Progress on Crowd-sourced Equity Funding Too Slow?
Wednesday, 20th May 2015 at 9:59 am
The Federal Opposition claims the Abbott Government is dragging its feet on reforms to introduce national Crowd-sourced Equity Funding (CSEF) laws.
Opposition Leader Bill Shorten said the Abbott Government had failed to provide a fast, clear pathway for the introduction of CSEF laws despite claims last week that a $7.8m funding Budget allocation equalled CSEF reform.
“This delay is costing the nation – with talented entrepreneurs being forced to offshore their operations to countries that have legal CSEF funding platforms,” Shorten said.
Shorten said Communications Minister Malcolm Turnbull had blamed Treasury for the delay.
“Instead of blame-shifting, the Abbott Government should act quickly to remedy its failure to lead the CSEF reform process," he said.
“The Government should take the opportunity in Parliament next week to outline a revised schedule to speed up the reform process, spelling out when draft CSEF laws will be presented for debate.
“Labor again restates its willingness to work in a bipartisan way with the Abbott Government to help fast-track the introduction of these reforms.
“Accelerating CSEF reform may help close the ever widening gap that is emerging between Australia and its competitors in providing new funding channels to support early stage innovation.”
In October 2014, the Federal Government announced that it would consult on a potential regulatory framework for crowd-sourced equity funding (CSEF) in Australia and released a discussion paper for public comment.Treasury received 41 submissions in response to this consultation.
The Opposition also released a CSEF position paper in December 2014 outlining “a range of steps that could be taken to build upon the recommendations of an independent report into the introduction of CSEF to Australia”.
In his Budget Reply, Bill Shorten said Labor would work with the banks and finance industry to develop Start-Up Finance, a partial guarantee scheme which will improve access to finance for Australian micro-businesses including social enterprises.
“Under Start-Up Finance, Labor will examine partially guaranteeing small loans from banks and finance institutions to give start-ups the affordable capital they need to get going with their business,” Shorten said.
In December 2014 the Financial Systems Inquiry also made recommendation around crowdfunding/crowdsourcing saying the Government should improve fundraising regulation to facilitate innovations in fundraising emerging from new technologies and ensure policy settings were consistent across funding methods.
In Australia, current regulatory settings impede the development of crowdfunding as proprietary companies are generally prohibited from making public offers of securities (equity and debt), and shareholder numbers are capped at 50 non-employee shareholders. Start-ups or other small businesses have no viable alternative structures, given public company structures have costly compliance requirements.