Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

I rise to speak on the Corporations Amendment (Crowd-Sourced Funding) Bill 2015. The social media has really turbocharged crowdsourced funding. It is now possible to go to a variety of platforms, some of which many people know and use regularly—Kickstarter, Pozible and many others—and put up a project or an idea online and put the call out for people who want to be part of it and who want to put a bit of money into that project. That is a remarkable thing and it has given rise to whole new ways of people relating to each other and supporting each other in their communities. On the whole it is to be encouraged, and it is something that is to be applauded because it is allowing people to connect with each other and form common bonds in a way that even 10 years ago, let alone 20 or 30 years ago, would not have been possible. I have helped a book come to fruition by being a small player in crowdsourcing it, and I have participated in other crowdsourced projects as well. Knowing that it is something that I could not have done 10 or 15 years ago is a good thing, and it is one of the more welcome aspects of the development of technology—the ability for people to connect to each other.

Many of the projects that use existing crowdsourced funding platforms reach an almost natural limit. These platforms are great for things like putting out a book, and some people have even used them for getting a new piece of machinery for their farm, for example. But there are certain projects where you want a bit more than someone offering to put in a bit of money on a website. You want something where the person who is putting in money might have a legal claim, and it is questionable at the moment as to what your legal status is if all you have done is to put in $20 via Kickstarter. So you might want to have a legal claim or you might want to have some say in what happens inside the enterprise. All these are questions we have to answer, as this new sharing economy develops, as to how best to deal with them.

In Australia at the moment, if you are someone with a good idea and you needed funding to make it happen, and you want to get that funding from multiple sources—as opposed to, say, going to a bank or getting into debt some other way—you have really only got the option, once you reach a certain size, of forming what is called a public company: a company that the law allows to go out and publicly advertise for people to put money into. The other form of company that most small businesses use, a proprietary company, does not allow you to do that. So start-ups find themselves at that point where they might have to make a choice: do they become a private company, as many small businesses would, but know that you cannot then go out to the public and ask for money—or do you become a public company? The problem with becoming a public company, for many of these innovative ideas, is that there are a lot of requirements that you have to comply with to become a public company. There is a lot of disclosure that you have to go through and it is an expensive exercise, and for those reasons not many small companies choose to take it up—public offerings and the like—and it gets even more complicated if you decide that you want to list on the stock exchange. You do not have to, of course, but many public companies do. So these new ideas are finding themselves at a point where they are facing an impasse. So, to that extent, it is good that the government has recognised that. It is good the Financial System Inquiry recognised that. And it is good that the government is bringing a proposal before this chamber to deal with it, because it is something that we should deal with, as members of parliament.

I am encouraged to hear from previous speakers and also from the minister that the government is going to have a look a bit later on at how to deal with debt funding for crowdsourced entities, because at the moment it would be fair to say that that characterises the majority of crowdsourced funding—people putting a bit of money into something that could be much more closely akin to debt rather than equity funding. But what we are dealing with here is: how do small enterprises encourage other people to take something akin to an ownership stake—an equity, or a share, as it would commonly be referred to?

It is good that there is potentially going to be a third way for these companies, so that they do not have to go through the rigmarole of becoming public companies and certainly not publicly-listed companies. And it is good that the government is considering allowing people in that position to opt out of a large number of the regulatory requirements. With that comes a potential downside, because the investors into those crowdsourced enterprises then might not have the same information that you would have if you were a normal, publicly-listed company in Australia. So if you jump on the internet and you see an idea or you hear an idea on the radio and you think, 'That looks like a good idea; I want to invest in that,' if they are going through a crowdsourced funding model as proposed by this bill, then you, as an investor, will probably have less information available to you than you would if you were to go off and buy a share in a public company. So, on the one hand, it makes it easier to get the idea off the ground; on the other, it potentially reduces the protections that are available for people who are prepared to invest in it.

Say I put $20 in to help someone publish a book. Many of us who do that are prepared to accept that we might not see that $20 again. Many platforms in fact only ask you for the $20 if you reach the full amount. We are talking about something different here. We are talking about potential investments of tens of thousands of dollars into a new idea—into a start-up. What kinds of protections should you offer those people?

I am pleased to see that this bill does place some weight on those protections for those people—that there is a version of the protections that are available to people who invest in public companies flowing through to this new crowdsourced equity funding model. That is a good thing. That has led some, though, in the sector to say: 'This bill won't do enough for start-ups. If we have to comply with those requirements, and if the protections that are available for the investors come in the form of limiting how much money we can raise or limiting how much money we can raise from an individual investor, then it is not going to do enough for start-ups.' We have had people approach our office from this sector saying exactly that—saying, 'If you really want to unleash innovation then you need a more laissez faire model than is currently being proposed,' and saying that this model is too restrictive.

I want to thank everyone in the sector who has come and approached us and raised those issues and said that there are ways that the bill could be improved. I also want to thank the minister responsible, for giving us an extensive briefing on it. I anticipate that this bill will be subject, probably, to an inquiry in the Senate, but it is certainly something that is being discussed and debated more broadly. We will continue to formulate our position based on those inputs that we get. We appreciate that this is about striking a balance, and the question is whether or not the government has got the balance right in this particular bill. That is in part going to be a question of judgement. But we need to have a bit more work done, from our perspective, before we can form a final position about the pros and cons of each.

There is one area that is of particular interest to us in the Greens, and that comes to the question of crowdsourced and community-owned renewable energy, because this is a booming sector. Increasingly, people want to own their own solar panels—their own way of producing electricity. They are going to start putting batteries in their houses soon so as to be able to store that electricity and generate it as they need. And it is expanding now beyond individual households to whole communities and whole towns.

In Victoria we have Hepburn Wind, for example, where the wind turbines that have been erected outside Hepburn are now helping power the whole community, but they are owned by the community as well. When the community decided to put this together, they had to jump over a number of hurdles to work out what the right legal form was to allow everyone in the community to own a bit of the wind turbine that exists in their area and how they—the people who wanted to make it happen—could put out an open offer to the community to get everyone to buy in and how to navigate their way through all these parts of corporations law that I have been talking about—private versus public company versus other kinds of organisations, associations and the like.

We have heard from a number of the community-owned renewable energy associations, of which there are many, many more around the country and whose number is growing, especially as they watch governments attack the renewable energy target and attack action being taken on climate change. People in this country are far, far ahead of this government. People know climate change is real, and people like renewable energy. They are now starting to build wind farms and large solar farms in their own backyards, especially if they are living in regional and rural areas, and they are starting to come together as communities to own them. One issue that we found is this. They get together, they navigate the system, and, after doing their crowdsourced funding, they have community ownership of renewable energy generation—and then they find it hard to plug into the market. They are told that there are a number of barriers to being able to do that and told, 'You are not the right kind of entity to do that.' We hope that perhaps this bill might give them a new way forward. Perhaps it might provide an opportunity for addressing some of those issues. But those issues are real, and they are ones that we will be considering in the context of this bill.

I can also say that, more generally, in Melbourne, which I think is the social enterprise capital of Australia and the social innovation capital of Australia, there will be many, many others who are looking at the prospects of doing their own crowdsourced funding who we will continue to talk to over the next little while.

As a result, I commend the government for taking the initiative of adopting this part of the financial systems inquiry and bringing a proposal before the House. The Greens will look at it in good faith and will continue to take soundings from the sector and will make the decision about whether it strikes the balance in the right way. I again thank the minister for approaching us in good faith as well and offering us information about this bill. As it progresses through this House and through the Senate, we hope that this is a bill that, either in its current form or in an amended form, will strike the right balance, because crowdsourced funding is an idea whose time has come and, if we can support it and protect people who want to invest in it as well, that is something that we as parliamentarians should do.

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