Australia and other countries compared on high net-worth individuals

December 1, 2002

Australia’s migration mechanisms for wooing high net-worth individuals appear to be working, according to the government. The number of applicants receiving subclass 131 and 844 visas, Australia’s main mechanism for wooing the wealthy, has increased from 146 in 1999 to 251 in 2001.Not surprisingly, Australia’s system most closely resembles those of other countries with long-established migration schemes that emphasize a brain gain through recruiting skilled applicants. For example, Canada, like Australia, has an investment-linked visa that allows applicants to make a sizable investment into a government fund that serves as a sort of bond for investors who are expected to become involved in business upon their arrival. And as with the Australian system, applicants for the Canadian investment-linked visa must demonstrate significant prior business experience and must be able to show that they have obtained their funds legally. However, Australia’s requirements are perhaps more rigorous in this regard as applicants must show that they have acquired their money through business or investment activity. In both countries, there is an expectation that successful applicants will become involved in business but there is no legal requirement that they do so. However, the substantial investment in both countries is considered a sort of bond. Moreover, both countries seek to examine the visa applicant’s intention before he or she makes the investment. The UK’s Investor scheme, which requires a £750,000 investment, is slightly different in this respect. Applicants may not legally undertake employment, but can be self-employed or start a business. Other facets of England’s system for attracting high net-worth individuals were drafted during the high-tech boom of the late 1990’s, and as a result are geared very much toward Information Technology applicants. A year-long pilot program, called the innovator scheme, which required no minimum investment began in September 2000. The main focus of this program was job creation through applicants with third party funding (It was already possible to migrate through a minimum investment of £200,000). Between September 2000 and December 2001, about 90 people have migrated to the UK under the program and have created a total of about 750 jobs, according to the UK’s home office. However, with the IT sector’s steady decline over the past year or so, it remains to be seen whether or not this approach will remain desirable. Ireland’s program, however, is entirely another matter. Whereas the UK, Canada and Australia have long been popular destinations, Ireland has not. But substantial economic gains in the mid-1990s, partly driven by an educated population and a favourable climate for foreign investment, helped to turn Ireland into a country with net migration gains. Ireland does have an investment-style visa, which appears to resemble a mix of features from the UK’s system. “Business Permission” applicants must transfer to the state a minimum sum, and create employment for at least two European Economic Area nationals. An unusual feature of the Irish system is that it makes it very easy for corporations to transfer their employees to Ireland. As or April 1999, a work permit is no longer required for intra-corporate postings of up to four years. While the system has been widely used, it has also been abused, as there is little or no verification process and no required period of employment before the employee is transferred to the Irish office.

By: Anne O'Donoghue and Tim McDonald