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Startup-land finds a sympathetic ear in Canberra

Promised review of employee share schemes to conduct public consultations

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Startup-land's liking for gifts of scrip as a way to keep wages and burn rate low has found sympathy within Australia's Treasury, which has opened a public consultation on the topic of employee share schemes.

Reform of the system was promised by Australia's previous government, as we reported last year, but the ball seems to have been dropped at some point. This new consultation seems to be framed around the notion the current rules are broken, opening with a statement that “The Government is committed to addressing the concerns that have been raised by startups in relation to Employee Share Schemes”.

Detailed here, the consultation will run for two weeks and feature real-world and online consultation, plus the chance to use this thoughtfully-provided cover letter on posted submissions.

Startup-land generally believes that employee share schemes are too hard to do in Australia, thanks to rules that cap the level of salary sacrifice. That in turn, it is argued, makes it hard for nascent businesses to attract the kind of folks willing to turn a startup into a smash hit, then cash in on their shares in order to end up with more currency in their pockets than would be the case if they worked for their market value elsewhere.

Exhibit A for that argument is Atlassian's recent departure from Australia, a move motivated in part by a desire to offer an enhanced employee share scheme.

Vulture South has no little admiration for those willing to put ambition ahead of beer money, but is also uncomfortable with those who believe Australia would be a more innovative nation if it offered the same business environment as Silicon Valley.

For what it is worth, Australia recently won third spot in the Heritage Foundation's 2014 Index of Economic Freedom (The USA was 12th and UK 14th), placing it among just six nations ranked as "free".

The Heritage Foundation also had this to say about starting a business in Australia:

"Australia’s highly competitive regulatory framework promotes business formation and operational efficiency. With no minimum capital standards, starting a company requires only one procedure. Flexible labor regulations enhance employment and productivity growth."

Yes, we know the Heritage Foundation is a very conservative organisation. But if even such an entity says Australia is among the six freest nations on earth, would better share schemes for employees really make a difference? ®

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