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Economics Legislation Committee

HOGAN, Ms Lauren, Analyst, Financial System Division, The Treasury

POWER, Mr Trevor, Principal Adviser, Financial System Division, The Treasury


CHAIR: We will move on. I now welcome representatives from Treasury. Welcome back.

I remind all senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted.

Officers of the department are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim. Thank you for appearing before the committee today. I invite you to make a brief opening statement should you wish to do so, and then the committee will ask questions. Do you wish to make an opening statement?

Mr Power : A brief statement.

CHAIR: Thank you, Mr Power.

Mr Power : Firstly, thank you for inviting us to appear. Globally, crowdfunding is an expanding source of alternative funding, helping early-stage business to access funding markets. Crowdfunding in many jurisdictions is still in its infancy, and they have taken different approaches.

A review of Australia's equity crowdfunding landscape was undertaken in 2014 by the Corporations and Markets Advisory Committee, or CAMAC. In the final report of their review, CAMAC found that crowdsourced equity funding is impractical currently for business, largely due to regulatory impediments in the corporations law.

The Productivity Commission's report Business set-up, transfer and closure, publicly released by the government on 7 December 2015, also supported the introduction of a crowdfunding framework in Australia.

The government has taken into account the views of CAMAC and the stakeholders who participated in various consultation processes throughout 2015 in developing the legislation. The objective of the bill is to put in place a framework that lowers the regulatory impediments for small business, including early-stage small businesses, that are seeking to obtain equity funding, while maintaining appropriate investor protections.

The CSF regime allows businesses that meet eligibility criteria to raise up to $5 million per 12-month period from retail investors by making a CSF offer using a CSF offer document. Information is to be included about the offering company and the offer that balances the need for information against costs on small businesses. Unlisted public companies with their principal place of business in Australia and annual turnover and gross assets less than $5 million will be eligible to use crowdfunding. A company that successfully crowdfunds within 12 months of becoming a public company is eligible for a five-year exemption from certain public company obligations. The business will not be required to have its financial reports audited by an independent auditor unless more than $1 million is raised under a CSF offer or other offers requiring disclosure or to hold an annual general meeting.

Like crowdfunding regimes in other countries, the crowdfunding framework outlined in the bill includes a number of investor protections. The framework permits retail investors to invest up to $10,000 per issuer per 12-month period. Investors will also be protected in the form of cooling-off periods for a period of five days after making an investment.

Intermediaries will also occupy a central role in the crowdfunding regime, providing services that will allow companies making offers to do so by providing investment opportunities to small investors. Intermediaries will be required to hold an Australian financial services licence, and the bill sets out specific obligations that intermediaries will need to perform as part of their role to facilitate crowdsourced equity funding, including mandatory checks on the company.

The bill also sets out a provision that would provide additional scope for the Australian market-licensing and clearing-and-settlement-facility-licensing regimes to be tailored, including for a crowdsourced funding regime, for crowdsourced funding intermediaries. This can provide more effective and flexible licensing regimes that could appropriately respond to and facilitate innovation.

CHAIR: Great. Ms Hogan, do you have anything? You are all right? How is this going to make us more agile in what we do in our economy, Mr Power?

Mr Power : Currently, the Corporations Act has a number of provisions which mean that essentially entities which are quite small in their number of employees or their asset base face prohibitive costs to raise equity. They need to issue product disclosure documentation, which is costly to prepare. So this bill effectively simplifies disclosure, allows retail investors to invest in small-scale companies through simplified disclosure regimes and exempts those entities which are approaching the public for retail investors from the key expensive elements of the public company regime, which are essentially to hold annual general meetings, have their financial statements audited and also provide hard-copy financial statements to their shareholder base that they might take on.

CHAIR: If we do not adopt this bill, are there other countries that we are at risk of losing the initiative with? If so, who and why?

Mr Power : As I said, a number of countries are taking steps now, introducing similar regimes. Those regimes take different forms and have idiosyncratic differences. The SEC in the US have set out rules about how their approach is going to operate. New Zealand currently has a regime, as do the UK, Italy, Singapore—a number of jurisdictions. So the world is moving towards freeing up markets for early-stage entities, and it is important that Australia also participates in that.

CHAIR: It is proposed to have a five-day cooling-off period. Is that replicated in any of those other jurisdictions? Is that in those other countries? How are we going? Are we stacking up against New Zealand and the US and all of those?

Mr Power : There are different approaches in different jurisdictions. I do not think New Zealand has a cooling-off period.

CHAIR: Once you are in, you are in?

Mr Power : Once you are in, you are in. The US and Canada both have cooling-off periods, both of which are 48 hours, or two days, to withdraw. Korea also has a withdrawal right up until the end of the offer period, and Italy has seven days. As I said, there are different approaches in terms of how jurisdictions balance investor protections.

CHAIR: That is to give an opportunity for mum-and-dad investors, as we colloquially know them here in Australia, to have a think about what they have done and see if it is appropriate for them, perhaps get some advice and then say, 'Okay, we're settled on this'?

Mr Power : We would hope, for example, that retail investors may take advice prior to investing in anything.

CHAIR: Let us hope that is right.

Mr Power : But of course this is a new class of securities. It is a low-disclosure environment. It is not a class of securities, as I said, that is widely known or has been in existence to this point, so there may well be circumstances where people do want to withdraw.

CHAIR: If you let the market run free, there will be a release date. I used earlier the example of the fellow who reward-sourced funds, where he sold product. But you will get other companies that will use this that will say, 'Okay, we're going to release this at nine o'clock on Friday, 1 April,' so there will be all this hype and then there will only be so much. There will only be, say, $5 million worth of equity available because that is all they are looking for. Then it gets fully subscribed in the first 20 minutes with mums and dads, but really that company have to wait for the next week, don't they, to know that they have actually got that funding?

Mr Power : To the end of the offer period.

CHAIR: To the end of the offer period.

Mr Power : Sorry, to be clear: the offer is open to them till the end of the offer period. The cooling-off period rights for—

CHAIR: But what if they are fully subscribed in minutes?

Mr Power : If the offer is fully subscribed then it is fully subscribed, and it can be closed.

CHAIR: But they still have five days?

Ms Hogan : Yes, they still have five days once the offer is closed.

CHAIR: Why isn't this regime appropriate for managed investment schemes?

Mr Power : The use of a management investment scheme to aggregate investors and then on-invest into a start-up, for example, is fine. There is nothing precluding that from being the case. What is precluded under the legislation, though, is a management investment scheme itself seeking to raise funds through a crowdfunding platform. The reason that that is not provided for in the legislation is that this is a low-disclosure environment, in a legislative sense, provided by the government for retail investors to invest in the direct equity of a start-up entity.

A management investment scheme structure is different, where a retail investor might invest in a fund which might then have an investment profile or a constitution of how it is going to invest in other entities. That is a different type of arrangement, where the retail investor is not investing directly in the company but is investing in a fund which is then deciding where to invest. There is a MIS regime which regulates and provides scrutiny over those types of structures, which ASIC regulates, but this regime here is a simplified regime for retail investors to invest directly into a start-up entity. So there is a level of complexity which is different between the two arrangements.

Senator KETTER: Mr Power, in your opening comments you talked about the fact that different approaches were looked at in other jurisdictions. In commencing my line of questioning, I am just interested in your telling us what Treasury saw as the viable options that were considered for introducing equity crowdfunding into Australia.

Mr Power : The CAMAC report, as I said at the start of my comments, looked at a number of different regimes and in fact looked at different approaches across the globe. That report was then provided to government, and Treasury looked at that and provided some advice to government. The government then subsequently released a paper of its own volition looking more specifically and closely at the New Zealand type approach and the type of frame that the CAMAC report had proposed. It then took submissions on that approach more specifically and then developed its legislation. So I think that, whilst the CAMAC report looked quite broadly across the globe at different jurisdictions and then recommended an approach, the government then took that and narrowed its focus on the model that CAMAC put forward and also the New Zealand model.

Senator KETTER: What level of consideration was given to, say, the UK model? Was that considered at all?

Mr Power : It certainly was—for example, in the survey work that CAMAC did, and we in Treasury also looked at the different models across all jurisdictions including the UK.

Senator KETTER: Can you tell us why you settled on the model in the bill which sees start-ups having to convert to unlisted public companies to access equity funding?

Mr Power : The government landed, effectively, on the approach to utilise the unlisted public company structure. In essence, that structure in Australian corporate law is provided for for the marketing of securities to the public, and it has various stepped-up requirements in order to provide disclosure and then ongoing reporting, essentially, to the shareholders of companies. Private companies in Australian law have a much reduced requirement to, and in fact do not in most cases need to, report to their shareholders, because they are closely held and have a limit of 50 shareholders. So the government's bill and where the government has landed have been to take on the public company structure so there is some transparency of reporting to shareholders once they have been taken on but remove some of the onerous elements of that, which I mentioned in my opening statement as being annual general meetings, the audit of financial statements and also the provision of hard-copy financial statements to shareholders.

Senator KETTER: I am just interested in some of the costs associated with conversion to an unlisted public company. Have you had a look at that within Treasury in terms of consideration of this type of approach?

Mr Power : We have. Some of the costs are related to, for example, application through ASIC. That is a relatively minor cost of $75. However, the cost of, for example—I think it was mentioned earlier—drawing up a constitution and those things can be in the order of thousands of dollars. But it will depend on the company and their specific circumstances.

Senator KETTER: Did you look at, say, what the average cost of obtaining legal and accounting advisory support for preparing start-ups of small businesses might be?

Mr Power : Certainly, as we consulted with people and talked with entities, through the process we received some information about that. As I said, the view that we formed was that the costs essentially amount to the cost of applying through ASIC, for the $75 form, and also a number of thousand dollars in setting up a constitution. But I think it is fair to say that there is not a one-size-fits-all to that answer.

Senator KETTER: Is that something you could take on notice just in terms of the average costs of businesses likely to access crowd equity funding?

Mr Power : I am not sure that Treasury has the information on the average costs that private companies might pay in relation to that.

Senator KETTER: Okay. Can you tell me why Treasury did not structure the bill to allow intermediaries to aggregate small multiple investments by retail investors into a collective vehicle to allow single investments into start-ups?

Mr Power : As I said in response to Senator Edwards, the government's position was to not preclude management investment schemes or collective investment vehicles. That is not precluded under the current legislation. What is precluded, though, is a collective investment vehicle using a crowdfunding platform or the crowdfunding lower disclosure environment to raise funds through the platform. As I said in response to Senator Edwards's question, the reason for that is that that is a one-step separation from investing directly in a company. That is investing in a fund which then may go and invest in a number of other start-up entities. One of the things that the government came to in developing the bill was the idea that retail investors are able to understand an investment directly in the equity of a start-up entity. It is fundamental to the understanding of how this regime works, as opposed to investing in a collective investment vehicle which then goes on and invests in another entity.

Senator McALLISTER: I have a follow-up on that. In the evidence earlier—I am not sure if you were here when the panel were presenting—a number of those were businesses operating as intermediaries at the moment, and the view they put was that, from the perspective of the start-up, having a single investor created a much more manageable set of relationships, and that kind of unit trust model was in fact a pretty important vehicle for start-ups and for crowdfunding at the moment. I suppose I would like your comments on that. In your considerations about this question, did you identify any ways that this particular investment profile differed from managed investment more generally? Are there some distinctions that we ought to be thinking about that might invite a different policy response for this particular model of investment?

Mr Power : I guess the first thing to reiterate—I just want to be clear—is that that model is certainly not precluded under the legislation. I think the question which is raised around this is whether there should be a more simplified regulatory regime for those collective investment approaches than exists currently. It might be specific, for example, to investing in start-ups. Certainly, as that issue was raised with us and we considered and provided advice to government, we thought through those issues. I guess all I can say is that, where the government have landed, the answer to that is that they have not changed the regulatory arrangements for those structures as they relate to crowdsourced equity funding.

Senator McALLISTER: What are the arguments for distinct treatment of these schemes, separate to what has been provided for in this legislation? You can tell me the arguments for and against, but I am interested in what the arguments for would be.

Mr Power : I think some of the witnesses earlier provided some of the arguments from their point of view—for example, that it might simplify shareholder management from a start-up's point of view. The arguments against would more likely be about whether a low-disclosure environment is appropriate for those management investment schemes for retail-end clients.

Senator McALLISTER: To represent, I think, the evidence that was given to us earlier, unusually for businesses appearing before this committee, they were arguing that the burden of regulation be shifted to them as the intermediaries and that that actually could be ramped up for them as the intermediaries and the burden lifted from what they described as relatively unsophisticated small businesses. They argued, indeed, that that would support a better interaction between investors and those small businesses, because the investors themselves were likely to be relatively unsophisticated. They argued that, of the three parties in the process, the intermediary was the one that had the greatest skill and that that was where the burden of regulation ought to lie. Were those arguments considered? I do not have a strong view about this; I am genuinely interested to hear how you would refute that set of propositions.

Mr Power : The bill places a number of obligations on intermediaries—which would be considered, I guess, to be the sophisticated party of those three parties—to conduct due diligence in terms of who the offering party is, offer a communication facility, make sure risk warnings are provided and all that sort of thing. So a lot of the, if you like, checks and balances in the systems do fall to the intermediary. The issuer has an obligation to provide a disclosure statement which is simplified and includes the information about the offer, the company, the directors et cetera, but it is certainly nowhere near the current requirements in a product disclosure statement. So I think that, to the extent that the regulatory burden falls in this process, it is being removed and lightened on the issuer side, and crowdsourced funding intermediaries are taking on a large role in the process to ensure its integrity.

Senator McALLISTER: Whether an intermediary is used or not, though, it does not seem to change the burden that sits upon the small business, the issuer, does it? I suppose that is the point that the small business might make: their obligations seem to be the same whether they are using an intermediary or not. So I suppose my question is: could a simpler regime be introduced for those small businesses that do choose to use one of these platforms—or a regime that is simpler, again, than what is proposed in the legislation?

Mr Power : I am not quite sure I am following. The only way issuers can access retail investors would be through a platform under this legislation. Private entities can currently raise funds from investors under exemptions under the Corporations Act, under an ASIC class order and under what is called small-scale exemption and personal offers. They are not currently allowed to approach retail investors, but the only way to do it and to get access to the reduced disclosure and reporting requirements is through the provisions in this bill.

Senator KETTER: Just coming back to the costs associated with the small businesses accessing this new source of funding, we have had submissions that talk about $15,000 per annum to have an auditor and audit accounts. Would you say that is in the ballpark of what it might cost?

Mr Power : It hugely depends on the complexity of the accounts. I am aware that those costs vary vastly depending on how large and complex the accounts are. Generally, the larger and more complex the more expensive, and the simpler and less complex the less expensive.

Senator KETTER: So you would not disagree with the assessment that that is a possible cost regime that a small business might need to take on in order to access funding under this platform.

Mr Power : Just to be clear, entities who raise less than $1 million will not need to have their financial statements audited under this bill. If they were to raise more than $1 million then they would. The cost of $15,000 that you have mentioned no doubt is a feasible cost that could be applied to an entity of a given size. I imagine there would certainly be many below that, and there will be others above that depending on the size. But we are talking about small entities here, so I expect the costs will not be on the higher end.

Senator KETTER: Were those costs taken into account when framing the regulatory impact statement?

Mr Power : I am quite sure they were. I do not have the regulatory impact statement in front of me, but I am quite sure they were.

Ms Hogan : Yes, they were certainly included in the costings in the regulatory impact statement.

Senator KETTER: Okay. We have also seen in submissions that the bill would exclude over 99 per cent of companies from accessing crowd equity funding. Do you have a reaction to that?

Mr Power : Certainly, the vast bulk of companies in Australia are private entities. What this bill does is make it a lot easier—or a lot less costly—for an entity to convert to a public company to access this regime. Obviously, that statement suggests that no entities would take up that provision. That is an assumption I am sure is not likely to hold—that no-one will take up the regime. Having spoken to a number of intermediaries and others, there are certainly those who are interested. I imagine those numbers are not—

Senator KETTER: Do you have an estimate as to how many businesses might take up the ability to access funding under this bill?

Mr Power : It is a very difficult thing to understand. All the information about their intentions, of course, is with the business community. But there was an estimate in putting together the regulatory impact statement?

Ms Hogan : Yes.

CHAIR: Has the industry put to you what they think the pent-up demand for unraised capital is? Sorry, it is on your point, Senator Ketter. I do not expect you to know—it is not your business; it is a market issue.

Mr Power : It is a difficult question. To be frank, I have participated in a number of workshops with a number of different entities and there are different views within the start-up community about whether there is currently ample access to funding or not. What this bill does is provide a framework for access to funding on a more streamlined basis.

Senator KETTER: But surely you would have an assessment as to how many firms might want to take up this. We would not be going through the process of introducing legislation which nobody is going to avail themselves of, so you should have some understanding as to where this is all going to head.

Mr Power : We certainly do and it has been strongly called for by entities, so there is clearly a demand for such a framework. There have been a number of reviews. The Productivity Commission looked at it and suggested that there was a role for this framework for at least equity. Certainly there is strong demand for it. There has been some evidence in other jurisdictions that it has been taken up to varying degrees, so I imagine it also will be in Australia. It is very difficult to put an exact number on both the amount of money and the number of entities that would access it.

Senator KETTER: We might have touched on this earlier, but I just want to put it to you. Specifically proposed section 738G(1)(a) of the bill, which goes to prohibiting an intermediary from aggregating investment, states that equity crowdfunding will only be eligible where:

… it is an offer by a company for the issue of securities of the company …

So what is the explanation for that particular prohibition?

Mr Power : I think this goes back to what we have been talking about, which is that this regime provides for low disclosure where an issuing entity going through an intermediary platform is saying to a retail investor, 'Would you like to purchase a share in my company?' It is not providing a low-disclosure regime where a collective investment scheme, for example, is saying, 'Would you like to invest in my fund, which I will then go and invest in a start-up entity?' I think that is the difference. I hope that has clarified it.

Senator KETTER: We have had submissions from the Employee Ownership Australia group, which made the comment that there could be more attractive overseas equity crowdfunding regimes available than what is being proposed here and that this may force start-ups to look overseas for equity crowdfunding. Do you have a concern about that?

Mr Power : I think what I can say on that is that the government has weighed various arguments, and in cognisant of what other jurisdictions have done, and has come to the approach which is in this bill, which the government considers to balance the interests of those seeking to raise capital and investors on the investor side.

Senator KETTER: It has been suggested that the risk warning recommended by the draft regulations seeks to cover too many possibilities, and that the risk warnings used in that New Zealand equity crowdfunding regime are more appropriate. Do you have a view on that?

Mr Power : Again, I think the best I can say is that the government, in coming to its view about what an appropriate risk warning is, has been aware of the other risk warnings and considered the other risk warnings that are in other jurisdictions. It is consulting on the content of the warnings. It has come to a view that that is an appropriate balance.

Senator KETTER: I will just keep moving, given the time. On budget allocation for ASIC, the 2015-16 budget provided for a $7.8 million allocation over four years to implement and monitor a regulatory framework to facilitate equity crowdfunding. There is a provision there for $1.2 million. Can you tell us how that has been allocated over the 2015-16 financial year?

Mr Power : No, in detail. That would be a matter for ASIC. But ASIC will obviously be the regulator which implements this regime, takes applications for licences, sets up the licence regime and provides various guides and information into the marketplace both for intermediaries and investors. The funding which is provided to ASIC is to do all of those things.

Senator KETTER: Are you aware of how many officers of ASIC have been assigned to devising the regulatory framework?

Mr Power : No.

Senator KETTER: Have any outside consultants been used to assist Treasury and ASIC as part of this exercise? If so, who were they and what was the cost of retaining these consultants?

Mr Power : I cannot speak for ASIC. I am not aware, to my knowledge, of consultancies being let by the department in relation to the development of this legislation.

Senator KETTER: Could you take that on notice?

Mr Power : I can confirm that on notice.

Senator KETTER: If we find that there are consultants, could you also tell us if they have an ongoing role in that function. I understand that an average of $1.7 million has been allocated to ASIC for three years from 2016-17 in relation to managing the new equity crowdfunding framework. Is this all of the money set aside for regulatory oversight of the new equity crowdfunding system over this time?

Mr Power : The money which is in the budget and allocated to ASIC is the amount that has been provided.

Senator KETTER: Do you know whether ASIC will be able to supplement further funds from its existing budget to manage regulatory oversight of equity crowdfunding in Australia?

Mr Power : That is the amount of funding that ASIC has been provided to implement the arrangements. It is a matter for ASIC, in its internal budget management, how it allocates its resources. So I do not think I can answer on behalf of ASIC in relation to that.

Senator KETTER: In terms of the Treasury, would you be able to tell us how many people will be tasked to provide ongoing equity crowdfunding oversight from the moment the bill receives royal assent?

Mr Power : I think, in short, the answer is 'no', because, for example, Treasury manages its own internal resources in a flexible way. Certainly, we have policy officers that cover across capital markets and myself responsible for capital markets, banking and various other issues. Treasury will allocate resources certainly to monitoring as things progress, but there will not be a specific and set number in relation to that.

Senator KETTER: Are you able to advise which division of ASIC will retain day-to-day oversight over equity crowdfunding?

Mr Power : No.

Senator KETTER: Are these questions that you can take on notice?

Mr Power : I do not think, for example, Treasury could answer that question. The answer to that question is best answered by ASIC because it will, obviously, be ASIC that determines where it sits within its organisation.

Senator KETTER: My final question is: did ASIC call for an amount of money for regulatory oversight that is different to the amount detailed in the budget papers?

Mr Power : I think that goes to the government's budget process and its cabinet considerations. I am happy to take advice from the chair, but I think that is a matter for government.

Senator KETTER: I am not sure. Are you seeking the public interest immunity? Is that what you are asking for?

Mr Power : I am happy to take that question on notice. But what I am raising is that that question goes to the budget process, which is a cabinet process. I would like to seek advice before answering that question.

Senator KETTER: I would be happy for you to take that on notice.

Senator McALLISTER: I am sorry about coming back on this again, Mr Power, but I really just want to check this. I am wondering if it would not have been a simpler framework—instead of the start-up or the small business having to become a public company, they could instead register with an intermediary that would then undertake due diligence and a range of other checks, and then that would trigger an exemption from the shareholder cap that applies to private companies. I am just wondering whether that was something that you considered, or if you could assemble the arguments around for us.

Mr Power : Certainly, Treasury and government considered various options in relation to how to deal with the question around this. In fact, it put out a discussion paper in 2015 on some of the options around how this could be dealt with. The government has taken a decision in introducing this bill that its priority is to introduce a framework—certainly for public companies. As I said my opening remarks, it was a recommendation provided by CAMAC and also by the Productivity Commission, so it has taken the approach to put forward this bill as the appropriate action at this time. Are there other approaches, and would others consider them more open or simpler, as you say? Certainly some would. The government has come to this position to put forward this bill at this time.

Senator McALLISTER: I think I am simply responding to quite strong messages from other stakeholders from the sector that we are creating a more onerous set of obligations for small companies than applies internationally. I imagine the impact of this was considered in the policy process.

Mr Power : As I said, certainly the approaches of other jurisdictions. What the appropriate balance between reporting and disclosure on the issuer side, compared to what you might call investor rights or protection on the other side, was definitely central to the government's consideration in coming to the provisions that are in the bill.

Senator McALLISTER: The provisions in the bill are not, though, exactly what CAMAC recommended, are they?

Mr Power : No.

Senator McALLISTER: And the discussion paper really only canvassed that, or the New Zealand option? In the last point of interactions that stakeholders had with this policy process, the two options on the table were the CAMAC option and the New Zealand option, and we have landed in a third place. So I am just trying to unpack how that came about.

Mr Power : I think it came about in response to stakeholder feedback from the processes that followed before that. So people responded and provided input into the government's consultation paper, the government took some of those comments on board and came to the approach which is in the bill.

Senator McALLISTER: Which were the key stakeholders that advocated for the approach that is now in the legislation?

Mr Power : It is a complex piece of legislation, so I am not sure that any one stakeholder came forward and said, 'I would like all these provisions'—

Senator McALLISTER: I suppose, particularly, the public company element.

Mr Power : As I said, the two independent reports that have come to that conclusion were the CAMAC and Productivity Commission reports that weighed up all of those things. A number of other stakeholders in the process—and I think I just heard the representatives from the CPA coming to that view—did so to. Certainly I think, on balance, many in the start-up community and intermediary community had different views and—

Senator McALLISTER: Did any of them support the public company model?

Mr Power : Off the top of my head I could not tell you; I would have to take that on notice.

Senator McALLISTER: It would be good to know if any of them did. We have heard a selection of views today.

Mr Power : We can take that on notice and have a look back to see if there are any particular names that we could bring to you.

Senator McALLISTER: Just one—just one name. That would be good.

Senator KETTER: To follow on from that, I am just interested in your reaction, Mr Power—and you may have been listening to some of the evidence that we took earlier—Mr Heasley from VentureCrowd in his submission made the point that:

If there had been proper consultation with the Australian start-up community before the Bill was drafted, it would have been apparent that these fledgling businesses are unlikely to be able to adequately deal with 20 new shareholders, let alone more.

So, he is somewhat critical of the consultation process. Also Mr Wilkinson from Equitise talks about changing focus since the change in cabinet. What do you say in relation to the criticisms of the consultation process?

Mr Power : When I look back over the consultation process, which started with the CAMAC report, the Productivity Commission report and the government's consultation process, two round tables run by former minister Billson and Treasury's own bilateral meeting, it suggests to me that there has been a lot of consultation throughout the process. That is not to say that everybody gets what they want out of the consultation process, but I think a number of consultation processes have gone on in the development of—

Senator KETTER: But when you have significant industry participants saying that their views have not really been taken into account in the drafting of the bill, that is a concern with the consultation process, isn't it?

Mr Power : I think there is a difference between having views considered and having them adopted, and I think they have been considered and not all of them have been adopted by the government, because the government has taken an approach that balances, from its point of view, the different competing considerations.

CHAIR: Was there consultation on the draft legislation, including those people who were here in the room today and additionally OzCrowd—there is a fellow, Nick Karolidis, not present—who were generally supportive of the approach?

Mr Power : There was consultation on the draft legislation with a targeted group of stakeholders who provided submissions. I do not have the list of who was involved in that in front of me, but we can provide that.

CHAIR: That would be great if you could do that. Thanks very much. We can skip out a little bit early. So, thank you very much, Ms Hogan and Mr Power, for your attendance today.