One of the shock announcements of the Budget was that working holiday visa holders will be required to pay about a third of their earnings in taxes. The Treasurer announced that from July 2016, those on a working holiday in Australia will no longer enjoy a tax free threshold of up to $18,200, and will instead be forced to pay 32.5 per cent tax from their first dollar earned. That measure will apparently save the budget $540 million over four years.

What is the real cost of this? Backpackers might go elsewhere like New Zealand. Fewer backpackers here could also mean a dive in the enrolments in the ELICOS sector – the English Language Intensive Courses for Overseas students. The ELICOS visa has been used by many backpackers to remain in Australia at the end of their work/holiday stint and some go on to full student visas for other courses.

Sue Blundell, English Australia’s executive director told The Australian that taxing backpackers will affect the ELICOS sector badly as these working holiday-makers could start looking elsewhere and drastically damage a $2 billion dollar industry.

The ELICOS sector accounted for 15.0% of total student enrolments and 21.5% of total commencements in YTD February 2015. A report by EA and the federal Department of Education has found that almost 164,000 students started English language courses last year, with student numbers increasing by 11 per cent on last year and revenues climbing to $2 billion.

China accounted for the largest cohort of enrolments and commencements in ELICOS with shares of 26.1% and 21.7% respectively. Brazil was the next largest nationality for ELICOS enrolments with 8.0%, followed by Thailand and Colombia (7.8% and 6.9% respectively).

In just four years, the number of Australian families needed to house the international students has soared 400 per cent, according to figures from the NSW Department of Education.

Paying an average of $300 a week to live with an Australian family in NSW is clearly no obstacle even after forking out a similar amount each week to study at one of NSW’s 150 state public school fees that accept overseas students. Wealthy Chinese parents are apparently driving the demand for homestay accommodation for young children in especially NSW.

“Thousands of teenagers from Asian countries are increasingly being sent to NSW to finish their studies at the state's public high schools,” notes a report in The Sydney Morning Herald today.

The latest figures from the department revealed a 25 per cent increase in new, full fee-paying international students in just 12 months. About a third of these students are in homestay arrangements.

According to the report, in 2010, only 276 families were required to host international students, but in 2014, 1129 families were needed and a tender process to find more families to cater for the expected influx later this year has just closed.

Anyone here know a good small cap stock fund manager? Australia’s venture capital groups and small cap stocks fund managers probably had a great weekend given the announcement that a significant portion of funds under the SIV programme is to be directed their way from 1 July 2015.

If the SIV program leads to the grant of 1000 visas a year, there could well be an injection of AU$5 billion into the Australian economy annually. Venture capital groups are expected see $500,000 million of this with the Australian small cap stocks possibly absorbing AU$1.5billion.

The question hanging over the changes is whether the wealthy Chinese investors who make up over 90 per cent of SIV applicants will still remain keen on the programme. Venture capital groups and fund managers who spoke to The Australian Financial Review (AFR) were quick to play down the higher risk element introduced into the SIV program with one saying, “…they [Chinese investors] like to keep their money so it won't disappear, but they also understand that with high risks such as VCs come high returns.”

According to an AFR report, last year, Australian small-cap managers posted a remarkable 16.25 per cent (their equal-weighted average return) against the S&P/ASX Small Ordinaries 0.76 per cent loss, according to the S&P Dow Jones SPIVA Australia Scorecard.

But small cap fund managers are known to charge hefty fees which can strip 20% of any gains for their work in investigating hundreds of companies each year to find the most promising ones for their clients.

The Aid Industry and Humanitarian Organisations need to be mindful that the rest of the world does drift into "misery overload". There probably is an unprecedented number of catastrophes impacting populations that result in forced or necessary movements. This then results in increased "humanitarian need"  etc around the globe. In the past few years somme of the better know hotspots are: Syria, Ebola, Eritrea, South Sudan, Central African Republic, Vanuatu, Nepal and the list goes on.

Human Trafficking IS part of the problem as this also encourages ambit migration which then adds to the problems of forced migration. Human Trafficking feeds off ease of entry into desirable destinations. Human Trafficking is now the third biggest money spinning industry in the world.

Humanitarian agencies frequently talk about "compassion" as a general idea without providing any real ideas as to how the limited resources associated with "compassion" may be best used. In my opinion, AID associated with humanitarian catastrophe is best apportioned quite specifically at immediate need e.g. in camps, for NGOs to better alleviate immediate suffering as best as possible. This is probably as good as it gets. The host countries of Pakistan, Jordan, Chad etc DO receive assistance with such. It becomes a global issue to pressure nation states that create unnecessary movements of people to act in such a way that their populations don't deed to leave. This is MUCH easier said than done. To intervene or to not intervene seems to backfire irrespective of whatever the decision. Fragile balances may exist in areas of teetering dysfunction. 

As per the below announcement from Austrade, we now have confirmation of the new SIV investment regime effective 1 July, 2015. On initial review of the draft options and final frameworks documents (attached) the main differences are: 

-          the Venture Capital  has been reduced to $500k although may rise to $1M within 2 years. Have addressed the “uncalled capital” question by having the remainder of the committed funds held in escrow in a Cash Management Trust or Australian bank account as security for a bank guarantee in favour of the Venture Capital fund

-          Emerging companies still $1.5M although allowing up to 10% in foreign companies i.e. New Zealand (this may mean we have additional group product that meets the requirements)