Tim Wilson (Goldstein, Liberal Party) Share this | Hansard source

I start by saying, in response to the previous speaker, that there is no limit to what somebody can achieve if they do not mind who takes the credit. So we do not need the constant references to who has done what at different points and thinking that is a necessary part of this debate, when, hopefully, we are all trying to improve the state of the country and the regulation that surrounds enabling businesses of the 21st century to excel. We should not be focused on trying to grab a credit; we should be focused on trying to do the right thing by the country.

When it comes down to it, this bill is enormously important because it fits straight into the objectives of the election of the Turnbull Liberal-National coalition government, which is committed to creating the jobs and growth potential of the future by backing the intellectual capital of every Australian. That is the objective, that is the purpose and that is what it seeks to deliver. I congratulate the minister and the assistant minister for their work in bringing this forward, because it is a very important part of the future economy to build the 21st century of Australia. By placing the economy at the centre of its policy agenda, the government is ensuring that we can continue to be a successful country by securing our sources of growth for the next 25 years and beyond. This bill, the Corporations Amendment (Crowd-sourced Funding) Bill 2016, is another part of the government's pro-growth agenda, intended to help transition the Australian economy into one that is more diversified, broader based and resilient, particularly in dealing with the opportunities that are presented to us by technology as a method of reforming business models to create economic opportunity and remove the barriers to people wanting to set up new businesses. That is what we should want and aspire to. This bill is intended to make way for the types of capital funding that are most relevant to the 21st century—funding that allows pioneering Australians to kickstart their ideas into enterprise opportunities and take that intellectual capital, commercialise it, take it to market, test the market and grow Australia.

Any measure which boosts investor confidence is a good thing for all of us. As we become increasingly reliant on service based exports, it is crucial that we promote productivity gains in our existing service industries as well as back new enterprises to innovate and take advantage of our ambitious trade agenda. That is what this bill seeks to do. This bill amends the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 to facilitate crowdsourced equity funding in Australia, and implements the commitment made by the government in the 2015-16 budget as part of our Growing Jobs and Small Business package.

Crowdsourced equity funding is a groundbreaking model. It allows entrepreneurs to access capital from a large number of investors from all around the world—and something that is very close to the heart of the Turnbull government is attracting foreign investment to build this country's future. It is managed through an online platform, where each investor typically contributes a small amount of money in return for an equity stake in the enterprise. According to a recent report by Massolutions, the crowdsourced industry is set to account for more funding than venture capital this year. That is a very welcome trend because it removes the costs and barriers for investment but, equally, opens up the opportunities for those with brilliant ideas to take them to market. In 2010, the relatively small crowdfunding market saw an overall investment of approximately US$900 million. Last year, we saw over $34 billion crowdfunded. That is an extraordinary growth in a relatively short period of time and comes from so many people, who may not have huge amounts of capital to invest but might want to secure and take risk in exactly the way that we should want to. This is the animal spirit of the market working. The World Bank estimated that crowdfunding would reach $90 billion by 2020, but, if the current growth continues, it is more likely to reach $90 billion by next year.

The crowdfunding industry is also beginning to diversify across several types of funding models, including rewards, donations, equity as well as lending. In the United States, some venture capital firms have already begun integrating equity crowdfunding as a component of their investment strategy. Isn't it an exciting thing to have an environment where anybody can buy into the future of building a business where they have confidence in the idea, the people, the skills and the strategy, and are able to go on and invest not just in their own future but in creating the jobs of the 21st century. We have seen the success of this investment model in agriculture, civic projects, science and technology, film, and real estate. In Australia, however, crowdfunding has been limited by the regulatory impediments in the Corporations Act, which impose an excessive compliance cost for start-ups and other small businesses.

This bill addresses these obstacles by establishing a legislative framework for crowdsourced equity funding that addresses the regulatory impediments identified in the Corporations and Markets Advisory Committee's report. The proposed framework will allow public companies to issue equity through crowdsourcing with reduced disclosure compared to what is required under full public equity fundraising activity. For newly registered or converted public companies that meet the assets and turnover tests, the framework provides concessions from some corporate governance and reporting obligations. To ensure investors are able to make informed investment decisions and not be exposed to excessive potential losses, the framework sets out the minimum disclosure requirements and a $10,000 per issuer per 12-month period investor cap for retail investors. It also sets out a number of obligations that intermediaries will need to perform as part of providing a crowdfunding service.

Crucially, crowdsourced funding will promote competition among lenders. Existing funding options for small businesses, including bank debt products, will need to adapt and increase their attractiveness and competitiveness, and I think that is a particularly exciting thing because, while we hear a lot of things from the opposition about the banks, it is competition that drives them to perform and prove better. That is what we should seek to achieve, and that is part of what this bill seeks to achieve. The crowdsourced equity funding regime set out in this bill will allow eligible companies to fundraise up to $5 million per year from the crowd. This will act as a springboard for entrepreneurs, ensuring their good ideas are able to find some clear air to compete for commercial success and enrich those people who seek to invest.

The time spent on regulatory compliance is time our small business men and women could be using to collaborate and to refine their business model. This bill will allow crowdfunded companies to offer equity securities to retail investors with lower disclosure than required at present. A full disclosure document requirement can be costly and time-consuming to prepare and is one of many hurdles which prevent enterprising Australians from getting their ideas to market. While reduced disclosure can be unnerving, the framework will ensure that investors have access to the key facts about the company, its structures and the fundraising. Investors will be able to interact directly with the company to ask questions relating to an offer. The government has consulted widely with small business and investors to ensure the balance is right between investor exposure and cumbersome regulatory compliance.

This bill will help foster innovative economic activity and unlock new sources of funding to ensure good ideas are able to be commercialised. The economic environment in this coming century will be more collaborative than ever, and that is a fundamentally exciting thing. Automation and the internet have provided opportunities to scale businesses like never before. This bill harnesses the changing environment and gives our entrepreneurs access to a whole new group of investors to share in their success. Most importantly, when small business succeeds, so does our great country. It is not the role of government to pick winners; it is the government's responsibility to foster the right economic environment for entrepreneurial spirit to be fully unleashed. By removing unnecessary regulatory barriers, we are backing the intellectual capital of Australians and their ideas.

I note the previous speaker has raised a number of issues around different proposals and amendments that they might seek to propose in the future. One of the great challenges, when you are dealing with regulation around different types of technology and how that operates within a market environment, is that the market is constantly changing, and that innovation and ideas continue to come through to shape its direction. So, while it is easy to say that we should just hold off until we can get it perfectly right, that completely dismisses and misunderstands the environment that we are in. There is constant change, and there will need to be a review of different pieces of law in the future. That is not a sign of the current law particularly failing or the government getting anything wrong, but quite the opposite; a recognition of a government that is nimble, agile—innovative, some might say—that responds to and recognises the changing market environment that this economy should be seeking to embrace, and so should our laws be respectful and mindful of that.

The need to create a proper regulatory environment for crowdfunding in this country comes up regularly when I speak to the investors and small business people in my great electorate of Goldstein. In Goldstein there are many people who want to come up with new ideas, test them in the marketplace, challenge the status quo, be disruptive—I say 'be disruptive' in the most exciting way possible—find new ways to do more with less, and disrupt existing large market players, particularly as avenues to secure new capital, because they want to invest in their ideas, they want to go out and sell their ideas to the world and they want the economic opportunity for people to come along and back them. That is what we are doing with this bill. We are backing the people who want to invest in the future of this country. We are the ones who are backing the intellectual capital of this great nation, and we are the ones who are going to create the economic environment for the 21st century. That is why this bill should be supported, and that is why we should continue to back Australia's future. I highly recommend the bill to the House.

See this speech in context