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Australian parliament should unite to remove innovation barriers: Clare

Adam Bender | April 11, 2014
Communications shadow minister backs startup share options, crowdfunding and copyright reform

The government and opposition can agree to fix issues holding back Australian startups and innovation, according to Communications Shadow Minister Jason Clare.

At the CommsDay conference today in Sydney, Clare backed regulatory changes supported by the Coalition that would encourage crowdfunding and tax changes to make it easier for startups to use share options as a hiring incentive.

"We can work together on both of these things, [with] government and opposition in the Parliament passing laws that reform equity funding and reform employee share schemes."

In addition, Clare urged the government to consider copyright reform and initiatives that would promote ICT skills.

Clare said he agreed with Communications Minister Malcolm Turnbull that the share options tax scheme must be modified.

The current tax rules, introduced by Labor government in July 2009, discourage Australian startups from providing share options to employees. The rules require that the employee is taxed on the value of the share option when it is issued, before any payments are made.

In other countries, the employee is not taxed until they execute the option. This is said to be better for cash-poor early stage startups, which can use share options as an alternative to a larger salary.

"I think there is a strong argument for reform here, particularly for startup businesses," said Clare.

Clare also supported Turnbull on creating a regulatory environment that supports crowdsourced equity funding for startups.

He said while startups have little difficulty getting seed funding, they struggle to get the next tranche of capital to drive their business forward. "Crowdfunding will help with this."

While the parties may already agree on those issues, Clare said Turnbull has been silent on the issue of copyright reform.

Clare supported a recommendation by the Australian Law Reform Commission (ALRC) for a flexible fair-use exemption like the one that exists in the United States. There, the exemption has helped to develop cloud computing and search engines, he said.

"Others have made the point in Australia that cloud computing services potentially breach the current copyright laws because they're often used to store or share copyrighted material."

He gave the example of Shazam, an app that uses a smartphone's microphone to recognise songs being played. "[It] probably leads to people buying more music, but according to the Australian Digital Alliance, it also potentially breaches our current copyright laws."

Clare said he wanted to see broader copyright reform than the measures proposed by Attorney-General George Brandis.

"I suspect that Minister Turnbull might have a different view, given his desire to remove obstacles from innovation, but he's been silent on this in the past."


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