David Bradbury (Lindsay, Australian Labor Party, Assistant Treasurer ) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Charities Bill 2013 introduces a statutory definition of charity that applies to all Commonwealth legislation.

The Gillard government is dedicated to supporting a strong, vibrant, diverse and independent not-for-profit sector. As part of this commitment, in the 2011-12 budget the government announced that it would introduce a statutory definition of charity.

The meaning of charity and charitable purpose has not been previously comprehensively defined for the purposes of Commonwealth law. It has been administered on the basis of principles derived from the common law.

The common law meaning has developed over 400 years, largely based on the preamble to the Statute of Charitable Uses, which is an English statute from 1601. The development of the definition of charity and charitable purpose through case law since that time has resulted in charity law that is in some areas unclear or inconsistent, or that does not adequately address matters relevant to the contemporary Australian charity sector.

A statutory definition of charity and charitable purpose is a reform with a strong evidence base. It was first recommended in the report of the 2001 Inquiry into the Definition of Charities and Related Organisations and in later reports including Australia's Future Tax System Review in 2010. The Productivity Commission recommended in its 2010 report, Contribution of the not-for-profit sector, the introduction of a statutory definition in accordance with the recommendations of the 2001 inquiry.

Charities are such an important part of the Australian community and deserve a modern regulatory framework which will support them as they grow into the future.

Having a definition of charity set out in legislation will provide greater clarity and certainty for charities, the public and regulators in determining whether an entity is charitable.

It will cut down on compliance costs for those wishing to establish charities and make the definition more accessible and easier to understand for the community. The definition aims to preserve common law principles, with some minor variations. The definition is informed by the 2001 inquiry, which identified principles underlying the common law. The definition also takes into account the findings of more recent judicial decisions that further clarify the meaning of charity, including the Aid/Watch decision which extended charities' ability to advance public debate.

Importantly, the definition retains the flexibility inherent in the common law that enables the courts, as well as parliament, to continue to develop the definition within the statutory framework. This will ensure that the definition remains appropriate and reflects modern society and community needs as they evolve over time. The bill sets out the key principles for an entity to be a charity, including that it must be not for profit and have only charitable purposes except for any ancillary or incidental purposes that further or aid the charitable purpose.

The charitable purposes must be for the public benefit. A purpose that an entity has is for the public benefit if the achievement of the purpose would be of public benefit, and the benefit from the purpose is available to members of the general public or a sufficient section of the general public. The nature of the benefit may be tangible or intangible.

In limited circumstances there are exceptions to this principle. These apply to the purpose of relieving the necessitous circumstances of individuals or small numbers of individuals. It also applies in the case of open and non-discriminatory self-help groups and closed or contemplative religious groups.

One departure from common law principles relates to entities with native title or other traditional rights in connection with the land. These entities, which might fail a public benefit test because they provide benefits only to indigenous individuals who are related, or have some other special relationship with the other potential benefit recipients, are treated as being for the public benefit in particular circumstances.

Consistent with the common law, the statutory definition retains presumptions of benefit for certain charitable purposes. These purposes are the relief of poverty, distress and disadvantage of individuals or families; preventing and relieving sickness, disease or human suffering; the care and support of the aged and individuals with disabilities; advancing education; and advancing religion. The bill extends the presumption to the whole of the public benefit test for these purposes. Also consistent with the common law, the presumption ceases to apply where there is evidence to the contrary.

The bill lists categories of charitable purposes. This list is not intended to be exhaustive, but rather identifies purposes that have strong recognition in the common law.

The bill reflects the Aid/Watch decision that charities may have a purpose to generate public debate about a charitable purpose. It allows for an entity to have a charitable purpose, including a sole purpose, of promoting or opposing a change in the law or government policy relevant to another charitable purpose.

Another area where the bill extends common-law principles relates to the purpose of assisting rebuilding, repairing or securing assets after a disaster, in furtherance of the purposes of exempt entities within the meaning of the Income Tax Assessment Act 1997. This purpose is included within the charitable purpose of advancing social or public welfare.

The effect of this is to extend existing charitable purposes to include re-establishing not-for-profit community assets after a disaster, independently of the relief of individual distress. Any benefits of a commercial or private nature must be only incidental or ancillary to re-establishing the community assets, and the assets must not be government assets. Given the destruction we have witnessed in recent years caused by natural disasters, this is a timely change to support rebuilding and reconstruction after a disaster.

Under the bill, a purpose of engaging in, or promoting, activities which are unlawful or contrary to public policy is a disqualifying purpose. The bill clarifies that public policy in this context refers to matters such as the rule of law, the constitutional system of government of the Commonwealth, the safety of the general public and national security.

Political parties are not charitable, and a purpose of promoting or opposing a political party or candidate for political office is a disqualifying purpose. This relates to direct partisan political engagement, and the bill provides that this does not apply to the purpose of distributing information or advancing debate about the policies of political parties or candidates for political office. By their nature, policy debates involve engagement with the political process, and the bill makes clear that charities are free to engage in policy debates by assessing, critiquing, comparing and ranking the policies of political parties and candidates for political office.

The not-for-profit sector has been widely engaged in the development of the definition, with over 200 submissions on a public consultation paper in 2011 and further consultation on the draft bill. The government has been very responsive to issues raised during the consultation process, including in the most recent consultation on the draft bill.

The government appreciates the extensive and significant contribution of the sector to the development of the definition and thanks all stakeholders for their valuable input. Their contribution will help ensure the definition supports and facilitates the important and significant contribution that charities make to the Australian community.

Further details are contained in the explanatory memorandum.

I commend this bill to the House.

Debate adjourned.