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Wednesday, 4 December 2002
Page: 9638


Mr HATTON (6:48 PM) —I plead guilty to actually having attempted this day to speak on five bills in this parliament. The Trade Practices Amendment (Small Business Protection) Bill 2002 [No. 2] was withdrawn, and I could not speak on it. I did not make it into the House to speak on the National Health Amendment (Pharmaceutical Benefits—Budget Measures) Bill 2002 [No. 2]. So on this day, I missed that debate. I am here for the Taxation Laws Amendment (Venture Capital) Bill 2002 and the cognate bill. I have just previously spoken on the Trade Practices Amendment Bill (No. 1) 2002.

At the end of this period, when the parliamentary secretary comes back, I do not want boofheaded comments like we had at the end of the last period. I had seen the parliamentary secretary this morning when I was speaking in the Main Committee on the Commonwealth Volunteers Protection Bill 2002. Through the goodness and kindness in my heart, I actually agreed to do a favour for him and I agreed to keep speaking until he returned to that chamber. The consequence of that was that I was not able to be in this House to speak on the National Health Amendment (Pharmaceutical Benefits—Budget Measures) Bill 2002 [No. 2]. What did I get in response from the parliamentary secretary? He said that I had been filibustering. Well, thank you very much!

In attempting to assist another member of this House from the opposite side—a person in a position of authority, the Parliamentary Secretary to the Prime Minister—I agreed to continue speaking in the Main Committee, which allowed him to go to a meeting. In doing that, it cost me the opportunity to speak on the pharmaceutical benefits bill. I desperately wanted to speak on that bill because of its implications for the people of Blaxland. The extension of the charges to pensioners and the cost to families in my electorate will be profound. I spoke on the bill the first time that the government dealt with it. I would have spoken on it today except for the fact that in doing a favour for a member of the executive of the government I missed the opportunity. What did I get for that? The assertion that I was just filibustering. That can pass. I can take that.

At the end of dealing with the last bill, the substantial comment from the parliamentary secretary was, `The member for Blaxland is making a lot of speeches, therefore the purpose of this must be that he might be thinking about his preselection.' Come on! We were elected to this place to speak in this House. I wanted to speak on the other bill but the parliamentary secretary was not sensible enough or gracious enough to take into account the fact that I was doing him a favour. I might not extend that favour in the future. I would like an apology from the parliamentary secretary and a withdrawal of the inane comments that he made.

Mr Deputy Speaker, you were not in the chair at the time, but the person who was attempted to bring him to order. Time after time, when this parliamentary secretary sums up bills and takes up points that opposition members have made, we get these inane sorts of tangential comments that are totally irrelevant to the matters at hand. It is incumbent upon a parliamentary secretary, just as it is upon a minister, to actually deal with the matters at hand and to do so in an utterly professional manner.

Having got that off my chest with regard to that situation, let us deal with venture capital and its importance to Australia both now and into the future. These bills are significant and they are important. Why? Because there has been a failure within the market. Why has there been a failure within the market? Essentially, the market has not done as well as it might have done because of the dotcom crash, with overextension into investment in the Internet economy. There was a burning of those people who had investment funds to put into these areas and there was a lot of wasted investment.

The member for Eden-Monaro is in the chamber and may or may not be speaking on this bill. In the committee that he chairs, the science and innovation committee, of which I am a member, we have taken some interest in the question of venture capital and its importance for Australia in pushing forward our nascent companies and allowing them to grow. In that committee's current investigation into research and development in Australia and the effective impediments to that, this is one of the areas we are looking at. In fact, we have noted the importance of venture capital over the last decade or so in terms of allowing Australian companies to innovate successfully. That was one of the key ingredients they did not have before that time. We have looked at Germany, we have looked at England, but primarily we have looked at the United States—the great example of venture capital creating an efflorescence of new business.

Trying to reproduce Silicon Valley is a task not just for North Ryde in Sydney; it is a task not just for different parts of Australia. We have seen that the success of Silicon Valley has been built on venture capital and on risk; it has been built on the notion that if, after perhaps putting your money into 30 different entities, you get three giving substantial returns, you will probably make a reasonable run of it. In Malaysia, under Dr Mahathir, for all his sins—and they have been many—we have seen attempts to build a strong, open and forward-looking information technology area, one that has tried to mirror the strength of what has been achieved in Silicon Valley. It has been argued by many that you cannot actually reproduce the achievements of Silicon Valley because of the United States culture, and particularly that in Silicon Valley and its extensions elsewhere. One could argue that what has been done in Seattle by Microsoft and the associated companies that have since set up there is another example of what investment capital, venture capital and reinvestment in the information technology allow to burgeon.

I visited San Jose last year while on study leave to speak to the people at Adobe. I spoke with them about the way in which they were developing innovative products built upon the software specifications that Microsoft had built into the Tablet computers, which were launched on 7 November this year. Adobe, an enormously innovative company, and other companies from that area of the United States, and indeed Microsoft, have achieved so much in that they have extended their economic reach through utilising new software tools and hardware to their fullest, but all of that at the start was very chancy.

When Steve Jobs and Steve Wozniak belted out the first Apple—in fact, it was almost the precursor to the Apple 1—there was a period of time when there was virtually nothing out in the private market for people to deal with. Both Jobs and Wozniak had had experience with the Altair computer. If you bought an Altair computer, essentially you paid your dough and got it sent to you in the mail with its construction kit. I failed basic Meccano and did not take that sort of thing up during my later life; I would have had considerable trouble with the mechanics of that. However, Steve Wozniak, in particular, very early bought a copy of the Altair computer—no disk drive, no keyboard and no display, but the first veritable and verifiable home computer. Wozniak worked in his garage on the basis of his understanding of that. Bill Gates, in conjunction with a man who was in some ways a mentor but also a sidelined partner, took the CPM operating system and modified it so that it could run on a personal computer and, in the end, he licensed that to IBM. Those people started from nothing. They had to gain venture capital. They had to get support. They did so and were able to build their businesses, and these businesses are profoundly important. We have seen example after example of where the depth of investment in the United States—in Silicon Valley and across the United States—is simply enormous.

Where have we been in Australia? Up until the eighties and into the nineties—and increasingly we are getting a greater benefit from this—our superannuation funds were relatively small. The genius of the HawkeKeating government lies in this simple step: the realisation that superannuation which was only provided to government employees or those who were privileged to get it in the private sector could not build Australia in the future. Given that it is 4 December, tonight we celebrate that it is 30 years since the Whitlam government was inaugurated—and we remember that Rex Connor wanted to buy back the farm. The key to the Hawke-Keating years, the then Treasurer's greatest reform, the government's iconic symbol of strength for the future of Australia, was building a superannuation system that could provide the depth, the width and the strength of investment in Australia that we had so sorely lacked. It has done so, even at a constrained nine per cent. We should have gone to 12; we should have gone to 15. This government lopped its head off.

We remember this Treasurer a few years ago—although he has not done it for a while—day after day, over and over again mentioning l-a-w law—can you spell it?—sideways, backwards and upside down. Let me remind the House of this fact: the first tranche of the Keating tax cuts were delivered 12 months early. They were not abandoned; they were delivered 12 months early. The second part was not delivered as tax cuts; it was commuted to superannuation benefits.

This government, because it chooses to say so, determined not to continue with that transformation—with reinvestment into more super. That means that the venture capital bills we have before us today are even more important. The core and the essence of these bills is a call to the United Kingdom and the United States pension funds—which are of much greater depth, much greater complexity and much greater strength than we could ever put together. It is a call saying that those pension funds should put their money into Australia.

In the past two years, there have been other bills put before this House which have sought to do that job. Labor totally supported that, because we understand, first, that historically we have always needed foreign investment and, second, that, despite the general sense of people being aghast at the fact that we have had foreign investment, we need it and we will continue to need it. In particular, there is one class of that investment that we particularly want, and that is investment from US pension funds, which are totally awash with money, which have enormous muscle and power and can provide a small percentage out of their incredible resources to invest in Australia. This would provide great ballast, particularly in the area of venture capital. What we have found since we have made those changes is that the economic climate worldwide has so utterly changed that the US pension funds have not come knocking at the door. They are not belting the door down. They are not charging into Australia.

The two bills that we are dealing with today are a further step to entice them, to tell them that Australia is aware of itself as a developing economic entity and that we have a relatively smart economy. We certainly have smart people operating in it. We are certainly trying to be as innovative as possible. We are certainly trying to highlight the scientific strength of Australia. We have realised not just the depth of our academic capacity but also the fact that commercialisation is possible for Australian entities. As the Chair of the Standing Committee on Science and Innovation well knows, we have realised that not just through the committees we are involved with. We have had a number of problems. In fact, another committee I am on, the Standing Committee on Industry and Resources, is also looking at research and development and the impediments to that. That is in a different framework, primarily in the petroleum and energy area.

All of this stuff does not just come back to tax. It comes back to the question of how you pull in foreign investment which is soundly based and how you change the cultures in Australia—the academic culture, the corporate culture or the general investor culture—to see a broader picture and to pass on to small Australian companies the lessons that have been gathered and garnered from past experience and those that can be readily communicated so that they can make the transition.

We have discovered that there are particular points—nodal points, if you like—where it is important to intervene effectively. That is essentially the case with R&D Start programs. In evidence recently before the science and innovation committee, it has again been said that there is a fundamental problem, that it was a stopstart program rather than just a start program; that the restarting of that program is utterly necessary and important; and that we need continuity of supply of funds for innovation within Australia. I am sure that those people who have given the evidence could argue quite readily that the steps taken in these two bills, conjoined with the R&D Start program and the other programs we have running, lead to one end—not allowing Australian companies to pick their way hopelessly through the economic morass that they face but actually assisting and helping them to grow from the garage style status of Steve Wozniak and Steve Jobs to the extended companies that are possible, where you grow to the tens, the hundreds and even the thousands. But you cannot do it without assistance and you cannot do it without intervention. The intervention can come from the market itself, but we found also that it comes from assistance directed by the government to that end.

We do not have a mature venture capital market within this country. We certainly have a stronger one than we had 20 or 30 years ago, when it virtually did not exist. We certainly have companies that are now viable which were not viable in the past and could not even be envisaged. What we have seen demonstrated time and time again before our parliamentary committees is that commitment, intelligence, sense, innovative quality, genius and inventiveness are not enough. You need money to go the extra steps, to work your way through the stages of development. Example after example of Australian companies that have failed at different hurdles because they lacked access to capital have indicated that this is something that we must address.

This is a call to the British and the United States investors—wherever they come from—that Australia is open for business in the venture capital area and that Australia understands, comprehends, feels and appreciates the fact that their foreign investment is welcome and is necessary to build the strength, depth, complexity and maturity—not just innovative quality—of the Australian economy.

In that sense, we need to recognise that there is a much broader context here, covering not just this coalition government but also the previous HawkeKeating government. It is the commitment to future savings as a platform to build Australian companies, to build Australian capacity and to develop the chance of future Australian jobs—not just part-time jobs but full-time jobs—across a range of industries. It is important that we endorse these bills. It is important that the Australian electorate at large understands what we are about, that venture capital is risky capital, that it cannot guarantee returns.

It is also important that Australian superannuation companies realise that the government and the opposition would like them to invest some money into venture capital and not just leave it to the UK and the US. If you have 100 companies, five or 10 of those might come to fruition and do what Cochlear have done. If you do a comparative analysis and look at Cochlear Australia, it is the dominant force in bionic ears. The Americans have almost gone out backwards. There were particular problems in terms of meningococcus which Cochlear's American competitors faced, and they tried to roll that off onto Cochlear. But have a look at the money that Cochlear is worth: from nothing to $35 a share? Excuse me? Have a look at the major banks and the prices that they bring. Have a look at our other major companies; have a look at what BHP Billiton is bringing today. Cochlear was a company that needed venture capital, needed support and needed help to work its way through its development stages, but it is also a signal of what Australia can be: diverse, strong, developed, smart and innovative.