Ed Husic (Chifley, Australian Labor Party, Shadow Minister for the Digital Economy) Share this | Hansard source

I think you'd be aware, Deputy Speaker Goodenough, as many others would: in this place, you can't even scratch yourself without running into a 'parliamentary friends of' group. These groups are doing some really good work, but there are a lot of them that seem to pop up with a great degree of frequency. I have a recommendation for the coalition: given how much they talk about this sector, particularly the fin-tech sector, and their inability to get anything done, I think they need to create the 'faux friends of fin-tech'.

The coalition talk a lot about how close they are to the fin-tech community. They talk about all this legislation that they're putting forward. They're always there with the media release. They're always there with the announcement. They're always there to try to claim some credit and show that they've got a fin-tech community. The Treasurer brings together the fin-tech community in his little consultative group and says, 'We're going to be putting these things forward.' Then, when you match the words against reality, you find a massive gulf. This is definitely the case with elements in this bill.

I will restrict my comments to the venture capital component, but I think that it is telling, particularly with this section, which should be relatively straightforward—but then you realise the enormous gestation period, the time it took to get to this point, which reflects that, while the coalition talk a big game on fin-tech, they don't deliver. This schedule would give the appearance of being fairly straightforward when someone reads the explanatory memorandum and understands what's going on. It allows for early stage venture capital limited partnerships and VCLP arrangements to change the way in which they can, where they've been prohibited before, back investments in the banking, finance and insurance areas—all straightforward. But what I have been finding out when talking with stakeholders about this is how long it took to get to this point—how long it took for this straightforward move to happen.

FinTech Australia—and I went and checked this out—put out a policy paper on this very issue in February 2016. The government, in its 2016-17 budget—May of 2016—said: 'Yes, we're going to do this. We'll move ahead on this.' And it was not until October 2017 that the government, through Treasury, started to consult on amendments to allow this to happen. So from February and May 2016 we get to October 2017. Again, they make the big announcements, claim the credit and, when the hard work needs to be done, are nowhere to be seen—they drag it out. The sector and people in the sector have raised with me that they're not entirely happy with what's been put forward in this bill. Again, it's a straightforward measure, but they still don't think that it's picked up their concerns. For example—and I had highlighted to me—in 3.26 of the explanatory memorandum it states that a fin-tech may be eligible for the tax concession when developing its technology. However—and this is what has been raised with me—it then goes on to say that when a business is commercialising the technology it would no longer be eligible. As has been raised with me: 'This hardly seems like a certain, longer term platform for a venture capital firm to make an investment in a fin-tech, given that the VC is only making the investment because it's hoping the fin-tech will be able to commercialise and profit from the technology.' This is what they're raising with me, and I'm sure they have raised it with Treasury.

It's another bit of legislation after some of the other stuff that was being done in this space to reform the VCLP and ESVCLP arrangements that we've already—we haven't even debated the regulatory sandbox and the other measures that were contained in there as it pertains to venture capital. The government hasn't even bothered to bring that debate in here. We're still having those concerns, and that they're not being taken seriously, raised with us. We are going to be moving an amendment that this be reviewed so that we can see if it's actually successful, because here are some firms that simply, in the banking, finance and insurance space, if they develop their product, can provide a competitive alternative to existing arrangements. The banks are so fearful of things like opening up banking data not because of a new-found commitment to protecting certain consumers or a new-found love of privacy after some of the breaches we've seen in the last few weeks. What they're really scared witless of is the fact that the fin-tech community, particularly in Australia, will offer a very strong and competitive alternative to what people have had to cop from the banks and financial services sector in times past. We should be encouraging them. We back the government's commitment, but what we really back is concrete reform.

As I said, we have this legislation that we've already picked up stakeholder reticence about because it doesn't necessarily pick up all their concerns. They are concerned, for example, about going through with Innovation and Science Australia and expecting some of the rulings, even though admittedly this legislation is supposed to provide a bit more certainty through the public and private ruling mechanism. But there are people concerned that they can't get the green light from ISA to go ahead and then get the investment that's required. They are obviously going to be concerned in the longer term, when the broadening of the definition plays out, about how long it might take to see things happen there. So there are concerns with that.

We are not even debating the regulatory sandbox changes that need to happen. Again, the government said that this is really important, and it is important because they stuffed the first version. They had only four fin-techs go through their regulatory sandbox—less than half a dozen—and they need to fix that up now with a series of changes that still haven't been put to the parliament. The other thing that is just staggering for a government that says it is pro fin-tech—as I said, faux friends of fin-tech—how come they haven't had the wherewithal to bring in the final lot of changes through the Senate on equity crowdfunding?

Last year, when they rammed through this place the changes that we said would be overly bureaucratic, would not deliver the benefits they said would happen, and would not allow smaller firms to access the level of capital raising required to help those firms grow, they still put them through. At the time, I labelled it 'ScoMo's dodo', because we knew it was heading for one thing and one thing only—extinction—because it had to have a whole new set of changes put to it. That's what they did in September. They brought another round of legislation in to fix up the fatally flawed legislation that they had in March. They introduced it in this place in September last year and then it didn't go in through the Senate at the end of the year. We then waited for February for it to come in, and they didn't debate it then. Then we got to March and it still didn't get debated, and then we had the long break before the budget. Now it's come in, in the first week in May, and they haven't put it through the Senate. Mind you, this is after the opposition has offered every assurance that we will work with them. We want to see the time frame for the introduction shortened. We've said to the government continually that we will work with them on this—just bring the framework in. And they couldn't get it into the Senate this week. What does that mean for the fin-tech community or others in the early-stage innovation space? You now will not see this legislation debated until three-quarters of the way through June. The government has baked in a delay of six months from royal assent before the new regime takes place, which means it would be December of this year, notionally, before it comes in.

To their great credit, the government agreed with us to shorten that period of time. We wanted it even shorter. We wanted it introduced right from the start of the new financial year, but they still won't agree to it, because they're worried about ASIC, and ASIC is playing ping-pong, saying, 'It's up to the parliament to determine what happens.' They didn't even know at estimates that there was this six-month period.

But, again, ScoMo's dodo, now the 'go-slow by ScoMo', is going to create another dodo, because equity crowdfunding is now being overtaken by an alternative financing vehicle in the form of initial coin offerings, using cryptocurrency as a way to generate capital for early-stage innovators. So this is now just taking place on its own and it threatens to potentially outstrip what could be raised through equity crowdfunding anyway.

The bigger story in all this is that we've been debating this since May 2013. We made the reference to the Corporations and Markets Advisory Committee in May 2013 to set up the framework. The coalition government got the report in May 2014, but by 2018 we still don't have the actual framework in place. It has been five years—four under your coalition government, where you say that you're pro innovation, you say you're pro fin-tech sector, but you can't even get the reforms in. You drag it out so long that alternative vehicles for capital raisings emerge, which, I have to say, are less informative to investors and will require much more sophisticated investors to understand and interpret what's going on. It's been dragged out. You're either fair dinkum about encouraging fin-tech and the emergence of a stronger fin-tech sector in this country, or you're just fake friends of the sector, only wanting to be there for the click of the cameras and the writing of the stories. You're not there to actually put it through, and this is even when we're prepared to work with the coalition on this. It is a disgrace. This shouldn't happen. If you were pro business, if you were truly pro opening up alternative pathways for capital raising, you would have got it done, but you haven't.

It's just the same as the concerns we have with what's contained within schedule 3 of this legislation. Based on what we're hearing out of the fin-tech sector and what stakeholders are raising with us, you still haven't cleared it up. If the Treasurer's too busy, he has an assistant minister. Assign him to make sure this happens. He has enough space to be able to make this happen. I'm sure he wants to cut his teeth on this legislation—he'll do the summing-up in a few minutes time. So why don't they take the steps, task up the proper people, make this happen, get the legislation through and prove that they are more than words, that they are action, as opposed to what we're seeing right now?

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