A new small business fund that would be open to investment from super funds and banks has been met with scepticism from the industry after it was announced by Prime Minister Scott Morrison.
The Prime Minister has announced plans to launch an Australian Business Growth Fund, with a view to help SMEs with annual turnovers between $2 million and $50 million get access to finance.
Super funds and banks would be allowed to invest in the fund that would help to grow businesses and is projected by the government to be worth $100 million and will assist 30 to 50 businesses each year.
“This is for those businesses like a local brewery or restaurant that wants to expand interstate or even overseas, or maybe a family-owned construction company wanting to grow so they can meet demand,” Mr Morrison said in a statement.
Neither Westpac or ANZ are in the working group dedicated to setting up the fund with ANZ refusing to join.
NAB has been chair of the working group and has worked with Treasury since December to set up the fund and has been joined by CBA on the group.
CBA is waiting on more clarity around the fund before it commits funding while international bank HSBC has committed.
Superannuation funds have also been invited to join but so far none have committed either way.
APRA is currently liaising with the government about the planned entity structure with criteria set to include diversity of SMEs that receive equity, fund management that is independent from the banks and contributions by the institutions to be capped.
The fund has also been rejected by groups like the Institute of Public Affairs who says that cutting red tape would be a more effective move for the small business community.
“Small business growth in Australia requires less red tape, not another taxpayer-subsidised, government-run scheme,” said Daniel Wild, director of the think tank.
“The best way to boost small business growth is to cut red tape and reduce government interference.
The Institute of Public Affairs is a conservative think tank that most recently called on the government to sell the ABC, pull of the Paris agreement and repel the ban on offensive speech in the racial discrimination act.
Similar SME funds are run in the UK and Canada and small business ombudsman Kate Carnell has lobbied for the fund since last year.
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