Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Hansard source

I am really pleased to stand to speak on the Tax and Super Laws Amendment (Employee Share Schemes) Bill 2015 today, because this is the one of the things that parliament should do more often.

This is very much about the parliament as a maker of space for the people who will drive our prosperity in the future. I use the phrase 'maker of space' quite deliberately. It comes from the last paragraph of a book called Invisible Cities by an Italian author, Italo Calvino—a great author, by the way, and an extraordinary book. It is essentially a conversation between Marco Polo and Kublai Khan. In the last paragraph of the book—and you can read the last paragraph first; it is not a linear narrative, so I will not wreck it!—they are talking about hell and hellfire:

And Polo said: "The inferno of the living is not something that will be; if there is one, it is what is already here, the inferno where we live every day, that we form by being together. There are two ways to escape suffering it. The first is easy for many: accept the inferno and become such a part of it that you can no longer see it. The second is risky and demands constant vigilance and apprehension: seek and learn to recognize who and what, in the midst of the inferno, are not inferno, then make them endure, give them space."

In many ways, when we talk about these start-ups, extraordinary people have come up with something new. These are not businesses based on things that people have thought of before. These are not people who copy other ideas. These are people who start with nothing and find a way of looking at the world that causes them to come up with a new idea and then set about making that happen. These are extraordinary, rare people in every society. It is not a normal feature of a human being that we can throw aside the assumptions that we have built up over a lifetime. But there is this relatively small number of people who can. They just see the world differently. They recognise within themselves what is an assumption and what is reality and find another way to look at it. They come up with ideas that, once they have come up with them, we all say, 'Well, that was obvious.' But in all the world they were the only one who actually came up with that idea. These are extraordinary people and people we should value, because they are the people who will drive this country into the next century. How we make that space for them to do what they do will be one of the major determinants on how well this country prospers in 2050.

I first encountered one of these people many, many years ago. I am going to tell this story because it demonstrates this quirk of perspective which is so special. There was a consulting company back in the late 1980s that I knew quite well. They were problem solvers. They were the kind of company that you engaged when you had a big problem that no-one else could solve. That was it. The problem that a particular company had was that they had built a new building that had one lift and it was slow. Retrofitting a lift is really expensive. The staff who were on the top floors of this building were getting really annoyed. That the lift was slow was destroying morale. Who would have thought? But, apparently, it was really slow. It took something like two minutes to get to the top of the building. So they employed this consulting company and asked, 'What can you do? We cannot afford to retrofit.' A month later, the consulting company came back with a piece of paper with one sentence on it. It said, 'Put in mirrors.' The conclusion was that the problem was not that the lift was slow; the problem was that no-one had anything to do in the lift while it was slow. Speed was not the problem; it was boredom. So they put mirrors in and the problem went away. They put mirrors in so that people could fix their make-up, do their hair or whatever else they wanted to do. So the two minutes became the time when you fixed your make-up or checked out your pimples—whatever you do in a mirror!—and the problem went away.

It is an amazing ability for a person to see a problem that everyone sees as the same and to flip it over and turn it into something else. I remember that at the time I thought, 'That is a very valuable trait in any country.' We have people like that. These are not people who respond to change. We often hear in this parliament, in the media and even from some of our great academics and policy thinkers about the need to respond to change. These people do not respond to change; they are the change. They pick the world up and they turn it into something else. They are some of our most valuable contributors. There are few of them. For those of us in this parliament looking for votes, there are not many of them. The return that we get as a country will not come until the next generation. Ten years down the track we will be seeing the benefits of the space we create for those people today.

We are doing something quite special today. We are recognising in many ways that, just as these special thinkers turn the world upside down through their perspective of what can be done and how to fill a need, they also quite often turn the world upside down on how to fund it. They really do. Those old assumptions we have on how you raise capital, build it and appreciate it, how the world works, when you invest and what the return period is essentially came from the agrarian age and the industrial age. All of that, for these people, is not it. They look at the world of finance and they turn that upside down as well. They come up with ways of moving from where they are with nothing to profit through a different path than we have considered. They are making up new ones all the time. They are finding new ways to do it all the time.

We as a parliament needs to be as flexible as possible in recognising that those changes will come and that they will keep coming. It is our job to keep that space as flexible as possible as long as the behaviour is about the business model, not the tax break. As long as it is about the business model and what the business needs to finance its growth, governments should be there supporting these rule breakers and these people who generate the next wave of change.

This amendment does that. This amendment is to the work done by the previous Labor government in 2009 designed to take out the behaviour of many people, particularly at the upper end of business, who were using employee share schemes as a way—let's be honest—to avoid tax.. It did that, and it did it quite effectively. Then it was discovered that those laws were also impacting on people who were using employee share schemes in a perfectly legitimate way to build their business, particularly in the early stages of start-ups. It is not like the old way. I often say that accounting was invented in the agrarian age when there really was an annual cycle. There is not an annual cycle for many, many businesses now. This employee share scheme recognises that quite often a person contributes to your business in the early stages of it well above an employee. In fact, what they contribute profoundly affects the ability of the idea to be finalised and exploited. These share schemes provide in that business model a genuine way to reflect the contribution that a person makes to a start-up. It also allows a group of people to share in the future of that start-up and to have a greater degree of buy-in. So it serves a very real purpose. One of the unintended consequences of that action in 2009 was that it shut down that option for a range of very, very important people who we need to do well.

As the previous speaker said, we as a country also need to be more forgiving of the level of failure of new ideas. They are not always successful. I am well aware that, if you go into business with a person on a start-up, experience in past ones, successful or not, is incredibly valuable. Getting it right is incredibly difficult when you are making the path as you go, when you are not treading a path already trodden.

This is a good amendment. In the interests of being extremely flexible, I suspect that changes will still need to be made in the not-too-distant future because the world is changing even in this space as we speak. We as a parliament need to be incredibly flexible and willing to consider the changing needs of this sector. That is where I want to say one thing about the government's speed on this legislation. I will try to be very mild about it, because I genuinely believe that if we, as a nation, want to provide the space for start-ups, for the people who will create the change that will drive growth in the future, we need to have a very bipartisan and cooperative approach to flexibility. I know that the Assistant Treasurer, who is sitting here at the table, has already said that, in terms of crowdfunding, this bill and a whole range of other—

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