2 September 2020

Senate Select Committee Inquiry on Financial Technology and Regulatory Technology Interim Report: Statement from the Australian Investment Council

 

SYDNEY: The Australian Investment Council welcomes the recommendations in the Senate Select Committee’s interim report on Financial Technology and Regulatory Technology released today.

“The Committee’s ability to pivot and respond to important policy and regulatory issues on the back of COVID-19 has led to a comprehensive assessment of the opportunity to unlock Australia’s FinTech and RegTech innovation potential,” said Yasser El-Ansary, Chief Executive of the Australian Investment Council.

“The FinTech and RegTech sectors are an important part of Australia’s multi-billion dollar innovation ecosystem. These sectors will increasingly play a significant role in delivering high-value economic output and new jobs, and at the same time, deliver sizeable productivity gains across our economy.

“Recommendations outlined in the Committee’s report provide clear direction on what has to be done to deliver the economic opportunity in these areas over the next few years. Some of the reforms identified in the report have been on the policy agenda for some time, and it’s more important now than it ever has been before that we prioritise the changes which need to happen.

“The Council welcomes the Committee’s recommendation to implement a new Limited Partnership Collective Investment Vehicle (CIV) to encourage more investment into high-growth Australian businesses in FinTech, RegTech and the broader economy. The existing out-dated framework for attracting investment capital is out-of-step with other jurisdictions, which means Australia misses out on offshore investment into our market because we are not as competitive as other leading markets around the world.

Mr El-Ansary also said the Committee’s recommendation to widen access to the Early Stage Venture Capital Limited Partnerships (ESVCLP) and Venture Capital Limited Partnerships (VCLP) investment vehicles was an important outcome of the report.

“Because Australia does not yet have an internationally competitive Limited Partnership CIV, the ESVCLP and VCLP regimes play a critically important role in supporting high-growth Australian business through venture and growth capital investment.

“Broadening the framework for VCLPs and ESVCLPs and making them competitive with other jurisdictions will be attractive to domestic and international investors who are considering medium and long-term investments into Australian businesses across a range of new and emerging sectors of the economy,’’ Mr El-Ansary said.

Greater clarity and certainty on the tax treatment of software under the Research & Development Tax Incentive (RDTI) regime was another important recommendation in the report that would be helpful for all technology businesses seeking to scale in Australia. However, Mr El-Ansary said there was still work to be done.

“Introducing greater certainty for software development under the R&D tax regime is vitally important for our innovation ecosystem because the inconsistency which currently exists is holding us back from realising our entrepreneurial potential in some areas.”

The Council has been a leading advocate for the major R&D regime policy reform package proposed by Government to be paused indefinitely, given the prevailing economic climate.

“The Government can deliver more certainty for our innovation ecosystem by making a commitment to hold-off on implementing the proposed R&D reforms contained in legislation before Parliament right now. Now is not the right time to be constraining the capacity of Australian businesses to innovate – we need innovation to help drive our economy out of recession,” said Mr El-Ansary.

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For an interview with Yasser El-Ansary please contact:

Robyn Tolhurst
Public Affairs Manager
robyn.tolhurst@aic.co
M: 0436 388 919

About the Australian Investment Council

The Australian Investment Council is the voice of private capital in Australia. Private capital investment has played a central role in the growth and expansion of thousands of businesses, which when combined represents a multi-billion-dollar contribution to the Australian economy. Our members are the standard-bearers of professional investment and include: private equity, venture capital and private credit funds, alongside institutional investors such as superannuation and sovereign wealth funds, as well as leading financial, legal and operational advisers.

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