Australia’s regulators need to stay in their lane and encourage competition to avoid innovative tech companies being “hacked to death by regulations”, according to Liberal senator and FinTech committee chair Andrew Bragg.
Senator Bragg, who is the chair of the parliamentary inquiry into FinTech, outlined his continued push for the adoption of recommendations from the committee’s interim report, and the future direction of the inquiry going forward on a panel hosted by StartupAUS on Friday.
The government has recently gone to war against the corporate regulator, with Treasurer Josh Frydenberg calling for ASIC to be overhauled to better address the demands of Parliament.
It came after ACCC chair Rod Sims last month called on the government to introduce stronger anti-merger laws to crack down on big banks buying early-stage FinTechs to stamp out competition.
Both of these regulators need to stick to their primary roles instead of pushing for new laws and risk stifling innovation and new tech firms, Senator Bragg said.
“We want to drive more competition by ensuring innovation isn’t hacked to death by regulators, or that the mandate for innovation falls in between the cracks. I want ASIC to enforce the law, not pontificate on policy,” he said.
“Certainly I do not want to see ASIC inflict market damage that results in the loss of choice, innovation and competition,” he said.
“It’s not a policy of our government that banks or financial institutions cannot purchase or invest in FinTechs. It’s important we don’t damage investment in the market this way. I look forward to the ACCC being much more focused in its lane.”
ASIC has also recently targeted the buy now, pay later sector, and Senator Bragg welcomed a report this week, which did not recommend regulation similar to credit card companies.
“Buy Now, Pay Later is the perfect example of Australian innovation. It’s important that it isn’t hacked to death by random regulatory reviews. This sort of innovation should be embraced by Canberra, and we should never be held to ransom under our democratic system, under the mercy of regulators that are misguided or misfocused,” he said.
“We want regulators to do their primary role. The first role of ASIC is to enforce the laws, not create new ones, and it’s the same for the ACCC.”
The co-founder of buy now, pay later giant Afterpay Anthony Eisen said the company is not against regulation, but these rules need to be “fit for purpose”.
“Regulation is hugely important for any industry. It’s never been for us about not wanting to be regulated or thinking it’s less important or having differentiated systems across the board. The key aspect to regulation is it needs to be fit for purpose,” Mr Eisen said.
The FinTech inquiry tabled an interim report in September, with 32 recommendations to government. Senator Bragg said eight of these recommendations were adopted in the October federal budget, with one legislated this month.
“FinTech is a ray of sunshine – it creates jobs, attracts investment and drives growth. We have to work on it to show that Australia is always open to FinTech businesses, and the 2020 budget was another step to achieving that,” he said.
Deputy chief financial officer Jacqui Purcell welcomed the tech discussion currently taking place in Canberra through the inquiry and called for the government to embrace tech creation, not just adoption.
“It’s great to see that these types of topics are being discussed at the federal government level. They are really important to make us a competitive place for innovation. Capital is global, talent is global, and we have to be able to compete with other parts of the world for both of those things,” Ms Purcell said.
“The more simple we can make things, the easier it will be for companies to be founded and stay in Australia and be successful. We have a huge opportunity to be tech creators. There are no boundaries to the tech that we create. We have demonstrated we are capable of building world-leading tech companies in Australia.”
Senator Bragg said he would continue to push for the government to adopt the other recommendations.
“There are recommendations around access to capital, which was identified as a major issue. The committee recommended a number of structural changes, and the goal is to make our scheme at least as liberal, comparable and competitive as other jurisdictions we compete with for capital,” he said.
“I’m urging the executive government to adopt these capital recommendations over the next six months as we look towards another budget in May 2021.”
He will be particularly pushing for further improvements to the research and development tax incentive, after the federal government backed down from its plan to cut $1.8 billion from the popular scheme.
“I would like to see more. I do think we have crossed the rubicon though – no-one can say that Canberra isn’t backing R&D, that is not in dispute. Genuine software creation by Australian startups should be reliably supported,” Senator Bragg said.
“I know the industry is looking to see more guidance on this question. We want to see R&D dollars for young software firms spent on hiring new staff and doing more R&D. It’s a high-value job creation scheme. I am working with the executive government to ensure there is more guidance on software development.”
The committee on FinTech recently released a new issues paper on its direction for its final report, looking specifically at Australia’s competitive position, the Consumer Data Right and big tech companies.
“The final report should be the plan to get us into a position of pre-eminence in the Asia-Pacific region for FinTech. And FinTech is a proxy for tech. If you look at the things that make you competitive in FinTech, those are the things that will make you competitive in the economy,” Senator Bragg said.
The committee will also be looking at how Australia can capitalise on the recent events in Hong Kong and attract FinTechs to Australia.
“The real test for us is whether we can capitalise upon the recent geopolitical events in Hong Kong. This will come down to how competitive our position is compared to Singapore. That’s a key opportunity, a very exciting opportunity for Australia,” Senator Bragg said.