Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Whenever this government introduce a piece of legislation, it is generally because they want to impose a new tax or they want to impose more red tape on the Australian community. This bill is all about imposing more red tape and on this occasion on our charities and not-for-profit sector. This bill provides for the establishment of a new statutory office, the Australian Charities and Not-for-profits Commission, which will be the new Commonwealth-level regulator for the not-for-profit sector. This bill supposedly sets up more bureaucracy at the federal level on the promise that eventually, perhaps one day, it will lead to less bureaucracy at the state level, except that none of the states have agreed to it. So we will have yet another level of government, another level of additional red tape, which will make it harder for one of the very important sectors in our community to do its business on a promise that eventually, one day, perhaps in the never-never, it might lead to less red tape.

This Australian Charities and Not-for-profits Commission is proposed to have far-reaching powers that will elevate it to one of the most powerful Commonwealth regulators. The coalition opposes this proposed great big new bureaucracy for charities and not-for-profits because it treats the sector as untrustworthy and the people involved in it as tainted. It introduces a new regime of red tape for the not-for-profit sector and it will hinder the activities of charities and not-for-profits, and it will discourage involvement from the community in our charities and not-for-profits.

The states generally oppose the creation of this new regulator, except for the Labor state government in South Australia. The states have not agreed to handover their powers with respect to charities and not-for-profits. The states' powers in this area are quite extensive, as I am sure you would be well aware, Madam Acting Deputy President Moore. The states have not agreed to handover to the Commonwealth their powers with respect to charities and not-for-profits—such as powers with respect to incorporated associations, fundraising and reporting. If this legislation passes the Senate, the new regulator will be an additional layer of red tape and will not achieve its primary objective of reducing regulation. This government is quite extraordinary: it can say that something does one thing when quite manifestly it does the exact opposite. The government is saying that the objective is to lead eventually to less red tape, but, 'Trust us, we have to go through this phase of increased red tape in order to get to this ultimate phase of less red tape.'

In our judgement, Labor's approach would hurt the sector, hindering the activities of charities and not-for-profits and discouraging involvement in this very important part of our community. Labor is creating a roadblock for the operation of charities and the not-for-profit sector and for people's involvement in community organisations. Labor's approach reverses the cornerstone assumption of trust, essentially creating legislation that assumes people involved in those charities and not-for-profit organisations who volunteer are untrustworthy and tainted. The Australian Charities and Not-for-profits Commission would discourage involvement in the voluntary sector. In our judgement, we should trust the voluntary sector. We should trust those people who get themselves involved in charities and not-for-profit organisations.

The coalition's plan will help support volunteers who get themselves involved in those many community organisations across Australia that do such a good job. We believe the government should get out of the way of those organisations and let them do what they do best: help people and help the community. We support a small commission to focus on innovation, education and advocacy, but our approach is to cut red tape. An example of our approach, of course, is the proposal in the family services area, where contracting reforms and cutting red tape out of contracting for services will make it easier for agencies that get involved in this area.

The sector, incidentally, does not support the government's proposed creation of a big new regulator for charities and not-for-profits. The Uniting Church in Australia, as part of our inquiry into this legislation, said:

…it is important to recognise that the introduction of any new reporting obligation on congregations, no matter how minor, will be another layer of legislative obligation and reporting for local members who are generally neither skilled nor trained for this burden.

From the same organisation:

… we remain yet to be convinced that the proposed legislation will work for the sector and its donors, eliminate the red-tape overload, and be adequately reflect the sector’s diversity in terms of compliance requirements.

From a totally different corner of the community organisations sector, Surf Lifesaving New South Wales said:

… reducing red-tape by reducing duplication of reporting requirements and assisting the efficiencies of the sector, however this will not occur without the involvement of the states and territories to align reporting requirements with the ACNC reporting framework.

That, of course, is not happening as part of this legislation.

The Australian Baptist Ministries have submitted:

We of course know from the states that that is exactly what will happen. There is not going to be this cooperation from the states around state uniformity and cooperation for the foreseeable future.

There are approximately 600,000 entities in the not-for-profit sector, of which it is estimated around 400,000 may access Commonwealth tax concessions either through the Australian Taxation Office endorsement process or by self-assessment. The Australian Securities and Investment Commission has a smaller role in the regulation of the sector at the Commonwealth level. ASIC is currently responsible for regulating approximately 11,000 not-for-profit entities incorporated as companies limited by guarantee under the Corporations Act 2001. That is a mere 11,000 out of 600,000-odd entities that there are across Australia, so it is a very small level of involvement in terms of regulatory oversight currently at the federal level, with most of the oversight happening at the level of the respective states.

ASIC regulates professional trustee companies as well as some charities which are incorporated as other types of companies under the Corporations Act 2001 and ASIC also has responsibility for the registration of incorporated associations and cooperatives if they wish to operate outside their home jurisdictions. The states and territories regulate incorporated associations and charitable trusts—although public and private ancillary funds are regulated at the Commonwealth level—as well as fundraising activities and imposing reporting and governance requirements on entities that receive state and territory government funding. Not-for-profit agencies have raised the issue that reporting requirements are inconsistent across the sector. The reporting requirements are increasingly and excessively complex and burdensome. The reporting requirements do divert resources away from frontline service delivery and towards complying with the needs of government. The sector is also very concerned that there is currently no single reference point for not-for-profits to access information, education and guidance.

This is why the coalition supports a small commission to engage in innovation, advocacy and education but not in this massive, superpowerful Commonwealth regulator on top of all the other regulatory arrangements—one that will choke charities and not-for-profit organisations in excessive and unnecessary additional red tape. Labor is effectively reversing the current approach, telling the sector they need a watchdog to promote transparency and trust from the sector. The community trusts the not-for-profit sector, and there is no identification from the government of the mischief that warrants the suite of powers that would be granted to the new commissioner. What is the problem that this government is trying to fix? Why do they want to provide all of these additional powers to a Commonwealth bureaucrat here in Canberra to make life more difficult for not-for-profit organisations and charities across Australia? People across Australia do not overwhelmingly welcome more power for a Canberra based bureaucrat to make their lives more difficult, and the government have not provided a justification for these powers or stated what sort of mischief they are trying to address.

The government claims it will consult further on the content requirements of financial reports and implement this through regulations: 'Trust us, we are from the government; we are here to help!' But registered entities will 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. We on this side of the chamber know only too well that any such commitment to consult is worthless. Just look at the track record under this government so far.

At best, they will bungle the consultation. At worst, it will be much like their approach to a range of other legislation—a complete sham process. At this point I am forced to point out that what we have here is the government's attempt at legislating a policy that they announced back in May 2011 to create an Australian Charities and Not-for-profits Commission, which was to come into operation on 1 July 2012. The start date of the Australian Charities and Not-for profits Commission has been delayed. It was then expected to start on 1 October 2012. Who knows what the ultimate timetable is going to be.

This reflects yet again the rushed approached to legislation, where the government is trying to meet deadlines and failing. This package of charities legislation was of course introduced on 23 August, the last sitting day before a fortnight's break in parliamentary proceedings. Yet, on 18 September, less than a month later, the Assistant Treasurer had the nerve to introduce 2½ pages of amendments to the package of charities legislation and a supplementary explanatory memorandum of 15 pages in relation to legislation which was due to come into effect less than two weeks later. And, of course, everybody across Australia would be expected to comply with all of the requirements.

The government cannot get their policy right, and that, of course, is why their legislation keeps changing. Clearly the bills were not ready to be introduced on 23 August. They should not have been introduced on 23 August. The government should have done their homework first. But, as on so many occasions before, they did not and now they are trying to patch things up as they go along. They are just making it up as they go along. We also have some more amendments to deal with in front of us now in the context of dealing with this legislation in the Senate this week. The government have the numbers in this chamber, I suspect. The fact that the bills are coming up for debate at this juncture indicates their sense of priorities. The Assistant Treasurer, in our view, should accept responsibility for a state of affairs where they are having to chop and change and make amendments as they go because they got things wrong when they first introduced the legislation.

The main bill, the Australian Charities and Not-for-profits Commission Bill 2012, provides the Australian Charities and Not-for-profits Commissioner with a range of enforcement powers. These powers are modelled on those given to other Commonwealth regulators, such as ASIC, the Australian Prudential Regulatory Authority and the Australian Competition and Consumer Commission. They provide the ACNC with the authority to issue warnings, issue directions, enter into enforceable undertakings, apply to the courts for injunctions, suspend or remove responsible entities and appoint acting responsible entities.

Of particular concern to us are the information gathering, monitoring and sanctioning powers, including the ability of the ACN Commissioner to remove a director. The bill specifies the conditions that must be satisfied before the ACN Commissioner can use enforcement powers, the scope and range of the commissioner's enforcement powers and the associated penalties for contravening enforcement powers issued by the ACN Commissioner. The ACN Commissioner will be able to exercise enforcement powers only over registered entities. The ACN Commissioner may generally only use enforcement powers against federally regulated entities. However, the commissioner may revoke the registration of any registered entity.

Groups in the not-for-profit sector have raised the issue that the reporting requirements, government standards and the ACNC enforcement powers are inconsistent with or overlap the common law of trusts and state and territory trustee legislation, are inconsistent with or overlap the Corporations Law and ASIC's regulatory role, are inconsistent with or overlap the ATO's guidelines on public and private ancillary funds, are possibly inconsistent with the Australian Constitution and are inconsistent with the overarching purpose of the ACNC legislation. I consider these comments about the ACNC's extensive powers by the Australian Catholic Bishops Conference to be a particularly appropriate description of this issue:

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

…   …   …

All groupings of systemic schools, independent Catholic secondary schools and many primary schools will be classified as "large charities" and therefore be subject to the highest level ACNC financial reporting and accountability requirements.

The outcome for schools is an unreasonable compliance burden …

This is what this government is imposing on not-for-profit schools across Australia—an unreasonable compliance burden.

In the same vein is the submission of World Vision Australia:

WVA considers that the tone and structure of the enforcement powers continue to suggest a heavy-handed approach weighted against the interests of registered entities and responsible entities. Further efforts should be made to ensure that the powers are better targeted, fairer, not used to inappropriately interfere with an organisation's legitimate operations and do not impose undue costs on an entity in taking action against the ACNC.

Unless and until the states and territories agree to hand over their powers to the Commonwealth regulator and harmonise their laws, these bills are going to necessarily add an additional layer of red tape which the sector will be forced to comply with. The smooth functioning of the ACNC is also dependent on a number of Commonwealth departments agreeing to either hand over their regulatory powers to the ACNC or to harmonise their regulatory requirements with the ACNC. From listening to the evidence at our various inquiry hearings, that is far from certain to happen.

The coalition believes that a reduction in red tape should be a priority issue where any reform of the not-for-profit space is concerned. It is our contention that these bills will actually take us in the wrong direction if the objective is genuinely to create less red tape for this sector.

Stakeholders remain concerned that these bills create unnecessary uncertainty with respect to the obligations and responsibilities of both the entity and those charged with governance of the entity. This issue arises from the fact that the requirement of the financial report and the requirements of those charged with governance with respect to financial reports are not presently specified with these provisions to be enacted by regulation by the minister. The sector is concerned that this will lead to a situation where not-for-profit agencies have limited input into decisions regarding how they are to be governed. Moreover, it exposes the risk that these standards can be subject to change frequently and at the whim of the minister or the government of the day.

The extraordinary range of services the not-for-profit sector provides covers programs extending from parenting skills, training, through marriage and family education and counselling, to divorce, mediation, drug and alcohol assistance, family violence—providing information and support to hundreds of thousands of Australians annually. Many agencies are motivated by charitable intentions; they are professionally conducted and often utilise the valuable contributions of volunteers. Taking the area of family services as an illustration of the current red-tape burden and inefficiency which I say will be exacerbated by these bills, we must not lose sight of the fact that government contractual reporting requirements costs family service agencies significant sums of money to administer. Much data is collected but little of it is every used.

The coalition supports transparency and accountability in the use of taxpayer funds. We also support simplicity and efficiency. The community sector has a long history of responsible governance and management. The coalition will respect and trust this. We will not support the creation of a heavy-handed regulatory body that would add to the red-tape burden for charitable organisations and duplicate state and territory legislation.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to make a contribution to this debate 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. I make my contribution based on a significant amount of work on these particular bills, in close consultation with many people from the not-for-profit and charity sectors, and I make this contribution based on where we are at today with the government's range of amendments that have been circulated.

At the outset, I will say that when we first saw the exposure draft, it caused a great deal of concern for the Australian Greens and for the not-for-profit sector. To give the government their due, they actually listened to what the not-for-profit sector said and made some amendments. The bill that came out was still not near the mark. But the bill we are now discussing with amendments is getting there. After very close consultation with the sector, I believe that, with the amendments, it has strong support. I will not be selectively quoting from submissions that were made to three of the various parliamentary inquiries, because things have moved on since that point.

The Australian Greens—and we have never made any secret of this—are strongly supportive of charities and the not-for-profit sector. We believe they play an essential role in our democracy. These organisations deliver services to hundreds of thousands of Australians every day. These services include: health, community services and development, disability, employment and training, aged care and community care, family support, children and youth services, mental health services, drug and alcohol treatment, Indigenous affairs, support for culturally and linguistically diverse people, victims of violence and abuse, housing and advocacy—and that is not even a full list; I have not mentioned any of the not-for-profit organisations outside of community services.

They are an essential part of our community. Our community could not function without them. The most vulnerable people in our community would not have the support they have, if it were not for the not-for-profit sector. I put this in a context because that is the context that I came from when I looked at this bill. I did not want to see anything put in place that would undermine the essential role of the not-for-profit sector. We want to in fact support that role. I was deeply concerned that the various earlier iterations of what we are looking at now would have had an adverse impact on the charities and not-for-profit sector.

The concept of a body that is dedicated to the administrative needs of the not-for-profit sector is a good one. The concept of a body that operates as a one-stop shop for the over 60,000 or so charities—that currently negotiate a maze of government departments as they attempt to meet their obligations under the current tax legislation and funding arrangements—is a good one. But it needs to be adequately funded and it needs to be focused on the administration and delivery of support services for charities and not-for-profits rather than on the regulation of this highly diverse sector that is so vital to our community yet has limited resources with which to meet its administrative and governance obligations. In other words, this has to be 'for' not 'of'; this distinction is a critical one.

As it stands, even with the amendments that were introduced in the lower house as a response to some of the recommendations made through the previous inquiries, this legislation is still too heavily slanted towards a reform 'to' the sector rather than 'for' the sector. Without further amendments, this legislation would establish or set up a commission that perpetuates the problems we have experienced right through this reform process.

The reform is critical because not-for-profits are a critical part of our society. They provide significant assistance to vulnerable citizens as well as to the natural environment and to animal welfare and the arts, when the not-for-profits are chronically underfunded and rely on donations from the public and/or government grants. Both these sources of funding are accompanied by significant regulatory and tax compliance burdens—as they should be; they should be transparent and accountable. But we should also not overburden these organisations.

Regulation at the moment is fragmented across jurisdictions and within jurisdictions. Some organisations, big organisations, have counted up to 600 grants for an organisation. The ATO regulates tax concessions, and some have company structures and therefore have to report to ASIC. Indigenous corporations report to the Office of the Register of Indigenous Corporations. And then there are the various state and territory regulations—many of which are different. This is a huge reporting burden. The overburden report, from a couple of years ago, highlighted the vast number of grants within federal government agencies that Aboriginal health organisations have to report to.

The sector has been calling for reform, genuine reform—and this is a very, very important point—for a significant period of time. So to say that the sector does not support this reform is actually not correct; the sector does, but it wants proper reform, not reform in the name of reform. The sector wants the removal of administrative barriers and it wants to make sure that the red tape is dealt with. That is a very strong message.

Like the sector, we recognise that this legislation is only one part of a larger project that needs to address issues such as governments contracting, wage equity, taxation arrangements and bringing the definition of 'charity' into the 21st century. These reforms will not be achieved simply by setting up a not-for-profit commission. But, if we can get the commission right, we will be on a path to enabling some of these other reforms and strengthening the not-for-profit and charity sector.

The Australian Greens recognise the opportunity we have to set up a one-stop shop which will help to unify a range of regulations that are currently fragmented across different legislation and to focus on addressing the barriers to good governance. But, like the sector, we still had serious concerns about this legislation and its ability to meet the needs of the sector. As it stood, without amendments, we had a strong concern that it would undermine the sector. We need to make sure that we have an independent, strong, well-functioning sector, and we certainly did not want any legislation that undermined the independence of the sector.

I have talked extensively to the sector and have participated in the various inquiries to reach the conclusions that we did in assessing this legislation. The legislation has three objectives: accountability and public trust; a vibrant and robust independent sector; and red tape reduction. Taken together, these three objectives can set the framework for a regulator who is responsive to the sector, promoting good governance and transparency. We do not believe that the legislation as it stood was balanced enough to ensure that the regulator had the capacity to walk that fine line between ensuring transparency and accountability—and, if they did not get it right, undermining the independence and the diversity of our civil society. However, there are a series of amendments circulating that have been developed by the government in response to both the concerns expressed through dissenting reports and through submissions from the community.

This is a really good example, we believe, of where we can work with the government, working the balance of power, listening to the stakeholders and negotiating constructively to help strengthen and improve legislation. Unfortunately, I cannot say the same for those opposite who—particularly when I was listening to the contributions in the House of Representatives—were focusing their comments on past versions of the legislation. In fact, tonight, we got a contribution that completely ignored amendments that had already been made to the legislation that we are debating.

The amendments that have been developed, we believe, will go a long way to ensuring that we get the ACNC right. We absolutely need to get this legislation right. We the Greens and I am sure the government and the broader community want a diverse, vibrant, independent third sector. This is a critical feature of a functioning democracy. Not-for-profit organisations and nongovernment organisations are often the trailblazers who promote positive social and environmental outcomes, well before the government is ready to shift its policy. The NGO sector are the leaders of change.

Without our not-for-profit sector, I doubt that we would have achieved many of the most important political and social reforms—such as the vote for Aboriginal and Torres Strait Islander peoples and, more recently, the action to address climate change. Not-for-profit organisations are playing a really important right now, for example, in the current debate, to shift community attitudes. Rather than denigrating those who are on income support and on low incomes and unemployed Australians, including single mums, they are now helping to shift that debate to see people in these unfortunate situations as those most vulnerable Australians.

Government is more and more dependent on the NGO sector. The NGO sector provide services and support in many cases much better than government can. But, critically, they also advocate for change. There are some things that some governments do not like. Sometimes there is a desire for government to stop those organisations playing this role.

Debate interrupted.