An Australian government review of red tape for business is holding a special investigation into the challenges facing disruptive startups and the emerging digital economy.
Representatives of high-profile tech companies including Uber and AirBnB are expected among attendees at a Productivity Commission meeting in Melbourne today to discuss the challenges facing companies in the sector.
The meeting will discuss the barriers businesses face in Australia and forms part of the Productivity Commission’s report into Barriers to Set-up, Transfer and Closure, announced by Treasurer Joe Hockey in November last year.
The digital economy is a separate stream of the Productivity Commission investigation, although digital isn’t mentioned in the inquiry’s Terms of Reference.
Productivity Commission investigations are hugely influential in the framing of future government policy.
Attendees will include Freelancer.com CEO Matt Barrie and Tyro boss Jost Stollman.
We’ve got our hands on the agenda, which you can see in full below, and there are a couple of things worth noting. First, the Productivity Commission is interested in getting a proper handle on how the new wave of disruptive businesses differ in the digital age.
Also, the inquiry is looking at ownership structures which are critical for startups as one of the main ways young companies attract talented staff is to give them shares in the company. The government recently announced major changes to restrictions on employee share schemes which have been broadly welcomed but, as we report elsewhere today, still contain some potentially costly barriers for young companies.
One item will be a red flag to some, however: the panel will discuss the “risks and barriers of more proactive engagement with regulators in this business setup phase”.
Consider that Uber has faced a number of regulatory hurdles with its ride sharing service. Although BRW has reported the Victorian government has struck a secret deal with Uber to bring 2,500 UberX drivers into the state’s regulatory regime as accredited hire-care drivers.
Also, consider that Airbnb has also come under question with some users breaching subletting laws. There was a recent case in Melbourne where a tenant was subletting her apartment on the site and the real estate agent popped by for a routine inspection. The agent realised the tenant was subletting – which under most leases in Australia is not allowed.
There have been some ugly incidents but these are services that consumers generally like, as they offer things cheaper and sometimes better, upending industries that have enjoyed regulatory protection resulting in poor service and high prices. While the emerging kings of the sharing economy have clear challenges to ensure they are operating legally and safely wherever they set up, more “proactive engagement” from regulators at early stages might have dissuaded Uber and AirBnB from ever setting up in Australia.
And that’s before getting to financial services, a sector which has the potential to be the next turned inside-out by mass disruption but by its nature involves more risk when holding or lending money to people.
One confirmed attendee is Stuart Stoyan, chief executive of P2P lending company MoneyPlace, is hoping to discuss whether regulation is right for the P2P lending space and fintech in general.
A former NAB exec, Stoyan is currently in the process of getting his financial services licence and believes fintech startups shouldn’t be regulated in the same way banks are but that there needs to be some rules to ensure it doesn’t get out of control.
Stoyan said what he would like to see is “a framework and a system that allows startups to test out their models and not be regulated out”.
“It’s clear there’s an intent to foster innovation in Australia… it’s important to have a representatives from different stages,” he said. “The key is then ensuring that the government acts quickly, doesn’t get caught up in red tape, rounds of consultation, and cuts through to action.”
One of the big issues that will be likely discussed are the government’s proposed changes to the Employee Share Scheme, something Stoyan said he hoped is pushed through and implemented quickly, though he shares concerns with others that how startups are valued remains unanswered.
Here’s the agenda:
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