There has been a significant increase in human mobility in recent decades. This is caused by factors such as globalisation, the relaxation of exchange controls and visa restrictions in certain regions, the pursuit of political and economic safe havens, the avoidance of real or perceived geopolitical risk, war and social unrest, climate change, and a desire for geographic investment diversity.

There is now global competition for human and financial capital in the form of economic residency/citizenship programmes. These allow people with liquid investment funds to acquire residency/citizenship rights in another country in addition to their usual country of residence/citizenship. 

In exchange, countries administering these programmes and providing these rights receive a significant financial investment in their domestic economies. It is a simple, legitimate, and mutually beneficial trade. 

Economic citizenship/residency programmes are a proven and legitimate economic accelerator

Economic citizenship programmes are offered by a growing number of small states in the Caribbean and Europe. These programmes are somewhat controversial because the lack of any residency requirements or commitment to the social fabric of the issuing country, if not properly regulated, can provide opportunities for malevolent activity in economically vulnerable developing nations. 

Economic residency programmes are quite different and, generally, uncontroversial. These programmes are offered in a number of European countries, including Austria, Greece, Italy, Portugal, Spain, and Switzerland. Almost half of EU member states now have a dedicated investor visa. Canada, the United Kingdom and the United States have had immigrant investor programmes since the late 1980s or early 1990s. Singapore, New Zealand and Australia also compete for this invaluable human and financial capital.

This is a proven and legitimate way for countries to attract capital, skills, and networks to grow the economy. The financial inflow to countries from these programmes can be significant and lead to significant macroeconomic benefits for many sectors of the economy.

One of the ways in which the Australian Government had encouraged foreign investment in Australia was through its own residency by investment program, known as the Business Innovation and Investment Program (BIIP).

The BIIP involved various visas and streams that included the Significant Investor visa, which was an Australian visa designed for high net-worth investors. To qualify for this visa, applicants were required to invest at least AU$5 million into complying significant investments in Australia. The visa was valid for five years, and successful applicants could then be eligible for permanent residency.

The BIIP was introduced to attract significant investment into Australia and contribute to the country's economic growth. However, in December 2023, the Australian Government announced a new Migration Strategy, which indicated that the BIIP, including the Significant Investor visa, was not delivering the desired impact. As a result, it confirmed in the 2024 Federal Budget that the BIIP would cease and it was officially closed as of 31 July 2024.

The visa criteria for the BIIP were, in our view, economically impactful and the program was a good source of capital to fund public services and infrastructure projects without diluting or divesting ownership and control of strategic or impactful assets. 

Furthermore, in our experience, capital was often recycled into active investments (such as venture capital and private equity) once the migrant became more familiar with the local economic, legal, regulatory, and investment landscape and socially integrated into Australian society. Very often that recycling of the initial investment funds was supplemented by tens of millions of dollars of additional investment made outside the visa programme into angel, venture, and private equity investments. 

It was therefore quite disappointing for many when the Significant Investor visa pathway, and the BIIP more generally, were closed. 

However, the good news is that in its 2024 Federal Budget, the Australian Government has announced that it would implement a new national innovation visa to target exceptionally talented migrants who will drive growth in sectors of national importance.  The new visa will form part of the Global Talent Program, to provide a replacement pathway for attracting globally mobile talent and capital. 

Key features include:

• Fast-tracked visa processing if Expression of Interest (EOI) requirements are met.
• No age limit.
• Permanent residency upon visa grant.

This last feature is critical - it's a pathway to permanent residency which makes it a good alternative to residency by investment programmes, which in some countries (such as New Zealand) have become more restrictive and mandate high minimum levels of investment in high-risk, illiquid investments. 

Eligibility to participate in the Global Talent Program will include applicants:

• having an internationally recognised record of exceptional and outstanding achievements in a profession, a sport, the arts, or academia and research;
• being prominent in their field of expertise;
• being highly skilled in one of the defined sectors or a related sector, which include resources, agri-food and agtech, energy, health industries, defence, advanced manufacturing and space, circular economy, digitech, infrastructure and tourism, financial services and fintech and education;
• currently earning or likely to earn at or above the Fair Work high-income threshold, which is currently AU$175,000 (as at 1 July 2024).

Further details on the proposed new visa are expected to be announced in mid-December 2024.

In our view, the Global Talent Program is a smart policy and a good fit for many of the mass affluent clients who consult us on global mobility options, but who can't justify the investment risks associated with residency by investment programmes in comparable countries. 

It’s also an expeditious option for family offices who are looking to strategically place family members or executives in ASEAN for risk management or to pursue new opportunities. 

Counterintuitively, by not mandating investment, and focussing on the talent in key defined areas of national importance and economic benefit to Australia rather than the money, a lot more patient and high impact capital may naturally flow into private markets in Australia. 

If this theory is correct, that will be a win for the applicants and Australia's economic growth prospects and innovation ecosystem.