Brett Whiteley (Braddon, Liberal Party) Share this | Hansard source

I rise this afternoon to speak on the Corporations Amendment (Crowd-Sourced Funding) Bill 2015. In doing so I am supporting the commitment of this government to put jobs growth and small business at the centre of our economic agenda. This bill is a key component of the Turnbull government's Growing Jobs and Small Business package and the government's response to the Financial System Inquiry, but it is only the start of what will be an exciting and economically enhancing journey. This package is targeted toward the innovators, small-business people and entrepreneurs in the economy, the people who create jobs and increase growth in the local community. They have been waiting for this government and past governments to support them in their endeavours.

Under the arrangements this bill puts in place, a regulatory framework to facilitate crowd sourced equity funding will be established. The aim of this framework is to mitigate regulatory impediments in the Corporations Act that make it impractical and costly for businesses to fundraise through crowd sourced equity channels.

Crowd sourced equity funding is an exciting new concept in financial markets, particularly for small and start-up businesses. There are businesses and innovators out there who have fantastic ideas that have the potential to grow jobs and the economy but who struggle to attract finance through traditional avenues. Crowd sourced equity funding has the potential to fill this gap in the financial market and give innovators a leg-up to contribute to our ideas boom. Crowd sourced equity funding is a funding arrangement that allows a large number of individuals to make small financial contributions towards a company or invention in exchange for an equity stake in the company. The funding is typically managed through an online platform and so reaches many potential investors who may not otherwise have invested through conventional methods.

Crowdfunding has been behind some simple yet effective designs from entrepreneurs who have the ideas but not the capital behind them. A lot of the time, crowd source campaigns come from people who notice a problem or scope for improvement in everyday life and decide to do something about it themselves. Examples of these kinds of projects include the Glif, a tripod for smartphone cameras, and Sole-Socks, socks that are invisible yet have the functionality of a conventional sock. An Australian invention, the beehive tap, raised $15 million from crowdfunding in two months. This new beehive design allows beekeepers to harvest honey without disturbing the hive. A father and son duo from Byron Bay spent a decade coming up with the idea and have made it a reality using crowdfunding. These products are conceptually, incredibly simple, yet they are the first of their kind on the market, solving simple everyday problems.

Crowdfunding is not limited to individual inventions and quirky creations. The multimillion dollar box office hit Veronica Mars was a crowdfunded project. Kristen Bell put the Veronica Mars movie project on Kickstarter, one of the platforms that I spoke about, and broke the website's fundraising record. She raised $2 million in 10 hours and had the most backers of any project with over 90,000 supporters.

Part of the way crowdfunding works is through online platforms such as Kickstarter, VentureCrowd, Fundable and Indiegogo, where innovators post a pitch of their idea. Investors can contribute if they want to see the idea come to fruition. I have a few ideas of my own that may be open to crowd sourced equity funding. I would like to see a company come up with a brussels sprout that tastes like a Cherry Ripe or a money tree that would be capable of paying off Labor's past debt, but I suggest there are plenty of other ideas that people would like to contribute to.

In some cases the ideas have been so popular that funds have been raised in under 24 hours or the funding levels have far surpassed the initial target. Crowd sourced funding allows mum and dad investors the chance to invest in what is important to them and the business ventures they want to see succeed, in a way that previously has not been available to them. It is an amazing new part of the economic horizon that we are talking about today.

The crowdfunding success stories I have just mentioned clearly demonstrate how simple and easy crowdfunding is. More importantly, they demonstrate how effective it is. Quite simply, if the market supports a project, then the finances will allow it to come to fruition. That is the way of the modern economy. Some of the traditional barriers to economic growth, such as geographic isolation or limited market access, are diminishing day by day through crowdfunding. This kind of funding model allows for a new economy built on innovation and ideas and a have-a-go attitude. That is the attitude that this government is absolutely committed to not only supporting but enhancing and creating the environment for it to take place. This is a have-a-go country. We have built our reputation, our economic platform, on the back of a have-a-go attitude. We are people of innovation. We are people of ideas.

As with any kind of financial investment structure, the government has also committed to protecting investors through various regulatory measures, including those in this legislation. Retail investors, who will share in the successes but also the risks of these businesses, will have adequate protection under the new crowd sourced equity funding regulations. ASIC will have ongoing responsibility for issuing licences to intermediaries and monitoring the crowd sourced equity-funding network. The intermediaries in the network will play an integral part in the integrity of the funding system, with the role of conducting checks on companies prior to their listing. We cannot have the law of the jungle with this. We need a regulatory framework that will ensure issuers and investors have confidence and trust in the intermediary, which will need to hold an Australian financial services licence, which can be issued only by ASIC.

Whilst these requirements are designed to protect the investors, some regulatory requirements of public companies have been removed to make it easier for small business and start-ups in the early stages of operation. The public disclosure requirement has been reduced, with companies required to offer generic information relating to investor rights and risk warnings, rather than full product disclosure statements.

The requirement to have an annual general meeting of shareholders has also been removed as well as reduced annual reporting obligations. These measures do not diminish the rights of the investor. They just peel away some of the paperwork, red tape and time-consuming obligations that are incredibly costly to business in their infancy.

These exemptions cease to apply after five years or if the business exceeds the assets and turnover tests of $5 million. This ensures the measures are there just for start-ups and are not exploited by big business aiming to take advantage of their investors. Most importantly it has the dual purpose of protecting the mum-and-dad investors in the economy whilst making it easier to start a business.

In my electorate of Braddon there is a strong small-business sector, with over 6,000 small businesses across the electorate. I have always said that if we can encourage just one in every three or four of all the small businesses in my electorate to hire just one extra person we would go a long way to solving unemployment in the north-west of Tasmania.

Improvements in technology and the ability for businesses to reach out to customers not in their immediate area has dramatically opened up the possibilities for businesses in my electorate. Businesses in towns like Smithton, Wynyard, Penguin and Latrobe—and smaller towns on the West Coast that are more remote and isolated—typically had a relatively small catchment area and customer base. Now, through technology, they can reach out to people wishing to access their goods and services who previously had no access to these businesses.

With this legislation people out there in my electorate have a fantastic new opportunity. If they have an idea but cannot get conventional finance for it, they can use technology to appeal to the rest of the world and crowdfund their project. It is exciting that all of these opportunities are opening up all around Australia. Crowdfunding allows anyone who believes in their idea to make a small financial contribution in exchange for an equity share in the company. Instead of relying on investors in the community or a bank loan, people can put their idea out there and seek funding from people anywhere in the world that share their dream and their passion.

To the innovators, entrepreneurs and creators in my electorate of Braddon, this is an opportunity to use technology to connect with people in the world who support your ideas. There has never been a better time to have a go. A brilliant idea does not have to be constrained by lack of finance in regional Australia, where it has been so hard to find investment. Banks have moved away from supporting those in regional Australia. Instead, with this legislation, someone who has an idea in Strahan, Devonport, Somerset, Ulverstone or King Island does not need to appeal to the finances in their local area only. They can go online with their idea and be funded by investors all over the world.

Anyone in my electorate willing to invest in a crowdsourced funding campaign will now, as a result of this legislation, be protected by regulations. Financial intermediaries involved in the crowdsourced funding network will need to hold a licence issued by ASIC, and the network will be monitored by ASIC to ensure confidence in the financial system is maintained.

This legislation has the potential to dramatically alter business in my electorate, boost the economy and grow jobs through new ideas reaching out around the world. If one person in each community is successful in using crowdfunding to start a business, that business becomes another potential employer in the community. Funding for one person becomes growth in the local economy, with benefits for everyone in that community.

This bill is a part of the package of legislation that forms the Turnbull government's national innovation and science agenda. Our economy is in a stage of transition. This is a transition into an economy driven by ideas, innovation and small business—the backbone and heart of this nation—while not abandoning traditional sectors like forestry and mining. Jobs and prosperity will come from our local communities supported by these reforms to our financial markets. It is fantastic to have bipartisan support for these measures to drive our economy in the 21st century.

I commend the bill to the House.

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