Gerard Rennick (Queensland, Liberal Party) Share this | Hansard source

I'm pleased to have the opportunity to speak in support of this bill, the Australia Business Growth Fund Bill 2019. Just before I do, though, I would like to touch on a couple of comments that Senator Whish-Wilson made before. I actually agree with him when it comes to an infrastructure bank. I think we need an infrastructure bank in this country. I think some of the projects we should spend that money on should be dams—in particular, the Bradfield scheme in North Queensland and also the Clarence River in northern New South Wales. As Senator Whish-Wilson would know, Tasmania's booming because of all the dams that have been built in Tasmania. So, yes, let's bring on some dams, and maybe we can fund some nuclear power stations as well. I know the Greens would support us on that! It's all carbon emissions free, so that's got to be good for the environment.

I'd also like to point out something about a banking royal commission that took place in 1937. One of the recommendations of that banking royal commission was that the government should control the volume of money in the system. Then the retail banks would basically control the distribution of it, with the central bank keeping an eye on that distribution of money. That was all turned upside down and on its head in February 1985 when a bloke by the name of Paul John Keating let all the foreign banks into the country. Basically he gave up the country's sovereignty when it came to monetary policy. Then later their year he brought in capital gains tax and left housing out of it. That has inflated the housing market. Then seven years later he introduced superannuation. There wasn't an election or anything; he just introduced it. So young people who want to pay their mortgage off aren't allowed to do that. No, they have to give their money to someone they've never met and they aren't going to get it back until they're 60, and they're going to be charged fees on their deposits and fees on their home loans. So they're getting shafted from both ends. That's one of the reasons why our banking system's gone topsy-turvy—because it's all against mortgages backed by foreign debt. That's not the way to do quantitative easing in this country. It should be done constructively by investing in capital stock to build infrastructure to provide essential services and income to pay for schools and hospitals. That's the way to do it.

Anyway, I digress. I'll come back to the bill. I'm proud to be part of a Liberal-National government that is committed to putting small and medium Australian business first. We know that small and medium business enterprises are the backbone of our economy, employing more than seven million Australians. The Australian Business Growth Fund is another way that this government is backing small and medium Australian businesses to create jobs, encourage innovation and boost economic growth.

Business growth funds backed by large financial institutions have proven successful in the UK and Canada where such initiatives have bridged the gaps between SMEs and accessing the competitive finance they need to grow. To date there has been no comparable fund to emerge in Australia, which is why the LNP has secured a $100 million funding commitment from each of the big four banks, as well as $20 million each from HSBC and Macquarie Bank to establish the Australian Business Growth Fund. Additionally, the federal government has committed $100 million as an initial investment in the fund, bringing the initial total balance to $540 million. With responsible management, and as the fund matures, it has the potential to increase in value to $1 billion.

Access to capital is a major obstacle for SMEs looking to expand their operations, particularly for those looking to avoid taking on unserviceable debt or relinquishing control of their business. The establishment of the Australian Business Growth Fund will give SMEs the assistance they require to clear this hurdle by providing a source of affordable, long-term equity funding, while allowing them to retain control of their businesses. Currently the equity funding market for SMEs is largely dominated by venture capital and private equity firms seeking quick returns and substantial control over a business.

The Australian Business Growth Fund will work collaboratively with small SMEs to provide patent capital equity with a long-term expectation for business growth. The UK and Canada business growth funds demonstrate demand for such capital from businesses looking to secure a relatively low-risk source of funding. Applicants will be eligible to receive an initial investment of between $5 million and $15 million, with the fund's investment share limited to between 10 and 40 per cent. This ensures owners will maintain a controlling stake while enabling the Australian Business Growth Fund to have meaningful representation and make a contribution to key business decisions.

In addition to equity funding, the Australian Business Growth Fund will also offer strategic advice and other consultative services to the businesses. Management of the fund will operate at arm's length from both the government and the participating financial institutions. It will be based on the model used in the UK and Canada business growth funds where a board and an executive team are responsible for management. The fund will be run in a commercially viable manner and will be restricted from investing in risky business. To be eligible businesses must have a record of revenue growth and profitability in addition to reasonable plans for growth.

The Australian Business Growth Fund is part of the Liberal-National government's plan to improve access to finance for Australian SMEs. Last year we introduced the $2 billion Australian Business Securitisation Fund, making funds available to smaller lenders to offer competitive finance to small and medium businesses. Helping SMEs access the funding they need to grow is part of this government's broader commitment to Australian businesses and the families they support.

Already we have introduced a significant package of taxation reforms, which show that this government is serious when it comes to backing small and medium businesses. For businesses with a turnover less than $50 million we reduced the corporate tax rate to 27½ per cent, the lowest it's been in over 50 years, but we won't stop there with the rate soon to be cut to 25 per cent in 2021-22.

We've expanded and extended the instant asset write-off, because we want to make it easier for small and medium businesses to be able to invest and grow. This means 3.4 million small and medium businesses can claim deductions for every business asset up to $30,000 in value until 30 June 2020, building on the success of this scheme over recent years under this government. Our deregulation taskforce is working to cut red tape, removing burdensome regulations and reducing the cost of doing business so that businesses can invest and hire more staff.

We've created a level playing field for small businesses, by stopping big corporations from abusing their market power to engage in anticompetitive practices or entering into unfair contracts. To show we're serious about giving small business a fair go, we established the Small Business and Family Enterprise Ombudsman to ensure a strong independent voice for disputes involving small business.

The Liberal-National government has a strong track record when it comes to backing small and medium Australian businesses, whether it's by removing red tape, cutting taxes or making finance more accessible. The Australian business community can rest assured that only a Liberal-National government can be trusted to put them first.

The Australian Business Growth Fund Bill introduces a much-needed new source of equity funding for small and medium business to further expand and prosper. We know that when businesses flourish they pay taxes and create jobs, the very jobs that are essential to keeping our economy strong, to provide the services and security that Australians rely on. I commend the bill to the Senate.