Teresa Gambaro (Brisbane, Liberal Party, Shadow Parliamentary Secretary for Citizenship and Settlement) Share this | Link to this | Hansard source

I rise to speak on the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. As the shadow minister and other members on this side have indicated, the coalition will be opposing these bills.

These bills are of particular interest to me, both as the member for Brisbane and as the shadow parliamentary secretary for international development assistance. They have applications in both those areas. The Australian Charities and Not-for-profits Commission Bill 2012 and the associated bill create a new regulator for the not-for profit sector. These pieces of legislation create a new independent statutory office, the Australian Charities and Not-for-profits Commission, or ACNC, as it will be known.

I congratulate and pay tribute to all of those people and community groups that work in the not-for-profit sector for the incredible work they do in enriching other people's lives in our community. They are made up of all sorts of entities that are neither commercial nor government. This sector plays a critical role in enhancing our communities culturally, socially, economically, environmentally and, much more importantly, provides assistance and support for the most vulnerable people in our community.

I want to recognise and salute the fantastic work that the not-for-profit organisations in my electorate of Brisbane do and the incredible contribution they make to our local community. Whether they are churches, charities, industry associations, aid associations, animal welfare associations, sporting clubs, veterans associations or the many hundreds of organisations that work diligently on behalf of the people of Brisbane, I want to acknowledge them foremost and congratulate them on the fine work they do in enriching our society. Never was this more apparent than when we had the 2011 floods in South-East Queensland. A whole host of these organisation were out there on the ground immediately doing a superb job and helping those in need who had their livelihoods and their possessions devastated by that terrible tragedy.

I also want to make special mention of a great organisation called ChaplainWatch, which works in my electorate. Many members would be aware the electorate of Brisbane contains the Fortitude Valley, which is the social playground of Brisbane. It is a major social precinct. Every weekend approximately 30,000 people—mostly young people—flock to the Valley for a night out. ChaplainWatch has a weekend patrol service that is dedicated to helping those in need or in crisis during the late-night hours in the Fortitude Valley. Those night do not always end happily, unfortunately. ChaplainWatch provides a service to those in potential situations of getting into trouble and provides assistance with a number of incidents that occur in the Valley. Last year they attended 880 incidents involving 1,215 people. In many instances it is a case of just being there to diffuse situations that can become very explosive, particularly when alcohol is involved. They provide an incredible service. I want to thank Lance Mergard and his wonderful team for the great work they do. They recently visited me and expressed a need for another vehicle so that they can expand and continue the wonderful work that they do. They do this work not only in the Brisbane CBD and Fortitude Valley but also in Caxton Street.

Given the government's priority regarding not-for-profit organisations, they should encourage the work that ChaplainWatch do. You would think the goal would be to try and relieve the burden of regulation on not-for-profit organisations so that they can concentrate on the great work that they do and so that they can help more and more people, instead of having to spend more of their valuable time and resources on dealing with more regulation and more paperwork. These bills do not support these organisations; in fact, all they do is add more red tape and more compliance costs to this very important not-for-profit sector.

We oppose the government's proposed new regulator for charities and not-for-profits because it will not reduce red tape; all it will do is add another layer of red tape. It treats the sector as untrustworthy and the people involved in it as tainted; it will hinder the activities of charities and not-for-profits; and it will clearly discourage involvement in civil society. It is also very clear, from the deliberations of the House Standing Committee on Economics inquiry into these bills, that the sector does not support it either.

As we know, the not-for-profit sector is currently regulated at a state government level. The states have not agreed to hand over any of their powers with respect to charities and not-for-profits to the Commonwealth, so the new regulator will simply be an another layer of needless red tape. Unless and until the states and territories agree to hand over their powers to the Commonwealth regulator and harmonise their laws, these bills are going to add more and more layers of red tape, which the sector will have to meet.

These bills set up a framework for a set of governance standards which will apply to most registered entities and will cover things such as the content of an entity's governing laws, the conduct of the entity and the processes that the entity has in place. This legislation also imposes a range of reporting requirements on the not-for-profit sector. As other members have noted, some of these not-for-profit entities have to comply with the Corporations Act, the state regulator, ASIC, any government department it receives grants or funding from and many more regulatory bodies. And now there will be one more—the ACNC.

An independent school in my electorate gave me a recent example. A lot of independent schools are quite worried about this legislation. They have boards and entities set up for their operations and other activities. Many of them have old boys' or old girls' associations. They have foundations that promote philanthropy

This school has asked to remain anonymous at this stage, but they are very concerned—they are concerned particularly about compliance, and they are concerned about the reporting regime. Independent schools currently report through DEEWR on their full financial status and they report in the required DEEWR format. They are already having to submit audited financial statements to DEEWR annually.

As well as that, independent schools in Australia already have extensive information available to the public on the My School ACARA website. This applies to all independent schools, regardless of which ACNC registered entity category they are in. Requiring independent schools to report similar but different data to the ACNC is just adding another unnecessary layer of red tape. In addition, independent schools also provide regular financial reports to their state government. This could result in independent schools requiring more administrative positions to fulfil all of the reporting requirements, again taking away funds from the delivery of much needed front-line educational services and positions.

The proposed compliance processes appear to be more onerous than those of public companies. In addition, the independent sector is most concerned about reporting requirements when schools receive donations—will there be an additional level of reporting when they fundraise? It goes on and on. The second concern relates to the statutory definition of the word 'charity'. The sector is concerned about the time and financial costs of having to prove public benefit when this notion has been long established. It is important to remain charitable to again reduce compliance costs for schools, focus on education and reduce fees to parents.

As regulations on the governance of entities are yet to be defined, these schools just do not know what these will be and how they will impact on them. There is a great deal of confusion out there. The schools representative said to me via email:

Schools don't mind being transparent it is just very hard when you need to redo numbers in four different formats depending on who you report to ...

These bills now impose a whole new level of regulation and uncertainty on schools. This unfortunately means the diversion of resources into compliance instead of contributing to the education of students.

Another part of the NFP sector that will be hurt is sporting clubs and associations that have NFP status. Not only do they have additional insurance and safety responsibilities which require high levels of compliance; now they will also have ACNC reporting requirements to adhere to as well. Also, keep in mind that a lot of clubs are manned by people who dedicate their service to volunteering, and they will now have this additional burden placed on them.

The ACNC will have far-reaching powers; powers that will elevate it to being one of the most powerful Commonwealth regulators. These bills provides the ACNC with the authority to issue warning notices, issue directions, enter into enforceable undertakings, apply to the courts for injunctions, suspend or remove responsible entities, and appoint acting responsible entities. Interestingly, the Australian Catholic Bishops Conference said:

The lengthy list of powers proposed in the ACNC Bill focuses on matters which appear more appropriate for a criminal investigation authority rather than a body which is intended to promote and educate.

The sector is also concerned that there is currently no single reference point for the NFP sector to access information, education or guidance. That is why the coalition supports a smaller commission to engage in innovation, advocacy and education.

This government is effectively reversing the current approach, telling the sector they need a watchdog to promote transparency and trust from the sector. The community trusts the sector and there has been no evidence provided by the government that problems exist to the extent that warrants the suite of powers that would be granted to the new commissioner.

In conclusion, the coalition opposes these bills because we want to relieve the burden of regulation for the not-for-profit entities and organisations. Unfortunately, these bills do the exact opposite.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

It is my pleasure to speak on the Australian Charities and Not-for-profits Commission Bill 2012. Strengthening Australian community life is a great passion of mine but it is an area which, in recent decades, we have sadly seen go backwards. I am going to do a little auto-citation, for which I apologise. In a book called Disconnected that I wrote a couple of years ago, I said that pretty much whichever way you cut it Australians are less involved in formal organisations than they were a generation ago. If you ask individuals whether they are active members of an organisation, you find that in 1967 33 per cent said yes but by 2004 just 18 per cent said yes.

If you look at the Directory of Australia Associations, the so-called bible for Australian associations, you find that the raw number of Australian associations has not kept pace with the Australian population. From the 1970s to 2010, the number of associations in that directory fell from 7,000 to 4,300. Put another way, there were about seven associations per 10,000 adults in the late 1970s and less than three associations for every 10,000 adults by 2010. That means that the associations we have are older than they once were. In the late 1970s, the typical association was about 22 years old; now, the typical association is about 39 years old. We are not growing new associations the way Australia traditionally has—the way we did in the 1950s and 1960s, when we saw the birth of the Endeavour Foundation, Community Aid Abroad, Brisbane's Blue Nursing Service, World Vision Australia, UNICEF Australia, the Scout Association of Australia, Choice and International Pen Friends, to name just a few.

If you ask the associations themselves, they tell you they are shedding members. The RSL, Scouts, Guides, Rotary, Lions, the Mothers' Union—if you put together what these organisations are reporting back, it is possible to track an index of organisational membership. Compared with 1950, membership was down by 14 per cent in 1980 and was down a full 67 per cent by 2009. So it is vital that we as policymakers do what we can to increase the strength of Australia's organisations.

As a member of parliament, I take great pleasure in being involved in the associations in my local community. Just looking back through my diary for the last fortnight, I have been involved with Micah Challenge; People Power; the Canberra Times Fun Run, which raised money for a range of different charities; the University of the Third Age; and Care Australia.

Australia's associations need a system of regulation which is as good as we can provide for them. The Australian Charities and Not-for-profits Commission is aiming to be a one-stop shop for Australia's charities. The notion of the Australian Charities and Not-for-profits Commission is that charities and not-for-profits will provide their information once to a single organisation. That organisation which will then pass that information on to other Commonwealth agencies, including the tax office. Once we get buy-in from states and territories, it will also be passing that information on to state and territory government agencies as well.

This is what past reviews into the sector have called for. As the inquiry into the bill by the House Standing Committee on Economics noted, there have been five major reviews into regulation and taxation of the sector since 2000—the inquiry into the definition of charities and related organisations in 2001, the inquiry by the Senate Standing Committee on Economics in 2008, the Henry review in 2009, a Productivity Commission review in 2010 and a Senate Economics Legislation Committee inquiry, also in 2010. All those reports recommended a single national regulator for the sector. It is a straightforward approach and one which would bring Australia into line with other jurisdictions. As the report points out, the United Kingdom, Canada and New Zealand have this same sort of single regulator. Moving towards a single regulator is good for the growth of the charitable sector. If we want to, we can squib this reform, as previous parliaments going back to 2001 have—that was when the first inquiry recommended such a one-stop shop for charities. But, if we do that, we would be doing Australia's charities a disservice and we would be continuing the red-tape burden which falls upon them.

As was pointed out by witnesses to the inquiry, the not-for-profit sector already has a regulator—by default. It is called the Australian Taxation Office. The Australian Taxation Office is not particularly pleased about this and many charities are not particularly pleased by it either. It has strained the relationship between charities and the Australian Taxation Office. But let's not pretend, as the member for Menzies has attempted to do, that there is no additional red tape being imposed upon Australia's charities. We heard a great deal of evidence from charities about the burden of having to provide the same information to multiple government agencies and about grant requirements which are subtly different and so require charities to employ people to provide information to government agencies—when they could otherwise be increasing their expenditure on front-line services.

So this notion of the charitable passport is enormously appealing and will allow us to continue to grow the sector. As the report notes:

The current regulatory framework for the sector is fragmented, inconsistent, and uncoordinated across a range of government agencies.

The report went on to note that it is vital we cut the level of red tape within the sector. The Treasury submission to the inquiry said:

For some entities the reductions [in red tape] will happen immediately, particularly those entities that are regulated at the Commonwealth level.

The Treasury submission went on to say that those entities will see a reduction in their red-tape and compliance costs.

Reducing multiple reporting is absolutely critical. The Community Council of Australia said:

I do not think people quite realise how often charities have to demonstrate their bona fides, and the capacity to do that, by having the equivalent of a charities passport, has incredible appeal

In summarising the situation I referred to earlier—the Australian Taxation Office becoming the default regulator for the sector—ACOSS said:

… it was never intended (nor has it wanted) to be the sector’s regulator; and the relationship between the sector and the ATO is less than positive as a result.

If we are able to provide a more streamlined reporting arrangement for Australia's charities, that will provide great benefit to these charities.

Some have asked why the states and territories have not signed on already, but I think this is putting the cart before the horse. It is vital that we build the ACNC and then allow states and territories to look at exactly what they will be signing up to. I fully expect that states and territories will do just that. It is strongly in their interests not to be collecting data that is already held by an ACNC. It is in their interests to be able to simply encourage charities to use a charitable passport. That ought to free up public servants in states and territories to focus on service delivery, not on requiring not-for-profits to provide information they have already provided to other agencies.

I commend the member for Parramatta for her excellent chairing of the committee. The report made a number of recommendations. It suggested, for example, that in the case of private ancillary funds, a tax-effective mechanism for individuals to pursue philanthropy which requires at least five per cent of the wealth of the PAF to be distributed annually and that the government investigate ways to strengthen protection in the bills for private donors who wish to keep their philanthropy anonymous. Recognising the desire for anonymity is an important feature in the bill. The committee also referred to the director's liability regime. The report said:

The committee is concerned that either the directors' liability regime is unduly onerous, as suggested by a significant portion of expert evidence presented to the committee, or that, as presented in the Bill, it is not sufficiently comprehensible for people to understand its intent or purported mode of operation. … Placing an unnecessary burden of liability could be seen as … a disincentive, which is opposed to the purpose and objects of the Bill. The committee therefore recommends that Treasury read draft this section of the legislation with a view to clarifying its intent and operation.

The committee went on to note that the penalty amounts in the bill were roughly comparable with state and territory provisions but there was uncertainty among some witnesses as to the amount of discretion that would be available to the commissioner. The committee recommended accordingly that the explanatory memorandum to the bills clarify that the commissioner has the discretion not to impose an administrative penalty.

The committee scrutinised the bills thoroughly but the majority of the committee came strongly to the view that this is an important bill, that this bill will cut through red tape for the charitable and not-for-profit sector, a bill which will reduce frustrating and unnecessary duplication. I could see in the eyes of many of the witnesses the sheer sense of frustration at having to write the same details on the same forms. We have all had it from time to time when dealing with an agency that requires us to provide back to it information which it knows already. But how much more frustrating must it be for many of these charities and not-for-profit to have to remit information to a second government agency which it knows is already held by the first government agency.

I am surprised that the coalition are not supporting this bill. I know there is a strong tradition in the conservative parties of supporting the charitable sector and of reducing regulation. I am disappointed that the member for Menzies has chosen to run something of a scare campaign on this bill and has chosen to suggest that the government is increasing regulation; whereas, in fact, we are in fact simply doing what so many inquiries, going back to an inquiry under the coalition in 2001, have recommended—that is, to take the approach that Britain, Canada and New Zealand have taken, to cut through the duplication by allowing the equivalent of a charities passport. The member for Menzies has been selectively quoting from the sector and has not recognised in many cases that organisations he has quoted strongly support the bill. For example, ACOSS, the Community Council for Australia, the National Roundtable of Nonprofit Organisations, Philanthropy Australia, the Smith Family, the RSPCA and Chartered Secretaries Australia are all supporters of the Australian Charities and Not-for-profits Commission. I commend the bill to the House.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

Hundreds of thousands of Australians each year participate in volunteering across Australia through local sports clubs, scout groups, surf lifesaving clubs, religious groups and other community organisations. The most recent census showed that more than three million Australians participated in voluntary work for an organisation or group. Of course, this figure does not include the many millions of Australians who conduct selfless voluntary work for others in the normal course of their lives without even considering it to be volunteering their time. The disparity is reflected in the Australian Bureau of Statistics' 2010 general social survey, which indicated that more than six million Australians volunteer every year, including many from different cultural backgrounds who are frequently not aware that some of their work in the community is actually volunteering.

Their work is funnelled through the charities and not-for-profit sector, with thousands of Australians managing and handling the many hours of administration, financial accounting and reporting, and compliance with federal, state and territory regulations. There are people like Craig Michaels at Connected, parents and volunteers at the Glenleighden School, Gwen Braga through her involvement in many community organisations, Anne Huggett at Mitchelton Meals on Wheels and Leith Manifold at Meals on Wheels Western Suburbs, as well as those at Kenmore and Ashgrove in my electorate, Merv Brown at Gaythorne RSL, Jutta Godwin of the Cubberla-Witton Creek Catchment Network, the wonderful members of the Moggill and Brookfield Country Women's Association and Cecily Walker of the Indooroopilly Senior Citizens, to name just a few. I am sure every member of this House could spend hours listing the enduring hard work of those who give up their time to assist others in their communities. It is no different in Ryan. Indeed, who can forget Brisbane's 'mud army' during the 2011 floods?

In November last year, we saw an attack on volunteerism by the Gillard Labor government in their changes to occupational health and safety laws, which effectively turned volunteers into workers, leaving community groups burdened with strict regulations accompanied by harsh punishments for noncompliance. Those changes last year meant that a Meals on Wheels worker could be fined up to $300,000 or jailed for up to five years due to noncompliance with the so-called harmonised laws. Under the auspices of harmonisation, the Gillard Labor government failed to support the volunteering, charity and not-for-profit sector in this country. That same process has been occurring with the bills before the House today, with a Labor government that has failed once again to consult appropriately with the sector itself, failed to provide certainty with regard to the obligations and responsibilities of organisations and those governing the organisations, and failed to devise legislation that would ease the regulatory burden.

The House of Representatives Standing Committee on Economics has previously conducted an inquiry into draft legislation proposed by the government, and the Parliamentary Joint Committee on Corporations and Financial Services tabled its report on 10 September 2012, just a few weeks after the bill was introduced into parliament on 23 August 2012. I note that previously the government introduced revised legislation on 6 July 2012 and set a deadline for submissions to the House economics committee of 20 July 2012, giving community organisations and the sector only nine working days to respond to changes that would so fundamentally change the sector.

These reports have exposed a number of issues with the draft legislation, issues highlighted in the 43 submissions to the inquiry from organisations across the board, including the Salvation Army, Anglicare, World Vision, the Institute of Chartered Accountants, the Australian Institute of Company Directors and the Independent Schools Council of Australia. Previously, organisations such as Surf Life Saving Australia, which would be heavily impacted by these changes, have made submissions. The concerns raised through these inquiries have not been adequately addressed to the satisfaction of key stakeholders in the sector, nor for that matter to the satisfaction of the coalition. For that reason, we oppose these bills.

As many members have commented, the Australian Charities and Not-for-profits Commission Bill 2012 and the associated Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012 primarily seek to establish the Australian Charities and Not-for-profits Commission, ACNC. Originally, this was supposed to come into operation by 1 July 2012, then 1 October 2012. Of course, we are still waiting on the Senate Community Affairs Legislation Committee to deliver its report, which was due on 12 September 2012.

Presently, there is no single institution responsible for the regulation of the not-for-profit sector. For both different and overlapping purposes, different parts of the NFP sector are across Commonwealth, state, territory and local governments. At the federal level, the Australian Taxation Office and the Australian Securities and Investments Commission act as de facto regulators in various areas. The Australian Taxation Office looks at organisations seeking to access tax concessions, including income tax exemption and deductible gift recipient status. This required endorsement from the ATO makes it the default determiner of charitable status, while ASIC has a smaller role, regulating approximately 11,000 NFP entities incorporated as entities.

There are over 600,000 entities in the NFP sector, of which approximately 440,000 are small, unincorporated entities. Less than one-tenth, 59,000, are determined by the Australian Bureau of Statistics to be what is called 'economically significant'—that is, they employ paid staff or have a significant tax base. Naturally, state and territory governments have certain governance and reporting requirements on entities that receive state and territory funding as well as regulate incorporated associations and charitable trusts. Not-for-profit non-government schools also have quite onerous reporting to, for example, the Department of Education, Employment and Workplace Relations, through their financial questionnaire, which is described in the submission by the Independent Schools Council of Australia as an 'annual collection of financial income, expenditure and liabilities from all non-government schools receiving Australian government general recurrent grants'. Their submission also goes on to list the other bodies to which many schools must report, including ASIC, state and territory registrars of associations and the ATO.

Of course, in an ideal world, it would be fantastic that a not-for-profit entity could register its details with one commission, once a year, and not have to worry about duplicating that administrative burden to comply with all the federal, state and territory and local government levels. Not-for-profit agencies have raised the issue of inconsistent and increasingly and excessively complex reporting requirements. Sadly, today's bills do not achieve that aim. Instead, there is a considerable lack of clarity in the bills about the specific steps which need to happen before the ACNC comes into place. If, as the government claims, these measures will result in a red-tape reduction for charities by streamlining regulatory requirements, then why have they not been up-front about how or why the federal government is going to supplant the roles which the states currently undertake?

In one of the many submissions the Australian Institute of Company Directors has made in this area, specifically in relation to the most recent report, comments included:

… no agreement has been reached with the States...

…   …   …

As it currently stands, the Bill therefore adds an existing layer of regulation for charities currently required to comply with State legislation.

They say they are not satisfied at all that proper steps have been taken to liaise with states and territories for them to agree to hand over their powers to a Commonwealth regulator. Anglicare noted in their submission that harmonisation of regulations across jurisdictions will require 'a lengthy transition period'—more evidence that the industry is extremely concerned about this legislation. Another measure in these bills which is of great concern to the not-for-profit sector is the prescriptive implementation of the set of external conduct standards which will apply to all registered entities, regardless of the entity type. The governance standards can cover a broad range of issues including the content of an entity's governing rules and the processes which a registered entity must have in place. The many thousands of volunteers who organise and run charities and not-for-profit organisations across Australia do not want a new regulatory burden or prescriptive conduct standards. They just want some advice and direction from people with volunteering experience so they can get on with their volunteer work. I fear that the conduct standards imposed on all registered entities with the ACNC will act as a disincentive for Australians to become involved in charitable and not-for-profit organisations and even more so in the setting up of new organisations.

I note that the Community Council for Australia:

… supports the ACNC Bills on the basis that they provide for the establishment of an independent and responsive regulator for the charities and not-for-profit sector.

The CCA represents a very impressive list of charities and has on its board members such as Brett Williamson from Surf Life Saving Australia and the Reverend Tim Costello of World Vision Australia. For large well-established charities and not-for-profits with experience and capability in terms of administration, it is possible that the ACNC could achieve its overarching purpose for streamlining reporting and conduct. However, many submissions expressed the view that it would be difficult for people in regional areas working in other very small not-for-profits to know exactly what is required of them from the ACNC. Indeed, as the Australian Catholic Bishops Conference noted:

A fundamental value is the independence of the charities. Their ability to organise their structure and governance to suit their own activities should not be compromised by prescriptive and unnecessary standards.

Many submissions echoed this sentiment. A one-size-fits-all approach to every charity and not-for-profit, the coalition believes, will decrease versatility within the sector. I understand that there are concerns in the community about the conduct of some organisations to which they donate their money, but that is not a justification for burdensome regulation that applies to each and every charitable and not-for-profit organisation.

This is why the coalition opposes the passage of these bills today. However, we also have a plan to assist Australians effectively in this area. On 18 June 2012, the shadow minister for families, housing and human services, the member for Menzies, announced that the coalition would support a small, independent charities commission, which would serve as an educative and training body for the sector. Such a commission would indeed support the sector by providing information about the process of registration for new organisations, it would advocate for the rights of these organisations and, further, it would help facilitate the interaction between government and the charitable and not-for-profit sector. This type of coordination is what the coalition supports, real on-the-ground support for community organisations, rather than a centralised government decreeing to each and every organisation in this country the exacting reporting and conduct requirements proposed in this legislation which will ultimately be handed down as regulation.

Members should resist any push that proposes a government-knows-best view and indeed any push that centralises functions of government to the Commonwealth where there does not exist any rational basis to do so. We must respect personal and community responsibility which we see so often in the charity and not-for-profit sector. We know that by fostering community spirit we reduce reliance on government.

At present, although these measures proposed in the ACNC bills have undergone many revisions, it is certainly not a process anyone would describe as exhaustive. The government addressed some concerns coming from the sector in the revised versions of the legislation, but ultimately I do not accept that the government has adequately addressed those concerns. The coalition will always support volunteering in Australia and we will always support charities and the not-for-profit sector. In that area it is incumbent upon government to reduce red tape and to remove the duplication of services where appropriate. These bills do not achieve that aim, and therefore do not support volunteering or charities nor the not-for-profit sector. For that reason, I oppose these bills.

Debate adjourned.