Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Hansard source

First of all, I would like to thank those members who have contributed to this debate, including the excellent contributions from the member for Fairfax and the member for Banks. I also commend the member for Banks for the outstanding work he has been doing on these issues more broadly, particularly now in his responsibilities as the chair of the House of Representatives Standing Committee on Economics, on this and related manners in the banking and financial services sector.

This Corporations Amendment (Crowd-Sourced Funding) Bill 2016 gives effect to the government's ongoing commitment to help transition the Australian economy from the mining investment boom to a more diversified and resilient economy. The bill will facilitate crowd sourced equity funding in Australia by introducing a framework which will reduce the regulatory impediments for small business, particularly early-stage businesses seeking to obtain equity finance.

The government consulted widely on the provisions contained in this bill, and this process began in late 2014 following the release of a discussion paper that sought to canvass stakeholder views on possible models for a crowd sourced equity-funding framework. These models included the framework adopted in New Zealand and the model recommended by the Corporations and Markets Advisory Committee in its review of Australia's equity crowdfunding landscape. The government acknowledges the efforts of stakeholders to provide feedback and to help guide development of the framework in this bill.

Our proposed framework for Australia was outlined in a separate consultation paper in August 2015, and targeted consultation was undertaken on the draft legislation. Overall, there was broad support for developing a framework that incorporates elements of the model recommended by the Corporations and Markets Advisory Committee and a model adopted by New Zealand. The framework that the government has introduced into parliament reflects improvements suggested by stakeholders during consultations. It seeks to ensure the balance between supporting investment and reducing compliance costs for the issuers of crowd sourced equity funding that it offers while maintaining an appropriate level of investor protection.

For equity crowdfunding to be a viable funding source it is important that the framework can operate effectively to benefit businesses and investors. Like in New Zealand, intermediaries will play an important role in the operation of Australia's equity crowdfunding market with the framework setting out certain obligations that are necessary for facilitating crowd sourced equity-funding offers. Intermediaries must be licensed and will have gatekeeping obligations, ensuring that certain disclosure and other requirements are met by issuers before their offer is listed on the platform. The crowd sourced equity-funding framework proposed in this bill allows eligible, unlisted, public companies to fundraise up to $5 million per year from retail investors with reduced disclosure obligations compared to traditional public equity fundraising. We are also streamlining public company corporate governance and reporting obligations for companies that become established as a public company in order to access crowdfunding.

The government has also continued to work on extending the regime to propriety companies, which are generally prohibited from offering shares to the general public. The government has asked Treasury to develop a framework for proprietary companies as a key priority, and I would expect that extension of the framework will be introduced through subsequent legislation in the near future. I am very pleased to be bringing the opposition up-to-date with the developments in that area to ensure that they also have a good understanding of the time line for introducing those additional measures, which I know they have expressed interest in.

The framework being introduced now will provide a number of protections, including offer documents providing basic information about the offer and an investment cap for retail investors of $10,000 per issuer, per 12 month period, to ensure investors can make informed decisions without being subject to excessive levels of risk. The government has also listened to stakeholder views on how to balance the fundraising needs of businesses while ensuring investors remain adequately protected. As part of this bill, the government has increased the eligibility threshold to $25 million in assets and annual turnover. This will help a broader range of companies make use of crowd sourced equity funding and provide investors with a broader range of investment opportunities. This bill also provides regulation-making powers that will allow these thresholds to be reviewed over time as the market develops.

To accommodate market developments, the bill also provides the minister with powers to exempt certain market operators from specific obligations, under the Australian market licensing and clearing and settlement facilities licensing regimes. This will enable the government to more readily tailor these regimes to particular market operators, including intermediaries operating in the crowdfunding market. These exemption powers will apply from the date this bill receives royal assent.

The crowd sourced funding framework in this bill will take effect six months after it receives royal assent. Over this period the Australian Securities and Investments Commission will put in place systems, processes and guidelines to effectively administer the framework and provide additional certainty to this industry. The government provided $7.8 million to ASIC in the 2015-16 budget to facilitate this.

This bill fulfils the government's commitment, our response to the financial systems inquiry and our National Innovation and Science Agenda, to introduce an equity crowdfunding framework. Its introduction will enable entrepreneurs of innovative early-stage businesses in Australia to obtain the capital they need to turn good ideas into commercial successes. It will also open a new form of investment class to provide an additional investment option for investors.

Together, this package delivers on the government's commitment to support small and start-up businesses, which are critical to building a modern and diversified economy and providing jobs for all Australians. This is an important bill in the progression of this agenda, but it will not be the last. There will be further bills that move into additional areas in this space which will provide further opportunities. There has been extensive and lengthy consultation in getting to this point, and it is now important that we take this step and then take the steps that must follow in subsequent legislation. With that in mind, I commend this bill to the House.

See this speech in context