Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to these bills. I thank the Clerk. I seek leave to move the amendments together.

Leave granted.

I commend our amendments and move (1) to (23) on sheet AP218 and (1) to (11) on AP219:

(1) Clause 40-10, page 21 (after line 4), after paragraph (2) (d), insert:

(da) all of the following subparagraphs apply:

  (i) the information is the details of a warning issued to a registered entity by the Commissioner under Division 80, as mentioned in paragraph 40-5(1) (f);

  (ii) the information has the potential to cause detriment to the entity, or to an individual;

  (iii) the contravention, likely contravention, non-compliance or likely non-compliance mentioned in subsection 80-5(1) was not, or would not be, in bad faith;

  (iv) the contravention, likely contravention, non-compliance or likely non-compliance has been dealt with, or prevented, such that declining to include the information, or removing the information, would not conflict with the objects of this Act;

(2) Clause 45-5, page 23 (line 8), omit "a registered entity", substitute "an entity".

(3) Clause 45-5, page 23 (line 12), omit "registered entity's", substitute "entity's".

(4) Clause 45-10, page 23 (lines 20 to 27), omit subclauses (1) and (2), substitute:

(1) The regulations may specify standards (the governance standards) with which an entity must comply in order to become registered under this Act, and to remain entitled to be registered under this Act.

(2) Without limiting the scope of subsection (1), those standards may:

  (a) require the entity to ensure that its governing rules provide for a specified matter; or

  (b) require the entity to achieve specified outcomes and:

     (i) not specify how the entity is to achieve those outcomes; or

     (ii) specify principles as to how the entity is to achieve those outcomes; or

  (c) require the entity to establish and maintain processes for the purpose of ensuring specified matters.

(2A) Without limiting subparagraph (2) (b) (ii), the principles mentioned in that subparagraph may reflect the size of the entity, the amount and nature of contributions to the entity and the nature of the activities undertaken by the entity in pursuit of its purposes.

(5) Clause 45-10, page 23 (line 30), omit "registered entity", substitute "entity".

(6) Clause 45-10, page 23 (line 33), omit "registered entity", substitute "entity".

(7) Clause 45-10, page 24 (line 6), omit "a registered entity", substitute "an entity".

(8) Clause 45-10, page 24 (line 11), omit "registered entity", substitute "entity".

(9) Clause 45-15, page 24 (after line 22), at the end of paragraph (1) (a), add:

  (iv) the Commissioner; and

(10) Clause 45-15, page 24 (lines 25 to 31), omit subclause (2), substitute:

(2) Without limiting, by implication, the form that consultation mentioned in paragraph (1) (a) might take, consultation to which all of the following paragraphs apply is appropriate consultation:

  (a) the consultation involves consultation with the public;

  (b) the consultation involves:

     (i) notifying, directly and by advertisement, the entities mentioned in paragraph (1) (a) of the consultation; and

     (ii) inviting them to make submissions by a specified date and, where necessary, to participate in public hearings to be held concerning the proposed regulation;

  (c) the consultation is facilitated by the Commissioner.

(11) Page 25 (after line 6), at the end of Division 45, add:

45 -20 Parliamentary scrutiny of standards

Despite subsection 12(1) of the Legislative Instruments Act 2003, a provision of a regulation made for the purposes of subsection 45-10(1) of this Act does not commence until the day after the earlier of:

(a) if both Houses of the Parliament pass a resolution approving the provision—the day the resolution is passed by the second House to do so; and

(b) the last day on which the regulation could be disallowed in either House, unless:

  (i) the regulation is disallowed; or

  (ii) either House passes a resolution disapproving the provision;

on or before that day.

(12) Clause 50-5, page 27 (line 1), omit "a registered entity", substitute "an entity".

(13) Clause 50-5, page 27 (line 8), omit "registered entity's", substitute "entity's".

(14) Clause 50-10, page 27 (lines 15 to 22), omit subclauses (1) and (2), substitute:

(1) The regulations may specify standards (the external conduct standards) with which an entity must comply in order to become registered under this Act, and to remain entitled to be registered under this Act.

(2) Without limiting the scope of subsection (1), those standards may:

  (a) require the entity to ensure that its governing rules provide for a specified matter; or

  (b) require the entity to achieve specified outcomes and:

     (i) not specify how the entity is to achieve those outcomes; or

     (ii) specify principles as to how the entity is to achieve those outcomes; or

  (c) require the entity to establish and maintain processes for the purpose of ensuring specified matters.

(2A) Without limiting subparagraph (2) (b) (ii), the principles mentioned in that subparagraph may reflect the size of the entity, the amount and nature of contributions to the entity and the nature of the activities undertaken by the entity in pursuit of its purposes.

(15) Clause 50-15, page 28 (after line 4), at the end of paragraph (1) (a), add:

  (iv) the Commissioner; and

(16) Clause 50-15, page 28 (lines 7 to 13), omit subclause (2), substitute:

(2) Without limiting, by implication, the form that consultation mentioned in paragraph (1) (a) might take, consultation to which all of the following paragraphs apply is appropriate consultation:

  (a) the consultation involves consultation with the public;

  (b) the consultation involves:

     (i) notifying, directly and by advertisement, the entities mentioned in paragraph (1) (a) of the consultation; and

     (ii) inviting them to make submissions by a specified date and, where necessary, to participate in public hearings to be held concerning the proposed regulation;

  (c) the consultation is facilitated by the Commissioner.

(17) Page 28 (after line 19), at the end of Division 50, add:

50 -20 Parliamentary scrutiny of standards

Despite subsection 12(1) of the Legislative Instruments Act 2003, a provision of a regulation made for the purposes of subsection 50-10(1) of this Act does not commence until the day after the earlier of:

(a) if both Houses of the Parliament pass a resolution approving the provision—the day the resolution is passed by the second House to do so; and

(b) the last day on which the regulation could be disallowed in either House, unless:

  (i) the regulation is disallowed; or

  (ii) either House passes a resolution disapproving the provision;

on or before that day.

(18) Page 31 (after line 16), after Subdivision 60-A, insert:

Subdivision 60 -AA—Object of this Division

60 -3 Object of this Division

(1) The object of this Division is to promote:

  (a) the transparency and accountability of registered entities; and

  (b) the reduction of reporting obligations of registered entities under other Australian laws.

(2) The Division does this by requiring registered entities to provide information to the Commissioner that:

  (a) relates to this Act or the taxation law; and

  (b) the Commissioner:

     (i) will use for the purposes of this Act; or

     (ii) may pass on to other Australian government agencies, removing the need for those agencies to require the information from the registered entities; or

     (iii) will make publicly available by publishing it on the Register.

     Note 1: Other Australian laws provide that giving information to the Commissioner in accordance with this Act satisfies the reporting requirements of those laws.

     Note 2: Division 40 limits the information the Commissioner may publish on the Register.

(3) The requirements this Division places on a registered entity are proportional to the size of the registered entity.

(19) Clause 100-10, page 85 (line 26), at the end of subclause (3), add:

; and (d) setting out the effect of section 100-25 (prohibition on suspended responsible entity managing the registered entity); and

  (e) if the registered entity is a trust—setting out the effects of subsections 100-70(1) and (5) (former trustees' obligations relating to books, identification of property and transfer of property).

(20) Clause 100-15, page 87 (line 12), at the end of subclause (2), add:

; and (c) setting out the effect of section 100-25 (prohibition on removed responsible entity managing the registered entity); and

  (d) if the registered entity is a trust—setting out the effects of subsections 100-70(1) and (5) (former trustees' obligations relating to books, identification of property and transfer of property).

(21) Clause 130-5, page 104 (line 12), at the end of subclause (2), add ", including how the ACNC has promoted the objects of this Act".

(22) Clause 130-5, page 104 (after line 12), at the end of subclause (2), add:

Note: The objects of this Act include promoting the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector (see subsection 15-5(1)).

(23) Clause 205-35, page 152 (line 29), at the end of paragraph (3A) (c), add "or any greater amount prescribed by the regulations for the purposes of subsection 205-25(1)".

(1) Schedule 1, Part 2, page 6 (before line 2), before item 2, insert:

Division 1—Endorsed entities

(2) Schedule 1, item 2, page 6 (line 9), after "item 3 or 4", insert "or paragraph 4D(4) (b), (5) (b) or (6) (b)".

(3) Schedule 1, items 3 and 4, page 6 (line 28) to page 8 (line 2), omit the items, substitute:

3 Health promotion charities

(1) This item applies to an entity that, on the day before the commencement day, is:

  (a) endorsed under section 123D of the Fringe Benefits Tax Assessment Act 1986 as a health promotion charity; or

  (b) endorsed under Subdivision 30-BA of the Income Tax Assessment Act 1997 as a deductible gift recipient because the entity is a fund, authority or institution covered by item 1.1.6 of the table in subsection 30-20(1) of that Act (charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings).

(2) The Commissioner is treated as having registered the entity on the commencement day under Division 30 of the ACNC Act as:

  (a) the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act (charity); and

  (b) the subtype of entity mentioned in column 2 of item 5 of that table (institution whose principal activity is to promote the prevention or the control of diseases in human beings).

4 Public benevolent institutions

(1) This item applies to an entity that, on the day before the commencement day, is:

  (a) endorsed under subsection 123C(1) of the Fringe Benefits Tax Assessment Act 1986 as a public benevolent institution; or

  (b) endorsed under Subdivision 30-BA of the Income Tax Assessment Act 1997 as a deductible gift recipient because the entity is a fund, authority or institution covered by item 4.1.1 of the table in subsection 30-45(1) of that Act (public benevolent institution).

(2) The Commissioner is treated as having registered the entity on the commencement day under Division 30 of the ACNC Act as:

  (a) the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act (charity); and

  (b) the subtype of entity mentioned in column 2 of item 6 of that table (public benevolent institution).

(4) Schedule 1, Part 2, page 8 (after line 2), after item 4, insert:

Division 2—Entities endorsed for the operation of institutions

4A Scope of Division

(1) This Division applies if, on the day before the commencement day, an entity (the operator) is:

  (a) endorsed under Subdivision 30-BA of the Income Tax Assessment Act 1997 as a deductible gift recipient for the operation of one or more institutions covered by item 1.1.6 of the table in subsection 30-20(1) of that Act (charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings); or

  (b) endorsed under that Subdivision as a deductible gift recipient for the operation of one or more institutions covered by item 4.1.1 of that table (public benevolent institution); or

  (c) endorsed under subsection 123C(3) of the Fringe Benefits Tax Assessment Act 1986 for the operation of one or more public benevolent institutions.

(2) This Division applies:

  (a) for the purposes of this Act (other than item 5 of this Schedule) from the day before the commencement day; and

  (b) for the purposes of the ACNC Act and the taxation law from the commencement day.

4B Institutions treated as separate entity

(1) The operator is treated as if it were 2 or 3 entities:

  (a) the entity (the non-institution sub-entity) the operator would be if it did not include the institutions; and

  (b) the entity (an institution sub-entity) the operator would be if the operator included only the institutions (if any) mentioned in paragraph 4A(1) (a); and

  (c) the entity (an institution sub-entity) the operator would be if the operator included only the institutions (if any) mentioned in paragraph 4A(1) (b) or (c).

Effect of revocation of registration of institution sub -entity

(2) From the time (if any) the Commissioner of the ACNC revokes under the ACNC Act the registration of an institution sub-entity:

  (a) paragraph (1) (a) has effect as if the reference in that paragraph to the institutions did not include a reference to the institutions included in the institution sub-entity; and

  (b) paragraph (1) (b) or (c) (whichever applies to the institution sub-entity) has no effect.

4C Non -institution sub -entity

(1) The ABN of the operator is treated as being the ABN of the non-institution sub-entity.

(2) If the operator was, apart from this Division, endorsed on the day before the commencement day as mentioned in paragraph 2(1) (a):

  (a) the non-institution sub-entity is treated, on that day, as being endorsed in that way; and

  (b) to avoid doubt, each institution sub-entity is treated, on that day, as not being endorsed in that way.

Note: Item 2 applies to that non-institution sub-entity

4D Institution sub -entities

ABN

(1) The A New Tax System (Australian Business Number) Act 1999 applies to an institution sub-entity as if the institution sub-entity were carrying on an enterprise in Australia.

(2) During the period:

  (a) starting on the commencement day; and

  (b) ending on the earlier of:

     (i) the day the Registrar of the Australian Business Register registers an institution sub-entity in the Australian Business Register; and

     (ii) 12 months after the commencement day;

paragraph 10(1) (a) of the A New Tax System (Australian Business Number) Act 1999 (entity must have applied for registration) does not apply to the institution sub-entity.

Note: Subitem (2) has the effect that the Registrar of the Australian Business Register must register the institution sub-entity in the Australian Business Register (including allocating the institution sub-entity an ABN).

(3) During that period (and without limiting item 4C), the institution sub-entity may treat the ABN of the non-institution sub-entity as being the ABN of the institution sub-entity.

Endorsements

(4) In a case to which paragraph 4A(1) (a) applies:

  (a) the endorsement mentioned in that paragraph is treated as being an endorsement of the institution sub-entity mentioned in paragraph 4B(1) (b); and

  (b) the Commissioner of the ACNC is treated as having registered the institution sub-entity on the commencement day under Division 30 of the ACNC Act as:

     (i) the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act (charity); and

     (ii) the subtype of entity mentioned in column 2 of item 5 of that table (institution whose principal activity is to promote the prevention or the control of diseases in human beings).

(5) In a case to which paragraph 4A(1) (b) applies:

(a) the endorsement mentioned in that paragraph is treated as being an endorsement of the institution sub-entity mentioned in paragraph 4B(1) (c); and

(b) the Commissioner of the ACNC is treated as having registered the institution sub-entity on the commencement day under Division 30 of the ACNC Act as:

  (i) the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act (charity); and

  (ii) the subtype of entity mentioned in column 2 of item 6 of that table (public benevolent institution).

(6) In a case to which paragraph 4A(1) (c) applies:

(a) the Commissioner of Taxation is treated as having endorsed the institution sub-entity mentioned in paragraph 4B(1) (c) under subsection 123C(1) of the Fringe Benefits Tax Assessment Act 1986 as a public benevolent institution; and

(b) the Commissioner of the ACNC is treated as having registered the institution sub-entity on the commencement day under Division 30 of the ACNC Act as:

  (i) the type of entity mentioned in column 1 of item 1 of the table in subsection 25-5(5) of that Act (charity); and

  (ii) the subtype of entity mentioned in column 2 of item 6 of that table (public benevolent institution).

ACNC Act

(7) For the purposes of the ACNC Act:

(a) the institution sub-entity mentioned in paragraph 4B(1) (b) of this Schedule is treated as being the subtype of entity mentioned in column 2 of item 5 of the table in subsection 25-5(5) of that Act for as long as each of the institutions included in the institution sub-entity is an institution whose principal activity is to promote the prevention or the control of diseases in human beings; and

(b) the institution sub-entity mentioned in paragraph 4B(1) (c) of this Schedule is treated as being the subtype of entity mentioned in column 2 of item 6 of that table as long as each of the institutions included in the institution sub-entity is a public benevolent institution.

4E Regulations

The regulations may, for the purpose of giving effect to this Division, provide for how this Schedule, the ACNC Act or the taxation law applies in relation to the non-institution sub-entity or an institution sub-entity.

Division 3—Opt -out

(5) Schedule 1, item 5, page 8 (line 8), omit "Items 2, 3, 4 and 6", substitute "Divisions 1, 2 and 4".

(6) Schedule 1, Part 2, page 8 (before line 14), before item 6, insert:

Division 4—Religious institutions

(7) Schedule 1, item 6, page 8 (line 21), after "item 2, 3 or 4", insert "or paragraph 4D(4) (b), (5) (b) or (6) (b)".

(8) Schedule 2, page 46 (after line 9), after item 44, insert:

44A Subsection 57A(1)

Omit "subsection 123C(1) or (5)", substitute "section 123C".

(9) Schedule 2, page 47 (after line 16), after item 56, insert:

56A Subsection 123C(1) (heading)

Repeal the heading.

(10) Schedule 2, items 58 and 59, page 47 (lines 20 to 25), omit the items, substitute:

58 Subsections 123C(3) to (5)

Repeal the subsections.

(11) Schedule 2, item 68, page 49 (lines 10 to 12), omit the item, substitute:

68 Paragraph 426 -5(d) in Schedule 1

Repeal the paragraph.

68A Subsection 426 -40(1) in Schedule 1 (paragraph (b) of note 1)

Omit "and (4)".

68B Subsection 426 -55(1) in Schedule 1 (paragraph (b) of the note)

Omit "and (4)".

68C Paragraph 426 -65(1 ) ( d) in Schedule 1

Repeal the paragraph.

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

I might just indicate on behalf of the coalition that we will not be opposing those amendments, but note that this is yet another series of amendments to a bill which is fundamentally flawed. The government have been making it up as they go along. Just before, as the minister was concluding the second reading debate, he was essentially telling the Senate that what we desperately need is more red tape now so we can have some cuts to red tape sometime down the track. But of course we know that that time 'sometime down the track' would actually require some agreement from the states to effectively hand over a whole series of powers to the Commonwealth which, on present indications, is highly unlikely. These amendments, while they improve a bad bill, do not fix the fundamental core problem. What we would get with this bill is a massive new bureaucracy which would make life harder for our charitable and not-for-profit sector, impose significant additional red tape, and come on top of existing state regulatory arrangements.

Of course what the government is trying to put to the Senate is, 'Trust us, there might be this massive increase in red tape now but at some unidentified time in the future this additional red tape will help us to reduce the red tape down the track.' Based on the government's track record, we do not trust the government's assurances in relation to this. We do not trust that this massive increase in red tape will ever lead to genuine reductions in red tape. We think that, when all is said and done, this new federal bureaucracy here in Canberra, which will have its fingers in every voluntary organisation across Australia, will be there to stay, and it will come on top of all the other processes already in place at state level. In fact this is a pretty far-reaching new federal bureaucracy which will get them involved in every aspect of the charitable not-for-profit sector. So with those few remarks, I say that we will not be opposing those amendments because we do recognise that they make some slight improvements to what overall is a very bad bill. But it does not actually improve this bill sufficiently for us to be able to support the bill as a whole.

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

I have a series of questions that I would like some information around that pertain to the amendments that have been moved. The amendments that have been moved are largely in response to the additional comments report that the Greens submitted during the Community Affairs Committee process.

I am pleased to see these amendments. In fact, as I indicated in my second reading speech, the Greens would not be supporting this legislation unless these amendments, or significant improvements, were made. These amendments aim to improve the Australian Charities and Not-for-profits Commission Bill 2012 to the point where we can support it, but we need some answers to some questions first.

I would also like to just correct a few of the misconceptions that anyone listening to the second reading debate would have taken away from that, particularly if listening to some of the coalition senators' contributions. One of these misconceptions was that this legislation is not supported by the not-for-profit sector. While the not-for-profit sector had a number of concerns, a lot of the concerns that were canvassed through the debate were in fact about the exposure draft and the first version of the bill. Subsequently there have been quite a few amendments in response to the community input.

I would like to point out here that one of the reasons we have a committee process is so that the Senate and the House of Representatives, when they look at bills, can look at the flaws in a bill and make amendments. Otherwise why do we bother with the committee process? We have a committee process to do due diligence to look at legislation. That is exactly what happened to this legislation. Lo and behold, the government actually listened to a committee and made the amendments. So I for one think that that is a really good process and I am really glad to see our democracy operating in that way.

I had a contribution from UnitingCare—and I do hope my voice holds out for the rest of this debate. UnitingCare contributed substantively, as did a number of other community and charity not-for-profits, to the three committee inquiries that were held into this suite of legislation. Their name was taken in vain a bit, they felt, during the debate on Monday night. They said that UnitingCare had raised some points of concern. In fact, they did through the initial process. But I would like to read an email that I have permission to read in response to some of the taking of UnitingCare's name in vain. This is from Lin Hatfield Dodds, the CEO of UnitingCare Australia. She said:

These quotes—

these are the quotes that were used during the debate—

are in relation to the draft Bill which appeared before the Standing Economics committee. Since that time there have been two other committees, a series of amendments made to the Bills and associated legislation, and two key commitments from the Government to anti-gag clauses and red tape reduction that have secured our support for this Bill as it stands before the Senate

This legislation is about more than simply the establishment of a new national regulator for the sector—it is recognition that our sector has come of age. A sector which is not an arm of government nor a subset of the business sector but one which has its own identity defined by its altruistic mission and characterised by its diversity and independence.

The introduction of this Bill together with the introduction of an Anti-gag clause legislation and amendments to the Commonwealth Grant Guidelines … are important in securing a robust and independent sector. It is important that Government legislate it's anti gag clause arrangements and implement its proposed changes to the Commonwealth Grant Guidelines to address some of the outstanding red tape issues and enshrine the capacity of community service organisations to do advocacy.

Help us get on with our mission, Australian Parliament and support this Bill.

As I said, I have permission to read that quote. That is exactly what I have been trying to do in terms of actively engaging with this piece of legislation to try and achieve change and to reflect the comments of civil society and the not-for-profit and charities sector to try and improve this bill. With this aim, I would like to start my series of questions if that is the will of the chamber. In particular, I would like to start where Lin Hatfield Dodds was talking about the gag clauses. In particular, I point out again that, as I articulated in my second reading speech, the independence of the sector is very important to the sector and it is something that the Greens hold very dear as well. So we were particularly keen to see the government respond to that with its amendment that was passed in the House of Representatives, but that has since gone further with the anti-gag-clauses legislation, which we are pleased to see. This is particularly important because the government has a monopoly over funding arrangements. In other words, it is often the sole contractor and the sole funder, which gives it an imbalance of power in negotiating contract arrangements. We have seen that abused in the past with gag clauses in contracts, and we do not want to go back to the bad old days. So this particular piece of legislation is very important.

So what I would like to ask the minister is: can the minister please provide us with a timetable for the introduction of that promised legislation, and can the minister please demonstrate how the government has engaged or intends to engage the not-for-profit sector in drafting this legislation to ensure that it is sufficiently robust to provide the reassurance that the sector is looking for that gag clauses will no longer be included in the Commonwealth funding arrangements.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

On 17 September the government announced that it would introduce legislation to ban gag clauses in Commonwealth contracts with the not-for-profit sector, ensuring ongoing positive engagement and open debate between the government and the not-for-profit sector. The government recognises that a strong, independent and innovative NFP sector is essential to provide an inclusive community. In contrast to this, the Howard government tried to silence the not-for-profit sector through gag clauses. The great doyens of freedom of speech, as they always pretend they are, wanted to gag charities. So they tried to muzzle the independent voice of the not-for-profit sector, and it took the election of a Labor government to act to remove these insulting gag clauses in 2008. We are now seeing a rerun. We are seeing Premier Newman doing the same in Queensland—gagging charities. You guys! You pretenders of protection of free speech: gagging charities because they might disagree with what you are doing. It is just a disgrace and you should be ashamed of yourselves. You pretend in this chamber to be a great, great supporter of free speech. The great defenders of free speech! You have actually been gagging charities. You have actually passed laws to gag people. Don't you stand up in here and try and pretend remotely—you are an absolute disgrace.

Senator Cormann interjecting—

Are you in a Collingwood outfit again? You can keep interjecting!

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

Order! Let's get back to answering Senator Siewert's question.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

When we get to debate the bill, you can try and pretend the bill is about gagging the media. What you will not be able to hide from is the fact that you gag charities with legislation. You did it. We undid it. The Greens supported it being undone. You did it. And now Premier Newman is doing it again. So everybody knows that if the coalition were to win government again nationally they would put those gags back in place. It is part of your DNA. You cannot help it. It is in your political DNA; you want to gag charities.

The government has announced that it will introduce legislation to ban gag clauses in Commonwealth contracts with the not-for-profit sector because we respect the independence of the sector. The government is currently progressing the preparation of legislation to ban these gag clauses. We are firmly committed to its delivery. Targeted consultation with stakeholders on the legislation is planned to take place during early December. The government will be introducing legislation in the first sitting weeks of 2013 with a view to prompt passage through the parliament.

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

This will apply to Commonwealth funding arrangements. Where there are joint agreements between the states and the Commonwealth, is it the intent that the legislation would also apply? In other words, could this legislation also apply to funding that is made available through such joint agreements to ensure that states cannot use that funding and impose gag clauses?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

We will need to get some further detailed advice for you, Senator Siewert, but we intend for this to reach as far as we can.

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

I thank the minister for his answer and I would appreciate any further information, because obviously there is a lot of money that is delivered jointly. This came up in estimates the week before last when I was in fact canvassing some of the issues around the next bill we will be debating in this chamber, the social and community services pay equity bill. There is a lot of funding delivered through joint agreements. So being able to deal with that through this legislation would give us and the sector a great deal of reassurance. That would be appreciated.

I am aware of the time so I am trying to move through these as expeditiously as possible. The issue of the volunteer individual directors was raised a lot in the various committee inquiries, and we flagged it in our additional comment report. Many of the organisations, as we have been discussing in the chamber second reading contributions, have few if any staff and rely heavily on volunteers to run their organisations. I note the comments from World Vision Australia during the Senate inquiry that it is well accepted that noncompliance is usually a matter of ignorance or underresourcing. In light of these comments the Australian Greens would expect that the commissioner would take an active role—that is what we understand from discussions in the various committees—in educating registered organisations about their obligations and ensuring that volunteer directors have easy access to plain English explanations of their duties and responsibilities under the act and how to perform. Can you tell us how the commissioner will support and educate volunteer directors and what safeguards has the government put in place through the legislation to ensure that volunteer directors are aware of their obligations?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

The government recognises and values the vital contribution made by volunteers and volunteer directors to the not-for-profit sector. We want to encourage them to continue to make an important contribution to Australian charities and not-for-profits. As part of its role, the ACNC will provide education and guidance to relevant responsible entities, including volunteer directors of unincorporated associations, to assist them to meet the requirements under the bill. This is consistent with the ACNC Commissioner's general approach of resolving compliance issues primarily through education and guidance rather than using heavy-handed enforcement powers. This regulatory approach is outlined in the ACNC's implementation report released in June 2012. In addition, as part of the development of the ACNC's regulatory framework governance standards, the government will also be seeking important feedback on the possibility of additional protections for volunteer directors of registered entities.

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

I thank the minister for his answer. In terms of the review process, I am pretty certain this is going to be an area of ongoing concern and we are aware that there are already provisions to allow the commissioner to have regard to the size and nature of organisations and the Australian Greens expect the commission to consider whether directors have acted in good faith and the extent to which compliance issues can be resolved through education particularly with volunteer directors and unincorporated organisations. However, we do have concerns about the extent to which the directors of unincorporated entities are exposed to legal liability on behalf of an entity under this legislation. Minister, what approach will the ACNC take in dealing with these issues that involve volunteer directors? Will the review process include an assessment of the impact that the ACNC arrangements have had on entities that are run by volunteers, particularly the impact on the ability of organisations to recruit volunteer directors? One of the points that came up through the inquiries is that this will put off people wanting to volunteer to be on these organisations.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

This is obviously an issue where, because we are stepping into a new jurisdiction, the culture of the ACNC organisation and commissioner is vital. The government's view is that it is vital that the commissioner follow through with the education and training aspect long before any other action is needed. We would be concerned if the first step was enforcement action. We think this would lead to a culture that you are describing. So we would only envisage that these powers would be needed in the most extreme examples of misbehaviour. I think we are right to be cautious and we are right to ask these questions as the culture of the agency is very important, but we do not believe that needs to be the first step; it needs to be the last resort in the most extreme circumstances.

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

I thank the minister for his answer. As I said, I know this is an issue that is exercising the minds of a number of people. Could I perhaps bring his attention to the second part of my question, which was about the impact of this legislation, given a review of any impact that has been had on the ability of organisations to attract volunteer directors and on the functioning of organisations. So can we go to that second part of the question?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am advised that the government will continually review the impact of this legislation including how it impacts on volunteer directors. The minister and I have swapped, Senator Siewert, and I come a little unprepared. I apologise for that. I had not realised that Senator Conroy, who was doing this, was leaving.

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

I appreciate the answer that there will be a continuing review rather than an overall review of the legislation. Would that be something that the commissioner might be able to include therefore in the report to the parliament that the commissioner will make annually?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

We can ask the commissioner to consider that.

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

That would be very much appreciated, thank you. Perhaps I can move on to the ACNC Commissioner upholding the objects of the act. We heard in the Senate inquiry that the ACNC Commissioner should be given specific responsibility for upholding the objects of the act and advising the minister on its implementation in the text or in the bill. Could the government and the minister please confirm that the commissioner will uphold the objects of the act? Can you please explain how they will do this and what resources will be made available for them to do that?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am advised that the commissioner does have responsibility for upholding the objects of the act and the report to parliament will include an assessment of how the commissioner has promoted the objects of the act, including the reduction of unnecessary regulatory obligations. My recollection is there is a provision in the budget for this reform, but I might have to take on notice the details of that at this point.

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

I thank the minister for her answer. There is continual discussion around whether the bill defined enough the objects that the commissioner was responsible for upholding, so I very much appreciate that clarification.

I want to go to issues around the basic religious charities. Basic religious charities are recognised as complex entities that have evolved over time in a way that is different from other not-for-profit organisations. They have been given some special status in these bills and, as a result, some different reporting thresholds and responsibilities apply to this type of entity. Some issues were raised during the committee's inquiries. The Australian Greens are still concerned that these arrangements may not provide sufficient requirements to ensure the accountability and transparency and hence maintain public trust and confidence in these organisations. The amendments introduced in the House of Representatives even further relax the non-financial-reporting thresholds for basic religious entities that operate for schools. While we are not seeking during this stage to amend the legislation in this regard, we would like a commitment that these thresholds will be reviewed when the legislation is reviewed. We would like a commitment that these thresholds will be included as part of that review.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

First, as part of establishing the commission, in consultation with stakeholders the government has decided to provide a targeted exemption for basic religious charities, and I think the senator referred to this. The practical effect is to exempt certain unincorporated religious entities from a number of requirements under the legislation. We do believe the exemption is appropriate. As with all elements of legislation, it will examine the effectiveness of the exemption as part of the five-year statutory review of the legislation.

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

I thank the minister for her answer. I have a similar question in terms of the thresholds for small, medium and large entities. Another point of very significant debate during the various committee inquiries was whether those sizes were appropriate. You have a number of organisations that are just over $1 million and some that are hundreds of millions of dollars. That group seems to be very wide. It is the same with small organisations. There is some concern about the definitions of small and medium organisations. When I subsequently looked into it and talked to various organisations I did not hear any better examples. The other examples raised also raised their own issues. I was persuaded to the argument that it is best to see how it runs for the time being and then maybe amend it in the future. Again I am seeking a commitment that specifically that issue will be looked into as part of the process of reviewing the operation of the act.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Yes, I am advised that that is the case. There is no carve out, as I understand it, for the statutory review. The thresholds would therefore fall within its purview. I also refer the senator to page 3 of the revised EM, which sets out the financial impact of the establishment of the ACNC.

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

Thank you. During the committee inquiry, an issue was raised about the inconsistency in the EM on the role of the ACNC board. Can you please clarify how the board will operate and under what conditions it will be able to offer advice to the commissioner? Can the minister expand on the make-up of the board, how the participants will be selected and how the board will ensure that its membership includes individuals with strong experience in operating not-for-profit organisations? To elaborate on that a bit more, during the Senate inquiry there were issues about the board only being able to provide advice on request, and there seemed to be another element in the legislation that conflicted with that and seemed to not quite rely on the concept of the board only providing advice when requested. I seek clarification so that they are really clear on that point.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I understand, firstly, that the intention is that the advisory board be appropriately representative of the sector. In the EM, however, on page 171, it says that the board would provide advice 'that is not in response to a request from the commissioner'.

Senator Siewert interjecting—

If you look at page 171, it indicates that it is not intended that the board would provide advice that is not in response to a request from the commissioner. I am advised that the commissioner has indicated that they would be actively seeking the board's advice.

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

I did understand that that is what the bill said but, because of that issue having been raised during the committee hearing, I was seeking clarification. So it is the intent that, despite any other contradictions, it is only 'can provide advice upon request'?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

That is what the legislation provides but, as we said, in practice this is unlikely to become a significant issue. If the commissioner is genuinely going to be seeking the advice of the board on appropriate matters, they obviously have the opportunity to provide that.

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

Thank you. What is the timeline for the establishment of the board? You have partially answered the question in terms of members with expertise in the not-for-profit sector and the board et cetera, but what is the timeline for the establishment of the board?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I suspect that this is going to be one of the 'in the near future' answers, Senator Siewert. I am advised that that work is underway, so we would anticipate being able to do so in the near future.

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

Does 'near future' mean by Christmas?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

We will do our best.

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

Thank you. There was quite a bit of debate during the Senate inquiry and out there in not-for-profit land about the governance standards. I am very pleased about the amendments that are planned for the way in which the regulation process will operate. They do not go as far as we would like, which is that we wanted the process in the legislation. As I articulated during my second reading contribution, I understand the reasons that cannot happen in terms of time frame, because it is a very complex issue. These are critical parts of the functioning of this act, and I am particularly pleased that the section that gave the commissioner the power to direct an entity to act or not act in a specific manner has been taken out, because that went to the very heart of the independence of the sector.

I have a couple of questions about the consultation process. That is an area to which we paid particular attention, and another amendment that I am particularly pleased to see is the inclusion of the consultation process and, further, the inclusion of the commissioner's role in the consultation process. I would just like to tease out here, and get a confirmation of, who will actually be the lead in the consultation process over the government's standards. Will it be the commissioner? Will it be the Treasurer or the minister? I understand it to be the minister. I do understand the process and that the minister is the final decision maker. But from our perspective it is important that the commission takes a very active role in this consultation process. That is the clear message that I have received from the sector. They want to be dealing with the commission; that is why they support a commission, because they see the commission as the body that will now be helping to look after them and helping them to enhance their vibrancy and their independence.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

On the first two points: obviously, I understand that the commission will take an active role in consultation and that the minister will seek the commission's advice.

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

With all due respect, that did not answer the question! I am glad that the government will seek the commission's advice, but how strongly will the commission be a lead in these discussions? Also, what resourcing will be available for it to undertake that consultation? And a supplementary to that one: will there be resources for the not-for-profit sector to be able to engage in this? This is going to be a really heavy-duty process; these go to the very heart of the operation and how it relates to the not-for-profit and charity sector. So it is vital that this particular process happens appropriately.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As I understand it, under the legislation it is the minister who consults. But, obviously, that is not an unusual statutory provision and my first answer does stand, which is that we would envisage an active role by the commissioner in consultation as well as, I assume, officers of the Treasury in that process.

I do not quite understand the 'lead' concept, to be honest. We would often have a consultation process where you would have a number of levels of consultation. That is not so unusual; you might have ministerial and you might have the different levels of the public service in any consultation process.

It is not intended as part of this legislation that there be any additional resources. I am sure that you will tell me why we should do that, but it is not intended. We have made various decisions, as you would know, through supplementation for SACS and so forth, for some parts of the not-for-profit sector. But that is for a different process.

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

Thank you. Maybe I need to be more blunt? The sector does not want Treasury determining it; they want to see the commissioner, whose role is to support the objectives of this legislation, such as an independent, vibrant sector, cutting red tape and raising public trust and confidence. They have more trust in an organisation that is coming from the perspective of understanding the sector, rather than Treasury.

I will just cut straight to the chase and say that that is the reason they want it. Quite frankly, some of the iterations of this legislation that we have seen have been because there has not been an understanding of the sector. I am not having a go at Treasury and I am not having a go at the ATO; they have their jobs to do. But the commission will bring an understanding and a relationship with the sector that those government departments just do not have. That is what we are looking for, an ability to be able to negotiate and work with the sector.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Thank you for being blunt; now I understand! I would say to you that it is in the government's interests to ensure proper a consultation process and to ensure that the commissioner is actively involved in that. I understand that the commissioner—Ms Pascoe, is it?—is a well-regarded individual in the not-for-profit sector. I do not have any doubt that the commissioner will be engaged to ensure an appropriate consultation process. If there are issues down the track which I raised with you, Senator, you do have the option, obviously, of making sure that the relevant minister is aware of that.

I should probably defend the Department of the Treasury as well, who actually consult many members of the community across a whole range of issues. But I appreciate what you are saying: the sector want to have somebody who is really engaged with their issues as part of this process, and we would envisage that that would occur.

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

People are now really engaging with, once the bill is in place, how the governance process and consultation process are going to roll out. I realise that you cannot pre-empt something that the commissioner will undertake, but I am wondering if it is possible that there could be an undertaking that, before the consultation starts, the development of the consultation process is discussed with the board or, more broadly, with the not-for-profit sector so that there is not a misunderstanding from the start about how that consultation process will occur.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am advised that the consultation is already starting and that the NFP reform council has been engaged. You are wanting an indication about the board's involvement in structural matters. Is that right?

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

Yes.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The board has not yet been appointed, obviously, but perhaps we can deal with it this way: we will ensure that the board is involved in consideration of the consultation process.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I have a series of questions, and these follow on from my spectacularly unsuccessful second reading amendment—I think I was the only voice supporting it—where I called on the government to introduce legislation detailing a definition of charities and charitable purposes and including a public benefit test within 12 months of the passage of these bills. Following on from that, can the minister provide any information on when legislation relating to the definition of 'charity' and 'charitable purpose' will be introduced, and will this contain a public benefit test? By way of background, the position in the United Kingdom, which I think is the benchmark for accountability for charities—it is something that has been tried and proven and works well with charities and the not-for-profit sector—–has included these definitions for a number of years. I support the broad intent of this legislation, but my question is: when will we go further with a definition of 'charity' and 'charitable purpose' and will it include a public benefit test?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As I understand it, the government is committed to introducing legislation to provide for a statutory definition of charities by 1 July 2013—obviously it would be anticipated that legislation will be introduced prior to that date. I am not in a position to give you any public indication of the content of that at this stage in the terms you have sought.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

What consultation process will there be as part of that, in broad terms? The minister does not have to be too prescriptive, but does the government acknowledge that in the United Kingdom there is a definition of 'the public benefit' that has been usefully used for a number of years?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

We would anticipate a public consultation process, so obviously people would be able to raise issues, such as public benefit, that you have raised.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Does the minister have a time line for extending the commission's responsibilities to NFPs—in other words, going beyond the scope of this legislation? And what further consultation will take place before this happens?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Obviously the framework we are discussing is focused on charities. The government's intention is that the ACNC be able to fulfil the responsibilities it currently has in the legislation before considering any expansion to other not-for-profits. As a matter of logistics, the earliest point that other not-for-profits could be included in the regulatory framework would be 2014. However, it would be premature to make any decision regarding this as we first want the commission to be up and running and focused on charities and doing an effective job in that regard.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

My final question to the minister in relation to these preliminary matters: can the minister clarify concerns that have been expressed in relation to the responsibility of board members where charities have been found guilty of non-compliant actions? I note some of my colleagues—I heard Senator McKenzie's considered contribution yesterday—talked about concerns raised by Mr Gonski about sanctions for non-compliance amongst directors being more onerous than in the for-profit sector. I did read into the Hansard in my contribution what Mr Gonski said just last month—that he was reasonably satisfied with the revisions. But, given that this was a legitimate concern that was raised, can the government clarify that what has previously been raised as a concern is no longer the case in terms of the proposed framework of this piece of legislation?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The provisions of the legislation governing obligations, liabilities and offences of incorporated an unincorporated entities have been redrafted, I am advised, consistent with the recommendations of the House of Representatives standing committee inquiry. Criminal liabilities for directors of incorporated charities have been removed completely. The bill also makes clear that, where there is a non-criminal contravention of the bill, the director of an incorporated charity is only liable for any amount payable by the body corporate where this arises from a deliberate act or omission of the director involving dishonesty, gross negligence or recklessness.

I am also advised that the director liability regime in the bill is not onerous when compared with other Commonwealth acts. For example, the bill imposes no personal criminal liability on directors at all, whereas the Corporations Act imposes personal criminal liability in certain situations—for example, breaches of directors duties, which may result in penalties of up to the $220,000 or imprisonment for five years or both. There are also references in the advice I have to similar types of provisions in the tax laws, which are obviously more onerous than the bill before the chamber.

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

Senator Xenophon, you touched on an area that I wanted to follow up, which is about the extension of this to other entities. Minister, you have already answered the first part of the question I was going to ask. You were a bit vague about the plan being to do this in 2014. Do I take from your subsequent comments that that time line is not a set time line—that it may depend on how the act is being implemented with existing entities?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I think I said 'at the earliest would be', didn't I? Is that what you mean by 'vague'?

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

Yes.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I do not think that indicated a specific commitment to a date. Rather, that in terms of the progress of this reform, that that would be the earliest time at which it could be introduced. So I think I got that right.

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

Thank you. Is the extension to the broader range of entities part of the harmonisation consultation and discussion process through COAG or is it completely separate?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am not sure if I understood the question. Were you asking if this was part of an existing consultation process?

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

There is a consultation process being undertaken at the moment, which is the harmonisation process. I am wondering, as part of that harmonisation process, whether this is part of that discussion?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

It is not part of the current process, but, obviously, were there to be any extension, that would be the subject of consultation with states and territories.

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

Thank you for that clarification. I would like to move on to red tape. This was a major issue and the sector has been following it up very strongly about wanting to cut down red tape and whether this is going to increase it. I am pleased to see that there has been more clarification in the bill. But I still have a couple of questions that I would like to follow up on and place on the record.

The ACNC establishes a time line for reducing unnecessary regulatory obligations on the Australian not-for-profit sector, and I am pleased that, as part of its annual report, it will be detailing its progress against the time line in reducing red tape. However, the red tape issues are, unfortunately, broader than those that are just under the influence of the ACNC and while the ACNC has been given the task of promoting greater integration and fewer reporting requirements, the government as a whole has set forth its commitments to the sector in having ongoing regard to the delivery on that commitment. Will the government also commit to ensuring that an independent regulatory impact assessment is undertaken and factor in the cost of compliance with the ACNC into its regulatory calculator?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am a little unclear about which reform you want a regulation impact statement for. What I can say to you is that the government has a very clear framework that applies across government decisions around the need to do a regulation impact assessment, which will look at the costs and the benefits of particular policy decisions. That is the case in this area and across all areas of government policy. Where required under the framework, an RIS—a regulation impact statement—which incorporates the assessment, has to be part of the decision-making process. It was not clear to me in in your question what reform you were saying should have an RIS.

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

With regard to the regulatory calculator, will the cost of compliance with the ACNC process be factored into that process?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

We have a very clear set of requirements under our regulatory assessment process. The costs of compliance, for whichever entity, are part of that assessment process. We do not differentiate between for-profit and not-for-profit; you still have to look at the costs of compliance.

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

During the inquiry—as I am sure many on that side of the chamber will be aware—various opportunities were looked at for red tape reduction. One of the proposals that was traversed was item 10 in schedule 1 of the transition bill, which states 'The Commissioner may treat a statement, report or other document given … to an Australian government agency' as being an information statement for a financial year or an annual financial report. During the inquiry process the Bishops' Council suggested that the government should amend the statement to read, 'The Commissioner will…' and argued that this arrangement would protect organisations from unnecessary duplication as a result of the ACNC registration until other arrangements can be resolved.

We agree, and the government responded to that. I partly accept the government's concern that taking this step to amend the text of the bill to replace 'may' with 'will' could have unintended consequences. But for all government departments there is no reason this could not be used as a standard until other arrangements are instituted, or put in place for a short-term process to see how it could operate.

Could the minister explain how the process of helping this to happen has been incorporated into the bill and the implementation of the bill to give effect to that concept. Even if you cannot amend the bill from 'may' to 'will', it is the intent that we are looking for. We are seeking a commitment of goodwill that until some of these other measures are put in place and all the harmonisation processes are achieved that for all intents and purposes an effort will be made to replace 'may' with 'will', even if it is not in the bill. Am I making myself clear there? What we are looking for is a commitment that while maintaining transparency and accountability every intent will be made in this transition process to ensure that reports are, as the government has said, 'done once, used often'.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The difficulty that I have with one of the implications behind the question—and it may not be the intention—is the suggestion that the commissioner would not do the right thing. The government's view is that it is appropriate for there to be discretion. When you are determining a document to comply with a regulatory requirement you would not want that to be mandatory, because you would want to make sure that a person is considering whether that document should comply with it. If it should comply then they have the discretion to do that. If the commissioner is doing the right thing, and we operate on the basis that they will, I do not think the issue that you raise is going to be a problem. With the alternative construction of 'will', you would still have to have an assessment against criteria, which arguably becomes a more legal type of test—'I can only do this if this ticks all these boxes'. What you have here is discretion. The commissioner has to have regard to a range of factors, but the government thinks it is appropriate for the commissioner to have discretion.

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

I was not intending to imply that the commissioner will not do the right thing. I put that on the record. I will also put on the record that, as you articulated earlier, there has been a great deal of faith expressed through the inquiry process in Ms Pascoe, and there is very strong support for her as the commissioner. I acknowledge that on the record.

What organisations are looking for is a commitment from government that in this transition process there will be every endeavour made to reduce red tape and to use reports as often as possible so that they do not have to keep reporting. This is not just about the commission; it is also about government agencies and how the commission can facilitate that relationship between government agencies and re-using reports as much as possible. Where is the government up to in meeting those commitments that it has already made to the not-for-profit sector about reducing red tape?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

First, in relation to the specific bill, I understand the commissioner has made that intention clear. I say to the Senate that we have done quite a lot of work in this area. I do not want to pretend to the senator or the chamber that it is easy to reduce some of the compliance requirements with government because, particularly in a devolved financial management framework, a particular entity might have a grant or an arrangement with two or three departments or with the same department but with different funding arrangements, and so that obviously creates a compliance burden, which is a function of the way government works. We have been doing a fair bit of work with Minister Butler, Treasury and Finance and Deregulation to try to work through some of the ways of how we can improve arrangements. You might be aware that we announced on 17 October that we would implement a report-once, use-often reporting framework by the ACNC and that we would support that with the Commonwealth Grant Guidelines. There have also been other arrangements in terms of contract management out of my portfolio from which I am happy to try to arrange a briefing. The intention is there—I do not want to overstate it, because having worked in this area for a while I know it is a lot easier to talk about red-tape reduction than actually deliver it. Delivering it requires quite a lot of work, but I think the bill before you and the commitments that the commissioner has given really indicates the approach the government is taking.

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

I thank the minister for that explanation. I think your comment about it taking a while to happen is the reason for the sector's nervousness. There were commitments on red-tape reduction before and it is not that the sector is questioning the commitment, it is how it is being done and, in particular, the difficulty of working across various government agencies, and the issue of providing financial reports to one organisation or to continue having to report to individual organisations on individual grants.

Is it the government's intent that where an organisation has reported to one agency on a particular government grant that they could use that same report to report against other grants, if appropriate?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

That was what I was referring to in the first part of my earlier answer: that we have announced the implementation of a report-once, use-often reporting framework and we have supported that through changes to the Commonwealth Grant Guidelines. The Commonwealth Grant Guidelines are administered by me out of Finance and they establish the grants policy and reporting framework for departments and agencies subject to the Financial Management Accountability Act. I can read all of the effects of that if you wish.

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

Table it.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I do not really like tabling these notes, per se. I can read it:

The change will benefit many organisations that will be registered with the ACNC and are recipients of grants from Commonwealth agencies and departments. These changes will state that agency staff should not seek information from grant applicants and grant recipients that is collected by other inter-Commonwealth entities and is available to agency staff. In particular, they will provide that agency staff must not request information already provided to the ACNC by an organisation regulated by it. The changes also state that when determining whether acquittal reporting requirements are required for a grant, agency staff must have regard to information collected by regulators, such as the ACNC. The changes will state that if an entity provides an annual audited financial statement to the ACNC then a grant acquittal should not be required, unless the nature of the activity for which the grant was being provided is regarded as high risk.

I am advised also—I think I made reference to this—that the ACNC has undertaken to develop and make public a red-tape reduction time line and plan, and the annual report of the commission to parliament will also provide details of performance against this time line.

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

I have two final questions on that particular area then I have one more set of questions and I promise I will finish then. I want to pick up on the last point about the time line. Will that include, both for that reporting process and for the long term review, the success of the legislation in reducing red tape, measures of red-tape reduction or what measures will be used to work out whether red tape has been reduced? I should say, what indicators will be used? Has that been determined, and will you determine some?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As I understand, not by government so I would assume, if the obligation is the commission has undertaken to develop and make public a red-tape reduction time line then probably that will be a matter that the commission will consider, what, I suppose, the KPIs are.

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

Fair enough. I should put on the record to the commission that it would be useful for some indicators, some KPIs, to be developed for that. I will go very quickly to the state-federal harmonisation process. I understand that process has started. It is an issue that is a hot topic for the not-for-profit sector and charities. Can you give us a quick update on where that process is up to and how soon you expect it to be completed?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The lack of an independent regulator focused on charities and the specific needs and characteristics of the sector has been a hindrance to delivering a national approach to NFP regulation. The government has made a decision to establish a regulator at the Commonwealth level and to provide a platform to deliver harmonising and consistent regulation of charities across Australia. The government is working collaboratively with the states and territories through the NFP Reform Working Group, established under the Council of Australian Governments. I am advised that the South Australian government earlier this month announced that that state will make amendments to its incorporated associations and charitable collections legislation to harmonise reporting requirements and authorise charities to collect charitable donations in South Australia once they are formally registered with the commission. We welcome South Australia's leadership in this regard and look forward to working with other states and territories to deliver similar reform outcomes across Australia. I understand that is also the position that has been expressed by quite a number of entities within the NFP sector.

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

Thank you. In the meantime, before the harmonisation process is complete, will there be circumstances where the ACNC can accept state reports as a substitute or as part of their reporting requirements to ACNC?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I am advised the answer is yes.

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

I am sorry, I misunderstood or did not catch what was the possible time line for completion of the harmonisation process.

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As you would probably be aware, what first ministers do is agree to processes and then they have a report-back date, so that is probably the best time line to give you. I understand the reporting-back date for this reform is early 2013.

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

I thank the minister. Would that be through a COAG process?

Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Yes. It will be a report from the working group, I assume, to first ministers.

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

That is the end of my questions. I thank the minister. As I indicated earlier, the Greens will be supporting the government amendments.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The question is that governments amendments (1) to (23) on AP218 and (1) to (11) on AP219 be agreed to.

Question agreed to.

Bills, as amended, be agreed to.

Bills reported with amendments; report adopted.