Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I rise to join with colleagues on this side of the House firstly to acknowledge the tremendous contribution the not-for-profit and charity sector make in all our communities around the country, making the fabric of society so strong, and secondly, in large part because of that, to oppose what the government is doing with these bills. We believe fundamentally that the government's approach is wrong. There is a big difference between the approach of the coalition and the approach of the Labor-Greens alliance. We believe in people and in trusting people to manage themselves in an appropriate manner, not overregulating where it is unnecessary; whereas the approach of this Labor-Greens alliance is so often to intervene, handing more power to government to overregulate, in many cases inappropriately, increasing red tape and treating the sector and individual charities and organisations in the community with a lack of trust and hindering their work.

We know that communities and organisations that are from communities know what their community wants. For example, our policy is to pursue self-management of schools—which my colleague the member for Aston argues for so passionately and well—because we know that if you give school communities more power to look after their own arrangements then the schools will be better and stronger. We know that from the evidence in Western Australia, where that program is working just so well in the public system. We know that from the private system, where private schools are managed by principals who have autonomy and can make decisions about their own schools and their future.

We know the same applies for charitable and not-for-profit organisations. I grew up in a family with a father who is a legatee and who has been the treasurer of the Mildura Legacy Club for probably as long as the club has been going. We saw when we were growing up how important these organisations are to local communities. The communities know how important they are because that is why they are there in the first place.

They are formed, as Legacy was, by people who wanted to look after their own community well back following the First World War, and they have been strong contributors to the community for that period of time. They do not need a great big new regulator to tell them how to do their job, and that is why we are opposed to this bill.

Equally, the Returned and Services League of Australia, another organisation representing people who have returned from serving our country, do such a terrific job in the community at looking after returned servicemen and their families—servicepeople and their families, I should say. They have small branches in regional electorates like mine, where you have lots of towns and lots of RSLs. You have lots of small clubs, small charities and small organisations which do so much in those smaller communities. My electorate has so many wonderful RSLs, whether on Kangaroo Island, in Victor Harbor or in Yankalilla. There are the Strathalbyn and Goolwa RSLs, of course. There are RSLs in Mount Barker and Lobethal and through the northern parts of the electorate, including Stirling, Nairne and other places. They do a terrific job of representing those people. One in particular I am associated with is the Macclesfield RSL, which is run by a small group of dedicated people who continually build and work hard not only to put on their public display of support on Anzac Day every year—on the Sunday evening immediately prior to Anzac Day they have a public service, which is always extremely well attended for a small community—but also do a lot of work below the surface at raising money to help veterans and veterans' families in the area. It is such important work, which in many cases cannot be done by governments.

This legislation will impact on them. Again, we know that not because the shadow minister—who is doing a terrific job in prosecuting why this is bad legislation—has said that but because that is what these organisations themselves are saying. Just on 7 September, a couple of weeks ago, I received a letter from the SA branch president, Brigadier Tim Hanna AM. He is the state president of the RSL's South Australia, Northern Territory and Broken Hill branch. In that letter he raised very real concerns about this legislation. He said:

RSL-SA has significant concerns about the proposed new legislation as follows:

because, of course, we know that several states have their own arrangements when it comes to managing charitable organisations as it is—

and that point particularly relates to my electorate, with a lot of smaller RSL branches which do such important work with an older group of members, as you would understand—

They are pretty substantial concerns from the South Australian RSL branch, representing all the branches in South Australia. Particularly relating to my electorate are the last two of those issues and the regulatory burden impact this will have on smaller sub-branches. It is just one example from the charitable sector. This will be consistent throughout the charity and not-for-profit sector. Many of my colleagues have referred in their speeches to comments that have come to us from such broad representatives as Australian Baptist Ministries, the Catholic Bishops Conference and even the ACF, of all organisations, who have complained about the regulatory burden, the uncertainty and the direction of this legislation. Many of those organisations have urged us to oppose this legislation because it is bad legislation.

Like in so many policy areas, we believe that we have got a better way. The shadow minister, the member for Menzies, has been talking about the important commitment that we have to our civil society to ensure that the not-for-profit sector and the charity sector are well regulated and well managed. He has said, and he has committed, that the coalition will implement one contract with the department for each agency, instead of multiple contracts, reducing red tape. Senator Sinodinos and his group has been set that task by our leader, to reduce a billion dollars of red tape requirements from the economy each year.

The coalition will require the department to negotiate the content of the contracts with the agencies instead of simply imposing it on them. We will simplify the auditing process to require one financial report from each agency annually. We will replace the current system of rolling audits with an initial benchmarking audit that has a period of five years, with spot audits to be undertaken if the Commonwealth is made aware of any adverse conduct on behalf of the agency. We will simplify reporting requirements for governance arrangements, with registration as a company or unincorporated associations sufficing as evidence of appropriate governance arrangements. We will require all agencies to lodge a one-page annual governance return by the chairperson of the board or governing council, indicating that the agency is governed properly. We will replace the current time-consuming, costly system of data collection with a requirement that each agency file a quarterly report indicating the number of clients seen by the agency, according to the program area, and postcode of the client. We will require each agency to publish on its website its annual financial return and an annual governance statement. We will replace the current system of data collection with a series of cross-sector evaluations of efficiency and effectiveness of various programs. We will work with the sector to ensure adequate and known whistleblower provisions are in place.

These are commitments that reduce red tape. These are commitments that will make it easier for the charity sector and the not-for-profit sector to get on and do what they do so well, which is represent their communities and work on behalf of their communities. It is about trusting those organisations to do the right thing, trusting the RSLs in my electorate—across South Australia and across the country, for that matter—to do the right thing, trusting legacy organisations and trusting aged-care homes. It is about trusting all those charitable organisations that work not for their profit, not for their own personal gain but for the benefit of the community. We know that in our country we have got such a great social fabric, such a commitment to each other through these organisations, that we should not be putting in place legislation that makes it much harder for these organisations to do what we want them to do in the first place. This is also legislation which discourages involvement in our civil society—in that very fabric that makes us such a strong place, whether it be commitments to surf clubs, commitments to RSLs or commitments to working in any charitable or not-for-profit organisation in a local community to make that community stronger.

Throughout my electorate I see it every time I go out. I will be at the local Hills Football League grand final this Saturday, which means so much to so many people. People give their commitment for free as a broader commitment to the social fabric of our society, whether they are undertaking roles that government just cannot do or whether they are doing things for the broader community good. These are organisations that should be supported by this place and by the state parliaments around the country, not have an additional red tape burden imposed upon them.

I will finish as I began, by saying there is a stark difference between what the coalition stands for and what the Labor Party and the Greens stand for. People often say that there is not much difference between the two parties. I would say to them that this is an area where there is a big difference. On this side of the parliament we trust these organisations, we want to invest in these organisations and we believe these organisations play an absolutely fundamental role in our society, and they do these things so much better than governments could ever do. I believe with every fibre of my being that these organisations will do these jobs far better than a government department could ever do them.

Those on the other side believe that the government should be there always, that the government know best, that the government should be undertaking many of these roles. That means that they will want to tax us more so they can have more services provided by bureaucrats. We say let's tax us less and let community organisations get out there and do the right thing—do what they want to do for their own communities and support their own communities. Remove this unnecessary red tape so they can get on and do just that, with that great Australian commitment to our broader society.

On that basis I stand with my colleagues in opposition to this bad piece of legislation. We do not support it. We will not support it when it comes to the vote. I congratulate the shadow minister on providing a very sound alternative plan.

Alan Tudge (Aston, Liberal Party) Share this | Link to this | Hansard source

I rise also 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. Everyone in this House no doubt shares the view that charities and non-profits do vitally important work across the community. They run many of our great hospitals and they run a third of all of our schools. They provide fantastic opportunities for our young through sporting clubs. They provide services for aged care. They run the RSLs. They care for thousands of people who are impoverished or in need of some sort of assistance, often through the churches or other Christian organisations.

We therefore all no doubt share the aim that we should be doing everything that we can to support the not-for-profit sector and, most importantly, this means from a governmental perspective allowing these organisations to get on with what they do best—that is, serve their community—and minimise the amount of bureaucracy that they face. These bills were intended to do just this but, unfortunately, they do the exact opposite. For this reason the opposition is firmly opposing these bills.

The bills themselves create a new federal charities commission, which has the intent of being a one-stop shop for the non-profit sector so they do not have to deal with multiple different agencies and report multiple times—a fine intent. But the bills do not go anywhere near achieving this intent. Indeed, the problem is that the bills in fact add an additional layer of reporting for these community organisations but do not remove a single layer in the process. Why is this so? Because the existing reporting bodies are largely at the state government level, although there are some federal ones also. Yet the federal government has held very few consultations and negotiations with the state governments to ensure that they would remove any of their reporting requirements before, or at least in alignment with, the introduction of this new commission. Indeed, at the Parliamentary Joint Committee on Corporations and Financial Services inquiry into these bills, the Interim Commissioner of the ACNC Implementation Taskforce told the committee that no state or territory government had entered into a memorandum of understanding with the Commonwealth to participate in the new arrangements—not a single one. As the member for Bradfield pointed out earlier in this debate, when one of the senior Prime Minister and Cabinet officials was asked in the hearings why these new reporting arrangements were put in place before arrangements were made with the states and territories, he simply replied:

Our view—and, I must say, with considerable experience of COAG processes—is that that would take many years to do.

What this official meant was that it would take many years of working diligently with the state and territory governments to ensure that they worked cooperatively and removed their layers of bureaucracy before this new layer of bureaucracy was added or in concert with this new layer of bureaucracy being added. But instead of the government doing this, instead of the government embarking on a process, taking its time and deliberately working through with the state and territory government to do this and then at the end of the process introducing this legislation, it has simply added another layer of bureaucracy on top of it all. This also means that we will now be stuck, if these bills are passed, with duplicating regulations for many years to come. We know that the states and territories are very reluctant to give up their powers. What this means in practice is that charities and non-profit organisations will do less of serving the community and do more of preparing duplicative paperwork for no particular purpose or objective.

The Baptist Church of Australia estimates that it will have to spend an additional $1 million per annum of its scarce resources to meet the new requirements inherent in these bills—$1 million from just one of our churches in Australia. The next time the offertory bowl is passed around at Baptist churches, including at the Rowville Baptist church in my electorate, some of that money given by the parishioners will be paying for this new red tape which is being imposed through these bills. That is the bottom line. What an absolute waste. The Baptist Church is not the only charitable organisation that is concerned about this new layer of bureaucracy. Dozens of organisations have come out to express their concerns. Let me mention a small sample of them. The Anglican Diocese of Sydney has said:

It is likely that we will need to employ someone on a full-time basis to deal with the compliance issues that this legislation is likely to raise ...

The Australian Council for International Development, which represents many charitable organisations, says:

The present drafting of the ACNC Draft Bill does not reassure ACFID or its members that it will actually reduce red tape … The drafting indicates that there is yet to be agreement with the States … it does not deliver a 'one-stop-shop' for the establishment of a charity or reporting by a charity …

Catholic Health Australia says:

… the effect of the Bills would be to add additional regulation to the operation of most not-for-profit organisations.

Catholic Social Services says:

… there can be no confidence that reductions in red-tape and duplicative reporting by Commonwealth agencies … will diminish in the foreseeable future.

The Independent Schools Association says:

The regulatory burden will be increased on individual non-government schools creating costly and confusing duplicative governance and reporting situations.

The independent and Catholic schools already have to report to myriad bodies, and now this is a further one laid on top of all the existing reporting mechanisms. I know the government is going to be moving amendments and it will enable schools to avoid having to provide this additional reporting—but only for three years. At the end of this three years there will be this additional layer of bureaucracy once again. Mission Australia says that:

… the bill is not sufficiently well balanced by a commitment to enable the not-for-profit sector to reduce duplication of reporting.

The Salvation Army says similar things, as do UnitingCare, World Vision Australia, the YWCA et cetera—I could go on almost all day with all of the people from the different not-for-profit sectors who have come out against the bill, or who have at least expressed their strong concern about the extra layer of bureaucracy which these bills are adding.

The extra layer of red tape is my primary concern about this legislation, but it is by no means my only concern. I am also particularly concerned about the powers that this commission is being given. They are extraordinary in their scope and may have the impact of deterring members of the public from taking up voluntary roles within the sector. For example, there are broad powers to investigate any breach of the law and powers to remove a responsible person. Extraordinarily, this would mean that the commission could remove ministers of parishes and congregations, in a manner which is totally unprecedented in this country. For a state agency to be going inside a church and removing a minister of a parish or a congregation would be extraordinary. This legislation also gives the power to the commission to deregister an organisation if it is conducting its affairs in a way that may cause harm to or jeopardise the public trust and confidence in the not-for-profit sector. But the phrase 'public trust and confidence' is not defined and remains unclear, which of course creates enormous uncertainty and means that the legislation is likely to lead to expensive litigation.

David Gonski, of the Australian Institute of Company Directors and a friend of the government, points out that this legislation may well make Australia the first country in the world to make being on a not-for-profit as a director more onerous than being on a for-profit board. It is going to make being on a not-for-profit board more onerous than being on a multibillion-dollar for-profit board—extraordinary. Why do we need these extra layers of bureaucracy and reporting? Why do we need such intrusions and such harsh penalties? If this were applying to trade unions, after all the scandals of the Health Services Union and the AWU et cetera, then I could understand that we would here debating the need for additional regulations to fix up the loopholes in the law. But what is the mischief that this legislation is intended to address? The government needs to make its case that there are problems within the existing system, and it should do so inside this parliament before it brings to this parliament bills such as the ones we are debating here. It has failed to do so. It has failed to mention any examples which it can point to which provide the basis for needing to strengthen our laws or to provide additional reporting requirements for every single not-for-profit across the country.

At its heart, this legislation suggests a mistrust by government of those in the community sector and a belief that the federal government should be at the centre of all national activity. It is a belief that government must be the guarantor of probity and policing of all our actions. I submit that this is the wrong approach. A civil society is fundamentally based on individuals and families freely associating to pursue their mutual societal, cultural, religious, sporting or other communal interests. They are neither instruments nor agents of the state but they are the community groups which hold our society together, that care for the sick, that support one another, that provide activities of mutual interest and that provide the vitality for our nation. They are built, most importantly, on trust—and on community spirit and mutuality, but most importantly on trust.

As the member for Menzies pointed out earlier in this debate, our civil society, built on the free association of individuals, preceded the modern nation-state. If we damage our civil society, the state cannot replace it. If our civil society breaks down, the state cannot regulate its regrowth.

I have seen the breakdown of civil society, of mutual trust and reciprocity, in remote Aboriginal communities where I have worked. The state cannot rectify this. We have had that experiment and it has failed. If anything, the state needs to back out of the Indigenous community somewhat to let the civil society grow again and to restore the Indigenous elders' authority and restore community voluntary activity, rather than the state being in there intruding in every single aspect of people's lives.

My fear with this bill is that it empowers the state over our civil institutions when, if anything, we should be freeing our civil institutions from state power. I say, let our charitable institutions —the churches, the Salvos, the schools, the RSLs, the sporting clubs and the other not-for-profit community organisations—do what they do best and that is serve the community to enhance and enrich our society. This bill does not support this goal. Consequently, it should be firmly rejected.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I rise to make a few comments about the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012 on behalf of the Greens, on the basis that further comments and amendments will be pursued if and when these bills reach the Senate. The strength of our democracy is our civil society. There are 600,000 not-for-profit organisations in Australia which support a range of social, cultural and environmental activities in our community. Of those 600,000, there are 60,000 charities that will immediately come under the commissioner's jurisdictions if these bills are passed into law. So it is important that we get this reform right.

The Australian Greens recognise the opportunities these bills present for reform and the unification of a range of regulations which are currently fragmented across different legislation. However, like the sector, we still have serious concerns about this legislation and its ability to meet the needs of the sector and the broader Australian community. The bill has three objects: accountability and public trust, a vibrant and robust independent sector and red-tape reduction. Taken together, these three objects can set the framework for a regulator who is responsive to the sector, promoting good governance and transparency, but it is essential that the regulator has the capacity to walk a fine line between ensuring accountability and undermining the independence and diversity of our civil society.

Independence and governance standards are among our largest concerns as the bill sets forth that the governance standards will be contained in regulation. Regulations are not subject to the same level of parliamentary scrutiny as is the legislation and governance standards that are embedded in regulation will be flexible and open to frequent revision. Regulation is a tool for determining aspects of legislation that can frequently change, such as annual fees or levies, and given that breaches of governance will trigger the commissioner's powers, we simply cannot leave these standards in regulation without increasing the safeguards to ensure they cannot be easily revised to the detriment of the sector in the future.

Consultation with the sector is an important amendment to and the government amendment which has been circulated goes some way to alleviating our concerns. I am supporting these government amendments under the understanding that my colleague Rachel Siewert in the Senate will move further amendments to resolve some of our outstanding concerns with the amendments as written, to address our expectation that the commission will lead to the consultation on governance standards with the not-for-profit sector and that the minister will have reference to those consultations in making the final decisions on the standards.

The independence of the sector is essential. The principles of independence need to be embedded in this legislation so as to prevent future gag clauses that would restrict a not-for-profit organisation from engaging in advocacy or criticising government policy during the pursuit of its mission or purpose. The other considerable concern of the sector which still needs to be resolved is ensuring that this regulator reduces unnecessary administration for our under resourced charity sector, rather than contributing to it. All of these concerns are spelt out in my colleague Senator Siewert's dissenting report to the Community Affairs Legislation Committee inquiry into these bills. The Greens will support these bills in the House on the proviso that we will seek to amend them and address the issues I have raised when the bill reaches the Senate.

Warren Entsch (Leichhardt, Liberal Party) Share this | Link to this | Hansard source

I certainly welcome the opportunity to speak today on this package of bills relating to the establishment of the Australian Charities and Not-for-profits Commission, the ACNC. Frankly, there are a number of elements within these bills that concern not just me but the organisations and people within my electorate, and I think it is vital that these be outlined here today.

To start I will first outline the incredible value of the roles charities and not-for-profit organisations play in our communities. In my electorate of Leichhardt, the poor, the vulnerable and the marginalised have been helped for decades through the work of organisations such as Lifeline Community Care, the Salvation Army, the Dr Edward Koch Foundation, the Red Cross, Centrecare and Anglicare. In the community, bodies such as the Men's Sheds, Surf Life Saving North Queensland, sports and recreation clubs far too numerous to mention, public schools and health facilities act as the glue that bring families, friends and strangers together. Animals and wildlife receive exceptional care through the RSPCA and other wonderful organisations like Yaps Animal Refuge Shelter, Cairns Turtle Rehabilitation Centre and Far North Queensland Wildlife Rescue. No-one would argue that, thanks to their dedication, drive and vision of a better society, organisations like these play an invaluable role. With that in mind, it is the coalition's view that we should do everything possible to help and not to hinder the activities of these charities and not-for-profits.

For that reason I will certainly today be opposing the government's plan to establish the ACNC, which will not achieve one benchmark with regard to reducing red tape, encouraging volunteers or nurturing the activities of these organisations. And why not? Because, firstly, in the main the states and territories already regulate incorporated associations, charity trusts and fundraising activities and impose reporting and governance requirements on bodies that receive state and territory government funding. Have they agreed to hand over any of these powers with regard to this? I would suggest the answer is no. All this new commission will serve to do is add yet another layer of bureaucracy, yet another layer of paperwork to complete, another layer of requirements to meet and another barrier to those organisations effectively carrying out their day-to-day operations.

As another example of unwieldy and unnecessary duplication, the enforcement powers that will be given to the ACNC commissioner are modelled on those already in place at other government agencies. If we are not confident in the existing powers of bodies such as the Australian Securities and Investments Commission, Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission then there has to be a major cause for concern.

Second, despite this being extremely complex legislation which would clearly require some in-depth scrutiny from the sector, continued government delays meant that they were only given nine working days to make submissions. I must confess to shaking my head whenever I hear the words 'consultation' and 'Labor' in the same sentence. This, I think, is just another example. In my electorate we do not have a good record with Labor consultation. If you look at the industry consultation that was meant to occur as part of the government's marine reserve network proposal, fishermen and marine users in my electorate reported that Tony Burke, the minister, turned up on a whistlestop tour and proceeded to play off industry groups against each other to try to win their support. This was at the same time as he was putting in place boundaries and usage zones that were totally opposite to what the fishermen needed to retain a sustainable industry and, of course, were totally against the science of the situation. We saw that even more recently in the debate on the supertrawler, where the science went out the window because of the lobbying of interest groups. When they thought they were going to lose the vote, they then made a couple of amendments to include recreational fishermen in the hope that they could again divide those interest groups to push through their agenda.

But before that, in my area and in the portfolio of the Minister for Sustainability, Environment, Water, Population and Communities, there was, unsurprisingly, the pretence of consultation around the proposed World Heritage nomination of Cape York. Once the concept of blanket World Heritage listing started being thrown around the Cape, traditional owners, graziers, tourism operators, residents and business people were so infuriated that they withdrew from the process altogether in protest. This resulted in the minister's department missing a key application date with UNESCO in May of this year. I suggest it was very embarrassing for them.

With regard to these bills, the government also says that they are going to waiting until after the legislation is introduced before they consult further on what exactly the financial reporting requirements will be. Forgive me for being sceptical about this, but I can see it is going to go the same way as other consultations—quite frankly, nothing less than a sham.

The third reason the legislation is not going to help the sector is that numerous not-for-profit agencies have given us feedback saying they are hugely concerned that the reporting requirements are inconsistent and becoming more and more complex, and certainly more burdensome. This is a reflection of the fact that over recent decades governments have been increasingly interfering with the day-to-day operations of agencies. The result is that they are forced to divert already scarce resources away from the frontline service delivery simply to comply with the needs of government. A key example of that in my electorate is the case of the Douglas Shire Meals on Wheels, based at Mossman, which has been suffering through an unbelievable regulatory battle with state and federal agencies for many months now.

Steve Macrae, the local coordinator, says that as a not-for-profit organisation they are required to submit their audited books to the Office of Fair Trading each year, a relatively simple process. This is as far as the volunteers are prepared to go with regard to red tape. As it is, they have three volunteers whose sole job is to ensure that the paperwork is completed. This equates to at least 20 man-hours per week. However, to continue to provide their unpaid service to the community, they need to complete at least four funding submissions per year. On top, the Cairns Regional Council now want annual inspections of 'their asset' and copies of various audited documents. In addition, occupational health and safety want them to implement their latest policies, which include a three-yearly police check for all volunteers. Now Queensland Meals on Wheels has jumped on the bandwagon with a new requirement too, and DOFA is forcing them to sign a multipage servicing agreement that will lead to even more red tape. Steve says that even if they complied with this they would need to employ a full-time manager. Steve's argument—quite frankly, he is absolutely right—is that if they are to comply with the Queensland Food Act 2007 and its associated regulations then there should be no further need for red tape regarding their meal production and delivery. But with all these additional bills containing such overly heavy-handed powers and penalties, there is a significant risk that members of the public will be deterred from volunteering. After all, whether people are working, retired or semi-retired, there is only so much of their limited spare time that they are prepared to offer as voluntary work. Steve agrees by saying:

The more red tape that is imposed on us the less time we have to spend on our core business. It makes it harder to find people willing or able to wrestle with these non-productive bureaucratic requirements. We are well and truly past the days of volunteers being well meaning little old ladies.

I have spent some time with this wonderful group, and for each and every one of them their prime reason for giving whatever time they can afford to Meals on Wheels is to actually get out there and deliver a meal. They never, ever envisaged being captured by a range of bureaucratic processes that make it impossible for them to carry out the task for which they volunteered. We need to look seriously at this, particularly when we start looking at the imposition of a broad range of other bureaucratic processes, many of which are being proposed in this current bill. At the end of the day, you are going to find out that there will be people out there who are more capable and willing to do it but that will just refuse to offer this service because of the risk to themselves and, of course, the fact that they are not actually doing what they intended to do. I think this is the perfect example of how a small local organisation, which knows very well how to carry its role independently, viably and successfully, is being overburdened with this bureaucracy.

So what is the solution? The coalition believes that there should be transparency and accountability in the use of taxpayers' funds but that this should not exclude simplicity and efficiency. These organisations have a long history of responsible governance and management. In the case of Douglas Shire's Meals on Wheels, they have been delivering nutritious meals to people in their homes since 1952. At the end of the day, it is about getting firsthand advice from those working in the sector as to how to make things more straightforward and not falling victim to those bureaucrats working in departments in Canberra who have little idea of on-the-ground challenges and, of course, operations.

On 18 June this year, the coalition committed to a policy of establishing not another big new regulator, like Labor, but a small educational and training body for the not-for-profit sector—a single reference point for access to information and guidance. The approach has many benefits, including that we will put in place a contract with the department for each agency instead of multiple contracts that duplicate the content and workload. We will simplify the auditing process so that agencies only need to provide one financial report each year. We will make the reporting requirements for governance simpler with the initial benchmark audit that will last for five years. Spot audits will only be undertaken if any adverse conduct is reported. We will work with the sector to make sure that whistleblowers can report misconduct under clear guidelines, without fear of reprisals. Ultimately, our measures as a whole will ensure that the responsibility for the conduct of these agencies rests with the agencies themselves, and not with government.

In closing, bureaucratic red tape is a term that we are all unfortunately too familiar with. The American economist Thomas Sowell summed it up very well when he said:

You will never understand bureaucracies until you understand that for bureaucrats procedure is everything and outcomes are nothing

But red tape moves from the inconvenient to the tragic when it serves to block the work of charities and not-for-profit organisations. It is time to stand up for a simpler and more efficient system that will allow people on the ground, who know how to do their jobs, to actually do their jobs. For these reasons, I certainly will not be supporting the bills that I am speaking on here today.

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

The Australian Charities and Not-for-profits Commission Bill 2012 is a throwback to the lazy philosophy of Labor and the misguided principles of centralisation. Centralised policy is slow, ineffective and expensive. Liberals believe in establishing a minimal charity commission. This body would have the explicit and transparent objective of education and training. Devolution and a competitive marketplace of ideas are the key tenets of the Liberal philosophy. This bill will enshrine a negative outlook in legislation—a normative framework that sees people as inherently corrupted, failing and in need of protection from each other. But we need protection from the real threat: government overreach.

What Labor are proposing with this bill is no great surprise. It is no surprise in the sense that they will introduce another layer of bureaucracy and red tape, but it is frightening for small charities and not-for-profits. There are a number of areas of the bill which trouble both my constituents and me. The stated goal of this bill is to establish 'one stop, many uses', to streamline the regulatory process surrounding the operation of charities and not-for-profit organisations in Australia—streamlined regulation with a new level of federal red tape. Really? I cannot see how states would give up this right of jurisdiction. Without states jumping out, the new commission is simply jumping in with more regulation and more administrative burden.

Constructive engagement was never really a priority—not with the states, not with the charities and not with Australians. The only certainty is the additional $4.8 million net expense saddled on the taxpayer this financial year. Page 5 of the explanatory memorandum states:

The compliance savings from introducing the ACNC and a new regulatory framework are hard to quantify, particularly for this sector, due to limited data availability.

Limited talent, more like! There is a $4.8 million net expense to make doing good in our communities more difficult, not less. This is the sentiment of David Gonski, the chair of the government's education review panel. He said that we are:

… the first country in the world to make being on a NFP as a director more onerous than being on a for-profit.

This tired and troubled government is out of touch with reality. Labor is good at spending other people's money. That $4.8 million of extra red tape would keep many of my constituents' bank accounts out of the red. In WA the Water Corporation have thrown an extra $21.6 million on the backs of their customers because of the carbon tax. That $4.8 million would go a long way.

The reality is that good and honest people in my electorate like Mr Colin Waddell—managers in local not-for-profit community enterprises—are frightened. In a submission to the Catholic Church during the committee hearings, fear is the factor—fear of the unknown. With so much regulation and so little time, organisations and individuals are afraid. The penalties are real, immediate and consequential. With so much regulation, so much legislation and so much dislocation, mistakes will happen. I support the recommendations and the view taken by the Catholic Church: if the prime objective is simplification—and I am in favour of that—then, instead of having categories of 'deductible gift recipient' and 'basic religious charity', why not get them all to register for an ABN? Charity begins at home. President Reagan used to quip that the most important charities are made at the kitchen table. The bill before us today will make those decisions much easier—easier to put off saying, 'I can and I will give back to my country.'

Again, the explanatory memorandum accompanying this bill acknowledges that the total cost of action will increase, with the cost of compliance increasing exponentially for small not-for-profits and charities. Small entities that currently have no reporting obligations are a minor exception. These entities would be required to report to the ACNC, increasing compliance burden. The coalition will go big for the little guy. If we do not, there is no doubt the ACNC will only grow in its scope and power will go big. It is explicitly stated as such in the bill and on page 13 of the explanatory memorandum:

… the role of the ACNC will expand …

From an economic perspective, having many efficient, competitive regulatory markets is optimal. Having minimal incidence of regulatory capture is ideal. Common sense, that rarest form, dictates that one should not fix something if it is not broken. What does a small charity or not-for-profit in Tangney have to gain with the introduction of this bill? The one thing that a small charity is said to gain from the ACNC is an online presence through the web portal infrastructure. Yet the very same experts have an average of 350 views on their own YouTube channel. Paint drying has more channels and on average the paint-drying clips have more views. Not value for the trade-off: a new, powerful ACNC federal body with oversight and monitoring powers for 350 views. A page on the ACNC website is the benefit they are selling us? Really?

Our charities and not-for-profits are more than circumspect. Their fear is well-founded. The government knew this all along, and that is the reason one group was given just 11 days to make a submission—this on a bill where the explanatory memorandum alone is 351 pages. I ask: how can the bill principally call this constructive 'engagement with stakeholders'? The machete management mafia will goad the unwilling into the light. It looks like intimidation. It smells like compulsion. In WA we call it Labor. The Gillard government is saying it is a voluntary sign-up. But if an organisation does not sign up then tax and concessions are withheld. They have six months to opt out and it is only reviewed every five years. Never in the course of a government has so much been found so wrong with what is so right by so few.

I will just list a few highlights. The ACNC Bill establishes a charity passport. What is it? Why do we need it? The ACNC Bill also defines what a charity is. The bill states that receipt of government grants precludes an entity from being a basic religious charity. Why? With the not-for-profit sector being worth $43 billion and employing eight per cent of the labour force, and given the ACNC has information-gathering powers, the checks and balances for this commission are more than insufficient. This bill is the epitome of a federal government that takes too much tax from people, takes too much authority from the states and takes too much liberty with the Constitution.

Simple, honest enterprise is the Australian way. The coalition will honour those values and support them in our every endeavour. We are proud of our people and optimistic in their goodness, knowing always that a government big enough to give you everything you want is a government big enough to take from you everything you have.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

Currently the Australian tax office is responsible for the regulation of charities and for determining an entity's charitable status, as well as having the responsibility for enforcing the taxation law. Labor has decided to create an independent national regulator, the Australian Charities and Not-for-profits Commission, ACNC, with a greater focus on the specific needs of the not-for-profit sector and having the role of determining a not-for-profit's charitable status. The ACNC is proposed to begin operations on 1 October 2012.

The associated Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012 seeks to restate the 'in Australia' special conditions for income-tax-exempt entities to provide that they must be operated principally in Australia and, it is claimed, for the broad benefit of the Australian community. The bill will standardise the other special conditions entities must meet to become income tax exempt, including complying with all substantive requirements in their governing rules and being a not-for-profit entity. It will also standardise the term 'not-for-profit', replacing the defined and undefined uses of 'non-profit' throughout the tax laws. The bill will also codify the 'in Australia' special conditions for deductible gift recipients, ensuring they must generally operate solely in Australia and pursue their purposes solely in Australia, with some exceptions, including overseas aid funding and some environmental organisations.

The ACNC was initially to come into operation on 1 July 2012 as part of a range of measures proposed for the not-for-profit sector in the 2011-12 budget. However, there was a concerned outcry from the sector regarding the turnaround time, and the government delayed the start date by three months, to 1 October 2012. The coalition believes this unnecessary big new regulator will only increase red tape, treat those in the sector as untrustworthy people, hinder the activities of charities and not-for-profits and discourage involvement in civil society.

Currently there are about 600,000 entities in the not-for-profit sector. Of these, 400,000 may access Commonwealth tax concessions through the Australian Taxation Office endorsement process or by self-assessment. The Australian Securities and Investments Commission currently has a smaller role in the regulation of the not-for-profit sector and is responsible for regulating around 11,000 not-for-profit entities which are incorporated as companies limited by guarantee. ASIC also regulates professional trustee companies as well as some charities which are incorporated as other types of companies. Additionally ASIC oversees the registration of incorporated associations and cooperatives if they wish to operate outside their home jurisdiction.

Currently the states and territories regulate incorporated associations and charitable trusts, as well as fundraising activities, and impose reporting and governance requirements on entities which receive state and territory funding. Not-for-profit agencies have raised concerns about the inconsistency of reporting requirements across the sector, which have become increasingly and excessively burdensome, requiring agencies to divert resources away from delivering services and towards ever-increasing compliance paperwork required from the government.

Therein lies the rub. Once more Labor is putting onerous, unnecessary red tape in place. At least this time it is red tape. Usually it is green tape with this government. Once more, Labor is making things more difficult. Government has a responsibility not to bog society down with bureaucracy, but federal Labor revels in it. If it moves, tax it. If it stands still, put a bureaucrat in charge of it. That is the Labor way.

The not-for-profit sector is also concerned about the lack of a single reference for the not-for-profit sector to access information, education or guidance. For this reason, the coalition does support a small commission to engage in innovation, advocacy and education for the sector. Labor is effectively reversing the current approach and telling the sector it needs a watchdog to promote transparency and trust in the sector. Remember, this is the sector which helps raise awareness of so many important things the community needs to know about. This is the sector which does valuable fundraising, in the name of charity, for all sorts of worthwhile causes.

The community currently trusts the sector and there is no identification by the Labor government of the mischief which warrants the raft of powers which would be granted to the new commissioner. The enforcement powers granted to the ACNC commissioner are modelled on those given to other Commonwealth commissions, such as ASIC, the Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission. The ACNC will be provided 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. The ACNC commissioner will also be able to use enforcement powers against federally regulated entities. However, the commissioner may revoke the registration of any registered entity. The commissioner's enforcement powers in relation to external conduct standards will apply to all registered entities.

In 2008 the Commissioner of Taxation had an unsuccessful appeal to the High Court in Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55. This has been the impetus for the provisions in this bill which amend the 'in Australia' requirement which applies separately to tax-exempt entities and to deductible gift recipients. The government responded to the court's decision in the 2009-10 budget, stating it would amend the 'in Australia' requirement to ensure that parliament retains the ability to fully scrutinise those organisations seeking to pass money to overseas charities and other entities. The 'in Australia' test currently applicable to tax-exempt entities was introduced in 1997.

Under the bill, the 'in Australia' test will require a tax-exempt entity to operate principally in Australia and to pursue its purposes principally in Australia. A number of stakeholders have concerns regarding the requirement that money, property or benefits must be used in Australia. World Vision believes that it is too onerous and unclear and should be removed or, alternatively, provisions should be more tightly drafted to identify mischief and allow reliance on statements that funds will not be applied offshore. The Australian Baptist Ministries believes that donations of funds to another organisation should not jeopardise tax exempt status. The in-Australia test under the bill will also require deductible gift recipients to operate solely in Australia and pursue their purposes solely in Australia. Conduit arrangements will put the deductible gift recipient's endorsement at risk where the donor entity itself uses the money, property or benefits outside Australia.

The coalition believes these bills will increase the regulatory burden being placed on charities and not-for-profits, many of which are already struggling to meet the demands of government in this area. Furthermore, unless the states and territories agree to hand over their powers to the Commonwealth regulator, and harmonise their laws, these bills will had yet another layer of red tape to the sector already struggling to meet with ever-increasing bureaucratic demands. The coalition through the course of the inquiry by the House Economics Committee, and discussion with stakeholders, understands that there has been no real progress made by the Labor government in its attempt to have the states and territories agree to harmonise their laws. We also believe, based on our discussion with relevant state ministers, it is likely that they are going to submit to handing over their powers in this space to the Commonwealth in the foreseeable future.

For the ACNC to function smoothly, it is dependent on a number of Commonwealth departments agreeing to either hand over their regulatory powers to the ACNC or to harmonise their regulatory requirements within the new commission. This is of particular concern to independent schools, which will be required to report much of the information to the ACNC which they currently report to the Department of Education and Workplace Relations, as well as to state education authorities. If an information sharing agreement is reached between the ACNC and the department, the ACNC will serve as an additional regulation layer for independent schools which are already drowning in compliance. Red tape should be a priority issue where any reform for the not-for-profit sector is concerned. The coalition believes these bills will have a detrimental impact on achieving this objective.

Stakeholders have voiced their concerns about the power and the penalties contained in these bills as being heavy-handed and may deter members of the public from taking up voluntary roles within the sector. Sector agencies have also raised issues about the reporting requirements, governance standards and the enforcement powers of the commission as being inconsistent with or overlapping the common law of trusts and state and territory trustee legislation; inconsistent with, or overlapping with the Australian Tax Office's guidelines on public and private auxiliary funds; inconsistent or overlapping the Corporations Law and ASIC's regulatory role; and possibly inconsistent with the Australian Constitution. Of particular concern is the information gathering, monitoring and sanctioning powers, including the ability of the ACNC commissioner to remove a director. David Gonski, of the Australian Institute of Company Directors, raised the issue that Australia may be the first country in the world to—and these are his words—make being on a not-for-profit as a director more onerous than being on a for-profit.

Key stakeholders have continually voiced their concerns about the consultation process for this commission as having been excessively secret and unnecessarily rushed, with not-for-profit agencies being provided as little as nine working days, in some cases, to make submissions. Haven't we heard this before from this Labor government: rushing through policy, giving key stakeholders little or no time to actually get their compliance right, to actually get their compliance in place so that the legislation, once enacted, can then be forced upon them in a rather onerous way and in a way in which, if they do not comply, they are going to be hit hard with penalties.

The charitable sector in Australia is an important part of our community and organisations provide a diverse range of services. The government has increasingly reached into the affairs of these agencies over the past two decades, imposing additional contractual and reporting requirements. These requirements are costing agencies significant sums to administer. The coalition supports transparency and accountability in the use of taxpayers' funds. We also support simplicity and efficiency. The civil sector has a long history of responsible governance and management and the coalition will respect and trust this.

The coalition believes in working with the sector, not directing the sector and treating it as an extension of the state. We believe those working in the sector, not bureaucrats in Canberra, are best placed to tell government how we can work together to ensure we are making life for instruments of the civil sector easier, not more difficult. The coalition would seek to retain the regulatory powers which already exist in the ATO and ASIC. Assuring simplicity and an easy understanding of the regulatory framework is not being helped by complicating powers and duties of key Commonwealth regulators. The coalition believes the government should not be putting up roadblocks in the way of civil society and should allow them to do what they do best: helping the people of the community, helping society, helping you and me. We trust the voluntary sector and trust those working in charitable endeavours. We do not support the government's initiative, which will hinder the work of these valuable agencies.

The government intends moving amendments because, as usual, Labor failed to think this policy through. Haven't we heard that all too often this parliament? This bill as it stands will affect church organisations as well as cultural, service and sporting clubs. I am deeply concerned about the impact it will have on clubs and charity groups within my electorate of Riverina. These organisations in many ways prop up communities. They provide the moral, social and in some cases financial support to help many in society, especially those who most need it, especially those who are the most vulnerable members of society. This bill will place unnecessary pressure on these groups and on these people already reeling under the strain of high cost-of-living demands, rising power bills, the carbon tax and so many other imposts of life under Labor. So much regulation, so little time to comply. The cost of compliance places too much of a burden on charities and this is why this bill stands condemned. If it ain't broke, why fix it? Why, Labor, why?

Rowan Ramsey (Grey, Liberal Party) 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. The most feared statement in regional and rural Australia is, 'We're from the government and we are here to help you.' I fear in this case that is exactly what we are looking at again. The government in its effort to try and help people has actually got it wrong again and in fact is likely to cause more harm than good. One of my guiding tenets when I came to this place was that we should analyse every piece of legislation and should seek to do the least amount of harm. There is little within this bill that convinces me that the net outcome will be an improvement rather than a retrograde step. The implications it has for the not-for-profit sector, for the volunteer sector, for the community sector are that it imposes costs and burdens upon them which they do not currently face.

In recent times there has been a trend from the government—this is just a handful, I might point out. We have had legislation in the financial services sector and in the trucking industry, instructing trucking companies about staffing, loading and rosters. We have had legislation and regulation in the education export sector, in the regional airport security sector. All these things have imparted extra cost and one must wonder just what the net benefits are for the community. So here we are once again with the government intent on extra regulation on a sector and inventing once again a new statutory office with the announced intention of streamlining the red tape these organisations face. It is difficult to see how a new government department specialising in red tape is likely to make life better.

The not-for-profit sector, the charity sector, along with the business sector, is groaning under the weight of compliance in Australia.

I can see my friend the shadow minister for small business nodding his head sagely because he knows. Every day when he and I go to businesses and talk to the organisations within our electorates, including the not-for-profits, they constantly complain, 'You have got to get the monkey of government off our backs. So much of our time is spent filling out paper—in compliance and not in doing the job which we signed on to do.' If this bill seeks to implement further compliance upon these bodies, we can hardly expect those bodies to keep going and performing their jobs to the same level they are at the moment.

Under the years of the Howard government there was a revolution in Australia. That government turned to the not-for-profit sector to deliver services that previously the government had delivered. It has been a revolution. Even those on the other side of the House believe it has been an advance. There have been efficiencies and competition in the supply of these services. It is not to say that the bodies concerned get it right all the time—we all have complaints about the way the system operates. But by and large it has been a great advance. We have organisations out there that are driven not primarily by the need to make a profit but primarily because they want to make the world a better place.

The areas of aged care in particular, employment services, disability services and counselling are but a few of those areas where the not-for-profit sector, at the large end, has become the predominant supplier of services to Australia. And generally they perform with strength and purpose and in an altruistic manner. I do not believe there is a prime facie case that there is widespread rorting of the system, that these organisations are not producing and not providing the services they purport to provide. By and large they are actually doing exactly what they say they are doing—and they are doing an excellent job and they have my support. So, I wonder what is driving the legislation.

I understand that in the initial stages when the government were talking to the sector they were saying, 'We will simplify the system for you. The government will get everything into one organisation and we will tidy it up and it will be easier for you.' I understand that initially the sector was supportive of that. But as with many of the reforms across the nation, and OH&S is but one, finding agreement between the states is long, hard and slow. We should strive to find those agreements and those efficiencies where we can come up with national standards, the one set of rules right across the nation. But in fact it is difficult to do. If we put the legislation in front of the reform, if we have not done the groundwork, if we have not reached agreement before we put legislation in place then we run the risk of just inventing another layer. And that seems almost certainly what is going to happen here. The states at this stage are nowhere near relinquishing their responsibilities in the same area. So this reform that was to streamline the sector is just another layer of bureaucratic red tape which will, in the current debate in Australia, call for an increased number of public servants to run it. And then somebody will have to face up to those terrible realities sooner or later.

I would like to come to a few local issues. I come from quite a small community and I think that the further we get away from the capital cities in Australia the more important become the not-for-profits, the charities, the local sporting clubs and the local church groups. They play a bigger and bigger role in the small community. That is because government cannot deliver all those services to every community. In my own town I think about the show society, the sports clubs, the hospital auxiliaries and the cancer support groups, which are capable of raising enormous amounts of money. I am constantly amazed at what some of the nights and frivolities can raise. There are also the Royal Flying Doctor Service, the progress association and the football clubs.

I would like to tell you, Mr Deputy Speaker, a little about my local football club. Twenty years ago we amalgamated three teams to form a very successful club. Twenty years ago the club decided they needed new clubrooms. The club tried very hard to get some government assistance but they were not fortunate enough to get that assistance. During that time they raised over $400,000. They put it in the bank, they looked after it, and that eventually gave them the ability to attract some government assistance—though they still provided the overwhelming proportion of the finance. The club built a magnificent complex. It probably should be valued at around $2½ million, by my estimates, and they built it for less than $1 million. The important point is they built it with the contribution of huge amounts of voluntary labour from the community. Tradesmen were prepared to give their time, farmers were prepared to come in and use their equipment, people became amateur painters and tilers—the whole works.

If governments choose to make things more difficult, they will stamp out that enthusiasm in local communities. Governments will make sure that people are not prepared to go that extra yard, because they know that government will be auditing their books, poring over them, and, importantly, someone in the club will have to do an extra job. You do not join a football club so you can fill out forms and become the accountant; you join it because you want to make a practical contribution.

As I said, I do not think there is a prima facie case for the government to hit this sector with what I call the big hammer—the big hammer to crush a very small nut. It seems as though this Labor government just cannot help itself. It believes government should be at the centre of all enterprise. In fact, with the amount of regulation that has been passed in recent months in this parliament, I am beginning to wonder if the government does not believe it will not be re-elected. It seems to be leaving the most difficult deck of cards stacked against an incoming government that it possibly can. I hope that is not the case; I am sure there are people of goodwill on that side of the House. But when you look at the proliferation of interference in people's lives, it is difficult to believe that Labor has an overall view of the effects of its handiwork on our community.

There are organisations in our communities like UnitingCare, Centacare, Meals on Wheels, the Salvation Army and carers—I have in Port Pirie, in my electorate, a wonderful branch of Bedford Industries; in Whyalla there is Phoenix, who deal with people in the disability sector. They do not need extra regulation. They are already doing a wonderful job. Why would we tie a hand behind their back and add to their compliance burden so they cannot function at maximum efficiency?

There are things that I see all the time, not just from this government but from all governments, that are eroding our way of life in Australia. I was recently in a butcher's shop. This butcher's shop makes the best ham in South Australia—or at least it used to. Some enlightened bureaucrat brought in a new regulation that said they had to buy a $20,000 fridge to cool down the ham within 20 minutes of cooking. They had been making it for 28 years and no-one had ever had food poisoning. But, no, they were from the government and they were there to help. I have farmers on my hammer because when they shift machinery now in South Australia they have to carry a copy of the government gazette in their tractor. They are very modern farmers; apparently you can get the gazette on your iPad. That is good enough; you can carry your iPad on your tractor. But it is not good enough to have an iPhone. If you drop out of range and your iPad does not work, then you need the hard copy in the tractor glove box. That is another man from the government trying to help. I could go on.

I know those examples are not strictly related to the bills and I thank you for your tolerance, Mr Deputy Speaker, but almost daily when I come into this place I have this great frustration and I am trying to limit the damage the government is doing to our Australian society and in this particular case to the not-for-profit sector. I certainly will not be supporting this legislation, and I call on the government to pause and go back and talk to the sector again and find out what it can do to actually help them rather than hinder them.

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I also rise to oppose the Australian Charities and Not-for-profits Commission Bill 2012 and the related bill. In following the member for Grey, I can say that I share his frustration, along with the frustration of many people in Australia today who are finding the government too often getting in the way of legitimate and proper activity and the functioning of Australian society.

My electorate is a good example of the voluntary sector taking a leading role in the charity work that happens through a myriad of organisations. I constantly find suburbs in my electorate at the top of the charitable giving statistics for all the major charities in Australia. We have a high rate of volunteerism and church activity. In my view, that leads to a better structured society. It is a model that Australia has been very proud to replicate for much of its existence. It is something that we want to see continue and encouraged by government, not negated or stopped. I think the member for Grey and other members here and so many ordinary people around the country are frustrated because the government primarily has the power to negate, restrict and prevent, not to create or empower. That is a fundamental difference in the approach to government.

When you look at the bills before us today, you can see that we are adding about 400 to 500 pages of legislation to the voluntary and charity sector. It is a massive amount to even try to read in order to get an understanding of what we are discussing today. The fact that we are adding such a burden to so many institutions in the voluntary sector is something that we should all be concerned about. Negation and prevention are not things we want in relation to the not-for-profit sector. We should not be seeking to prevent, stymie, stifle, restrict or penalise the activity of people engaging in charity work. We ought to be seeking to promote, encourage and ensure that they can continue that work and, perhaps, sometimes assist them. But, frankly, the sector has been doing a great job by itself for a long time.

The motives for these bills and the provisions they contain are really unclear when you consider that the sector has not had any major scandals and is not the subject of major concern within the community. In fact, the community continues to give unprecedented support to the not-for-profit sector in doing the work of government, doing more work than the government could possibly do at all times.

Many entities, such as unions—the Health Services Union—are facing severe scandals. From this government we have seen a lack of response, half-measures and delay. When we consider that, why are we rushing to put in place these bills, which encompass large additions to the regulatory burdens on the private sector? The government says it is to streamline things, to put in place a new federal regulator that will resolve all the woes of the not-for-profit sector with one stroke of the legislative pen.

We oppose this legislation because a great big new regulator for charities and not-for-profits will not enhance the ability of those organisations to do the job that they are already doing. This is the concern we find from those in the sector every day. I have heard from many organisations in western Sydney and in my electorate. When you talk to almost any group—whether church groups or charity groups—you find that all of them have concerns about the lack of consultation on this legislation and about the operation of this legislation. They are expressing their view because—we find what we always find with this government—this legislation is hastily put together. Already the government is bringing forward amendments to correct flaws in its legislative design. This legislation has not had the rigorous and necessary test of COAG. Given our federal system, the states really need to be involved. Memorandums of understanding would greatly assist in the quality of federal legislation.

We also see that the government has not thought out how these burdens will affect everyone in the voluntary sector. Do we really want to put in place barriers that will discourage activity in this sector? The answer, of course, is no; I do not think there is a member here that would suggest that is a good idea. So why the legislation? It is unclear how a new Commonwealth entity—the Australian Charities and Not-for-profits Commission—will reduce red tape and ensure that people can continue their activity long into the future. No argument has really been advanced about how this will enhance and secure the activity of the not-for-profit sector into the future.

Considering the outcry that has been given by the sector, especially in relation to the government's original proposal to start the scheme in March, they were forced to delay until 1 October 2012. This is not a reprieve in relation to the reporting requirements and all the other onerous measures the government have put in place in relation to these matters. This governs approximately 600,000 entities in the not-for-profit sector, of which it is estimated about 400,000 may access Commonwealth tax concessions. So this really is a massive proposal affecting a huge segment of Australian society.

Once again I think the government's approach is, 'We've done something: we've put in place bills to fix that.' It tends to be this government's constant approach—'Look at how many bills we have passed. Look at how many pages of laws we've passed.' But there is the ancient saying: the more corrupt the government, the more numerous the laws. Why do we need 500 new pages of legislation in these bills to regulate a sector that has really been at the core of Australian society for most of our nation's existence? It is very unclear what the government is intending here.

I support the opposition's call for a small—emphasis on 'small'—federal body to assist the not-for-profit sector with training and development and to ensure that they can function as professional entities in the modern world. That is not because I favour new bodies, new government agencies or new government laws to provide for activity which is already occurring; it is because in the complexity of the modern world there is a necessity to assist those organisations and entities to fulfil requirements associated with all of the federal laws we have in place in relation to tax and handouts from government. So a small body to assist with this is a necessary requirement and would be appropriate. I think we could find our way to supporting the government if the government were proposing something sensible like that to assist rather than hinder. This, however, appears to be a big hindrance on behalf of government. These bills appear to be a big hindrance on behalf of the government—hindrance of a sector which we really ought not to be hindering, hindrance of people we really do not want to get in the way of. So why do it?

We have announced that the small educative and training body for the not-for-profit sector would be put in place to ensure that there would be no adding to red tape burdens and to deal with the duplication of state and territory legislation. You cannot really do that without using the COAG mechanism. Sometimes the government says, 'We can't get agreement at COAG' or 'It takes too much time,' but that is the process of getting decent-quality legislation. Time and time again when we stand in this place, when we examine the provisions of these bills, they have not been well thought out. They have not been well drafted. They have been put together in haste. The timings and implementations that are required have been put together in haste. When we see that in the commercial sector and so many of the other different sectors that this government has legislated for, we get an outcry from the sector and they get a bad piece of legislation that is often backflipped on about four times before it is implemented and which then halfway compromises to what people had originally wanted. If the time had been taken in the beginning to get it right, a lot of pain and grief would have been saved in the beginning. But then people are generally happy that they did not get the worst outcome that they could have got from government. But those are the provisions and standards that the government usually applies to so many different sectors of life in Australia.

Why we would do that for the charities and not-for-profit sector is really beyond me, and I am very happy to oppose this legislation, considering that these are the people that we really ought not to be interfering with, that we really ought to be allowing to get on with the things they need to be doing. They do it so well in Australia today. I want to record all my support for the charity and not-for-profit sector in my electorate, which, because of the socioeconomic models that government uses at state and federal level, often does not receive government funding to the level of other areas in Sydney in particular—which, of course, hides disadvantage. There are vulnerable people in every community, and the slack is often taken up by these not-for-profit and charity organisations in communities like mine. The slack is picked up readily and joyfully, with the assistance of so many people in the community, and it is a really good thing to see even though it is very difficult. I want to acknowledge the closure of St Michael's in my electorate, which has done a magnificent job over a long period of time but will be closing due to operational reasons. This will leave a significant gap in my community which government will have to fill.

That is, I guess the key point here—that if we hinder and hold back the ability of the charity and not-for-profit sector to deliver in this regard then we will have to pick up the bill. Government will have to pick up the tab. So why interfere with these people? Why put such an oppressive 500-page regime here as we see in front of us today? Why not consult the states and get in place a memorandum of understanding with each of them so we can get it right and so minimum disruption occurs to the sector? It is something that we need to address and that the coalition has said we will address. We oppose the bills as drafted by the government because, primarily, they add to the burden of the charity and not-for-profit sector and do little to remove regulatory duplication and other problems that legitimately should be removed by government. I support, of course, the coalition's intention to bring into place better training and development and some assistance from the Commonwealth level to ensure that charities and not-for-profit entities get this right. However, in its current form I certainly cannot support the legislation as drafted.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) 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. These bills provide for the establishment of a new independent statutory office, the Australian Charities and Not-for-profits Commission, which would be the Commonwealth-level regulator for the not-for-profit sector. The ACNC is proposed to commence operations on 1 October 2012.

As highlighted by the federal member for Menzies—the Hon. Kevin Andrews, the shadow minister for families, housing and human services—the coalition opposes the government's plan for a great big new regulator for charities and not-for-profits for four main reasons: firstly, it will not reduce red tape; secondly, it treats the sector as untrustworthy and the people involved in it as tainted; thirdly, it will hinder the activities of charities and not-for-profits; and, fourthly, it will discourage involvement in civil society. The coalition has not come to these conclusions lightly. We have undertaken extensive consultation with the sector from when the discussion paper on the ACNC was first released right through to the present moment.

Following significant concerns from the sector regarding the tight turnaround time for the start of the ACNC, and given the number of concerns raised with the draft proposal, the government in March decided to delay the commencement of the ACNC until 1 October 2012. In July 2012, the government released a revised ACNC Bill and the terms of reference for the House of Representatives Standing Committee on Economics inquiry into the bill. They gave the sector only nine working days to respond and to make public submissions to the inquiry.

Throughout the course of the inquiry by the House economics committee, and throughout our discussions with stakeholders, we have noted that no real progress has been made by Labor in its attempts to have the states and territories agree to harmonise their laws. In fact, the states have not agreed to hand over any of their powers with respect to charities and not-for-profits to the Commonwealth, such as their powers with respect to incorporated associations and fundraising. So the new regulator will be an additional layer of red tape. Furthermore, based on our discussions with relevant state ministers, we do not believe it is likely that they are going to submit to handing over their powers in this space to the Commonwealth in the near future.

The government claims it would consult further on the content requirements of financial reports and implement these through regulations. Registered entities would be required to prepare their first financial reports for the 2013-14 financial year, with the first financial reports due by 31 December 2014 unless a substituted accounting period applies. Members on this side of the House know only too well that any such commitment to consult is worthless. At best the government will bungle the consultation; at worst it will be much like their approach to a range of legislation: a total facade.

While the member for Menzies spoke at length about the precise details of the bill and how representatives of the various charities have responded, I wish to focus specifically on how it will impact on schools. All groups of schools—Independent and Catholic schools—will be classified as large charities and therefore be subject to the highest level of accountability and reporting requirements under the ACNC. This is the last thing that schools need. Schools are already subject to a high level of public accountability through the provision of ongoing detailed financial reporting to both Commonwealth and state agencies. As highlighted in the National Catholic Education Commission's submission into the review of funding for schooling, there are currently 19 pieces of Commonwealth legislation to which the non-government school sector is required to adhere, not counting state and territory legislation, which amounts to approximately 50. Some examples of relevant Commonwealth legislation are the Schools Assistance Act, the Schools Assistance Regulations 2009, the Australian Curriculum, Assessment and Reporting Authority Act, the Disability Discrimination Act, the Disability Discrimination Amendment (Education Standards) Act, the Corporations Act, the Privacy Act, the Copyright Act, the Copyright Amendment (Digital Agenda) Act, the Education Services for Overseas Students Act, the Migration Act, the A New Tax System (Goods and Services Tax) Act, the Skills Australia Act, the Family Law Act, the Racial Discrimination Act, the Sex Discrimination Act, Australian Human Rights Commission Act, Affirmative Action (Equal Opportunity for Women) Act, the Fair Work Act, the Australian Sports Anti-Doping Act, the Social Security (Administration) Act.

Over and above the Commonwealth legislative framework I have just described that non-government schools are expected to comply with, state and territory governments have a major role in the regulation of schools. There are myriad legal and other accountability requirements and interventions at state and territory level. Schools must participate in all national student assessments and in the preparation of detailed reports such as the National Report on Schooling in Australia, which is produced each year on behalf of the Standing Council on School Education and Early Childhood. Non-government schools already collect and provide extensive information relating to their students to the Department of Education, Employment and Workplace Relations and the Australian Curriculum, Assessment and Reporting Authority. The department of education's financial questionnaire and My School website require all non-government schools to provide relevant financial information, including income and expenditure. All school accounts and documents must be available to department of education officers in return for funding and be provided, if needed, to other agencies, such as the Auditor-General. As some independent schools are companies limited by guarantee or are incorporated associations they are also accountable to the Australian Securities and Investments Commission.

A complaint that I receive frequently from school principals, when consulting on the issue of school funding, relates not to the types of information that governments seek from them but rather that they have to constantly give so many government departments the same information. School principals feel that they are spending more and more time filling out multiple forms to submit to government departments—often the same information but in different templates—in order to comply with various regulations.

A recent inquiry into red tape in New South Wales schools revealed, for instance, that some schools are required to report separately for up to 200 different programs. That is outrageous. Worse still, principals feel that they are spending more and more of their school's resources to employ administration staff to comply with these requirements, taking resources away from teaching and learning.

In relation to education, the impact of the ACNC will be that non-government schools will face even stricter reporting requirements than ever before. The Australian Catholic Bishops Conference's submission to the inquiry into the ACNC draft exposure bills summarises the key point made by the National Catholic Education Commission:

The outcome for schools is an unreasonable compliance burden linked to demands to respond to differing compliance requirements, definitions, regulatory and funding obligations.

The same conclusion was made by the Independent Schools Council of Australia in their submission to the draft exposure bills:

An examination of the existing and proposed regulatory structures for independent schools indicates that it would appear impossible to achieve the objective of reducing the regulatory burden on the non-government schools system through the introduction of the ACNC and its associated legislative requirements. It is far from clear that an agreement could be reached with states, territories and government agencies to remove many of the operational requirements for non-government schools already in existence".

Schools sector stakeholders have also highlighted the potential for inconsistency in application or conflict where schools are required to meet both ACNC and other Commonwealth and state statutory requirements. The example given by the National Catholic Education Commission is, for instance:

… what would be the impact on State 'fit and proper person' tests for registration of non-government schools if the ACNC made adverse findings or issued warnings or directions or even removed the head of a school or school system?

These are big issues and questions that would need to be thought through very carefully, and obviously have not been thought through carefully by this incompetent government. In addition, the schools sector is also concerned schools that are charities are required to provide an enormous range of financial information for publication by the ACNC. Again, like many other programs the government has introduced, this could lead to the creation of distorted 'league tables', particularly in instances when state schools do not have a similar level of reporting requirements imposed on them. It also appears to me that some activities that might be undertaken by the ACNC might significantly overlap with activities that the Minister for School Education, Early Childhood and Youth, Peter Garrett, has announced he will be undertaking with state and territory education ministers. A report from the Australian on 3 August 2012 reported that the minister decided to take a proposal to state and territory education ministers to develop:

… stricter reporting guidelines for independent schools as well as nationally consistent definitions of 'not-for-profit', to prevent the misuse of public funds.

Specifically the minister for schools has announced that key areas of the project plan are to include the operation of not-for-profit requirement; minimum viability standards for schools; claim for, and use of, recurrent funding; joint investigations and issue management. The minister has described this project as a 'harmonisation' project and said that the objective is:

… to achieve greater consistency and clarity in the eligibility criteria of non-government schools for public funds, and the appropriate use and accountability of these funds across all jurisdictions.

I cannot help but be very sceptical of this project. When this government starts to talk about harmonisation I start to think about re-education camps. I do wonder if the minister for school education announced this project as a knee-jerk reaction to two unfortunate instances over the last 12 months, where an Islamic school in Sydney was deemed to have misused funds and the sudden closure of Mowbray College in Victoria.

Instances where non-government schools close due to poor governance arrangements leading to financial viability issues or instances where funds are misused are extremely rare. There are nearly 2,800 non-government schools in Australia and there have only been a handful that have been investigated or been forced to close due to financial difficulty over the last few years. The coalition's view is that government should not try to overregulate in response to unfortunate incidents of wrongdoing in such a way that impedes all of the others who are doing all the right things and complying with the regulatory requirements.

The federal member for Goldstein and shadow minister for finance and deregulation frequently makes mention that we have a tendency in this country to overregulate. It is almost as though governments should be responsible for preventing every single bad thing from every happening. The coalition believes that, unfortunately, sometimes bad things do happen, and society in general needs to accept that over-regulation is simply not the solution.

Mr Keenan interjecting—

I note the support from my friend the member for Stirling. I do, therefore, have my doubts about this so-called harmonisation or re-education camps plan, but I do sincerely hope that this process as it progresses through ministerial council does meet the objectives of providing more consistency and does not result in more layers of red tape. It is, at the very least, clear that the minister's so-called harmonisation plan will cut across the responsibilities of the ACNC significantly. Yet I have not yet seen the minister for schools come into this House and explain the impact of the ACNC on schools or how it relates to his so-called harmonisation project. Neither is he here explaining what effect the ACNC might have on the day-to-day operation of schools.

On top of the government's euphemistically named harmonisation project, the ACNC, the government has also announced that it will establish a national school improvement plan that all Australian schools will be expected to participate in from 2014. There is very limited information available in the government's fact sheets about the precise nature of this plan. While the coalition, of course, supports the government's objective of improving student outcomes, there is very little detail on the conditions that will be attached to schools in return for funding beyond 2014. We very much look forward to scrutinising the details of this plan so we can be sure that any new reporting requirements in return for public funding will not unnecessarily burden schools.

We envisage that this commission would be responsive to and not hinder the sector. Unfortunately, I have very grave doubts that that will be the case and, as a consequence, I strongly oppose this bill and do not commend it to the House.

Wyatt Roy (Longman, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. My electorate is home to people with a great sense of community. In my role, I have the advantage of hearing about some of the most generous examples of volunteering and benevolence in my community. I constantly see others giving of their time, their energy and their resources to make our local community an even better place to live. I am so often amazed at the outstanding generosity of those in the community and the amazing dedication that they have to a cause, whether that cause is the environment, helping others find employment, their church community or their sporting club. Whatever their cause, their commitment and passion are strong.

I know that what I see evidenced in my electorate is not the exception but rather the rule. All across Australia there are thousands of groups that have come together under a common idea and with the intention of making their community a richer and better place to live. Australian society itself is underpinned by the notion that as individuals we can choose to come together and celebrate our shared beliefs and make a tangible, positive difference to the lives of others. We have such a rich tapestry that is civil society in Australia which does in fact contribute much to our enjoyment of life. We need to do everything we can to empower this. It is our role as key decision makers to support civil society, facilitating individuals to continue value-adding to our life experiences. It is our role to enable and empower, not to hinder, this process. It stands true for all areas of government that as policymakers it is our responsibility not to govern with a heavy-handed, Big Brother approach. We on this side of the House believe in the virtue of small government, we believe that organisations know how to do what they do best, and we believe that burying them in red tap does not allow them to achieve this.

But we are here debating a bill that proposes to do exactly this—to hinder, restrict and regulate civil society. This bill imposes a great big new regulator on charities and not-for-profits, making it more, not less, onerous for our not-for-profit sector. It increases red tape and duplication and creates far-reaching powers that puts civil society squarely under the control of government.

We on the Liberal side of politics understand that businesses have the best chance to prosper and succeed when government gets out of the way and lets businesses get on with their work. The same can be said for civil society: community groups, independent schools and welfare organisations have a far greater chance of success when government simply acts as a facilitator and keeps out of the way, letting them pour all of their available resources into the valuable work they do.

We all know that funds are scarce for not-for-profit sector groups. Their focus, by their very nature, is on serving others, not on building wealth. Their goals are to create income enough to conduct their work and no more than that. Every available cent is channelled into the outcome of the group and the cause it promotes. Local football clubs spend their funds on team jerseys and sports equipment. Local schools spend their money on providing learning opportunities for students. Local Meals on Wheels spend their money on purchasing food. These are the types of organisations that will be severely impacted by the regulatory authority this legislation seeks to create.

The Chief Executive Officer and Managing Director of the Australian Institute of Company Directors, John Colvin, quoted feedback from one of his members, an aged-care provider, who said:

Every hour we pay for compliance, we lose about 1½ hours in one-to-one support for our ageing residents.

It is the communities, the beneficiaries of our community groups, charities and other not-for-profit organisations, who ultimately miss out when the regulatory burden is increased on these groups. What this legislation will create is a cumbersome regulatory authority that stifles our nation's culture of giving and volunteering. It will penalise the mums and dads, the aunts and the grandfathers who spend their time volunteering for Neighbourhood Watch or for the environmental protection groups that our communities hold dear. It will mean that groups such as these will be forced to spend hours and hours of precious time as well as hundreds, thousands or millions of dollars more—depending on the size of the group—on taking care of all the additional red tape and paperwork that this regulation will create.

One organisation, the Baptist Church of Australia, said in their submission on this bill that the regulation created by the bill would cost $1 million. That is a $1 million on top of the already burdensome red tape facing this organisation. That is $1 million that needs to be pulled out of other activities, which include welfare assistance for the vulnerable. What concerns me is the hindrance this additional regulatory burden will be for not-for-profits, particularly for smaller groups such as those in my electorate. It will be a significant disincentive for locals to give their time to volunteering because the joy of giving through volunteering is severely diminished by reams of red tape.

The fact is that this bill and the regulatory body it establishes do nothing to fulfil the rhetoric this Labor government has been sprouting for so long. This bill does nothing to cut red tape and regulation for the not-for-profit sector. Conversely, this bill adds to the red tape facing not-for-profit organisations. We well know that a large percentage of red tape comes from states and territories. Much of these reporting requirements are then duplicated through Commonwealth agencies. As well, we know that states and territories are unlikely to forgo their powers and reporting requirements. Additionally, despite the creation of this commission, none of the Commonwealth agencies' reporting requirements will be transferred to the commission. What this means is that the Australian Charities and Not-for-profits Commission creates an entirely new level of bureaucracy and red tape for the not-for-profits to content with. I feel that David Gonski, a life fellow of the Institute of Company Directors, gave a good summary of what this commission will truly mean for the not-for-profit sector. He said:

It concerns me massively that we might be the first country in the world to make being on a not-for-profit as a director more onerous than being on a for-profit.

It is a sad day when it becomes more difficult to help others than to help yourself.

Another aspect of this bill I find deeply disturbing is the stance it has taken against the individuals involved in not-for-profit groups. Traditionally, in line with our laid-back Australian nature, not-for-profits have received the benefit of trust from government. What this means is that the previous legislation has treated community groups and their volunteers as trustworthy and untainted for the purposes of their work.

Debate interrupted.