Millionaire migrants pouring into Australia
The number of millionaires streaming into Australia has surged to 7260 in the past year, new figures show, delivering a multibillion-dollar investment boost as Australia becomes the destination of choice for thousands of the world's wealthiest individuals.
The Department of Home Affairs data challenges claims that Australia's high-income tax rate is discouraging international investors as an Asian-led millionaire boom drives investment in Sydney and Melbourne.
Visa applications in the Business Innovation and Investment Programme, which includes investors with more than $1 million in business assets, jumped by 74 per cent in 2016-17 up from 5781 to 9051. Of those 7260 were approved, compared to 6484 in 2014-15.
In the same category, a fast-track visa allows the government to plough foreign cash into local projects in exchange for residency rights in as little as 40 days without the person passing an immigration test of their education, English proficiency and employment qualifications.
Chinese investors have become Australia's largest source of millionaire migrants.
The "significant investor stream" asks investors to stump up $5 million for Australian bonds, shares and venture capital projects. By March 2018 up to 2000 had been approved, delivering a $10 billion windfall to the Australian economy, despite a slow-down after property was excluded from the category in 2015.
The Business Council of Australia and Ernst & Young told a Senate inquiry in June that the top income tax rate needed to be cut to keep high-net worth individuals from tax havens such as Singapore but an AfrAsia Bank report shows Australia far outpaced its south-east Asian neighbours last year in attracting lucrative moneymakers.
Education opportunities, a favourable climate, the safety of women and political security were among the top reasons cited by investors in the New World Wealth survey of high-net worth clients.
"The high growth recorded in Australia and New Zealand is particularly impressive, as these countries are already well developed markets - they both make our top 10 wealth per capita rankings worldwide," the report for 150,000 investors found.
"Normally countries that start from a ‘high wealth per capita base’ struggle to record this type of wealth growth."
The report said Australia had a net-inflow of 10,000 millionaires in 2017. The Department of Home Affairs confirmed "high wealth individuals may also be granted visas through other visa classes [outside the business and innovation programme]" to explain the difference between the two figures.
"That is the highest net migration of millionaires to any country last year in absolute terms, let alone correcting for population," said Grattan Institute chief executive John Daley.
"This is in a year where, Australia's top marginal tax rate was relatively high [45 per cent] and cut in at a relatively low income [$180,000]. Singapore, with its very famous 15 per cent tax rate, only attracted a thousand millionaires."
The report found the political instability of Brexit had been a boon for millionaire migration to Australia, as well as the relative strength of the local healthcare system compared to the US and the absence of inheritance taxes.
Australia's proximity to Asia and its time zone were also cited by wealthy Asian migrants as key factors behind their decision.
Deepening political tensions between China and Australia appeared to have no impact on private Chinese migration in 2016-17, with the mainland remaining Australia's number one millionaire source, closely followed by Hong Kong.
China has become the world's fastest growing millionaire factory over the past decade, driven by strong growth in the high-tech, manufacturing, construction and healthcare sectors - a boom that is expected to continue as it transitions from a component manufacturer for US brands towards finished products.
China accounted for 90 per cent of all high-net worth investors coming to Australia in 2016-17, with the remainder made up by Malaysia, South Africa and Vietnam, a rapidly emerging market that has seen a 200 per cent growth in the number of high-wealth individuals over the past year on the back of a manufacturing and financial services surge.
One significant investor - who asked not to be named over concerns he would come to the attention of the Chinese government - said he made the decision to transfer his wealth to Australia to become eligible for the visa once his son started studying here.
"Australia has fresh air and pleasant climate for living," he told Fairfax Media through a translator.
"The time difference between Australia and China is only two hours. If we have more business people [coming] to Australia, can be benefit to Australia's economy, both win."
LRG lawyers migration manager Mark Ryan said the visa was attractive to astute investors.
"If you had $5 million why would you not just do that? All you have to do is show up for 40 days," he said
"It's a great visa, they don't have to come and work, it gives them the flexibility to invest $5 million, and then their kids can go to school here."
Last year, Assistant Immigration Minister Alex Hawke announced a review of the visa. He was unavailable for interview, but suggested tougher language tests could be implemented in future at a Chinese in Australia seminar in 2017.
“The program has to be designed to meet the Australian economy’s needs,” he said. “The expectation from the Australian community is that migrants have competent English, I don’t think that is unfair.”