Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

Well, we finally made it! The Senate can finally consider the government's Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017. It's been nearly four years in the making, but the government has finally put forward some legislation that might meaningfully give effect to equity crowdfunding in Australia. The problem is that the government have been so diverted by the muppets across the chamber, so diverted by the extremists in their own party, that they really can't get on and deal with the issues that are important to the Australian economy and to the Australian people. Taking four years to get a bill to the Senate floor on crowdfunding just demonstrates how incapable this government is of actually focusing on the real issues of government.

This bill removes a range of government imposed regulatory blocks stopping proprietary companies, especially start-ups and small businesses, from using crowdsourced equity funding. By way of brief explanation, equity crowdfunding uses the internet to harness the financial support of investors to back a business, and in return those investors get a stake in that business. I open by referencing the tortuous journey this reform has been forced to experience under the coalition. It is worth recalling some history. In government, Labor tasked the Corporations and Markets Advisory Committee to start scoping out a framework for equity crowdfunding in May 2013. A full year later in May 2014, following the change of government, CAMAC handed its report to the new coalition government, and all action subsequently stalled due to endless rounds of further consultation throughout 2014-15 and endless self-recrimination within the Liberal Party, which is stuck in an absolutely chaotic position—a government that has been incapable of governing.

Meanwhile various reports continued to identify the potential of equity crowdfunding to improve access to finance for small to medium enterprises: for example, the government's Industry innovation and competitiveness agenda report, released in October 2014; the final report of the Murray inquiry into Australia's financial system, released in December 2014; the Business set-up, transfer and closure Productivity Commission draft report, released in May 2015; the government's National Innovation and Science Agenda, released in December 2015; and the government's own fin-tech statement, released in March 2016—more reports, more analysis, less action. That has been this government through and through.

The government eventually introduced its bill in 2015, but it was roundly criticised for being too cumbersome for the sector. After ultimately withdrawing that bill, those opposite introduced a new version in 2016 with roughly similar flaws. This is our government: you point out the problems; it looks at the bill and brings it back with the same problems still in it—totally incompetent. No wonder the Prime Minister describes his own party as the muppets!

Finally in March last year the government used its numbers to force the bill through and sign into law an equity crowdfunding framework that it knew full well would have to be fixed before the year was out. The reality was that the current framework was racing towards one milestone and one milestone only: extinction. Sure enough, here we are in 2018 considering yet another attempt by this dysfunctional government, a government of muppets, to fix mistakes of its own making. The title of this bill is worth noting. It is the Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill—2017! The bill has been stuck in parliament for a year because the government couldn't be bothered bringing on debate and getting this bill moving. Not only that; those opposite have had their own internal little problems in the meantime, carving each other up, knifing each other, changing the Prime Minister—complete dysfunction, complete chaos. This country needs a government that can focus on the issues that are important for the Australian people, and it is not the muppets sitting across the chamber. It is taking a new Treasurer to make it happen. The incompetence of this government is extraordinary.

In the other place the former Treasurer, now Prime Minister, lamely attempted to paper over this by suggesting his hand had been forced by shareholders to bring in new changes to its flawed equity crowdfunding framework. He said:

Submissions expressed widespread support for the extension of the crowd-sourced equity funding framework to proprietary companies.

This is not a surprise. This is not a new revelation. Stakeholders have said this for years. That is because the government was repeatedly told that its equity crowdfunding regime was highly restrictive and unlikely to get business support. They were told they needed to bring in a regime that would be usable by proprietary companies. They were warned of this years ago by a range of people.

The most damning assessment, provided by the Faculty of Law at the University of New South Wales, argued that the 2015 bill and its successors excluded, and I quote:

… over 99.7% of companies from accessing CSF.

…   …   …

… the current proposed model in front of the Parliament is too restrictive and excludes the majority of Australian companies from relying on CSF.

The government get up here and lecture everyone on how they know about business, how they can really push business along in this country and, at the same time, they can't even get the basics right in a very simple bill. They are a bunch of frauds. They are a bunch of muppets. Even their own Prime Minister has got the adjective right about them—absolute muppets; economic incompetents and absolute political incompetents. This is a government well past its use-by date.

The assessment by the University of New South Wales Faculty of Law was made years ago, but it remained the biggest criticism that confronted the government's botched reforms in this area. It is worth remembering that, even last year, speaking in response to the government's 2017 bill, business was critical of the government's efforts, with tech firm Veromo's Andy Giles stating:

… the thought of switching to a public company to avail ourselves of a potential wider investor base is unthinkable.

So businesses are saying that the proposition from this government, who claim that they are the government of business, was 'unthinkable'. What a bunch of amateurs on the other side!

Not embarrassed by criticism that they were continually dragging their feet on this reform over the last four years, the government introduced this bill here in September last year and we debated it 12 months later. Now the government have come up with a bill to plug the gaps they left in March last year. The opposition is largely supportive of the bill. It provides some new allowances in its current form. For example, it permits that investors who acquire shares through crowdfunding offers not be counted towards the shareholder cap currently applied to proprietary companies. The bill exempts proprietary companies with shareholders who acquire shares through a crowdfunding offer from the takeover rules in chapter 6 of the Corporations Act. To provide some safeguard to investors, the bill also contains a regulation-making power. This will give the government the capability to respond quickly by imposing additional conditions on this exemption, if required.

The question remains: is 'quickly' something the government are capable of doing? Well, in some things, the answer is yes. They can quickly get rid of a Prime Minister. They can stab a Prime Minister in the back. They can demolish their own credibility very quickly. They can do all of those things. They can quickly turn on each other. The Liberal Party can turn on the National Party. The National Party can turn on the Liberal Party. The Liberal Party can turn on each other. They can do that very quickly, but can they do anything that supports progress in this country? Not really. They talk a big game and they do nothing.

The bill also intends to impose additional obligations on companies who opt in to the equity crowdfunding regime. For example, proprietary companies with crowdfunding shareholders will be required to provide additional reporting to ASIC, provide information on the company register, prepare financial reports and statements for audit when over $3 million has been raised through crowdfunding offers, and have a minimum of two directors to assist with succession planning.

Again, while we largely support this bill we are mindful of the start-up community's criticisms concerning the further delays baked into the bill by this incompetent government. Notably, the government's current bill would force businesses to wait yet another six months after royal assent before they could access this regime. In our consultations with the sector they called for this delay to be significantly reduced, which is why we pushed for this on behalf of small business and innovative enterprises forced to wait for the new regime. Given the bulk of the regulatory changes that have been put in place, and the extraordinary length of time people have been made aware of the likely arrival of equity crowdfunding, we believe that one month after royal assent is long enough for the government.

To their credit—and I don't give them much credit; they don't give themselves much credit, so let's give them a little bit of credit—the government has taken on board the opposition's concerns and has indicated its willingness to scale back the wait time to one month. While we would have preferred no delay back in May, as the fin-tech sector called for, we recognise this does present challenges for the responsible regulators, so we accept the need to amend the start date accordingly. Having said that, just imagine if the government had scheduled this debate sooner. We may well have had the new regime start earlier. I commend our amendment to the Senate and urge the crossbench to support our commonsense proposition.