Senate debates

Tuesday, 10 December 2013


Australian Charities

7:50 pm

Photo of Ursula StephensUrsula Stephens (NSW, Australian Labor Party) Share this | Hansard source

Tonight I rise to speak on the revisionist efforts of this government in their determination to wind back the not-for-profit reform agenda that has been developed in the past decade through the work of the Productivity Commission, the Australian Taxation Office, the Australian Charities and Not-for-profits Commission and the range of charities and not-for-profit organisations who have lent their considerable expertise and efforts to improving the governance and transparency of Australia's charitable sector. Minister Andrews has signalled his intention very clearly—and it was reiterated yesterday by his spokesperson—that the government is committed to winding back the ACNC and replacing it with a centre of excellence. In his second reading speech on the introduction of the social security legalisation, he introduced an additional amendment as he said:

The new measure will delay the commencement of the Charities Act 2013 by nine months from 1 January 2014 to 1 September 2014. The Charities Act 2013 defines 'charity' and 'charitable purpose' for the purposes of all Commonwealth legislation.

The significance of this delay is not to be underestimated. Until the passing of the Australian Charities Act in the last parliamentary session, the meaning of charity and charitable purpose had not been comprehensively defined for the purposes of Commonwealth law. It had been administered on the basis of principles derived from common law. The common law meaning had developed over 400 years, largely based on the preamble to the 1601 Statute of Charitable Uses. The development of the definition of charity and charitable purpose through case law since that time has resulted in charity law that is in some cases quite unclear or inconsistent, or that does not adequately address matters relevant Australia's contemporary charity sector.

A statutory definition of charity and charitable purpose is important. It was first recommended in the report of the 2001 inquiry into the definition of charities and related organisations and in later reports including Australia's future tax system review in 2010. The Productivity Commission recommended in its 2010 report Contribution of the not-for-profit sector the introduction of a statutory definition in accordance with the recommendations of the 2001 inquiry. The definition aims to preserve common law principles, with some minor variations. The definition is informed by the 2001 inquiry, which identified principles underlying the common law. The definition also takes into account the findings of more recent judicial decisions that further clarify the meaning of charity, including the AID/WATCH decision which extended charities' ability to advance public debate. Importantly, the definition retains the flexibility inherent in the common law that enables the courts, as well as parliament, to continue to develop the definition within the statutory framework. This will ensure that the definition remains appropriate and reflects modern society and community needs as they evolve over time.

The bill sets out the key principles for an entity to be a charity, including that it must be not for profit and have only charitable purposes except for any ancillary or incidental purposes that further or aid the charitable purpose. The charitable purposes must be for the public benefit. A purpose that an entity has is for the public benefit if the achievement of the purpose would be of public benefit, and the benefit from the purpose is available to members of the general public or a sufficient section of the general public. The nature of the benefit may be tangible or intangible. For many of us, that might sound a bit like gobbledygook, but it is really actually very important.

The new considerations in the 2013 charities law make some very specific provisions. The first is the implications it has for Indigenous organisations. One departure from common law principles relates to entities with native title or other traditional rights in connection with the land. These entities might fail a public benefit test because they provide benefits only to Indigenous individuals who are related or who have some other special relationship with the other potential benefit recipients; they are treated as being for the public benefit. We know that there are instances of philanthropic funds not being able to support projects in remote communities because these entities that operate there do not have DGR status.

The second is presumptions of benefit. Consistent with the common law, the statutory definition retains presumptions of benefit for certain charitable purposes. They are: the relief of poverty, distress and disadvantage of individuals or families; preventing and relieving sickness, disease or human suffering; the care and support of the aged and individuals with disabilities; advancing education; and advancing religion. The bill extends the presumption to the whole of the public benefit test for these purposes. This is of particular interest, for example, to those following the current case of the anti-wind campaigning organisation, the Waubra Foundation, whose directors include former coalition minister Michael Wooldridge and insolvency specialist Tony Hodgson, which is being investigated right now by the ATO and the ACNC as to whether or not it is entitled to its tax deductible charity status.

The third is that the Charities Bill also reflects the AID/WATCH decision that charities may have a purpose to generate public debate about a charitable purpose. That means it allows for advocacy around a charitable purpose, including a sole purpose of promoting or opposing a change of law or government policy relevant to another charitable purpose.

And finally, the issue about disaster relief and recovery. Another area of the bill extends common law principles relating to the purpose of assisting rebuilding, repairing or securing assets after a disaster, in furtherance of the purposes of exempt entities within the meaning of the Income Tax Assessment Act 1997. So that purpose is included within the charitable purpose, and the effect of that is to extend charitable purposes to include re-establishing not-for-profit community assets after a disaster, independently of the relief of individual distress. Colleagues may recall the measures that had to be put in place after the Victorian bushfires so that philanthropic moneys and funds raised by the government's bushfire appeal could be provided to local bushfire brigades and local organisations that did not have DGR status. So it was a timely change to support rebuilding and reconstruction after a disaster. Let us just hope that we do not witness similar disasters this summer.

So there are four very clear reasons why the government should not delay the Charities Bill, which is due to come into effect on 1 January 2014. The Labor government moved to resolve these uncertainties in the law, and to delay these provisions is to subject organisations to continued uncertainty and the prospect of further legal action. The only justification given by the minister was:

The delay will mean we can work holistically with civil society, consulting a range of stakeholders, including charity law specialists who provide advice to the sector.

Well it was Prime Minister Howard who, in announcing the establishment of the charity definition inquiry in September 2000, said:

We need to ensure that the legislative and administrative framework in which they operate is appropriate to the modern social and economic environment.

This last-minute inclusion in the legislation to delay the implementation of the Charities Bill is actually a slap in the face for the significant group of advisers, charity law specialists, academics, accountants and organisers who have worked for more than a decade to come to agreement on the provisions of the Charities Bill that was passed in the last parliament.

There has already been widespread consultation, and the new legislation has attracted almost universal support from charity law experts and the charity sector. I attended a very significant conference at the Queensland University of Technology on modernising charity law, facilitated by Professor Myles McGregor-Lowndes, that that legislation drew from the best of other jurisdictions and guarded against the missteps that had occurred in other countries and that had led to legal challenges and precedents.

The new definition in the Charities Bill achieves important goals, including: enshrining the High Court decision in AID/WATCH to ensure that charities can advocate changes to laws; modernising current law to recognise charitable purposes as the protection of human rights, the promotion of reconciliation and tolerance; and to acknowledge that modern charities advance their causes by researching, educating, preventing and raising awareness. The question everyone should be asking is this: why does this government not want a modern definition of charity which also enshrines the right of charities to advocate in legislation?

Last week Mr Brough, in a parliamentary contribution, suggested that charities and not-for-profit organisations are spending too much on marketing and administration and he urged the government to link DGR status to greater disclosure. He argued for greater transparency—something which is being achieved through the charities register established by the ACNC—and he quoted the Choice article of 2008. He can be forgiven for not knowing how much progress has been made, but the truth of it is that the government has a national register. It has an ACNC and it should allow this charity act to proceed.


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