Kevin Andrews (Menzies, Liberal Party, Shadow Minister for Families, Housing and Human Services) Share this | Link to this | Hansard source

I rise to speak on the Australian Charities and Not-for-profits Commission Bill 2012. In doing so, I would like to outline the coalition's approach to the not-for-profit sector or civil society, as I would prefer to name it. The description 'not-for-profit' immediately connotes an economic framework; whereas 'civil society' involves a different broader notion of which the economic is just one part. The Productivity Commission itself accepted this broader role for the sector and noted the tensions that arise from the conflict between economic and other objectives.

Civil society comprises the groups of individuals which freely associate to pursue their mutual social, cultural, professional, sporting, religious or other communal interests. They are neither instruments nor agents of the state. They are the local carers groups in the towns and cities of this nation. They are the sporting clubs, the congregations, the communities that fund and build schools, the welfare agencies, the bands of people who work together to support medical research or assist the poor and the afflicted both here and overseas. They are the myriad of large and small associations that provide the organic vitality of our nation. And they have one thing in common: they are neither created nor controlled by the state. Instead they arise from the desire to associate to fulfil common objectives. They are built on mutuality and trust.

Starting with the family and extending to many and varied groups of people, they preceded the state.

It is the coalition's strong, principled belief that the political community—that is, the state, the government and its bureaucratic agencies—should be at the service of civil society. Where the state interacts with civil society, the former should facilitate the latter. A good example of this principle in action is the introduction of associations incorporation legislation in the 1970s and 1980s. This legislation enabled associations to better fulfil their mission. It allowed them to obtain the benefits of incorporation, to ease contractual arrangements, to obtain insurance and to protect individuals. It was light-touch, enabling legislation seeking not as much to regulate as to empower and to enable. It recognised that the sphere of government is separate from civil society. It acknowledged that the all-powerful state ultimately becomes Caesarean. It respected the principle of subsidiarity: that government should remain limited and that the responsibility of the elected arm of government is to ensure that the bureaucratic wing regulates only where and to the extent necessary. It was also built on the premise of trust: that individuals and the organisations they establish are motivated by the common good of their members. This is the common story of associating for the welfare of individuals concerned and their neighbours, whether in local communities or further away.

This understanding is now under assault. Under the pretext of simplifying and easing the regulatory burden on associations, the government proposes a new regulatory body, the ACNC. But what was promised and what has emerged from the bureaucracy are poles apart. The primary concern of the Labor Party's reform as originally proposed was that it should reduce administrative compliance and duplication by reporting agencies, enabling them to direct more of their limited resources to their charitable and related activities. This was reflected in the regulatory impact statement attached to the explanatory materials. Yet the bill, which was developed in a secretive process with minimum time for general comments, fails to meet this basic objective. The bill fails to provide any basis for the reporting requirements of companies limited by guarantee to be transferred to the new commission, for relevant parts of the not-for-profit reporting requirements of Commonwealth agencies to be transferred to the ACNC or for any clear commitment to obtaining the agreement of the rationalisation of government reporting requirements between the commission and the relevant state and territory authorities. I am informed, indeed, that there have been no meaningful discussions with the states and territories about these matters.

To illustrate this failing in the bill, I will take an example—namely, the case of non-government schools. In addition to the proposed ACNC reporting and accountability requirements, schools will continue to be subject to: (a) the DEEWR financial questionnaire and the reporting requirements in accordance with the Australian and state governments funding agreements and the Schools Assistance Act 2008; (b) the ACARA MySchool data collections and reporting requirements that also include sector-neutral collection of financial data; and (c) state and territory government minimum standards and reporting requirements for registered schools, including financial accountabilities—in some states, there are reviews taking place without coordination with the ACNC proposals. Indeed, there is very little indication that the Treasury bureaucrats behind the ACNC proposals have even consulted with officials at the Department of Employment, Education and Workplace Relations in any meaningful or comprehensive way. This is just one realm of activity that would be captured by the ACNC legislation and which illustrates the flaws in the proposal. What had been promised as simplification turns out to be costly and burdensome additional reporting requirements with no reduction in red tape and no reduction in duplication.

Indeed, the responsible minister now concedes that the premises upon which this legislation is being brought forward will not be met. In a recent speech, the minister, Mr Bradbury, acknowledged that the agenda is ambitious, stated that the government is now only 'working to reduce red tape', conceded that it will require 'more time for work to be completed' and agreed that the commission is not going to 'solve all the problems overnight' of a fragmented, inconsistent, uncoordinated approach to regulation. In addition, the new system, far from saving associations the financial resources that could be best directed to their community activities, will cost them more. The experience of the UK was that many associations have had to employ additional employees with regulatory, legal and financial expertise to meet the new requirements. The same would happen here. The Baptist Church, for example, in its submission on the bill, has estimated that it alone will have to spend an additional $1 million per annum of scarce resources to meet the new requirements. Multiply this sum through the many associations upon which this regulatory system is to be foisted, and the cost to the community will be enormous. The cost, I stress, is to that sector of the community which is using scarce resources mostly to deliver services to people in need. It is shameful that the government is putting in place a regulatory system which will have the effect of diverting necessary resources from services into the community to administration. I was in the UK last week, where agencies told me that they had to employ a whole new department of staff with legal, regulatory and accounting expertise just to meet the requirements of the charities commission in the UK.

I turn to some of the other deficiencies in the government's bill. Firstly, many of the regulatory requirements will be introduced by regulation—in other words, one of the most distrusted governments in Australia's history is asking the community to trust it when it cannot even meet the objectives it set for itself. Secondly, the basic religious charities proposal is very narrow and does not reflect the history or practice of religious bodies in Australia over more than a century. The very narrowing of the definition of religious activity is a dangerous precedent. The ACNC was conceived as a body to support charities and not-for-profits to enhance their contribution to society. However, its role, as outlined in the draft of the Australian Charities and Not-for-profits Commission Bill, appears to be mainly policing and enforcement. For example, there are powers to investigate any breach of the law, powers to remove a responsible person et cetera. No evidence has been put forward of either cases of noncompliance by charitable entities which could justify the seemingly heavy-handed reforms or of how the proposed reforms would address any current problems.

Furthermore, the proposed commission has a range of powers to interfere in and remove responsible office bearers, including ministers of parishes and congregations, in a manner which is totally unprecedented in this country. That brings me to the central objection to the government's approach.

The bill gives the commission the power to deregister an organisation if it is conducting its affairs in a way that may cause harm to or jeopardise the public trust and confidence in the not-for-profit sector. The phrase 'public trust and confidence' remains unclear, which creates much uncertainty and the possibility that the meaning of the expression will need to be decided through expensive litigation. This has been the experience in the UK, where, for example, the Charity Commission proposed that independent non-government schools would only qualify for charitable status if they offered bursaries to poor pupils. After expensive litigation the courts reversed that position, restating the age-old view that the provision of education itself was a charitable activity. I invite those who content themselves that common sense finally prevailed in the UK to consider the recent remarks by the UK shadow education secretary, Stephen Twigg, that a future British Labour government could legislate to remove the charitable status of schools not serving the community, whatever that expression may come to mean.

What this demonstrates, I contend, is that once the tentacles of government are allowed to interfere in novel and unprecedented ways with the activities of charities and associations there is no limit to the possible interference. Worse, these and other provisions treat the civil sector with a state paternalism. If entities or their directors break the law, they can be prosecuted. If existing laws need strengthening, let the government make the case for doing so, replete with examples of the breaches that need to be rectified.

Some weeks ago, in a major policy speech I delivered on civil society, I invited the government to outline the mischief that this bill was intended to address. Neither before that speech nor in the weeks since has the mischief that this bill assumes been made out. It is in fact a power grab by government which will extend extraordinary powers to bureaucrats to reach into the affairs of organisations, ranging from local congregations to international charities.

Under the provisions of the bill, individuals ranging from a local parish minister through to the archbishop of a diocese could be suspended and removed by the commission, and every entity will be required to meet a new complex set of reporting requirements that will cost charitable organisations, including local congregations, thousands of dollars. Officers of the commission will have powers to inspect and seize records. As the Associations Forum stated, 'In the work that the Associations Forum does with associations and charities, we do not see that there is any major problem in governance systems.'

Let me give a flavour of the comments that have been made in various submissions to the inquiries into this process, which indicate that this is not just what I am saying; it is what is being said broadly across the charitable and not-for-profit sector. Add-Ministry stated: 'What we now have still appears to be a document that is designed to tightly control the Charity Sector with a plethora of regulatory obligations. We have a legal document full of red tape and inflexible regulation to show us what we must do, or risk being penalised.' The Anglican Diocese of Sydney said:

It is likely that we will need to employ someone on a full-time basis to deal with the compliance issues that this legislation is likely to raise for the Diocese of Sydney. I am sure we will not be alone in this regard.

That is indeed too true. Australian Baptist Ministries said:

The reporting requirements for medium sized entities are too onerous. In our view the increase in compliance obligation will make it more difficult to fill volunteer roles within local congregations as well as requiring more time to be spent on compliance matters and therefore less time on matters that will provide a benefit to the community.

Australian Catholic Bishops Conference stated:

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.

They further state that the extent of information required to be disclosed to the ACN register is unnecessary and burdensome in terms of costs and resources.

The Australian Conservation Foundation stated:

The ACF is concerned that rather than remove duplication, the ACNC Bills will duplicate reporting obligations.

The Australian Council for International Development said:

The present drafting of the ACNC Draft Bill does not reassure ACFID or its members that it will actually reduce red tape, for three reasons:

(a) The drafting indicates that there is yet to be agreement with the States;

(b) It does not deliver a “one‐stop‐shop” for the establishment of a charity or

reporting by a charity;

The Australian Council of Social Service—this again illustrates the breadth of the objections and complaints about this bill—stated:

… the Bill does not yet contain any provisions that make it explicit that the reduction of unnecessary compliance and regulatory burdens is a core object of the Bill, nor does it identify these kinds of reforms as policy directions or drivers of the ACNC’s purpose or activities. There must be a direct link between the reduction of red tape and the objectives and functions of the ACNC.

The Australian Institute of Company Directors states:

We have had member feedback … all saying basically the same thing as we have said. I will quote from one which I think is very pertinent. It comes from an aged-care CEO:

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

… Another one from an Indigenous corporation states:

This legislation compounds the barriers that discourage pro bono directors offering their services to the not-for-profit sector.

I turn to someone who is a favourite of the government at the moment, a life fellow of the Institute of Company Directors, David Gonski, who said:

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

That is Mr Gonski, revered in certain circles by this government. When he gives direct advice which is consistent with everything that has been said by all of these other agencies, ranging from the major churches in this country through to the Conservation Foundation, it is obviously ignored.

The Australian Institute of Public Directors stated:

The Bill lacks detail about the proposed interaction between the ACNC, the Corporations Act and other legislation, and about governance and external conduct standards, which we consider make it impossible to provide meaningful comment on the Bill as a whole.

Key parts of the Bill are confusing and overly complex and need to be redrafted.

The Bill in its current form will represent a major retrograde step by imposing substantial and unwarranted compliance costs on charities.

Carers Australia stated that they were concerned about the:

Apparent lack of agreement by the states and territories to give effect to the reduction in red tape.

Further, they state:

… it is quite clear that due to lack of Constitutional coverage the enforcement powers and governance standard regulations can only be used against federally regulated entities or where the organisation is subject to an ‘external conduct standard’. This will clearly lead to a two-tiered approach to enforcement with some registered entities potentially subject to the enforcement and governance requirements, whilst others operating nearby with exactly the same situation will not.

Catholic Health Australia said:

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

The CEO, Martin Laverty said:

The principal problem with the bill is that right now I cannot say to any of the chairs or the boards of directors of our organisations that from the time of the enacting of this bill, and indeed in the years ahead as more of the powers of commissions come to be, this is the framework from within which you will govern your organisations.

…   …   …

I ask those who are promoting the bill, and I am genuinely seeking to understand: what is the problem with the Corporations Act and the case law that underpins it that means that, for not-for-profit organisations, we need a new set of laws that oversee their governance and, indeed, determine whether or not a not-for-profit organisation can be registered?

He went on to say:

Our principal concern is that we have not yet seen what problem actually exists that requires the establishment of a new body of law—a new principle at law—to oversee public trust and confidence. It is our view that the Corporations Act currently provides like capacity for government to regulate those circumstances—few and far between as they are—that might give rise to the potential for such a power to have been created.

Catholic Social Services said:

The [role of the Commissioner] falls substantially short of the series of ministerial statements about the reform agenda from 2009 until early 2011. The Exposure Draft does not require either the ACNC, or any other Commonwealth agency, to take action to establish such a 'robust and streamlined regulatory framework' or to be evaluated for making such progress. The specific 'Problem' identified in the EM is left unaddressed—the problem of red-tape.

The Chamber of Commerce and Industry of Western Australia said:

CCI does not support any move for the ACNC to be the 'shop front' for the NFP sector.

Chartered Secretaries Australia said that their main concern with the exposure drafts is the duplication of reporting that will result if the bills are passed in their current form. I could go on and on and on about people and reputable organisations in this country serving the community who make these sorts of objections. Community Employers WA said:

A key objective is the reduction of red tape and duplication with regards to compliance, accountability and transparency. It has not to date, and remains, unclear that the Bill will achieve this.

The Conservation Council of South Australia stated:

[Whilst there is] a national 'one-stop-shop' and a 'report-once, use-often' process, there remains a major problem in that at this stage state regulation will continue to apply.

The Financial Services Council said:

The Bill is not appropriately targeted to the currently unregulated NFP sector and instead extends the cost of compliance to other entities that are not supposed to be the focus of this reform.

Eve Brown, the senior policy manager of trustees, said:

The bill therefore creates a new layer of regulation that applies to trustee companies and public trustees as trustees of registered entities. This is unnecessary and incompatible with current federal, state and territory regulatory regimes.

The Housing Industry Association said that they consider the:

… regulation of charities should be on a completely separate basis from the regulation of other NFPs. HIA also considers that NFPs which are companies should continue to be regulated by ASIC.

The Independent School Council of Australia stated:

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

Bill Daniels, the executive director said:

We spend a lot of our lives meeting with the Commonwealth and state governments through various national forums. I have been with this organisation for more than a decade. I have seen no reduction whatsoever in reporting requirements. There has been no discussion whatsoever with the states or, indeed, with the Commonwealth department that I am aware of that has involved the independent sector on any reduction in reporting requirements. The only discussion that I have had with the Commonwealth apart from the ACNC briefings we had received is a less-than-perfect understanding of what is intended by the commission. So there has been no discussion whatsoever of any reduction or any proposal to reduce reporting.

The Executive Director of the Association of Independent Schools of New South Wales, Geoff Newcombe, said:

I have been in this game over 40 years. This will decimate school boards. There is enough concern out there now.

Again, I can go on and on and on. The Institute of Chartered Accountants in Australia stated:

The initial Bill had two stated aims, one of which was to 'minimise regulatory duplication and simplify such entities' interactions with governments'. The initial Bill did not fulfil such an aim and we notice that this aim is missing from the latest draft of the legislation.

Kerry Hicks, the institute's head of reporting said:

The biggest issue with the legislation is the duplication that it will create. Duplication and red tape reduction was the major theme of the reforms, so we do not feel the legislation has adequately addressed it.

Makinson & d'Apice Lawyers said:

The ACNC Bill will add to the burden of the vast majority of charities who will now have to provide an Information Statement and in many cases a Financial Report each year. In most cases, there will be a need for an auditor or other professional person to review or audit financial statements. This will not reduce red tape but rather add to it.

The sector can have no confidence that this [charity passport] will be achieved based on the contents of the ACNC Bill, the requirement for the sector specific reporting in various areas and the failure at this stage to get co-operation from States and Territories to adopt the standard reporting and the charity passport concept.

Mission Australia said:

[The Bill] is not sufficiently well balanced by a commitment to enable the not-for-profit sector to reduce duplication of reporting and to provide public confidence in the sector.

The National Roundtable of Nonprofit Organisations said:

The Bill does not distinguish between charitable funds and charitable institutions.

Registration [of a charity] will not be voluntary. It is unlikely that existing charities that currently enjoy tax concessions will be in a position financially to forego these benefits. A charity which is structured as a company and is currently income tax exempt would be subject to income tax of 30% if it opted-out.

The Not-for-Profit Sector Reform Council said:

The vast majority of directors in the NFP sector are acting in a voluntary capacity. We are concerned that this not reflect in the draft Bill. Any increase in liability for Directors could result in individuals refraining from taking on these roles.

Research Australia said:

Of particular concern for not for profit entities was the risk that the creation of the ACNC and its registration and reporting requirements would simply impose an additional burden and layer of regulation on the not for profit sector.

RSM Bird Cameron chartered accountants said:

We have particular concern about the possibility of duplication of reporting requirements for registered entities who currently operate as associations under state-based legislation.

The St Vincent de Paul Society said:

Any regulatory regime cannot adopt a 'one size fits' all approach. Furthermore, the development of any regulations ought to be done in consultation with the not-for-profit sector.

…   …   …

The Bill currently contains no requirement for the ACNC to inform or hear an organisation before it makes an adverse decision against it.

Surf Life Saving 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.

The Salvation Army of Australia said:

The Bills suffer from a lack of reinforcement of this purported outcome and does not contain a specific object that addresses this reduction in red tape.

The Uniting Church in Australia 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.

UnitingCare Australia said:

Many of the implied 'red-tape' reduction benefits of a single national NFP regulator are predicated on State/Territory Government cooperation.

World Vision Australia said:

The constitutional powers on which the Commonwealth relies for the establishment of the ACNC highlight significant gaps in the Commonwealth's power to regulate NFPs. These gaps mean that the ACNC will or may lack the power to effectively regulate all registered entities.

YWCA Australia said:

The most important goal of national regulation should be to remove the current duplication while streamlining requirements to provide consistency and minimise compliance costs.

If I had an hour to speak, rather than half an hour, I could continue with the litany of criticism and complaint about this bill, about the process that the government has engaged in to bring it to this point and about the extraordinary displeasure of the sector. The reality is that this bill is an extraordinary reach by government into the affairs of civil society. It assumes that people who give of their time and efforts, most often in a voluntary capacity, are untrustworthy and tainted.

Furthermore, it is being introduced at a time when international practice is going in the other direction. New Zealand is closing its commission and as reported in Civil Society the head of NFP activities at the Australian Taxation Office has observed that efficiency initiatives in Scotland, Northern Ireland, Singapore and elsewhere also reflect this trend. Why is the Labor government proceeding with a flawed proposal that is being reversed in other jurisdictions?

This is the same government which, when faced with egregious examples of corruption in another sector of society—namely, the union movement—sits on its hands for years, allows investigations to proceed at a snail's pace and does not lift a finger to deploy against the questionable activities of some union officials the kind of powers it proposes for associations. As we observed recently, union officials can blithely threaten to shift the expenditure of hundreds of thousands of dollars of their members' hard earned money from the support of one political leader to another without so much as a raised eyebrow from the Labor government, yet hard-working, decent, community minded individuals who are going about their critical work for the good of our society are threatened with this leviathan proposal. That is why we have announced, for example, that penalties under Fair Work Australia legislation will be changed by the coalition government to reflect the same provisions that apply to directors of corporations.

Let me summarise the coalition's approach. We reject the approach taken with this legislation. We reject it not because of the philosophical basis that I outlined at the outset but because overwhelmingly the sector rejects it as well. The sector sees it as a heavy-handed, unwarranted interference in the activities of civil society in Australia. In government, we would have a small body that would act as an educative and training body to help lift standards without the overbearing regulatory and enforcement powers that are being proposed in this bill. For those reasons, we oppose this legislation.

I give notice that if entrusted with government in the future we would not only continue to oppose this bill, we would repeal these provisions and would take it back to a sensible provision that respects the demarcation between the institutions of civil society, which the government should serve rather than seek to have power over, in the way in which it does. There are two approaches to these matters which can be summed up in two quotes. One approach is summed up in the opening words of the maiden speech of the former Prime Minister Mr Rudd, when he said:

Politics is about power. It is about the power of the state. It is about the power of the state as applied to individuals, the society in which they live and the economy in which they work.

This legislation is a manifestation of that view, that the state should have power over individuals and organisations, which rightly it should not.

The other approach—the coalition's approach—is about empowering people, not exercising power over them. It is the approach that the Leader of the Opposition utilised recently when he referred to as Abraham Lincoln's famous description of democracy as being 'of the people, by the people and for the people'.

In conclusion, the political community should be of service to the associations of civil society. That is what the coalition will endeavour to achieve in government. That is why we oppose this legislation. That is why, if we get the chance, we shall repeal it.

Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Before I give the call to the member for Blair, I need to confirm that it is the wish of the House to debate this order of the day concurrently with the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. There being no objection, the chair will continue to allow that course to be followed. The question is that this bill be now read a second time.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. This tranche of legislation is the fulfilment of this Labor government's commitment—a major reform agenda which we took to the 2010 election—to deliver better regulation, reduce red tape and improve transparency and accountability in the sector.

In a submission in relation to this legislation, Dr Matthew Turnour, an expert in the not-for-profit law and regulation and a director of the Australian Charity Law Association, quoted Jonathan Edward Garton's The Regulation of Charities and Civil Society in identifying six overlapping grounds justifying the regulation of not-for-profit organisations. Those grounds are: preventing anticompetitive practices; controlling campaigning; ensuring trustworthiness; coordinating the sector; rectifying philanthropic failures; and preventing challenges to organisational quiddity.

Dr Turnour in his consultation paper said that not-for-profit organisations in general and charities in particular:

… have enjoyed favourable treatment since time immemorial.

…   …   …

Elaine Abery has observed that the favouring of charities is at least as old as Ezra’s return of the exiled Jews. Colombo and Hall pointed to evidence of tax favour for charities in ancient Greece, ancient Rome and in ancient Egypt. They began their work with the words: ‘Exempting charities from various forms of taxation is a practice that appears as old as western civilization itself’. The exemption has applied in the United Kingdom since William Pitt introduced income taxation.

This is an important piece of legislation that deals with organisations that have been around for a very long time in Western civil society.

The not-for-profit sector is a massive factor in our economy, a major player and consists of organisations which do tremendous work, from sporting organisations to church organisations to organisations that work with disability, health, education, conservation and many other forms of noble purpose. It is a sector that comprises at least 600,000 not-for-profit organisations. There are about 180,000 bodies corporate, about 100,000 incorporated associations, 12,000 companies limited by guarantee—I created plenty of those when I was a practising lawyer—and 3,500 cooperatives. It has been growing in size over the years and it has had an annual growth rate of about 7.7 per cent since 2000. Currently it adds about $43 billion to our GDP and employs about eight per cent of Australia's workforce. There are over 4.6 million volunteers who contribute close to $15 billion worth of unpaid work. This is a very large sector of our society. It is comparable, as Minister Shorten pointed out in a speech a couple of years ago, to the transport and storage sector of our economy. So it is a very, very large sector of our society.

Currently there are close to 180 pieces of Commonwealth, state and territory legislation governing the sector and about 19 separate agencies regulating and determining the charitable purpose status of any particular entity. So the system is overburdened with regulation, the taxation arrangements are complex, there is a lack of transparency and accountability in the sector, it lacks coherence and there is already a high compliance burden. It is not as if this sector does not have interaction with government, the community and what the member for Menzies called civil society.

The legislation before this House establishes what is called the Australian Charities and Not-for-profits Commission as a national regulatory body. It really establishes that and sets a framework. It charges the ACNC with the capacity to register not-for-profit entities and maintain that public register . It is voluntary to go on the register but, of course, registration is a prerequisite for gaining access to Commonwealth tax concessions. I doubt whether those opposite if they were on the Treasury bench would change that. Other Commonwealth concessions, exemptions or benefits are also contingent on registration.

This legislation comes as a result of many, many reports in relation to this particular sector, and those opposite did not respond to the sector's request for a national regulatory body when they were in power. The reports are many and varied in relation to this particular sector. We have an ambition to create a one-stop shop regulatory body for the not-for-profit sector. We believe that it is important to consult. We have consulted and we will continue to negotiate and consult with states and territories and the not-for-profit sector. It is important to do so. It is of vital importance because this is a major sector that deals with Australians every day from the Torres Strait to Tasmania and from Palm Beach to Perth. The reviews over the last 17 years—including the 2001 report of the inquiry into the definition of charities and related organisations, the 2009 review into Australia's future taxation system and the Productivity Commission report of 2010 titled Contribution of the not-for-profit sectorall make it clear that it is in Australia's national interest to establish a national regulatory body to streamline regulation in the sector.

There will be further amendments in relation to this. One of those relates to requiring the government to consult the not-for-profit sector in developing and implementing governance and external conduct standards. We will also ensure those standards do not prevent a charity from engaging in political advocacy in respect of their charitable purpose except where, of course, that advocacy is unlawful or in support of, say, a candidate for a political party such as, for example, Labor, the Liberals or the Greens.

It is interesting for us to be lectured by the member for Menzies in relation to the not-for-profit sector because the political parties opposite who now say they champion the sector were the very people who when in office banned community organisations and the not-for-profit sector from making public statements without informing the government first—the gag rule—and, even more ominously, were involved in a position where they could dictate staff changes. So they have now had a Damascus road conversion with respect to the not-for-profit sector, previously banning them, effectively gagging them, from criticising and advocating for the causes in which they believed and on behalf of people, whether they were the homeless or disabled or any organisation or individual or group of individuals, to government or in the media. When in government they gagged these organisations and opposed them having a voice. But now they say in opposition that they will support them.

Lest we think that those opposite have changed, we have only to look to my home state of Queensland.

The same political party, the LNP—the Liberal National Party over there—have already introduced the gag clause in any contracts with the not-for-profit sector. Talk about censorship, dictatorship and authoritarianism! They have done that already with health and other organisations in the not-for-profit sector. Following the Howard coalition government doing that, the Campbell Newman LNP government in Queensland is engaged in this authoritarianism with the not-for-profit sector. When we got into power we abolished the Howard coalition gag rule in 2008 because we wanted organisations to be able to respond and advocate for their causes, the people on whose behalf their organisation was formed. We believe they should be able to advocate without fear of their funding being lost.

We believe differently from the Howard coalition government. We believe differently from the Campbell Newman LNP government in Queensland. I think it is in the DNA of those opposite. They have history, they have form and their position in Queensland is contemporaneous. When on the treasury bench, when it comes to the not-for-profit sector, they say: 'Shut up, sit down and say nothing or you will lose your funding.' When in opposition, 'We're your best friend.' I think the not-for-profit sector know the reality of what is going on.

We have supported the not-for-profit sector and there are many organisations that have benefited from that. In Queensland we are seeing the detrimental effect on the not-for-profit sector of an LNP government. We saw it with the Howard government. The not-for-profit sector is now feeling the squeeze. About 23 not-for-profit organisations such as tenancy advocacy services in my home state, including IRASI in Ipswich, will lose staff. IRASI help those in need—the poor, the weak, the vulnerable—on tenancy issues. Last year they supported and represented about 152 people in court. This not-for-profit organisation took 600 phone calls. People go there and speak to them face to face. That is gone now, under the actions of the Campbell Newman government. So much for the Liberals' commitment to the not-for-profit sector. They will not support it. The state LNP member for Ipswich said in relation to this not-for-profit organisation in my city of Ipswich that they can just speak to their neighbours for tenancy advice. That is the attitude of the coalition parties to the not-for-profit sector.

We have situations in my home city where the not-for-profit sector is feeling the pinch, not just in having their funding cut but in losing access to services which assist the people they represent. An example is the Ipswich Women's Centre Against Domestic Violence. I was pleased to be at their fun day the other day. I was there at their party in the park, in Queens Park on 6 September. There were craft activities, face painting, a sausage sizzle et cetera. I spoke to a number of the women there. The LNP government in Queensland is cutting funding to the services for women who seek help who are suffering from sexual abuse and physical abuse. The funding that goes to the health services in Ipswich that assist those women is being cut and jobs are being lost. So do not come into this place and tell us how you are great champions of the not-for-profit sector, as if you are somehow great supporters, because you have form on this issue. You had historical form when you were in government and you have form up in Queensland, my home state, in the way you deal with it.

These people opposite are supporters of the not-for-profit sector so much so that when it comes to actually finding money to assist organisations in the not-for-profit sector in my home city of Ipswich—organisations like CODI, Focal Extended, IRASI, Aftercare, the Endeavour Foundation, CATS, organisations that help people in the disability sector—those opposite and their allies, their comrades and colleagues in Queensland, cannot even come up with $20 million to assist the not-for-profit sector to help people with disabilities. They cannot even come up with that. I heard the member for Menzies go on and on about this, about how they are going to champion the not-for-profit sector. But on this issue of helping the not-for-profit sector they have wrong choices, wrong priorities and wrong values. Once again it is the same old Liberals, saying one thing in opposition and doing another thing in government.

The legislation that is before this place will ensure that governance standards do not prevent—I repeat: do not prevent—a charity from engaging in political advocacy. (Time expired)

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to rise to speak on the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. It is an uncontentious proposition, a view shared by all in this House, that charities and not-for-profit organisations do vitally important work across so many areas of our community. Many schools, for example, are operated by churches and other not-for-profit organisations. Many great hospitals were established by religious orders and many hospitals continue to be run by charities and not-for-profit organisations. Charities support the poor, the sick and the disadvantaged, in Australia and around the world.

It is therefore clearly desirable to consider a change to the law so that charities and not-for-profit organisations face a less expensive, less burdensome and more efficient regulatory regime.

If such a regime were before the House this evening in the bills which the House is considering, then we in the coalition would be only too pleased to welcome it and support it. Unfortunately, the bills that are before the House this evening do no such thing. They are sold as delivering reductions in red tape and reductions in the regulatory burdens faced by charitable and not-for-profit organisations. Sadly, they do precisely the opposite. It is for that reason, amongst others, that on this side of the House we are unable to support the package of changes contained in the bills before the House.

In the time available to me, I would like to make three points. Firstly, while these bills clearly will, should they pass into law, add a layer of federal regulation to the charity and not-for-profit sector, they do nothing to reduce other layers of regulation, particularly at the state level. Secondly, it is claimed that, even if these bills do nothing to improve the position at the state level, they will deliver some efficiencies at the federal level, but on analysis these claims are quite implausible. Thirdly, contained in this package of measures is the imposition, in a number of ways, of onerous, challenging and difficult new requirements for charitable, not-for-profit and voluntary organisations which place burdens on organisations and people wishing to make a contribution through the sector.

Let me turn firstly to the question of how this package of measures imposes a new regulatory regime at the federal level when the government has clearly conceded that it has not secured any tangible outcomes in rolling back the regulation of charitable and not-for-profit organisations at the state level. This was a very clear message from participants in the sector who appeared before the recent inquiry conducted by the Parliamentary Joint Committee on Corporations and Financial Services as well as a number of other committees of this parliament which have looked at these bills. The national and state and territory peak bodies for volunteering highlighted the significant concern in the sector about the duplication and overlap between Commonwealth and state and territory laws governing the not-for-profit sector. They had this to say in their submission:

The ACNC—

the Australian Charities and Not-for-profits Commission—

is meant to relieve these compliance burden issues by providing a 'one-stop' regulation shop. However it is argued by some that red-tape reduction cannot be achieved without collaboration between Federal and State and Territory governments.

…   …   …

A number of NFP agencies expressed their concern about this matter … harmonisation between the two levels of government is some time away.

Mission Australia also commented on the disparity between what was promised to the sector and what is actually going to be delivered, having this to say:

We support the notion of the ACNC as a one-stop regulatory stop and support the notion of a Charity Passport that will see us provide our financial and governance information once, to be used often. Yet it is disappointing to see no evidence of how this is being achieved.

Our overriding concern is that rather than reducing red tape and compliance burden, the ACNC will add another layer of compliance and that nothing will be taken away.

Those are the words of one particular non-profit organisation analysing the practical impact of this package of measures on their activities. Their conclusion is that, despite the bold promises, the practical consequence will be no reduction in red tape but, on the contrary, an increase in red tape. In a similar vein, Father Brian Lucas of the Catholic Church had this to say, when he appeared before the committee recently:

Much has been said about the need for reduction of red tape. That was very much the rationale that led a number of the various government inquiries to recommend a national regulator. You will have heard, I am sure, that there is still concern in many sectors that particular legislation that we are now dealing with does not bring about the reduction of red tape that was envisaged.

The Australian Conservation Foundation had this to say:

ACF is concerned that rather than remove duplication, the ACNC Bills will duplicate reporting obligations.

We heard that these issues are of considerable concern to independent schools, who are worried that they will be required to report much of the same information that today they provide to the Department of Education, Employment and Workplace Relations to the ACNC as well. So far, there has been no indication of any information-sharing agreement having been reached between the ACNC and the Department of Education, Employment and Workplace Relations. We heard from the Catholic Bishops Conference that they are concerned about Catholic schools facing a competitive neutrality problem because this will impose new, burdensome reporting obligations on Catholic schools, obligations which will not be faced by the state school just down the road.

Against this backdrop of real and tangible concerns, what satisfaction has the government been able to offer that there will be a harmonisation between federal and state and territory obligations leading to the promised reduction in red tape? I am sorry to say that absolutely no satisfaction on this point has been given by the government.

In evidence to the Parliamentary Joint Committee on Corporations and Financial Services, the interim commissioner of the ACNC task force told the committee that no state or territory government has yet entered into a memorandum of understanding with the Commonwealth to participate in the new regulatory arrangements. There is no state or territory government which has yet entered into a memorandum of understanding.

We heard from Mr Ronalds, a senior official of the Department of the Prime Minister and Cabinet. He was asked about the progress of negotiations with the states, and he was also asked why it was the case that these arrangements with the states had not been put in place first before the imposition of this new layer of Commonwealth regulatory requirements. Here is what he had to say—with, I must say, a certain lofty disdain which perhaps only officials of the Department of the Prime Minister and Cabinet can display. He said:

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

By that he means many years to arrive at a deal between the Commonwealth and the states. He went on to say:

Our perspective is that it was much better to begin the regulatory reform process, to make the improvements at the Commonwealth level and to then work very constructively with the states and territories, and that is in fact what is going on.

That is his claim. I must say that I was wholly unpersuaded by that claim, because, if you analyse what Mr Ronalds said when he said it 'would take many years' to achieve a deal between the Commonwealth and the states and territories, what he is in fact saying is that it is going to take many years before regulation at the state and territory level is likely to be wound back. That therefore means that for many years charities will now face the operation of this new Commonwealth level of regulation on top of, in addition to, the existing level of state and territory regulation which they face.

Let me turn, then, to the second point I want to address, which is that the efficiencies which we are told will be achieved at the federal level by reason of the introduction of the Australian Charities and Not-for-profits Commission are quite implausible. It really does strain the credulity of any objective observer that these benefits will be claimed. In practical terms, the benefits are going to require other Commonwealth departments and agencies agreeing either to hand over their own regulatory powers to the ACNC or, at the very least, to harmonise their regulatory requirements with the ACNC. For example, it was claimed that the charities would be able to lodge their details once with the ACNC and that, once those details were on the register maintained by the ACNC, then any other Commonwealth agency or department which is to grant them money under a contested grant process, for example, would be able to take the information as read. There will be no need to provide it separately, and so, rather than having to provide a 20-page application form, they will only need to provide a couple of pages because most of the information will already be on the ACNC's register.

Wouldn't that be a marvellous thing if it were in fact to happen? Wouldn't it be a marvellous thing if these efficiencies could be achieved? On this side of the House, we do not dispute that it would be a marvellous thing; we are just deeply sceptical that it is actually going to happen. There appear to be no tangible mechanisms to ensure that bureaucrats in other departments will cheerfully vacate the field when the ACNC comes along. I asked a question on this point, at the committee's hearings last week, of Ms Linda Lavarch, who is chair of the Not-for-Profit Sector Reform Council. This was her very reassuring answer. First she told me that there is a compact that has been signed to deal with these matters. Then she said:

A compact advocate at the deputy secretary level has now been appointed in each department. It is their role to take the leadership in their department to ensure that they not only are the principals of the compact but also have a shared vision with the sector about reducing red tape. The red tape is not just reduced for the sector; it is reduced for government as well.

I am deeply sceptical. In theory, of course, it is plausible that the ACNC could be a one-stop shop and that other agencies could wind back their levels of involvement and accept, for example, information that had been already lodged with the ACNC. In practice, this would require a remarkable and most unlikely change in bureaucratic behaviour.

Let me turn briefly to the third point I want to make, which is that the new law presents major difficulties for charities in a range of areas. First of all, it imposes onerous new requirements to deal with issues like the threat of money laundering. It is hard to understand why this needs to be dealt with in the ACNC Bill when there are already other regulatory regimes which address the issue of money laundering.

Another way in which this new legislation creates difficulties for charities is that it establishes draconian powers on the part of this new regulator. Just as one example, the new regulator will have the power to disqualify a director, whereas, by contrast, if ASIC, the corporate regulator, wants to disqualify a director, it must first seek a court order. In fact, this regulatory regime is extraordinarily intrusive, with enforcement powers and provisions—division 70, 'Information gathering powers'; division 75, monitoring powers; powers to gain warrants; powers to enter onto the property of charities; and so on. This is very far from being the so-called light-touch enforcement regime that we were promised by officials appearing before the committee.

In conclusion, the coalition stands for supporting not-for-profit organisations and volunteers. We believe that this onerous and intrusive package of regulation will do precisely the opposite, and that is why we oppose it.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the legislation before us tonight. In doing so, I would like to pledge my support for the not-for-profit sector and for all those tens of thousands of volunteers that work within the communities that every politician in this parliament represents, because it is the work of those volunteers and the not-for-profit sector that really help our society function in the way it does. The legislation before us tonight is the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012.

As previous speakers on this side have outlined, the legislation establishes the Australian Charities and Not-for-profits Commission, which I will refer to from here on as the ACNC.

It charges ACNC with registering not-for-profit entities and maintaining a public register; it provides for the powers of the ACNC Commissioner in relation to the regulation of registered entities; it establishes a single national regulatory framework for not-for-profit entities; and it sets out the obligations and responsibilities of registered entities. All these things are very important—it is all about transparency, accountability and ensuring that our not-for-profit sector functions appropriately.

The new regulatory framework will enable the implementation of a robust and streamlined regulatory framework for the not-for-profit sector, including a report once, use often reporting framework. Anyone listening to the previous speaker, the member for Bradfield, would think this was about increasing reporting requirements, about making it harder for the not-for-profit sector, when in fact it is all about cutting red tape and reducing the bureaucracy. A report once, use often reporting framework is one way that this legislation will bring that to fruition.

The new regulatory framework will also support the sector's transparency, governance and accountability, and I think every member of this House would like to ensure that the not-for-profit sector is transparent and would like to be satisfied that governance and accountability are in place, ensuring that we have a strong and viable not-for-profit sector. It will provide information to the public about the not-for-profit sector, assisting donors to make more informed choices and promoting philanthropy. That is also very important, because the not-for-profit sector is becoming more and more important in our society. The public needs to have confidence in the administration, the governance and the accountability of the sector. That is what this legislation does—it gives the public, investors and those people who rely on the not-for-profit sector that confidence.

The objects of the ACNC Bill are to maintain, protect and enhance the public trust and confidence in the Australian not-for-profit sector. I have touched on that slightly already by emphasising how the bill does exactly that, and how important it is for the not-for-profit sector to enjoy the trust and confidence of the Australian people. The bill will also support and sustain a robust, vibrant, independent and innovative Australian not-for-profit sector. I do not think anyone could disagree with that object—it is imperative. The third object of the bill is to promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector. Listening to the previous speaker, you would believe that all this legislation does is increase red tape and regulation, when in fact it is not about increasing regulation—it is about ensuring confidence in the not-for-profit sector, it is about reducing regulation and it is about giving confidence to the community, to those who use the not-for-profit sector and to those who invest in it.

All members would be aware that the not-for-profit sector is large and diverse. It is a key part of Australia's community, providing many important services to those who are disadvantaged or in need. The not-for-profit sector operates in many areas. It is actively involved in the provision of aged care, in the provision of services that assist unemployed people and in the provision of support to people who need assistance in a variety of ways. It is because of this important role that the not-for-profit sector plays in our community that we need to ensure confidence while at the same time reducing red tape. It is fair to say that the not-for-profit sector is growing strongly, and it is important that that growth be promoted while maintaining transparency and reducing unnecessary regulation. Often this regulation hinders the ability of not-for-profit organisations to deliver on their core goals. I work very closely with a number of not-for-profit organisations in my community, and I know how their services are valued and how important it is that the right sort of framework is in place.

One thing that quite disturbed me when I was preparing to make this speech was the number of reviews of the not-for-profit sector over the last 17 years. I think there have been something like six reviews—there has been review after review after review but unfortunately there has been no action. There is strong evidence that there need to be changes in this area. All six separate reviews of the charitable and not-for-profit sector have recommended a national regulator. I ask myself, who does not support a national regulator? And it is no surprise to learn that the opposition are opposing it—just as they oppose practically everything. One thing the opposition are good at doing is saying no, and that is what they are saying here—no to reform and no to putting in place a national regulator.

It is really disappointing, when we have a positive and proactive reform, as is encompassed in the legislation before us—a reform that will strengthen and support the not-for-profit sector as it grows and develops into the future—that those on the other side of this House are opposing it. This reform has strong support from across the not-for-profit sector, from organisations such as ACOSS, the Community Council for Australia and the National Roundtable of Nonprofit Organisations. These are key players in the not-for-profit sector, yet those on the other side of this parliament are refusing to support this legislation. This sector has been subjected to six reviews over 17 years, with no action. What those on the other side of this parliament are saying is, 'No, we do not want any action and, no, we do not want to listen to those key players in the not-for-profit sector.' These are players who have been involved in the sector for many years. They are asking government to give them a national regulator and they support reform.

Reform for the not-for-profit sector was an election commitment of the government. The government's reform agenda for the not-for-profit sector is quite ambitious. We want to implement some of the most progressive reforms this sector has seen over the last century. In doing that, we recognise the key role that not-for-profit organisations play in our community. We want to assist them by putting in place a one-stop regulator. A one-stop regulator will really benefit not-for-profit organisations.

Whilst the previous speaker was quite scathing about the government's intention to negotiate with the states and territories on a national regulator, the government is totally committed to doing it. It is imperative that the states do not react in a parochial way but rather look at what the best outcome for the not-for-profit sector is—what the most effective way for not-for-profits to operate is and how they can operate with efficiency while at the same time giving the community a high level of confidence in the sector.

The government has undertaken extensive consultation. There was an inquiry held by the House of Representatives Standing Committee on Economics. A number of recommendations were made and those recommendations have been taken seriously—some changes have been made to the legislation as a result. I believe the Senate Community Affairs Legislation Committee is handing down its report tomorrow and I will be very interested to read that. As I have mentioned, this sector has been the subject of six reviews, an inquiry by the economics committee and an inquiry by the Senate committee—for 17 years this issue has been looked at and looked at, but no action has been taken.

It is time there was some action. It is time both sides of this parliament listened to the issues raised by the sector. It is important that government acknowledges the key role played in our community by the not-for-profit sector and, at the same time, puts in place the right regulatory framework, a framework which will enable the sector to deliver and to do so in a efficient and effective way.

I know that seeking their support for the legislation is asking a lot of the opposition. A critical flaw in their policy is that it does not address the deficiencies which currently exist. I believe that, if they are really serious about supporting the not-for-profit sector, they need to acknowledge the fact that there are currently deficiencies in the system as it operates now. This legislation sets out a real reform agenda which is going to make it easier for the not-for-profit sector to operate and I wholeheartedly support the legislation before us tonight.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

In my opening remarks 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, it would be remiss of me not to offer some advice to the previous speaker with reference to the intent of this bill. Whilst at face value, as it says in the preamble, the bill seeks to reduce red tape for our not-for-profit and charities sector, the coalition shares my great concern that this is just not achievable given the evidence we received at the hearings of the House of Representatives Standing Committee on Economics.

I represent the electorate of Wright. Earlier in my term, we suffered massive loss of life as a result of flooding. Those in my electorate were firsthand recipients of the generosity of charities from right across Australia who came to our aid.

So it is only fair that I return the favour to those agencies, who under this bill will be burdened with extra regulatory requirements. I will extrapolate from the Hansard the evidence that was provided to the House committee and leave the government in no doubt that the tack they are taking on this legislation will not reach its objectives; and, for that reason, the coalition cannot support these bills.

The not-for-profit sector plays a major role in Australian society. It comprises 600,000 entities that provide services in education, sport, welfare, arts, religion, culture and community wellbeing. By definition, the sector also engages heavily with volunteers, and much of its contribution to Australian society is outside the dollar economy, but it is estimated that volunteer time donated to this nation is in excess of $14.6 billion, a colossal effort by those who give their time freely.

These bills provides for the establishment of a new statutory office, the Australian Charities and Not-for-profits Commission, which would be the Commonwealth regulator for the not-for-profit sector. The bill provides the ACNC Commissioner with a range of enforcement powers, and those powers are modelled on those given to other Commonwealth regulators such as ASIC, APRA and the ACCC. The bills provide the ACNC with the authority, no less, to issue warning notices, issue directions, enter into enforceable undertakings, apply to the courts for injunctions on charities, suspend or remove responsible entities, and appoint acting responsible entities. These are enormous powers being given to this body under this legislation.

The bills specify the conditions that must be satisfied before the ACNC Commissioner can use enforcement powers, the scope and range of the ACNC's enforcement powers and the associated penalties for contravening enforcement powers issued by the ACNC Commissioner. The commissioner would be able to exercise enforcement powers only over registered entities. The commissioner may generally only use enforcement powers against federally regulated entities; however, the commissioner may revoke the registration of any registered entity. The ACNC Commissioner's enforcement powers in relation to external conduct standards apply to all registered entities.

Only the coalition's plan will help the sector. We support a much smaller commission, to focus on innovation, education and advocacy. Our intention is to cut red tape—genuinely cut red tape—as reflected in our proposal in the family services area, where contracting reforms will make it easier for agencies in civil society. The intention of the bills, we are told, is to reduce red tape, with the ACNC Commissioner to cooperate with other government agencies to oversee a simplified and streamlined regulatory framework for not-for-profit entities. When challenged, the ACNC said, 'Our plan to reduce red tape is to go to the states and have them reduce their regulatory burden on the sector.' In doing that, they would be creating another level of bureaucracy over the top of an already regulatory compliance laden sector. The bill should place a clear obligation on the government and its agencies to reduce the unnecessary duplicative and burdensome administrative reporting and compliance obligations on not-for-profits. Evidence provided to the House of Representatives Standing Committee on Economics in its inquiry on the draft bills revealed the serious concerns of stakeholders and that there is a lack of confidence that this legislation will reach its objective of reducing red tape.

The previous speaker, the member for Shortland, indicated that the legislation had wide-ranging support across the sector. That is just not true. There are many players in the sector who oppose this legislation and it is my intention tonight to highlight their concerns. ACOSS—an organisation mentioned by the previous speaker as showing undeniable support—was concerned that the benefits from minimising procedural requirements and duplication or cooperation between the commission and other government agencies do not provide adequate assurance that the sector will benefit from this reform. Their submission said:

Throughout the evolution of this reform, the sector has been assured of principles such as ‘light touch regulation’; and of the commitment to reduce duplication of reporting requirements and enhance the value of the reporting that is undertaken in terms of information for and about the sector. Yet these principles are not evident in the ACNC Bill. It is important that the legislation includes an explicit objective of reducing red tape. Yet these principles are not evident in the ACNC Bill. It is important that the legislation includes an explicit objective of reducing red tape.

That is firsthand evidence that ACOSS have serious concerns about this legislation, so it is fair to say that there is not support for it right across the sector.

The coalition acknowledge the wishes of the not-for- profit sector that the reduction of red tape should be made an explicit objective of the bill, but we are greatly concerned that these objectives will not be met. Mr Bill Daniels, Executive Director of the Independent Schools Council of Australia, said in his evidence to the economics committee inquiry:

… we would say that some of the proposals in this legislation are simply another layer of legislation and that reporting and accountability would add to the burden—

hardly the comments of someone supportive of the bill, I would suggest. At the same hearing, I asked:

One of the cornerstones of the proposed bill is that it will reduce compliance red tape. Do you have an indicative date or indicative opinion from the states as to whether or not they are moving towards reducing their compliance requirements?

From the Hansard, Mr Daniels response was:

I have been with this organisation for more than a decade. I have seen no reduction whatsoever in reporting requirements—in fact an increase in reporting requirements … There has been no discussion whatsoever with the states or, indeed, with the Commonwealth department that I am aware of that has involved the independent sector on any reduction in reporting requirements. The only discussion that I have had with the Commonwealth apart from the ACNC briefings we had received is a less-than-perfect understanding of what is intended by the commission. So there has been no discussion whatsoever of any reduction or any proposal to reduce reporting.

Perplexed by this response from someone who was supposedly a supporter of the bill, I asked him:

Would that be a concern of the organisation that you represent here today given that evidence that we heard earlier today was clearly underpinned and motivated by the fact that there was going to be a reduction in red tape in order to streamline funding and provide long-term stability to the sector? If that fundamental piece was not going to be there or is not evident before the legislation is put before the House, does that raise a concern with you?

Mr Daniels comment was:

It is a concern — but it is just another added complexity that each individual school would have to deal with. It is likely to add a layer of reporting and accountability that is not there.

When the government says they are going to put mechanisms in place to reduce compliance and the expectation is that the compliance reductions will come from the states, can you imagine the state health departments reducing their level of compliance on their hospitals which would fall under this bill? Would you suggest the state education departments which would reduce their level of compliance because now there was another layer of bureaucracy in Canberra? I suggest not.

The states have not agreed to hand over any of their powers with respect to charities and not-for-profits to the Commonwealth—such as the powers with respect to incorporated associations, fundraising et cetera. S o the new regulator will be an additional layer of red tape and thus not achieve its primary objective of reducing regulation. We the coalition believe government should get out of the way of civil society and let them do what they do best—help people and help the community. Labor is creating a roadblock for the operation of charities and the not-for-profit sector and for people's involvement in civil society. The bill provides a tiered system of registration based on revenue thresholds. This has been done in order to minimise the compliance burden placed on registered entities.

Reporting requirements under the bill are proportional to the size of registered entities, based on revenue thresholds. There are three tiers: a small registered entity is an entity with annual revenue of less than $250,000; a medium entity is considered to be under $1 million; and a large entity is over $1 million or more . Revenue is calculated in accordance with the relevant accounting standards issued by the Australian Accounting Standards Board .

During the inquiry, the c ommittee received evidence that the proposed thresholds were too low. In its submission, the Anglican Diocese of Sydney expressed explicit concern that the revenue thresholds used to determine whether a registered entity is small, medium or large remain s ' unhelpfully low' —again, far from the support that the Labor government are saying there is unqualified support for. The submissions also noted that t he thresholds currently proposed are based on those used by states and territories under incorporated associations legislation and also under the Corporations Act for companies limited by guarantee. We understand it is conv e nient for these thresholds to be retained, particularly to ensure that that there is minimum impediment for s tate and t erritory agencies agreeing to report the ACNC as a one-stop shop. However, beyond convenience, there is no obvious basis as to why these thresholds should be adopted for the whole sector and, in our view, good reason to doubt their suitability as thresholds for the whole sector under the ACNC B ill.

In hearing this evidence we have the ACNC now aligning itself with the very organisations for which they claim they are going to reduce the thresholds. This is not what one would perceive to be a positive step to remove itself from state legislation . I nstead , we see Labor putting up policy which supports the parasitic behaviour of a growing bureaucracy, justifying its own existence.

The Independent Schools Council of Australia also protested against the probable impact of the threshold on the indep endent schools sector. M ost schools would qualify as large entities with the consequent reporting b urden that applied to that tier. I would like to take you to the directors' liability and the impact of those volunteers who give many hours around the nation. A provision of the b ill deals with obligations, liabilities and offences under the a ct, and provides that:

If an entity is subject to an obligation or liability, or commits an offence, certain entities that are responsible for managing the primary entity may also be subject to the obligation or liability, or commit the offences, in specific situations.

In effect, the bill imposes personal liability on directors of bodies corporate in certain circumstances. The bill establishes a regime for administrative penalties. These can be imposed by Commonwealth agencies without the need for court action—quite perplexing. However, appropriate sanctions are required for a deterrent effect and protect those who seek to cooperate with the commission.

The committee also received evidence that the Australian Institute of Company Directors questioned the value of placing liabilities on people who essentially are volunteers working for the community—comments such as:

It concerns me massively that we might be the first country in the world to make being a not-for-profit, as a director, more onerous than being a for-profit. That is what this bill does.

In conclusion , t his b ill is Labor to its boot laces . T he bill is presented to the H ouse with the intent of reducing red tape. I have provided evidence from the sector which shares my concern that you cannot reduce red tape by creating another layer of bureaucracy. The b ill provides unnecessary penalties on volunteer organisations wh ich are the backbone of our nation and it is unfair that penalties inflicted on them would be greater than that under the C orporations A ct.

My heart goes out to every single volunteer who assisted me in the electorate of Wright during those terrible floods. Again, it is my civic duty and my responsibility in this House to try to reduce the burdens on not-for-profits by opposing this bill.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits (Consequential and Transitional) Bill 2012, referred to as bills one and two. The not-for-profit sector—or the NGO sector, as it is commonly known—is a sector I am very familiar with. It is a sector I worked in for a long time—and the Minister for Health is nodding her head, because she did as well. We have history going back a long time of working in that sector, understanding that sector and knowing it.

In its development the sector has not had an appropriate regulatory framework to give it the protection and the status and all the other things that it needs. We have heard a lot in here tonight about the number of inquiries that have taken place on the not-for-profit sector—three substantial inquiries over about 17 years. I think that everybody has thrown their hands up and said: 'It's too hard. We won’t deal with this; it's just too hard,' but everybody knows that change has to happen. It is time to say: 'We're going to start. We're going to do it, and we'll do it now.' There will be a transition period where some things develop which we know will need to be changed. There is a five-year review built into the legislation, and, even before the five-year formal legislative review, there will be ongoing review. The minister, the government and everybody associated with the bill have made this fact clear. But introducing change can disturb people. The not-for-profit and NGO sector is broad, and trying to make sure that absolutely everybody who runs a not-for-profit knows every detail about it is a challenging task. The ACNC task force was set up to make sure of this. It did some consultation, and I have been doing some consultation myself locally, giving information to people and trying to assure them that this legislation is being done for them rather than to them, because often the two things can be confused.

I said that there have been three separate reviews over the last 17 years of the charitable and not-for-profit sector; I meant that there have been six. However, the three reviews that I was referring to were the 2001 report of the inquiry into the definition of charities and related organisations, which is always a rather vexing issue; the 2009 review into Australia's future tax system; and the Productivity Commission's 2010 report Contribution of the Not-for-Profit Sector. All these reviews have recommended the same thing, as did the reviews over the last 17 years that preceded these three. They have recommended simplifying and harmonising taxation and regulation of the sector. They have all recommended without hesitation or any caveats a national regulator, a statutory definition of a charity and the modernisation of the sector.

I listened to the contribution of the honourable member for Wright, and I agree that we need to let civil society do the work it does and does well and not interfere in it. But the sector also needs some changes, and that is what these bills aim to achieve. I also heard the member talk about directors' liabilities, and I turn now to talk about the liabilities of people who run not-for-profits, charities and NGOs. When I worked in the not-for-profit sector I used to do workshops, seminars and roundtables on people's liabilities and responsibilities. One thing I used to say was that, within the sector, you can be a tiny little charity organisation doing some really good work at a very local level and in a very specific area and attract almost the same fiduciary duties and responsibilities as companies such as BHP. Over the years, with the common law and corporations law, even though they might have been registered under the associations incorporation acts at their respective state levels, they attracted such responsibilities and liabilities. That is of the things that the reviews over the past 17 years have been trying to deal with. I can remember one of the cases, though I forget the case reference now. It was a case involving the Victorian division of the National Safety Council. They had a voluntary board and they were doing their charitable work. They also had people who worked for them and a CEO, and the case had to do with fraudulent activity. The chairman of the board ended up with a judgement against him for a huge amount of money. The case went behind the corporate veil, and he had to pay back a lot of money. Cases such as this are of real concern in the charitable sector. I will always remember that case. I am not going to mention the name of the chairman of the board there, but it was probably a terrible shock to him because he was doing good and doing it voluntarily, and he ended up with huge liabilities in the judgement against him. I used to do my workshops and seminars and roundtables on this case in order to try to communicate to people the sorts of things that they needed to do protect themselves.

I am not saying that these bills are about the same thing, but the whole focus is on saying that the sector is different to and separate from big corporations and that it needs its own regulatory framework. I am pleased that the government has embarked on providing the sector with its own regulatory framework instead of saying, as everybody has said after the six separate reviews of the charitable and not-for-profit sector, 'It's just too hard; we won't do it.' Reform has to start somewhere.

I will outline briefly the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. In the 2011-12 budget, the government announced that it would establish the Australian Charities and Not-for-profits Commission as a national regulator.

Initially only tax endorsed charities will be regulated by the ACNC, but the bill establishes a framework that can be extended to all not-for-profit entities in the future. That is a good thing, because it gives a transition; it gives people time.

The main bill establishes the ACNC. It charges the ACNC with registering not-for-profit entities and maintaining a public register. It provides for the powers of the ACNC commissioner in the regulation of registered entities. It establishes a single national regulatory framework for not-for-profit entities and sets out the obligations and responsibilities of registered entities.

The second bill contains amendments to Commonwealth legislation resulting from the establishment of the ACNC, giving operational effect to the main bill. It makes ACNC registration a precondition for charities to access certain Commonwealth tax concessions as well as a number of other Commonwealth concessions, benefits and exemptions. It contains transitional provisions to allow registered entities time to transition smoothly from the currently regulatory framework into the new ACNC regulatory framework.

I have had discussions with local charities and made direct representations to the minister about some of the things the local people have said. I have invited the minister to come and talk with some of my local groups and he has accepted that invitation. I will have a round table in my seat of Page and invite members of the not-for-profit sector along so they can sit around the table and have a conversation with me and the minister about the implementation of the bills.

I have also had discussions with the Catholic Diocese of Lismore. It covers a broad area, larger than just the city of Lismore, my home town. They have raised with me some issues relating to implementation. They support the thrust of the bill, with the single national regulator and the regulatory framework, and they want to be assured that there will be a reduction in red tape. They want assurance that the reports they currently make under certain acts, particularly under the Schools Assistance Act, can be deemed to be reports that will satisfy the new national regulator. I agree with that; it is just common sense. That is clearly what we need to do if we are to reduce red tape. They also want assurance that certain entities will continue to have the basic religious charity status that operates now. I also support that and have had discussions with the minister about it. In relation to the ACNC register, we have to make sure that due process and natural justice are followed before people can give warnings and directions. I am assured that that will be the case. I have copies of submissions from the local Lismore diocese which I have put before the minister. It is clear that these bills form a large part of the government's reform agenda in the not-for-profit sector.

Over the years, I have taken up the issue of DGR status, which comes through the ATO. I have written many submissions and helped organisations to get DGR status. It is not always easy to get DGR status. Yes, there is law and, yes, there is a form one follows. I have found it easy to write the submissions as long as you have the corporate entity that satisfies the legal requirements. But sometimes people are puzzled and ask, 'Why do they get it but we don't?' That is an issue I have been working on with neighbourhood centres and learning centres. I have been advocating for that to be clearer, and I think everyone would agree with me on that. This is an issue that I am passionate about, and I hope to see some changes in this area.

I support the bills, noting some issues of caveat. I commend the bills to the House.