Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the parliamentary Joint Committee on Corporations and Financial Services I present the committee's advisory report on the Australian Charities and Not-for-Profits Commission Bill 2012, the Australian Charities and Not-for-Profits Commission (Consequential and Transitional) Bill 2012 and the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012. I ask leave of the House to make a short statement in connection with the report.

Leave granted.

On 23 August the House of Representatives referred the Australian Charities and Not-for-Profits Commission Bill 2012, the Australian Charities and Not-for-Profits Commission (Consequential and Transitional) Bill 2012 and the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012 to the parliamentary Joint Committee on Corporations and Financial Services for inquiry and report. As chair of the committee I am pleased today to table the committee's report.

The committee received 46 submissions and held a public hearing in Canberra on 3 September. The evidence is clear that there is overwhelming support for uniform national regulation for the not-for-profit sector. These bills are the culmination of nearly two decades of work by the not-for-profit sector, the government and committees of this House and the Senate to establish a national not-for-profits regulator. Indeed, the not-for-profit sector has been a driving force in the development of a national regulatory approach.

The ACNC bills respond to the sector's firmly held belief that national regulation will reduce unnecessary regulatory burdens and increase the sector's productivity, transparency and long-term sustainability. While there is resounding support for the Australian Charities and Not-for-Profits Commission, stakeholders did raise some concerns with aspects of the proposed legislation. The majority of these concerns were addressed by the House of Representatives Standing Committee on Economics during its inquiry into the exposure drafts of the Australian Charities Not-for-Profits Commission Bill 2012 and the Australian Charities and Not-for-Profits Commission (Consequential and Transitional) Bill 2012. The House economics committee recommended the enactment of the proposed legislation subject to recommendations to amend the bills to enhance the operation of the national regulatory regime.

I am pleased to report that the government has accepted the House committee's recommendations. Further, this committee's inquiry found that stakeholders' concerns with the bills have largely been addressed following the bill amendments. I commend the work of the chair of that committee, the member for Parramatta, and her colleagues, for their very careful response to the sector and the significant changes, which were afforded considerable recognition during our further hearing into this matter and into these bills.

However, during the current inquiry further proposals for legislative amendment were put to the committee, and I draw the House's attention to two matters of particular note. The first matter that I would like to raise is the issue of the definition of a basic religious charity. The ACNC Bill would moderate the reporting requirements applying to not-for-profit entities operating as basic religious charities. Stakeholders expressed some concern that the definition may not reflect current financial management practices that have been used for many years by basic religious entities. In particular, it was brought to the committee's attention that to meet the definition a basic religious charity would no longer be able to operate school-building funds with deductible gift recipient status.

The evidence before the committee indicates that this is an unintended consequence of the draft legislation and not in line with the policy intention to reduce the financial reporting burden for basic religious charities while still maintaining very appropriate levels of transparency and accountability in the sector. Accordingly, the committee has recommended that the definition of 'basic religious charity' be amended to allow charities that currently operate school building funds and have deductible gift recipient status to retain that capacity.

Secondly, another area where there was considerable representation was with regard to the reporting requirements for independent schools. The introduction of a national regulator for not-for-profit entities is intended to reduce the red tape that can limit the resources available to not-for-profit entities to undertake community service activities.

At the Commonwealth level it is clear that the creation of the ACNC will provide significant opportunities to streamline the Commonwealth services available to support the work of not-for-profit entities. However, strong concerns were raised with regard to the impact of the creation of the ACNC on independent schools. It is noted that independent schools are currently required to provide annual financial reports to the Australian Curriculum, Assessment and Reporting Authority, better known as ACARA, as part of the My School web site. It is consistent with a policy to streamline Commonwealth regulatory requirements for the Australian Charities and Not-for-Profit Commission to utilise the data provided to the Australian Curriculum, Assessment and Reporting Authority. Accordingly, the committee has recommended that the ACNC bill be amended to allow the commission to accept data that independents provide to ACARA in fulfilment of the reporting requirements under the ACNC bill.

The Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012 will reverse the effect of the decisions of the High Court of Australia in Word Investments to ensure that funds donated to Australian charities are exercised for the benefit of Australians in Australia. The bill would also strengthen Australia's compliance with international obligations to minimise the potential for not-for-profit entities to be exploited by terrorists and terrorist organisations.

There appears to be some confusion among stakeholders regarding the steps the Australian Taxation Office will require for not-for-profit entities to demonstrate eligibility for tax exempt status and deductible gift recipient status. The committee has therefore recommended that the Australian Taxation Commissioner issue explanatory material to provide clearer direction and information to those not-for-profit entities.

In conclusion, the committee recommends that the House pass all three bills. I am very mindful that another member will speak shortly after me and that there is a dissenting report. The reality is that this sector has urged the passage of these bills. The sector is very much ready for the passage of these bills. The committee concurs with the not-for-profit sector that now is the time to act to establish the Australian Charities and Not-for-profit Commission, and it is a critical part of the leadership of this government that we are tackling challenging problems like this. For two decades now it has been the subject of incredible scrutiny and there is a desire in the sector for this to come to pass.

In commending the report on the bills to the House I conclude with the words of the National Roundtable Of Nonprofit Organisations:

Once again, we are at the altar of the reforms we want and need and we ask for the support of our national parliament and of the states and territories to deliver for us better and smarter regulation. We don't want to be jilted yet again.

They can rely on this government to get on with the hard task of making sure that the good work they do is enhanced, and the transparency of the sector is very much going to be enhanced by the passage of these bills. I commend the report to the House.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

by leave—I am pleased to speak on the report of the Joint Committee on Corporations and Financial Services into the Australian Charities and Not-for-profits Commission Bill 2012, the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012 and the Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012. The purpose of these bills is to establish the Australian Charities and Not-for-Profits Commission, to establish the office of the commissioner and to make provisions for the not-for-profit sector's eligibility for tax concessions.

The Corporations and Financial Services Committee has held a hearing and conducted other inquiries into the bills. I must say that the conclusion reached by coalition members on the committee was different to the conclusion reached by government members, which has just been described to the House by the chair of the committee. Coalition members did not find evidence of overwhelming support for these bills. On the contrary, coalition members were struck by the degree of concern in the charities and not-for-profit sector about the extent of additional red tape and additional regulatory compliance burdens which these bills would, if passed into law, impose upon the sector.

The preamble to the Australian Charities and Not-for-profits Commission Bill 2012 states:

It is important that a national regulatory system that promotes good governance, accountability and transparency for not-for-profit entities be introduced to maintain, protect and enhance public trust and confidence in the not-for-profit sector.

Coalition members of the committee reject the fundamental premise that the current Commonwealth regulatory system applicable to charities and not-for-profits, based upon the activities of the Australian Securities and Investments Commission and the Australian Taxation Office, is broken. We do not believe that the premise of the need for this new regulatory megastructure in the charities and not-for-profit sector has been made. We, therefore, do not recommend supporting the creation of another regulatory body that will add to the red-tape burden for charitable organisations and, in practical terms, in many ways duplicate the existing state and territory regulations.

One of the themes in our report is that there is a difference between good intentions and the likely results of a package of legislation based upon detailed, careful analysis of its provisions. Based upon detailed and careful analysis, we have reached the conclusion that this package of legislation is going to significantly increase the regulatory burden faced by charities.

We are particularly concerned that smaller charities, which rely on the active participation of volunteers, will be overcome by the approach that this package of bills adopts. The sheer volume of this legislative package is profoundly daunting for smaller entities, those which do not find themselves in a position to employ professional compliance officers. The coalition wishes to encourage volunteers. We think volunteers have a very important role in the not-for-profit sector. In our dissenting report we indicate our concern that community members might be discouraged from participating in their local charity, in their local religious group or in another important organisation because of the fear of legal action that they might face as a director of a not-for-profit entity.

In the minority report we note that, unless and until there is a harmonisation of the various Commonwealth and state and territory laws governing the charity and not-for-profit sector, the proposed Australian Charities and Not-for-Profits Commission will simply add another layer of regulation and bureaucracy. We, in the committee process, asked detailed questions with a view to determining whether any state or territory government has agreed to vacate the field so as to allow for exclusive Commonwealth regulation of the sector. The evidence suggests that, at present, no state or territory government has proceeded beyond, at the highest, expressing support for the concept of reducing red tape. The evidence the committee received was that no state or territory government has yet entered into a memorandum of understanding with the Commonwealth to participate in the new regulatory arrangements.

The evidence provided to the committee about the scope for efficiencies at the Commonwealth level was also unpersuasive. The smooth functioning of the Australian Charities and Not-for-profit Commission in reducing duplication and red tape at the Commonwealth level will depend upon cooperation by a large number of Commonwealth departments and agencies—for example, to take as read information which has been lodged on the register by charities and not-for-profit organisations which have provided that information to the Australian Charities and Not-for-profit Commission.

The evidence that was given as to the mechanisms that will ensure that other Commonwealth departments and agencies do take actions necessary to, amongst other things, take as read the information which is on the register, was unpersuasive. Independent schools indicated particular concerns in this area, including a requirement that they may need to lodge with the Australian Charities and Not-for-profit Commission much information which they already report to a range of Commonwealth and state authorities.

The committee also heard evidence from a number of witnesses as to important gaps in the bills—for example, evidence from the Institute of Chartered Accountants regarding gaps concerning governance requirements and the reporting framework.

In conclusion, coalition members of the committee are unable to support the passage of these bills, because the mischief that the main bill seeks to address has not been adequately identified and we do not support the imposition of an additional costly compliance regime on a sector which is already heavily burdened by red tape.