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

Gospel. I do not run around and seek out gospel, but I thought it was such a good idea that I thought, 'Yep, I'm gonna to do that.' So I did. So I participated in that one and that made me part of the buy-in on then. Every time I saw an ad for that choir I was part of their world. I was part of making it actually happen. In a way I was kind of Adam Smith on steroids—you know the old Adam Smith quote that says 'if each person acts in their own enlightened self-interest the resources of the world are best allocated.' This was not just me doing that by spending my money. This was actually me involving my time, my attention and my money in the production of the product which other people then bought. It was an incredible thing.

In the arts industry, theatre was crowdfunding in the seventies. In fact, in Australia the mechanism where people buy their entire year's subscription a year early, and arts companies start the year with 90 per cent of their revenue in their bank, and the crowd actually cash flows the production of their work, was developed in the seventies in Australia. Only Australia and South Africa do it. It is one of the great innovations in the theatre world. Even now, if you look at the proportion of where crowdfunding is, you will see that the arts sector matches start-ups in crowdfunding, because it has been in it for decades.

Crowdfunding for me, perhaps because I come from that background, is not just about business, and start-ups seeking investment. It is actually about the power of people to determine where a society spends its resources. It is actually about the crowd itself as much as it is about the investment. I can imagine the time when someone comes up with a way for crowds not just to fund something that exists but to cause it to happen, to cause it to come into being, to cause the idea to form. We can already see all around the world communities trying to take back that power, the power of determining their own direction. Even in Australia you see organisations, like GetUp!, that do it through the political process quite well, but you also see a whole range of other social enterprises and not-for-profits that are using the power of the crowd to make things happen.

The problem with the government's approach is that it excludes the kinds of organisations that are already in the crowdfunding space. It is very difficult for small business, which is not actually in the crowdfunding space, to get in, because most of them are now proprietary companies. They would have to become unlisted public companies—something that is quite expensive for a business to do. There is a lot of red tape and hurdles for small business, and most small businesses do not currently meet the requirements of crowdfunding. Then you have social enterprises, which also do not fit. You have not-for-profits, which do not fit. You have some intermediaries that are already using mechanisms that will no longer be legal under this platform.

What we have in a sense is a whole range of things that are happening—start-ups that are ready to do this—and then we have the government coming in with a structure and a process which do not match what is already happening and the vision that the sector itself has for how it might use crowdfunding. I hear from social enterprises, for example, that believe that crowdfunding could be a pathway between where they are now and the impact investing world, which requires them to be of a much larger scale than they currently are. That is one pathway that we would hope this question of equity crowdfunding would solve, but not under this legislation.

This legislation is very narrow in its definitions and in many ways serves the larger end of equity crowdfunding quite well. Businesses that are well established, businesses that have some administrative capacity and the larger investors are served quite well by this legislation, but the many, many people who would be interested in making small contributions to quite young and emerging organisations of a whole range of types are actually excluded in this legislation.

It is good that it opens the door to some. We on this side will be watching very carefully. We are looking forward to the results of the outcome of the Senate inquiry and we will be watching very carefully. We are listening very carefully to the criticism that is coming from the field and we are urging the government to reconsider some of the more difficult elements of this bill.

But I do want to say that it is very good that the government is acting and that at least some elements of the start-up and small business communities will find a way to use this bill to grow their activity. But, again, it is a belief I have that the time for governments to prescribe the way people do things is coming to an end. If we really want our community to be agile, if we really want innovation, the way of regulating now is not to describe what the narrow framework is; it is to describe the outcome and the rules and allow people and businesses to find pathways that best work for them; to allow business to define their structure by what works for them as a business not because of this single piece of legislation. We want people who wish to do social good to determine the pathway to do that—whether it is a social enterprise or whether they have to do it through some other structure—in the way that best satisfies the work that they are doing, not in a way which the government prescribes in order to allow a very narrow definition of equity crowdfunding to take place.

Once again, I thank the government for its work in getting to this point. I thank all the many stakeholders who have spoken to me and who have written submissions to the Senate. They have been very clear in their criticism. I strongly urge the government to pay a little bit of attention and rethink some of the elements of this bill.

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