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Legislative Assembly for the ACT: 2004 Week 09 Hansard (Thursday, 19 August 2004) . . Page.. 3912 ..

government wants to make sure that venture capitalists operating in the territory can access those tax breaks. I understand that registered VCLPs and AFOFs are able to get their gains on the sale of eligible venture capital investments taxed as capital gains rather than as income, and partners are able to get flowthrough tax treatment of income, profits, gains and losses.

The federal government made the taxation changes partly to improve incentives for foreign investment in the venture capital sector. Economic analysis undertaken by Econotech for the Australian Venture Capital Association estimated that the limited partnerships and tax changes would attract an addition $1 billion in foreign capital, and I expect that most of us would be glad to see at least some of this investment flowing into the ACT.

My main concern with this legislation is the provision that limited partners of venture capital vehicles get a complete exemption for any liabilities that the partnership incurs. Just last sitting, this Assembly passed a law to impose personal liability for taxes on directors of corporations, including corporations formed and operating for non-profit purposes. Yet this bill gives corporations providing venture capital a complete exemption from liability for debts to the territory or debts to other parties, such as employees or creditors.

I am not trying to argue that venture capital is not important. I agree that we should be encouraging this type of investment. However, I cannot see why it is more important than essential community and charitable work done by non-profit corporations, and why we should not be giving people willing to work for their community the same level of encouragement. It does not seem right to me that venture capitalists get immunity from personal liability for debts while people giving up their time to serve the community run the risk of their personal assets being seized.

The argument that has been advanced for the different treatment is that incorporated partners in venture capital partnerships do not, and in fact must not, under this legislation have any management control over the business. I appreciate that directors of community boards are exercising, or are supposed to be exercising, some form of management control. However, there are many different models of how community organisation boards work. Some actually encourage the board to have less management control than you would see in some commercial operations—management control rests directly with the executive director of that organisation and the board provides policy oversight.

Of course, many people who volunteer to take on roles in community organisation boards already contribute in many other ways to their community, so their time is stretched and it is quite likely that they are not intimately familiar with the day-to-day operations of the organisation. As I said, in some cases they are encouraged not to make those day-to-day decisions. If we required a very high level of control we would not be able to fill many of those directorship positions. I have strong concerns that current law ignores these realities. So I have ongoing issues with clause 67 (1) of this bill.

I recognise that this legislation is supported by the majority of the Assembly and will go through as it stands. However, I wish to state my disappointment that business is once again being put ahead of the community. I hope that we can find a better way of putting

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