On one side of the Australian economy sit operators who have already proved they can create value and now need capital to scale. On the other sit households and professionals who want a chance at higher returns than they can reasonably expect from a default superannuation option. Between them stands a regulatory wall.
The result is not merely inconvenience for a few entrepreneurs and investors. It is slower business formation, fewer jobs, weaker local supply chains, less tax revenue, and a large pool of domestic savings that is systematically steered away from the very enterprises that would most benefit the country.
The problem is not a shortage of savings. Australia’s superannuation system is one of the world’s largest. The problem is that the legal architecture of fundraising and financial advice makes it expensive, risky, and often pointless for growing private businesses to seek equity from anyone except banks (on conservative loan-to-value terms), a narrow circle of “wealthy” investors, or closed venture and private-equity funds.
A farm that works — and cannot scale
Consider a farmer who inherited a marginally profitable, single-product family operation employing three people. Over two decades he rebuilt it: thirty products instead of one, a hundred employees instead of three, visitors and local suppliers drawn in, higher animal-welfare standards, food produced without a heavy reliance on synthetic chemicals, and a return on capital several times the industry average. The business is more resilient to flood and drought. It is also better for the mental health of the farmers.
He now wants to buy additional farms and install the same model. His local bank, which knows him, will lend against perhaps half the purchase price of each new property. That still leaves a large equity gap — land, infrastructure, equipment, and working capital. Stockbrokers are not interested. Wealth managers are not interested. APRA-regulated super funds are not interested. There is no active private-placement industry.
So, the rollout doesn’t happen. The opportunity cost is not theoretical. One additional farm in four or five years could become several. Each would employ many more people, buy much more from local suppliers, produce healthier food, and generate far more taxable income. None of that happens because the equity capital cannot be secured.
From the investor’s side the same transaction looks attractive. Farmland is a real asset whose scarcity is increasing while global food demand rises. If an operator can lift a typical 3 per cent return on capital toward 18 per cent, the value of the equity can multiply several times over a handful of years, even before land-price appreciation. Many Australians — not only the already wealthy — would prefer that prospect to another year in a balanced super option returning something in the mid- to high-single digits. Australian Super’s Balanced Option, for example, delivered a five-year annualised return of around 7 per cent to mid-2026; the industry median balanced option sat in a similar range. That is paltry compared to what is offered in the private market.
The Canva illustration
The same logic applies to high-growth companies. An early investment of $1,000 in Canva around the time of its seed and early growth rounds — when the company was still valued in the low tens of millions — would today be worth a life-changing sum at recent valuations in the low-to-mid $30 billion. Most Australians never saw that opportunity. Entrepreneurs rarely bother to offer it to them. The compliance burden of a retail offer, and the near uselessness of the resulting documents for actual investment analysis, make the exercise unattractive.
Offer Documents
Retail offer documents are written by lawyers for regulatory compliance. They rarely contain the information that actually determines value: the company’s specific objectives, the plan to reach them, the key assumptions, the range of plausible outcomes if those assumptions prove too optimistic or too conservative, and the implied returns under each scenario. A sophisticated investor considering a deal outside his or her own industry has almost nowhere to turn for independent analysis of that kind. The advisory industry that would serve that need has not been allowed to form.
The regulatory wall
Chapter 6D of the Corporations Act and the related wholesale-client rules create a two-tier market. Offers to “retail” investors generally require a prospectus or product disclosure statement — costly, slow, and of limited decision-usefulness. Offers to “sophisticated” or wholesale investors can proceed with far less formality. The main individual tests have barely moved since 2001: an accountant’s certificate of $2.5 million in net assets or $250,000 of gross income in each of the two preceding years, or a $500,000 minimum investment. There is also a small-scale exemption — no more than 20 investors and $2 million raised in any rolling 12-month period — that is far too small for a serious farm expansion or a scaling technology company.
Because the retail path is so heavy, capital raisers naturally target the wealthy and institutions. Venture-capital and private-equity funds, themselves invariably closed to ordinary investors by the same rules, become the default intermediaries. Those funds charge substantial management fees and bonuses, and the investor loses the ability to choose which underlying businesses receive the money.
Meanwhile the default destination for most household savings — industry and retail super funds — deploys roughly half of their assets offshore. The remainder is concentrated in existing listed scrip and existing real estate. Buying shares or units from another fund manager does not build a new plant, hire employees, or fund the next Australian software company. It merely reallocates claims on assets that already exist – with one superfund selling to another.
Capital must be allowed to seek its highest-valued use
An economy grows when savings flow to the people and projects that can turn them into more output, more employment, and more taxable income. That process is throttled when the law treats ordinary Australians as too unsophisticated to be shown a farm expansion or an early-stage company, so puts their money into the hands of fund managers who send half the money overseas and the rest into secondary-market equities – adding precious little to the economy.
Government should demolish the regulatory wall. Rather than using wealth tests and prospectus formalism, it should make it easier for proven operators to raise equity from a broader pool of willing investors, allow a professional private-placement and advisory industry to develop, and encourage meaningful offer documents — those containing the forward-looking analysis investors need.
It is imperative that government recognise that locking retail capital inside large funds that cannot or will not support the capital needs of a successful private business, is particularly damaging to the Australian economy.
Classic Liberals’ position is straightforward: It will demolish the regulatory wall. It will let those who have demonstrated they can create value find the capital they need and let those who want a chance at higher returns see the opportunities that currently never reach them.
The alternative is continued under-investment in the businesses that employ Australians, buy from Australians, and pay tax in Australia — while the savings of those same Australians are sent offshore or recycled among institutional investors, adding no value to the economy.