Productivity Commission investigates whether regulation is forcing SMEs out of Australia

SmartCompany has obtained a copy of tomorrow’s agenda.

The Productivity Commission is holding a series of confidential discussions investigating new business models and the digital economy. 

A round table will be held in Melbourne tomorrow and SmartCompany has obtained a copy of the agenda for discussion.

The round tables will operate under the Chatham House rules. 

The Productivity Commission will look at regulatory barriers for business starting up and selling up in particular in the digital space, with Uber and Airbnb attending. 

Topics of discussion include whether current regulations are too restrictive, whether they prevent new entrants to markets or the uptake of new technology or new business approaches and whether regulation is a motivation for moving new businesses to another country.

Stuart Stoyan, chief executive of P2P lending company MoneyPlace, has been invited to the round table to talk about regulation in the financial technology sector. 

Stoyan hopes to launch MoneyPlace in the next quarter and is in the process of getting the necessary licences – a slow and complicated process. 

Stoyan told SmartCompany it’s frustrating trying to launch a disruptive business – which facilitates a way to provide benefits to borrowers and investors by cutting out the banks – while being forced to go through an extensive process of applying for an Australian Financial Services licence with the Australian Securities and Investments Commission.

“Making someone run through a 12 month process is not helpful,” Stoyan says.

“We are not anti-regulation but you would hope the government would see a graduated approach is better for these new industries.”

Access to data is another issue for Stoyan, who wants all financial services companies to be required to participate in comprehensive credit reporting (CCR).

He says CCR will enable better risk assessments of borrowers and lower rates, and more accurately reflect their credit risk; but the banks are slow to adapt to this, which is hindering small businesses in the financial technology sector.

Stoyan says the Productivity Commission round tables need to consider how to protect consumers but also foster innovation. 

“We want quick action so startups can get on with building great businesses,” he says.

“We have a flight of talent of individuals and businesses that we want to retain in Australia,” he says.

Stoyan says Australia is losing great businesses, which are forced to move overseas, and losing individuals to overseas business, which can offer incentives such as stock options.    

“For every Atlassian I can point to a hundred companies that have left Australia,” he says. 

Stoyan says removing the restrictions on employee share schemes is key to encouraging innovation. 

“If you are starting up a business you don’t have cash, so the best way to incentivize your team is to share equity,” he says. 

“Ultimately you want to foster a culture of innovation, but let’s make sure it’s not just rhetoric and becomes something that we have an opportunity to create a platform for Australian business to grow.

“The mining boom has come and gone so let’s look to the industries that will promote growth – that is technology.”