Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

It is with pleasure that I rise to speak today in support of the Corporations Amendment (Crowd-sourced Funding) Bill 2016. This bill is important for the future opportunities of small businesses and start-ups in our economy because one of the issues that they face every single day is how to raise funds to grow their businesses. That is the main policy rationale around which this legislation is built. It is built around the idea of supporting, promoting and facilitating innovation in the Australian economy, particularly for our small firms and start-ups, because it is true that these firms and these start-ups, as we have seen over many years, can become the large businesses in our country.

Innovation, by its very nature, is highly dependent on access to adequate levels of finance. It is so important for these small businesses. When I speak to businesses around my electorate of Forde—businesses like Supapeg, Merino Country, Technical Fabric Solutions, Beovista and VAC Group—I can have a discussion with them for a long period of time about the capital requirements to grow and develop their businesses. There are many more businesses such as these in my electorate, and in electorates right around the country.

It is these discussions, and evidence from many other sources, that show that inadequate access to finance is the biggest impediment to innovation for small and medium enterprises. The Australia Council of Learned Academies' 2012 survey—which was also conducted by the ABS—Securing Australia's future: Australia's comparative advantage, showed that 43 per cent of small firms and 20 per cent of medium-sized firms identified funding as the biggest impediment to innovation. This contrasted with only 12½ per cent of large firms that noted funding was a constraint.

However, for firms that were focused on innovation and developing new ideas, these constraints are even more acute. I have had many an occasion when I have had people come to visit me in my office seeking assistance with an idea and how to find money to develop it and take it to the next stage. This is where we see this bill helping companies in that early stage of development. Some 66 per cent of small firms consider financing to be the biggest impediment. That is where this bill seeks to create the framework to allow these businesses to raise funds through crowd-sourced equity funding.

It is not that crowd-sourced equity funding is such a new idea. A couple of centuries ago, books were actually funded through crowd-sourced equity funding, through potential readers of the books providing funding to the authors to produce the book. They would then receive the books when they were published. But what we see today is the facilitation of crowd-sourced equity funding on a global scale as a result of technology.

Many of the funding platforms that we see today have only been around for about 10 years or so, but with this bill we want to provide a legislative framework for this to work in Australia—we have seen it work overseas—for our small to medium business sector. The bill is focused on establishing a framework to facilitate crowd-sourced equity funding for small, unlisted public companies; to provide new public companies that are eligible to crowdfund with temporary relief from the reporting and governance requirements that would normally apply; and to enable the minister to provide certain financial market clearing and settlement facility operators who are exempt from specific parts of the Australian market licence with an opportunity to participate.

This bill has been subject to an enormous amount of consultation over the past few years, as other speakers have outlined. It follows on from the bill that was introduced into the House about 12 months ago that lapsed with the election. There have been a number of changes in this bill from the bill that was previously in this House. A couple of those are very important for medium sized businesses. Eligible companies will be able to raise up to $5 million per year under this legislation, but their turnover threshold has also increased, to $25 million. That is important because it provides access to this funding for a much broader range of companies. Some of those that I mentioned earlier will benefit from this increased turnover threshold.

Public companies will be eligible to use crowd-sourced equity funding, as will unlisted or private companies, and they have a period where they can move to become public companies. It gives the opportunity for retail investors now to take part in supporting our small to medium business sector. It gives them the opportunity to invest up to $10,000 per company per 12-month period, with a cooling-off period of 48 hours after making an investment.

The bill also sets out the role of intermediaries in the crowdfunding market, ensuring that they take a quality assurance role, to ensure that there are the necessary protections in place for these retail investors.

This bill and the framework that it provides create tremendous opportunities for businesses in the electorate of Forde but also for small to medium businesses right around our country. If we can create the opportunities for this alternative avenue of funding for our small to medium business sector, it will also create an alternative avenue of finance so they are not always relying on the banks to raise that finance and capital. I commend the bill to the House as it was presented in its original form.

Debate adjourned.

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