conducive to entrepreneurship and business development The role for skilled migration in this national policy objective is to be able to attract and recruit prospective talent to capture this potential for growth in its early stages A new entrepreneur visa designed to support the governmentrsquos innovation agenda must competitively recruit for the best long term prospects for starting a business and allowing for the possibility of false-starts before success Restricting the programme to experienced businesspeople who have already attracted funding may mean that Australia misses out on prospective talent that will instead establish elsewhere or worse not be realised at all With the current BIIP framework designed to attract those with a history of business and investment success it is important that a new entrepreneur visa attracts talented individuals with little career history but with entrepreneurial and innovation skills who are able to lsquovalue addrsquo by creating novel solutions to complex problems This requires the creation of an environment which attracts and supports talented people from around the world to develop and then work in innovative and emerging industries so that the fruits of their talents remain in Australia The role of migration in this imperative is to enhance the opportunities for talented individuals to move to Australia early in their careers on a prospective basis creating a pool from which successful entrepreneurs can transition to permanent residency

4

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 21: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

3 RECOMMENDATIONS

RECOMMENDATION 1 The entrepreneur visa pathway should be established as a new stream within the subclass 188 visa with a pathway to either the subclass 188 Business Innovation (Extension) visa or the subclass 888 Business Innovation visa

RECOMMENDATION 2 The provisional entrepreneur visa should require nomination by an Australian university or the Commonwealth Science and Industry Research

Organisation (CSIRO) or one of the Growth Centres established by the Department

of Industry Innovation and Science (DIIS)

State or territory nomination would then be required when transitioning to either the subclass 188 (Extension) or 888 visas

RECOMMENDATION 3 Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

RECOMMENDATION 4 An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

RECOMMENDATION 5 Success of a venture should be measured by being able to meet the standard requirements of the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 6 Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within 4 years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

RECOMMENDATION 7 For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As an integrity measure the business idea must meet the university CSIRO Growth Centre nomination criteria

RECOMMENDATION 8 Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies and the Australian research and development sector

RECOMMENDATION 9 There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa after four years

RECOMMENDATION 10 Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa

RECOMMENDATION 11 The establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

5

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 22: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

4 WHAT ENTREPRENEURS NEED

41 Departmental reviews of skilled and business migration have always been based on a premise that skilled migration is a binary process the highly skilled person self-selects to emigrate because of the comparative advantage that doing so would provide that person the destination state then selects migrants who meet the governmentrsquos stipulated combination of criteria1 But there is a critical intermediary step that is overlooked in these analyses and which is becoming an increasingly important variable particularly for business skills migration the selection by the migrant of destination state Implicit in historical studies of Australiarsquos migration program is an assumption that skilled migrants will be sufficiently attracted and fulfilled by sun sand and surf alone2 However global studies of migration flows show that factors such as lifestyle and social mores are only secondary factors in the migration decision-making process As depicted in Figure 1 the primary decision-making determiners are those related to the prospective return on investment that the skilled person has made in their own human capital the opportunity to maximize the realisation of professional goals3 Highly skilled individuals with a choice of destination make migration decisions based on a range of factors but most important is the human and physical infrastructure and the presence of talented workers

Figure 1 Migration decision-making drivers

Infrastructure Dynamic professional and

personal growth opportunities

CHOICE OF DESTINATION

Cluster Pool of other skilled professionals

Social and political factors

Immigration process

Opportunity The best human capital ROI

Lifestyle factors

1 Cully M 2012 above p 5 See also Borjas G 1987 lsquoSelf‐selection and the earnings of migrantsrsquo AMERICAN

ECONOMIC REVIEW 77 (4) pp 531‐553 2 Birrell B Hawthorne L and Richardson S 2006 above p 11 3 Papdemetriou DG Somerville W and Tanaka H 2009 lsquoTalent in the Twenty‐First Century Economyrsquo in The Transatlantic Council on Migration 2009 above pp 215 ndash 266 at p 244‐245

6

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 23: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

42 A recent study of successful entrepreneurs in the United States4 provides some insight into what type of environmental conditions are conducive to attracting and retaining entrepreneurs and thereby business growth and innovation a cluster economy to which highly skilled workers are naturally attracted world class infrastructure to support both business and the large skilled

populations that staff them and access to capital most critically in the embryonic stages of business

development and innovation

Clusters

43 In order to maximize economies of scale and return on investment newly emerging industries tend to congregate in close proximity to each other Once established it is more economical for the business to remain in the same location Where businesses have established and maintained operations this attracts other businesses in the same industry creating lsquocluster economiesrsquo which become the pre-eminent and lsquobest in fieldrsquo global centres The development of London as a global financial centre and Silicon Valley as an information technology powerhouse are cases in point These lsquocluster economiesrsquo induce swarming behavior among similar businesses and the crossroads of knowledge creativity and transformation create ecosystems and synergies that result in innovation breakthroughs 5 Joining the cluster is of benefit to new entrants due to the critical mass of businesses already operating there while the addition of new entrants makes the cluster more valuable6

44 The survey found that most entrepreneurs set up their business in a different location from their place of birth7 Many of Silicon Valleyrsquos success stories were founded by people born outside the US including Google Yahoo Intel eBay and Hotmail London and Silicon Valley have been such successful examples of clustering in part due to the high level and diversity of talent congregated in those centres through immigration More importantly from an Australian perspective people starting businesses are usually resident in the location for at least two years prior to starting their business 8 but once the business is established neither the entrepreneur nor the business are likely to relocate again9 This creates the imperatives of attracting the young and the restless soon after the completion of their university

studies and creating an environment which encourages them to stay to develop businesses

and innovate to participate in research and development or to find opportunities to work in highly skilled employment 10

4 Endeavor Insight 2014 What Do the Best Entrepreneurs Want in a City Lessons from the Founders of Americarsquos Fastest‐Growing Companies httpwwwissuucomendeavorglobal1docswhat_do_the_best_entrepreneurs_want 5 Papademetriou DG Somerville W and Tanaka H above at p 245 6 Legrain P 2006 above at pp 97 ‐ 116 7 In the case of native‐born Americans this may be due to the propensity to move away from home for university studies 8 Endeavor Insight 2014 above p 6 9 Endeavor Insight 2014 above p 4 10 Endeavor Insight 2014 above p 3

7

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 24: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

To that end we are encouraged by the establishment of Industry Growth Centres under the auspices of the DIIS and their objective of providing a focal point for greater engagement between research and industry11

Infrastructure

45 To be able to grow and flourish business needs access to both human and physical infrastructure An environment which is conducive to entrepreneurship is one to which skilled workers will naturally gravitate because of world class infrastructure in transport communications and education12 simultaneously supporting business through access to clients markets suppliers and other global centres of business Readily identifiable infrastructure challenges that impact on the attractiveness of Australia as a global business centre include the east coast air road and rail transport corridors major city airport capacity telecommunications networks the quality and cost of education the quality and affordability of housing and child care availability Initiatives like the COAG National Partnership Agreement on Land Transport Infrastructure announced in October 2014 are therefore critical to the prospect of cluster economies in the future13

Capital

46 In its nascent stages any start-up business or technological innovation requires capital investment In this regard Australia is disadvantaged because it is not able to raise domestically the capital required to meet domestic demand14 In the same way that technology is driving entrepreneurship and innovation it is also providing new ways of raising capital Entrepreneurs with new inventions or business ideas are able to connect to a global pool of potential investors who are each prepared to invest a small amount in the development of the concept but who collectively provide the large sums of money to get that idea off the ground This lsquocrowd-sourced fundingrsquo is an increasingly common method of resourcing start-up projects A regulatory environment which facilitates this type of funding arrangement is therefore of particular importance to the emergence of new technologies and industries In Australia allowing bright ideas to connect with willing investors in this way requires financial and prudential regulatory reform to align Australia with countries that have already moved in this area including the USA Canada the UK and New Zealand Similarly microcredit funding originally used in developing countries to assist with self-employment is becoming more common in developed countries especially through the internet via peer-to-peer lending Australian lenders are willing to provide small loans to borrowers lacking capital collateral steady income or credit history However the regulation of such financing needs to be carefully calibrated to ensure that the price of capital and transactions is not

11 httpwwwbusinessgovauadvice‐and‐supportIndustryGrowthCentresPagesdefaultaspx 12 Endeavor Insight 2014 above p 8 13 Council of Australian Governments 2014 National Partnership Agreement on Land Transport Infrastructure Projects Intergovernmental Agreement on Federal Financial Relations httpswwwgooglecomausearchq=coagampoq=coagampaqs=chrome69i57j5l3j69i60j69i59929j0j8ampsourceid=chro meampes_sm=93ampie=UTF‐8q=national+partnership+land+transport+infrastructure 14 lsquoForeign capital helps economy withstand external shocksrsquo The Australian 12 November 2013 httpwwwtheaustraliancomauopinioncolumnistsforeign‐capital‐helps‐economy‐withstand‐external‐shocksstory‐fn5r96n6‐1226757668980

8

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 25: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

prohibitive and that interest rates are reasonable We look forward to the deregulation agenda relating to capital raising following the principles set out governmentrsquos National Innovation and Science Agenda 15 Reform in areas such as insolvency law are critical to creating a supportive environment in which entrepreneurial businesses are able to incubate and grow without fear of initial failure and false-starts

47 The environmental factors needed to stimulate entrepreneurship and innovation show that the migration program is only a part ndash but a critical part ndash of this policy imperative The factors set out in Figure 1 point to at least three roles that the migration programme can play in attracting talent providing opportunity for individuals to demonstrate their lsquovalue-addrsquo creating a critical mass of talented professionals and entrepreneurs and the immigration process itself

For an entrepreneur visa programme to be successful it must operate as an invitation to prospective migrants to participate in lsquothe next big thingrsquo Key to this role is how the visa is calibrated to act as a selection mechanism for prospective talent and success rather than those who can demonstrate a history of talent and success

5 INTERNATIONAL COMPARISON

51 The UKrsquos Tier 1 (Graduate Entrepreneur) visa provides a prototype as to how a system which selects for prospective as well as demonstrated talent might recruit effectively The Graduate Entrepreneur visa allows international students who have started a business while in the UK or who are engaged in cutting-edge research and development the opportunity to remain in-country following their studies in order to pursue these entrepreneurial opportunities further The visa programme is also open to recent graduates from overseas universities to capture that prospective talent as well

52 A Graduate Entrepreneur visa application must be lsquoendorsedrsquo (analogous to lsquonominationrsquo in Australian migration parlance) by either an appointed UK university or through the Sirius programme run by UK Trade and Investment (UKTI) The university endorsement pathway contemplates the commercialisation of the graduatersquos research and deployment activity funded and supported by the university itself The Sirius programme operates as a team-based competition which brings a range of benefits over and above endorsement for a visa Competitors apply in one of two streams The idea stream for those who have a concept only or The business stream for those that have have reached proof of concept

prototype beta version or early start up stages These streams are then assessed on the following criteria by a panel consisting of UKTI representatives as well as external experts and entrepreneurs16

9

15 httpwwwinnovationgovaustartentrepreneurstid=4 16 httpswwwomnicompetecomhostinguktiabout_siriusphp

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 26: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

Business Stream Idea Stream

Has the concept been validated convincingly Has the team shown high entrepreneurial potential Do they have sufficient commercial andor technical skills and experiences Does the financial and commercial model show

potential to receive investment (Can it be profitable and scalable Is the size of the market big enough)

Is the team made up of highly talented Is the team made up of highly talented individuals that can make this plan happen Do individuals that can make this plan happen Do their skills appear well-balanced and their skills appear well-balanced and complementary complementary

Has the team shown a clear and accurate understanding of the target market Does the go-to-market strategy reflect this understanding

Is the addressable market big enough Does the idea have potential to disrupt competition

Is this team likely to have a lasting positive Is the team motivated and well placed to make a impact on the UK Is this business likely to lasting contribution to the UK economy Does flourish under the Sirius programme the programme offer the right conditions for this

team to develop

53 Rather than requiring the visa applicant to demonstrate a sound business history or the accumulation of venture capital the Sirius programme prizes provide access to funding and other support including the following endorsement for a Graduate Entrepreneur Visa pound12000 funding per person paid in regular stipends settlement support if the person is relocating to the UK an accelerator programme which includes office space mentoring sales training

and other support services in one of the UKrsquos innovation clusters support from high profile businesspeople and entrepreneurs including one

dedicated mentor drawn from a pool of experienced and successful entrepreneurs

peer group and networking opportunities a lsquodrop inrsquo office space in London to facilitate business meetings and facilitated access to prospective investors17

54 Since its launch in September 2013 the Sirius programme has attracted international graduate entrepreneurs from over 93 countries There are currently over 40 companies on the programme with collective sales revenue of over pound2 million Seventeen of the companies have raised pound145 million in equity investment with a combined valuation of pound42 million18

55 The Graduate Entrepreneur visa allows a stay of up to two years with the possibility of transitioning to a Tier 1 (Entrepreneur) visa if the business is successful19

10

17 httpswwwomnicompetecomhostinguktiabout_siriusphp 18 httpswwwgovukgovernmentcollectionssirius‐programme‐for‐graduate‐entrepreneurs 19 httpswwwgovuktier‐1‐graduate‐entrepreneur‐visaoverview

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 27: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

6 ENTREPRENEUR PATHWAY FOR AUSTRALIA

61 In our submission the BIIP provides an appropriate framework for the establishment of an entrepreneur visa pathway However the criteria for the provisional visa must be calibrated with sufficient differentiation from the existing pathways so as to appropriately capture prospective talent in nascent stages of development The UKrsquos scheme provides a workable model of how a stream might work in the Australian regulatory context Rather than a state or territory nomination an entrepreneur stream application would require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

62 Similar to the UK system the entrepreneur visa should sit within a broader suite of programmes that have the objective of supporting and incubating the start-up enterprises to provide them with the best possible prospects of making a long term positive contribution to Australia and the state or territory in which they establish themselves In our view there should be no requirement at this provisional stage of a certain level of funding or assets nor satisfaction of the business innovation and investment points test Qualification for the stream could be limited to graduates of an Australian university and a prescribed list of overseas universities In recognition of the fact that not all bright ideas come from university graduates there should be an exception to the qualifications requirements for those assessed by the relevant state or territory government as having an idea of exceptional benefit The state and territory governments are already tasked to perform such an assessment in the BIIP where the applicant is aged over 55 Serendipitously most Australian universities are constituted under state or territory legislation and most Australian states and territories will be the host of one of the DIIP Growth Centres

63 It is important that the business idea is allowed to evolve change fail and go through several false starts before succeeding The current subclass 188 validity period of 4 years is an appropriate amount of time to allow the entrepreneur to develop their business but it should not have to be the original business idea that is the basis of the subsequent visa application At the four-year mark visa holders in the provisional entrepreneur stream would then have a pathway to apply for the subclass 888 visa in the Business Innovation stream if their business

meets the requirements or a further subclass 188 visa in the Business Innovation (Extension) Stream at

which point applicants would need to demonstrate an ongoing business and be allowed a further six years to qualify for the subclass 888 visa

As an integrity measure the subclass 188 (Extension) or 888 visas would need to be nominated by the host state or territory government on the basis that the business is of benefit A summary of the proposed pathways is set out in Figure 2 below

11

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 28: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

Figure 2 Entrepreneur pathways to permanent residency

Subclass 188 Entrepreneur Stream

Nomination by University CSIRO Growth Centre

Subclass 888 Business Innovation Stream

Nomination by state territory

Subclass 188 Business Innovation (Extension) Stream

Nomination by state territory

6 years

4 years

7 RESPONSES TO CONSULTATION QUESTIONS

In this section we set out our responses to the 10 specific consultation questions for this review

1 Should the entrepreneur require nomination from a state or territory government in order to apply for the Entrepreneur visa consistent with the other streams of the Business Innovation and Investment Programme (BIIP)

The provisional entrepreneur visa should require nomination by an Australian university or the CSIRO or one of the DIIS Growth Centres

State or territory nomination should then be required when transitioning to either the subclass 188 (Extension) or 888 visa

2 Is four years an appropriate period for the provisional visa to enable the entrepreneur to develop and commercialise their innovative idea in Australia

Four years is an appropriate period to require the provisional visa holder to meet the requirements of either the subclass 188 (Extension) or 888 visa Where the 188 (Extension) visa is accessed this provides a further six years for business development but comes with the additional integrity measure of state or territory nomination

12

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

13

8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14

Page 29: 22 September 2016 BY ELECTRONIC SUBMISSION Department of ... · 22 September 2016 BY ELECTRONIC SUBMISSION . Department of Immigration and Border Protection . Please find attached

3 Should an extension of the provisional visa be permitted for individuals who have not established a successful and innovative venture in the relevant time period to allow them additional time to do so

An extension of the provisional visa should be permitted through the standard subclass 188 Business Innovation (Extension) stream with an additional requirement of state or territory nomination

4 How would success of a venture be measured to enable the entrepreneur to progress to permanent residency and is there an appropriate form of third party verification that could be used to verify the success of the business venture For example should measures include a specific level of business turnover number of Australian employees et cetera

Success of a venture should be measured by being able to meet the standard requirements of the subclass 888 (Business Innovation) visa stream after four years

5 Should grant of permanent residence be contingent on success of the original idea put forward for development or would other successful business ventures in the timeframe also be considered If so how could this be defined

Business ideas on which provisional entrepreneur visa applications are based must be allowed to evolve change fail and go through several false starts before succeeding Nonetheless within four years the business must meet the level of business success required to qualify for either the subclass 188 (Extension) or subclass 888 visa

6 Are there particular sectors that should be targeted (or limited to) which demonstrate a high level of innovation and provide significant benefit to Australia such as Science Technology Engineering and Mathematics (STEM) and Information Communications Technology (ICT) sectors Are there particular sectors which should be excluded such as residential real estate development or residential real estate schemes

For the entrepreneur visa stream to attract business ideas which are truly novel and innovative the programme should not limit access by industry sector or occupation As reflected in the Growth Centre industries identified by the DIIP the core skills areas of science technology engineering and mathematics are all pervasive which is likely to make any attempt to place restrictions around the application of those skills self-defeating As an integrity measure the business idea would still need to meet the requirements of nomination

7 What third party backing should be acceptable to ensure a robust process of assessment and investment has taken place For example some BIIP visa pathways require third party funding to come from members of Australian Private Equity and Venture Capital Association Limited

Rather than requiring the visa applicant to have venture capital funding already in place the purpose of the provisional entrepreneur visa should be to allow the entrepreneur time to attract such funding with the support of Australian government trade and industry agencies

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8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

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8 What is the most desirable third party capital investment threshold to balance the attractiveness of the visa to genuine entrepreneurs while promoting a high general standard of applicants

There should be no minimum third party capital investment threshold at the provisional entrepreneur visa stage The business venture would either by funded and supported by the university of CSIROrsquos commercialization arms or given access to funding and investment sources as part of a broader support package The business must meet the level of business success required to qualify for either the subclass 188 (extension) or subclass 888 visa after four years

Are there any specific integrity measures that should be considered being built into the initial visa assessment criteria ongoing visa conditions and criteria for permanent residence

Nomination by a university the CSIRO or a DIIP Growth Centre would provide rigour to the assessment of provisional entrepreneur visas The visa holder would then need to meet the standard criteria for the subclass 188 (extension) or subclass 888 visa including nomination by a state or territory government

Would the Business Talent (Permanent) (subclass 132) Venture Capital Entrepreneur visa stream still be required as a visa option once the Entrepreneur visa is implemented

The development of a provisional entrepreneur visa with the parameters we have recommended would not encroach on the role of the subclass 132 Venture Capital Entrepreneur visa stream While there has been minimal uptake of that stream and there may be policy considerations as to whether to remove it in our submission the establishment of a provisional entrepreneur stream in the subclass 188 does not in itself provide a reason for removal of the Venture Capital Entrepreneur stream from the subclass 132 visa

14