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

In continuation, at the time we adjourned last night I was talking about the importance of the NGO sector and the fact that we need legislation to protect the independence of the not-for-profit sector, both for the right of an organisation to exist and to ensure that government does not use its position, often of sole-funder status, to stop not-for-profit advocacy. If you remember—I am sure everybody does—I was talking about the important role of NGOs in advocacy and their leadership in policy development.

Government is often the sole provider of funds for many of the social, cultural and environmental services that not-for-profits provide. Government, therefore, is clearly in a powerful position compared to the not-for-profit sector and service providers when they are negotiating. The threat of loss of DGR status or a grant is a very powerful one because it means that not-for-profit organisations are unable to carry out their functions effectively and to the full extent possible. Given that not-for-profits and charities are dependent on these funds for their survival, it is very important that we ensure that there is guaranteed independence for these organisations.

It is fair to say that, in the past, governments have taken advantage of this power to try to silence the not-for-profit sector into silent dissent. We saw in the past, during the Howard era, gag clauses imposed on not-for-profit organisations. The present government, to its credit, removed most of those onerous aspects of such clauses. However, we are seeing a return to this approach with gag clauses. During the Senate committee's inquiry we heard about gag clauses being imposed on the not-for-profit sector by the Queensland government. In other words, they are going back to the bad old days when they expect not-for-profit organisations to sit there, be quiet, provide services but not advocate for their clients, both individually and-or for systemic change.

Even with government grants, it can be rather oblique when governments say to organisations, 'You need to run your media comments past us before you release them.' Again, that limits the independence of not-for-profits. We need to ensure, therefore, that the independence of the not-for-profit organisations is protected.

For all these reasons, it is absolutely critical that the individual components of this bill reflect the commitment to an independent vibrant sector. We felt it was very important that this was outlined in the objectives of this particular legislation. However, although it was included in the objectives, there were some components of the bill that did not properly support this outcome without amendments. That is why we are particularly pleased that the government has amended this bill to include the process of articulating upfront that governance standards cannot impinge on the independence nor the advocacy role of not-for-profit organisations. We are also pleased that the government has announced the process of bringing in a separate piece of legislation that means gag clauses cannot be imposed.

This bill allows for governance standards to be established by regulation. I recognise that this has come about because of the difficulties and the time frame both the sector and the government encountered in attempting to draft these standards. This is particularly because we have such a diverse range of strong and vibrant charities and not-for-profit organisations in this country that do totally different things. It is very hard to come up with a set of governance standards that covers all of them, therefore more time was needed.

Given that the governance standards trigger very significant powers for the commissioner and can lead to a charity having its registration revoked, we simply cannot leave these standards to the manner by which the government proposed the regulations would operate. We need to increase the safeguards to ensure that they have better certainty in place and cannot be easily revised to the detriment of the sector in the future. These issues were raised in the committee's inquiry and I am pleased that the government will move amendments that deal with them.

The Australian Greens recommended that the governance standards should be only a minimum standard of contact and be principle based, specifying the outcome to be achieved rather than detailing an entity would meet the standards. We also recommended clarifying and limiting some of the currently unfettered powers of enforcement that had been provided to the commissioner—such as the 'more likely than not' clause which gives the commissioner the power to act pre-emptively to prevent a breach of the standards.

Similarly, section 15-10 of the ACNC bill outlines matters that the commissioner must have regard to when exercising powers and functions, which includes the maintenance, protection and enhancement of public trust and confidence in the not-for-profit sector. We were concerned that, as they stood, these provisions gave the commissioner too much power to take pre-emptive enforcement action when an organisation had not as yet breached the conduct standards and could be used to look beyond specific breaches of legal liability and responsibility towards subjective judgements about how the not-for-profit sector should operate.

All of these recommendations reflect the comments that were provided by the charities and not-for-profit sector, who submitted evidence to the committee process. The amendments that have been circulated have finally resolved the biggest problems associated with these bills—that is, the governance standards. I hope that with these amendments we will get a more satisfactory process around the commission. Many organisations participated in this process looking at this legislation and I thank them very much, because the not-for-profit sector are often so busy delivering their vital community services that they have little time to participate in these sorts of overarching discussions.

Currently, the not-for-profits have to report across a number of government departments as well as state and territory regulations, depending on the size of the organisation. Issues around red tape are absolutely critical for the sector and they came up extensively during the committee process. As it stood, we thought the process did not articulate enough how the government intended to deal with issues around red tape. This matter came up repeatedly and there was much criticism that this bill could drive more red tape. That is why the government has also circulated some amendments to deal with issues of red tape. One of these is that the commissioner will be required to report to parliament specifically against red tape reduction. Also, the charity passport will be developed, and I think that will also assist.

It is very important that we have the commissioner driving the process of red tape reduction. If the commissioner does not have that specific mandate, I am concerned that red tape reduction will fall off the agenda and that there will be no-one driving specific government departments to work across and within government departments. I think we have made some significant progress there. This brings me to the point about the commission and the commission's role in consultation on governance standards. That is another particularly important amendment that has been circulated: that the commissioner will be involved intimately in the consultation process to set up the governance standards.

In conclusion, these amendments that have been circulated by the government include some extensive amendments, but they also reflect the outcomes of the committee consultation process. The Greens will be supporting these bills, although in the Committee of the Whole I will be asking the government some particular points around mechanisms and the way the legislation will operate. We will be supporting this legislation with these amendments.

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am very pleased to see us debating the Australian Charities and Not-for-profits Commission Bill 2012 and related bill at last. From my perspective, they breathe life into the reforms that have been so long in coming for Australia's not-for-profit sector. The government's commitment to establish the Australian Charities and Not-for-profits Commission, the ACNC, also reflects the sector's advocacy for the establishment of an independent, one-stop shop, specialist regulator. This regulator will provide the framework to support the vital contribution that not-for-profit organisations make to Australia's civil society. Rather than reflect any lack of trust in the sector, as the Senator Cormann said last night, in fact the ACNC supports public and government trust and confidence in the sector, which in turn helps charities and not-for-profits achieve their mission.

The government, working with the sector, is delivering an ambitious not-for-profit reform agenda. This reflects two very exciting though challenging phenomena: the impressive growth of and the wide-ranging changes taking place in the sector in Australia today. Australia's not-for-profit sector comprises around 600,000 entities. About 400,000 of those have access to Commonwealth tax concessions and about 56,000 of them are endorsed as charities. The sector contributes about four per cent of Australia's GDP and it is growing rapidly, with one million Australians employed in the sector and about five million volunteers involved. The sector turns over about $100 billion every year and has a 10-year annual growth rate of about five per cent a year—that is second only to the mining sector in Australia. The sector is at the heart of our education, our health, our arts, our culture, our sport, our environment and our welfare services.

Thanks to much hard work for a decade, during which I have been proud to be a strong advocate, the sector is finding its voice. It has grown its voice and its presence in Australian society because it has taken on many new responsibilities in areas of service coordination and delivery, and it has contributed to good policy development, shaping Australia's future. This is a good thing because a robust, vibrant, independent and innovative not-for-profit sector is vital in every modern democracy, and Australia is no different. I say 'robust' and 'independent' because, as Senator Siewert reminded us, who will ever forget the insidious, creeping, gagging clauses of the previous coalition government's contracts and funding agreements and the overt threat to cancel contracts, and the cuts to funding for organisations deemed to be advocating for policy change and not compliant with the government's agenda.

After a decade of hollowing out capacity and stifling innovation, it was a privilege for me to lead the work which led to the national compact with the sector. It was signed in 2010 and gave life to a new, robust and respectful relationship with the sector. So much work, so much time and so much commitment have gone into the development of this reform agenda, which includes the establishment of the ACNC, whose purpose is to deliver smarter and more effective regulation of the not-for-profit sector. The ACNC is future focused, its structural reform recommended by six reviews, including the comprehensive Report of the inquiry into the definition of charities and related organisations conducted under the previous coalition government and, of course, the 2010 Productivity Commission report.

Under the current arrangements, the Australian Taxation Office has the dual and potentially conflicting duties of determining an entity's charitable status as well as having responsibility for enforcing the taxation law. It acts as gatekeeper and enforcer. At the Commonwealth level, the Australian Securities and Investments Commission also plays a role in terms of its oversight of companies limited by guarantee. But the not-for-profit sector does not want to be regulated by the ATO or ASIC. Organisations have made it clear over the years, time and time again, that they want an independent regulator, one that understands the sector, one that understands not-for-profit organisations. The ACNC will be that independent and dedicated regulator, enabling the sector to consolidate its standing in the community through improved transparency and accountability.

The not-for-profit sector has the confidence of Australian society, but the opposition, in opposing this bill, say that the current arrangements are just fine. Last night Senator Cormann said that the ACNC is a solution in search of a problem. That is patently unfair and it is absolutely untrue. The not-for-profit sector is burdened by the complicated and duplicated regulatory obligations that are imposed on the sector. I have to say that the coalition are great champions of business, campaigning for harmonising regulation and reducing red tape for businesses—for the finance industry, for mining, for agriculture—but not the not-for-profit sector, which is larger than all of these except, as I said, mining. They believe the sector should be in the service of government. We believe the sector should be serving the Australian people, especially those who have little voice or representation.

Senator Siewert outlined the detailed history of the bills in the amendments before the Senate, and we will get a chance to debate them. Those amendments include providing additional parliamentary scrutiny of governance and external conduct standards to be made under the ACNC legislation and to codify the process for public consultation in the development of the standards. The objects of the bill are to cut red tape and reduce the regulatory burden, not to impose greater stresses on the sector. The ACNC will administer a 'charities passport' and work to implement a 'report-once, use-often' reporting framework. This charity passport is the data that charities will report to meet the baseline corporate and financial reporting requirements of Australian government agencies. This will be supported by changes to the Commonwealth Grant Guidelines which will benefit the organisations that register with the ACNC.

The changes build on the introduction of the standard chart of accounts framework—another great piece of the government's not-for-profit reform agenda. Information will be in one place and, if an entity provides an annual audited financial statement to the ACNC, then a grant acquittal should not generally be required. It is light touch regulation commensurate with the risk involved in the funding agreement. The ACNC will report to the parliament and the sector by developing and publishing a red-tape reduction timeline and plan and reporting against that timeline. The ACNC taskforce is already hard at work, implementing these arrangements until the ACNC itself is established. An example of that is the work that is currently going on between AusAID, ACFID and the government, with AusAID staff working with the ACNC taskforce to improve the process of NGO accreditation and entry into the AusAID-NGO Cooperation Program, reducing the reporting burden on ACNC registered charities and increasing the focus of AusAID assessments on the effectiveness of Australian aid funds.

AusAID and the ACNC will also work together to educate and support overseas aid charities to understand their obligations. This partnership with the sector will free up significant resources for frontline services and is a great example of what the ACNC will be able to deliver. The ACNC will provide a platform for delivering a national approach to not-for-profit regulation. With no national regulator, there is no opportunity for that to happen—and that is why a harmonised, national approach to regulation has not been achieved to date.

Senator Cormann would like us to believe that the sector does not support this legislation. This is simply not true. Last night, he deliberately misquoted out of context evidence from UnitingCare Australia. The first quote addressed a proposed definition of 'basic religious charity'. At the time, the definition excluded religious charities that received government grants. UnitingCare Australia argued that receipt of a government grant should not be a trigger for additional reporting, an argument accepted by government. The second quote was actually preceded by this statement: 'The church is supportive of one-stop reporting and a regulation concept.' I warn coalition senators: every time that you misquote or misrepresent the views of people like Reverend Tim Costello, Patrick McClure, Martin Laverty, Anne Robinson, Father Brian Lucas, David Crosbie, Lin Hatfield Dodds, Ken Henry, Professor Myles McGregor-Lowndes and Productivity Commissioner Robert Fitzgerald, you are traducing the intellect and reputation of prominent Australians who have contributed to shaping this agenda over the past decade. It is you who are undermining trust and confidence in the sector.

Let me reiterate: this reform has been led by the sector itself. ACOSS, Volunteering Australia, Mission Australia, Anglicare, World Vision, UnitingCare, Catholic Social Services and Philanthropy Australia are some of the many not-for-profit charities and organisations that have helped shape the bill and support it publically and consistently. ACOSS said just recently:

The creation of the Australian Charities and Not-for-profit Commission is the culmination of a long process and has broad support from the community and social services sector.

Chartered Secretaries Australia, in the Financial Review, contributed this view:

If we really want to support the NFP sector, the best way is to establish the ACNC, fulfilling the promise of all those inquiries and the desires of NFPs.

The Community Council for Australia said it:

… strongly supports the ACNC Bills on the basis that they provide for the establishment of an independent and responsive regulator for the charities and not-for-profit sector.

And Philanthropy Australia are supporting 'the principles of the ACNC being an independent regulator to deliver smarter regulation, reduce red tape and improve transparency and accountability within the sector'.

Last night Senator Cormann outlined the opposition's position, and I wondered, as I listened to him, whether he is not aware of or whether he is completely uninterested in the fact that the 2008 Senate inquiry brought down a unanimous report, the first recommendation of which was the introduction of an independent regulator.

So what has changed? I certainly hope Senator Mason's view has not changed. He was adamant when he spoke here in 2006, saying:

I have little doubt that the vast majority of organisations are doing the right thing and are doing great work. The problem is that we cannot sort out the many good not-for-profit groups from the handful of bad ones or those who are underperforming. It is my belief that this threatens the donor-charity trust relationship within the sector at large.

It is here that government needs to step in and provide clarity where confusion prevails. After all, the government does have a legitimate interest in the not-for-profit sector, as the sector is the beneficiary of a raft of taxpayer funded subsidies handed out by government.

…   …   …

Charities have a good reputation but trust can very easily be lost. It is vitally important that the sector makes itself more efficient and transparent, lest the sector experiences a decline in trust. There is a role here for government to step in and promote high standards within the sector and to establish a clear, transparent regulatory regime that will allow Australian charities to thrive in the 21st century.

Now we hear that the coalition not only is opposing the ACNC legislation but also will repeal the legislation and abolish the ACNC at the first opportunity.

The establishment of the ACNC is structural reform. It is about designing a regulatory framework which is suited to the not-for-profit sector and which addresses flaws in the current approach to not-for-profit regulation. The coalition's alternative charities commission is nothing more than an information and advice body, but that is not the key challenge confronting the sector in Australia. The key challenge is the need to address the deficiencies which currently exist when it comes to not-for-profit regulation—namely, the fragmented, inconsistent and uncoordinated approach to regulation of the sector.

If the coalition had their way there would be no ACNC and no regulatory reform. We would be back to the bad old days of gag clauses to silence dissent, as Senator Siewert said. We have already seen this occurring in Queensland. The National Compact would disappear. The work that has been done to develop a respectful relationship would be discounted and would disappear. Fundraising legislation would continue to be a nightmare for charities trying to raise money across borders or online. Volunteers would be subject to nonsensical cross-border rules that currently exist and which are part of the not-for-profit reform agenda negotiations. The sector would continue to be underpaid, underresourced and undervalued.

These bills before us today are about getting the balance right—promoting transparency and good governance while reducing red tape and supporting the capacity of the sector organisations. I congratulate the sector for its leadership and its persistence over more than a decade, and the Assistant Treasurer David Bradbury for his attention to this important agenda. He is someone with experience and connection with the sector who understands the importance of these reforms and who has championed them in cabinet. Senator Siewert made some important points about the role of the commissioner.

I commend to everyone the work of the interim commissioner, Susan Pascoe, who has done an amazing job in driving these reforms and in dealing with the consultation that has been part of the development of these bills. Starting with the original 2001 charities bill, the draft of which was rejected so soundly under the previous government, she has brought the sector and government to the place that we are today. It has been an amazing effort and she is to be commended for her leadership of her team and for the work she has done with the ACNC task force. All of this is a big-picture vision. It is about not-for-profit reform. It is about positioning our organisations for Australia in the future.

We need to come to a definition of charity. We are still working with the Queen Elizabeth statute common law provisions. We need to consider how all of this plays out in terms of workforce planning. We know the demands that are being placed on the sector. We know the challenges. We know where the compact is taking us, and the codes of conduct and of consultation that are being developed there. We know how much work is being done to understand the sector through funding the work of organisations like the Centre for Social Impact, another big commitment from this government to understand the sector and provide some intellectual framework around it. We know the work that has been invested in the Social Investment Fund, and the kinds of models that are being developed for enterprise opportunities. We know the work that is being done by organisations on capacity building for the sector.

All of those things were in a hiatus for a decade, and all of those things now need to be invested in and supported. They come quite clearly out of the recommendations of the Productivity Commission report, which outlined, quite succinctly and quite transparently, the agenda of five key pillars for this sector that are going to sustain them into the future. It is a seminal piece of work, and I recommend that it be on everyone's bookshelf. If you really need to understand what is going on in the sector that is a really good place to start.

I place on the record my thanks to Senator Claire Moore and Senator Siewert for their work in bringing this latest round of amendments to the Senate. It reflects good consultation and the way committees work best in this place. It is about improving legislation that is in the national interest. It puts party politics out of reach and that allows people to honour the commitment we have made to the sector through the national compact that we would develop and support a thriving, robust, independent sector into the future. These things which are now part of the COAG reform agenda in health, in ageing, in community services are things that we need to invest in now for the long term. I am quite sure that these bills before the Senate today will be part of underpinning good policy and good practice to carry us through into the 21st century.

Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I also rise to speak on the Australian Charities and Not-for-profits Commission Bill 2012. As the title of the bill suggests, the bill seeks to establish a new statutory office, a Commonwealth-level regulator for the not-for-profit sector called the Australian charities and not-for-profits commission.

Let me be clear up front: the coalition does oppose this bill. We do so on the basis that despite the intent, the new regulator would hinder not help civil society. I want to acknowledge the previous contributor to this debate, Senator Stephens, who has a genuine interest in the not-for-profit sector and has had that interest for many years. But on this occasion I respectfully disagree with the conclusion that she has reached.

A robust civil society is a reflection of the sort of country that we are. It is built through people who choose to freely associate with organisations and causes that are important to them. Australia has a strong and diverse not-for-profit sector that thrives on community spirit and goodwill. We all know of local carer groups in the cities and towns we live in, the sporting clubs which as members of parliament we have associations with and we know that these networks, associations and clubs are sustained by people who volunteer their time and energy to causes that matter to them and to organisations that they see as important.

It is the view of the coalition that the state should be at the service of civil society to make life easier for civil society. We on this side of the chamber start with the principle that the government should do no harm to the efforts and endeavours of the not-for-profit sector. Government should be a facilitator but it should not intrude upon the operation of the not-for-profit sector. The government's proposal enshrined in this bill for a new regulatory body is what you might call a typical Labor 'reform'. The intent is fine, worthy and noble, but the reality in the text of the legislation we think would lead to an altogether different outcome.

When the new regulator was proposed, the primary objective was to reduce administrative compliance and reporting duplication for the not-for-profit sector. The intent of that was to allow these organisations to direct more of their limited resources and time to their core business. We do not believe that the bill in its current form does justice to the original objective. One of the key aims of the legislation is supposedly to reduce red tape for the not-for-profit sector. We do not think that it will do that. Also unless the states and territories agree to hand over their powers to the Commonwealth and agree to harmonise their laws, these bills would add a layer of red tape which the sector would have to meet. Susan Pascoe, the head of the commission implementation task force, has stated that:

You are only going to achieve full red-tape reduction with the involvement of the states and territories.

The states and territories to date have declined to hand over any of their powers with respect to charities and not-for-profits. In fact, they are highly critical of the proposed commission. The Commonwealth have not had a terrific track record, it must be said, of negotiating with the other jurisdictions. Instead they tend to try and seek to blame and scapegoat the states at every opportunity.

The proposed commission treats Australian not-for-profits as though they are not entirely to be trusted. The legislation has a range of powers to interfere with the internal workings of an organisation which has the potential to jeopardise the independence of civil society. The bill gives the commission the power to deregister an organisation if it is deemed to be conducting its affairs in a way that might cause harm or threaten the public trust or confidence in the not-for-profit sector. While that is a noble sentiment, it is a very strong power for a government to be able to deregister a not-for-profit. The phrase 'public trust and confidence' in the legislation is ambiguous and creates uncertainty as to the definition of that phrase. No doubt if this legislation is passed it would ultimately be the courts that would determine what the phrase means.

The bill provides the ACNC commissioner with a range of enforcement powers that go far beyond what is necessary. The commission would have the authority to issue warning notices, issue directions, enter into enforceable undertakings, apply to the courts for injunctions, suspend or remove responsible entities and appoint acting responsible entities.

These sorts of provisions are, I think, disproportionate for the potential risk that there is in the sector. We think that, when it comes to the not-for-profit sector, you should not be adopting not so much a risk minimisation policy but rather a risk management policy. Where the risk is low, government should have a light touch. We think that the powers proposed here are not commensurate with the level of risk and that they are excessive.

As I have said, the powers and penalties contained in the legislation are pretty heavy-handed. But also of concern is the commissioner's ability to remove the director of a not-for-profit. In his submission to the House of Representatives inquiry into the legislation, Mr David Gonski, of the Australian Institute of Company Directors, raised the issue that Australia may be the first country in the world to make being a director of a not-for-profit more onerous than being a director of a for-profit organisation.

In short, the legislation is a bad piece of legislation. What was supposed to create a one-stop shop for charities has created an environment that in effect undermines confidence in the not-for-profit sector. There is no agreement with the states to harmonise powers. There would be duplication of reporting requirements, and the onerous compliance obligations would have the potential to discourage community involvement and volunteers from being involved in local organisations. There are approximately 600,000 entities in Australia's not-for-profit sector. They are made up on people who give their time and their energy to many Australians who greatly need it.

The coalition have a different approach. We reject the legislation. We will not be supporting the creation of a heavy-handed regulatory body that would only add to red tape and compliance burdens for the not-for-profit sector. The government should seek to work with the sector rather than treating it as an arm of the state. I think that the level of intervention that this legislation seeks to give government the capacity exercise is a reflection of the Labor Party's philosophical approach. We should make sure that government is of service to Australia's civil society, that it should not hinder it. That is what the coalition will endeavour to achieve.

We oppose the legislation and, as my colleagues have indicated already, if we have the opportunity, we shall repeal it. As I said at the commencement of my remarks—and now that Senator Stephens is in the chamber I will repeat my remarks—I do respect Senator Stephens' interest in and contribution to the not-for-profit sector and the charitable sector over a long period of time. I listened to her contribution but, on this occasion, I respectfully have reached a different conclusion to her.

Lisa Singh (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak to the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. There have been many reviews of the not-for-profit sector over the past 17 years, including the 2001 Report of the inquiry into the definition of charities and related organisations, the 2009 review into Australia's future tax system and the 2010 Productivity Commission report, The contribution of the not-for-profit sector. Each of these reviews has recommended the establishment of a national regulator, which would simplify regulation for the not-for-profit sector, which is why the Gillard Labor government made it an election commitment to do exactly this.

As the not-for-profit sector grows, we must help it consolidate its standing in the community. The reform of the not-for-profit sector is ambitious, and the government has undertaken extensive consultation to ensure that these bills address the issues facing not-for-profit organisations. Through both a public consultation process—to which 47 written submissions were received—and a public hearing held in Canberra in September, organisations such as the Smith Family, the Salvation Army, World Vision, Mission Australia, the Fundraising Institute of Australia and the Institute of Chartered Accountants Australia, to name a few, have contributed their views on the proposed reform of the sector.

From the beginning, effective and close consultation with the not-for-profit sector has been of vital importance to the Gillard Labor government. Issues raised during the public consultation period and through the committee hearing have been considered and the bills revised to ensure that they deliver the most effective outcome in light of the feedback that has been received. The sector has made it clear they want an independent regulator which can focus entirely on their needs, which is what these bills in fact deliver.

Australia's not-for-profit sector is very much diverse. It is made up of charities, charitable trusts, churches, religious groups, sporting organisations and clubs, advocacy groups, community organisations, cooperatives, trade unions, trade and professional organisations, chambers of commerce, welfare organisations and service providers. It is incredibly diverse. The sector currently consists of some 600,000 organisations, of which nearly 60,000 are economically significant, in that they employ roughly eight per cent of the nation's total workforce—some 890,000 people—and they contribute $43 billion to the nation's gross domestic product. The remaining 440,000 organisations are small, unincorporated organisations which have been traditionally exempt from reporting obligations. They do not have an ABN, and cannot be endorsed as charities or receive deductible gift recipient status. They can, however, self-assess income tax exemptions.

The not-for-profit sector performs a valuable role in our society as it very much endeavours to provide services that meet the needs and betterment of the Australian community. It is for these reasons that the government provides assistance to such organisations, both directly through the funding of programs and services as well as through tax exemptions and concessions. In seeing the immense value of the sector, everyday Australians also lend their support by volunteering their time and through financial and in-kind donations.

In the 2006-07 financial year, donations of more than $7.2 billion were made to the sector, and over 4.6 million Australians donated their valuable time. Increasingly, not-for-profits and their donors are influencing where community and government resources are directed. Regulation of the not-for-profit sector has traditionally fallen to the Australian Taxation Office. The ATO has been responsible for determining charitable status and for determining whether not-for-profit organisations are eligible for tax exemptions and concessions such as fringe benefits tax, deductible gift recipient status, refundable franking credits and goods and services tax concessions. This can potentially be seen as conflict of interest, as the ATO is ultimately responsible for revenue raising while also being charged with making decisions on whether not-for-profit organisations should be granted charitable status.

Regulation of not-for-profit organisations limited by guarantee has fallen to the Australian Securities and Investments Commission. Some not-for-profit organisations can also receive state or territory tax concessions or exemptions and therefore need to be registered with their own state or territory government. This means that, depending on their status and location, not-for-profit organisations have found themselves subject to a number of reporting requirements at both Commonwealth and state or territory level. Many of the reporting requirements have been designed with for-profit organisations in mind and are therefore unsuited to the not-for-profit sector, as they quickly become both time consuming and costly.

This is why the Gillard Labor government has committed to reforming the NFP sector. We want to ensure this sector is transparent and accountable while also ensuring that resources are directed to the most valuable outcomes rather than being swallowed up by excessive regulatory requirements. The Australian Charities and Not-for-profits Commission Bill 2012 will: establish the Australian Charities and Not-for-profit Commission, charge the Australian Charities and Not-for-profit Commission with registering not-for-profit entities and maintaining a register, provide powers for the commissioner in relation to the regulation of registered entities, establish a single national regulatory framework for not-for-profit entities, and set out the obligations and duties of registered entities.

The Australian Charities and Not-for-profits Commission will be a one-stop-shop regulator for the not-for-profit sector—something that the not-for-profit sector have been asking for and have been wanting for some time, to clear out the hodgepodge nature in which not-for-profits have been able to become regulated and receive those levels of status and recognition that they deserve and should have access to in a timely fashion. I note Senator Fifield's earlier comments, and I also note the opposition's position to not vote for this bill. In doing so, the opposition is not supporting the not-for-profit sector, because this bill very much reflects what the not-for-profit sector have been calling for. I noticed that Senator Fifield talked about the fact of this regulatory environment and his opposition to the new regulatory environment which will be created through this new commission. But already we have South Australia agreeing to align its own regulatory environment with the new commission that is being created. I congratulate the South Australian government for having the foresight to do so and I hope that other states follow suit fairly soon. Again, that shows that states also want to have a simplified, one-stop-shop process to this issue of regulating the not-for-profit sector. Senator Fifield fails to understand—or at least omitted, in his contribution in the debate on this bill—the fact that South Australia is already agreeing to align its regulatory environment with the new commission.

The new commission will act as an independent statutory agency, separate from the ATO. It comprises a commissioner, an advisory board and officers who are engaged under the Public Service Act 1999. The commission will report through the Treasurer to the parliament each year and will be held accountable for its work in delivering reductions in the regulatory burden. While registration is voluntary, it will be a prerequisite for those charities wishing to access certain Commonwealth tax concessions. The commissioner will be required to maintain the register and will be able to revoke the registration of those not-for-profits who, after being given written notice and the opportunity to contest, fail to meet the necessary conditions.

The Australian Charities and Not-for-profits Commission provides a framework for record keeping and reporting, requiring all entities to keep records which correctly record and explain the financial position and performance of each entity. In order to gain and maintain registration, not-for-profit organisations will be required to meet governance and external conduct standards set out in the regulations, keep financial and written records and, in the case of small not-for-profit organisations, provide information statements. In the case of large and medium organisations, they will be required to provide financial reports, audits or review reports, and of course they must notify the commissioner of relevant changes in circumstances.

While all registered not-for-profit organisations will be required to provide an annual information statement, the Gillard Labor government recognises that a one-size-fits all approach is not appropriate. That is why entities with revenue less than $250,000 will not have to provide financial reports. Entities with revenue between $250,000 and $1 million will be required to provide financial reports which will be reviewed, and large entities with revenue of $1 million or more will be required to provide audited financial reports.

The key purpose of these bills is to reduce the red tape requirements associated with running a not-for-profit organisation and enable those valuable organisations to focus on their true purpose, on their mission, on their values, and on the objectives that define what that community organisation is supposed to be doing and what it is all about. The evidence has long shown that regulatory reform of the not-for-profit sector is necessary and there is agreement that the establishment of a national regulatory authority and a national regulatory framework is an essential component of such reform.

I have long been involved with the not-for-profit sector—through my work in the past, as Director of the Working Women's Centre in Tasmania and, more recently, as a founding CEO of the Asbestos Free Tasmania Foundation, both not-for-profit community organisations, as well as being on committees and boards, having involvement in various other community organisations and seeing the work that they do. They often run on the smell of an oily rag. They have limited funding, staff, time and resources. They need to direct all of those resources as much as possible into their mission, into the values and objectives that define what that organisation is all about. For most, that is through supporting people at the grassroots level. They are not into overly burdensome regulatory reporting and all the red tape that has gone with seeking deductible-gift-recipient status through the ATO, which for some has taken many months, if not years, to finally receive, because it is such a cumbersome and difficult process.

Unless some of those not-for-profit organisations have accountants or people with a legal background or the necessary skills and expertise on their boards or on their committees, they simply find it very cumbersome and difficult to meet the necessary ATO requirements for them to receive that status, even though their mission statement and their objectives often fit very much in line with being able to receive that status. That is why these bills are so important to that sector. The bills very much allow them to ensure that the mainstay of their work and their workforce is focused on the things that matter, and that is delivering on their objectives, delivering on supporting people in our community, delivering on their lobbying, delivering on supporting workers, and whatever else that organisation may represent. I can see considerable benefits through this new regulatory body.

Of course, as we heard from Senator Fifield, unfortunately those opposite do not share the view of the government or the sector. By opposing the establishment of the commission, the coalition is very much ignoring the views of those who would be affected by these bills, they are ignoring the views of the thousands of workers in the not-for-profit sector and they are ignoring the evidence base, preferring instead to ground their policies in the negativity which we continue hear. As Senator Fifield shared with us, if, lo and behold, they do ever get into government, it is another example of good policy, good legislation, which they intend to repeal.

What I want the not-for-profit sector to hear loud and clear today is that an Abbott-led government would repeal this legislation. An Abbott-led government would ensure that the status quo of the burden of trying to apply for deductible-gift-recipient status, for example, would remain and this new regulatory regime, this new body, this new commission, would no longer exist. Organisations would no longer have a one-stop shop available to them to be able to ensure that they are being listened to and responded to in a timely fashion. They would no longer have their workforce able to focus on the things that matter, their objectives, because they would instead be going back to the dark ages, like other positions of the opposition, such as climate change and the like. They would be going back to the dark ages of a very cumbersome and awkward regulatory method for ensuring that an organisation is able to gain the necessary charitable status that they should be able to gain in a more timely fashion. That is incredibly disappointing.

One strong message that needs to be heard today as we debate these bills and as we vote on these bills is the fact that the Abbott opposition is not supporting these bills and, in doing so, is not supporting the not-for-profit sector in Australia. As I said, the sector currently consists of some 600,000 organisations across this country, of which nearly 60,000 are economically significant to this country, and they employ some eight per cent of our nation's total workforce. That works out to be nearly 900,000 people across this country who are contributing some $43 billion to the nation's gross domestic product. They are the workers, the charitable organisations and the community organisations that I listed earlier, and the opposition is not supporting them. Let's make it very clear: we know that the opposition supports the profit-raising of the biggest miners in this country, but, when it comes to the 900,000 community workers in this country, it decides to not support them at all and stays in the position of going back to the dark ages. Why? Because it is a sector that the opposition simply does not care about. The community sector does not even warrant any kind of presence on the opposition's agenda. It shows absolute disrespect for the community sector. With his lack of support for these bills, Senator Fifield should be ashamed to be in this place and not supporting the community sector. The Gillard Labor government very much believes in a strong, innovative and independent community sector. That is why we have brought these bills to the Senate—they deliver that aim. I commend the bills to the Senate.

Brett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | Link to this | Hansard source

This is an important debate about a very important aspect of Australian civil society—the voluntary sector. It contributes so much in addition to, or perhaps even instead of, government in so many different areas in dealing with the challenges of health, education and underprivilege. Indeed, it often does a better job than government.

As we debate these bills and argue about the levels of regulation and compliance in the charities and not-for-profits sector, and the best ways to balance accountability and, of course, flexibility, one issue remains largely unaddressed, and it has not really been addressed in the debate thus far today. It is a problem that has been with us for some years now, and I remember raising it in this chamber some eight years ago, but little has changed since then. If anything, the problem is even more pronounced today. It is simply this: increasingly, some charities are moving into political advocacy, not just in addition to their other work but, in many cases, almost as their sole work. We live in a democracy and everyone is entitled to voice their opinions, advocate for certain positions and lobby for any outcomes they desire. That is all fine; none of us would object to that. This right applies to individuals as well as groups of people, businesses and, indeed, charities and not-for-profits—of course it does. But the right to free political expression does not entail an ancillary right to have that free political expression subsidised by the taxpayers. That is the issue. This, however, is what some charities now expect.

Charities and not-for-profits enjoy numerous tax benefits. As you know, Mr Acting Deputy President, they are exempted from income tax, they can get refunds on imputation credits, they can reduce their fringe benefits tax and they can obtain all sorts of various GST concessions. They are entitled to all that. Last but not least, the gifts and donations they receive from the public tend to be tax deductible. They are all benefits the charities and not-for-profits receive. This has been a longstanding practice which recognises the public benefit—the public good—that derives from the work of charities, which we all accept. In return for these benefits, we as a society and a government agree that we should make life and work easier for charities so they can better compete for staff with the public and private sectors as well as help them raise funds to finance their work. In a sense, that is the give and the take of what they do.

This has been a pretty straightforward proposition for hundreds of years now—indeed, since Elizabethan times—generating a strong consensus and little debate, because the public benefit from the work of charities was pretty clear. People could see it everywhere: education charities would provide education, health charities would provide medical care, social charities would care for those in need, and, more recently, environmental charities would roll up their sleeves and plant trees, clean up pollution or shelter animals. That is what they would do.

But the last few decades have seen the emergence of a new phenomenon: some charities and some not-for-profits are now simply involved in political advocacy and campaigning. No longer would community donations go to help charities do something; they would go to help charities lobby the government to do something. There is a big difference. It is a sort of philanthropy by proxy or compulsory philanthropy. It is no longer really philanthropy because when the government does something we all pay for it whether we want it or not.

This is of course always a matter of degree—I accept that. Many, if not most, charities and not-for-profits from time to time find themselves trying to influence public debate. That happens all the time and I accept that. The law has always recognised this as an entirely legitimate activity if carried in an ancillary way to the main charitable purpose. So the Salvation Army or St Vincent de Paul may talk about poverty, but their main purpose is providing for the poor. They are quite able, of course, to lobby government in certain areas and in certain sectors. There has never been a problem with that. The problem is when influencing public debate becomes a dominant, or even the sole, purpose for the charity's existence. That is when the problem emerges. For such charities, their work becomes less tangible. It is no longer underprivileged kids getting a better education or the homeless getting a roof over their heads or a koala habitat being protected and preserved—it is about affecting the direction of government policy and government spending, or even affecting those who are elected to government.

Such charities are no longer charities per se; let's face it: they are in effect not-for-profit lobbying and PR outfits, enjoying a sizeable subsidy from the taxpayers and the public purse. That is what they become. The question is: should they? If the aim is to effect policy or political change, shouldn't the charity workers join political parties, which have their own and relatively low tax deductible thresholds? Or, conversely, if political lobbying or campaigning should have tax benefits for charities, then why not for everyone else as well? If it is okay for koalas and the homeless, why isn't it okay for sugar farmers or small business men?

An even more ambiguous case than merely lobbying is campaigning at election time. This seems to be particularly common in my home state of Queensland, where charities and other groups enjoying favourable tax status, such as the Wilderness Society, have on many occasions in recent years produced and distributed election material, including how-to-vote cards, aiming to boost the Australian Greens or the Labor Party or at least diminish the coalition vote. That is what they have done with the tax benefits that they receive. This is not what a majority of people imagine charities do or should be doing. The courts and the bureaucracies, however, have been quite liberal in reinterpreting the definition of charitable purpose, as well as expanding the scope of other activities that charities can engage in without losing those particular tax benefits. We might ask, however, is it good public policy? We might want to ask ourselves that question. Should the taxpayers really be subsidising political lobbying and political campaigning? What makes charities so special that they should enjoy this privilege and benefit, which is not available to anyone else in our society except, to some extent, to political parties? Are some charities in reality merely associated entities of political parties? Are not the tax benefits granted to charities in recognition of the value of services and actual tangible support delivered to those actually in need? Should then these tax benefits be available to self-proclaimed charities which do not actually do anything directly to help, but merely write press releases and lobby politicians? Is that appropriate? We need these sorts of questions debated, and sooner rather than later actually answered—one day soon.

As any questioning of the status quo invariably attracts a howl of indignation about the evil Liberals trying to stifle debate and silence dissent, let me repeat that the debate is not whether charities have the right to express their opinion or to lobby. Yes, they do. I make that very clear. Of course they do. The debate is whether some of them should enjoy a special tax status, not    available to anyone else, if their supposedly charitable work consists mainly in expressing opinion or lobbying. That is the question.

The coalition opposes the current bill because it ends up burying civil society in red tape. I do hope, however, that future governments will find time to address the problem of politicised charities. Way back in 2004 I made a few comments and they are still relevant today. I said that the taxpayers of Australia are owed some answers regarding the activities of organisations such as the Wilderness Society. But also, just as importantly, we owe it to other charities and groups enjoying tax deductible status, who quietly go about their work of helping others without involving themselves in the rough and tumble of politics, to ensure that charities, which as a general rule do so much good in our society, are not tarnished in the public's eye by the misdeeds of a few political wolves in charity sheep's clothing. If the coalition wins the next election, I do hope we address this issue, which gnaws at the credibility and public acceptance of the status and benefits which we bestow very willingly on our charities.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I too rise today to make a contribution to the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits (Consequential and Transitional) Bill 2012. The not-for-profit sector plays a vital role in the Australian community by providing support and assistance of some of the most vulnerable people whilst also supporting a number of issues-based causes that might not otherwise receive advocacy. The government values the important work provided by the not-for-profit sector in building social capital and helping to make stronger communities. That is why we want to ensure that we provide appropriate support to allow the sector to grow and flourish into the future.

Our commitment to reform of the not-for-profit sector began at the 2010 federal election when we announced that we would introduce the most extensive national reforms the sector has ever seen. The introduction of this bill is the culmination of delivering these reforms. They will support the sector and build upon the announcement that we made in the 2011-12 budget that the government would deliver these series of reforms to strengthen and support the sector, to ensure its sustainability into the future. We are doing this because over the past 17 years there have been a number of reviews looking into the not-for-profit sector. These include a comprehensive 2001 report of the Inquiry into the Definition of Charities and Related Organisations, the 2009 review into Australia's Future Tax System and the 2010 Productivity Commission report into the contribution of the not-for-profit sector. There has also been a number of parliamentary inquiries which have encompassed this issue. Together, these reviews and inquiries have identified the need to establish a single national regulator to simplify and reduce regulation for the not-for-profit sector.

The not-for-profit sector is made up of a wide range of organisations which range from small sports clubs right up to multinational charitable organisations. Due to the important role all these different charitable entities play in Australian society, the not-for-profit sector receives a wide range of support, including funding, donations from members of the public and tax concessions, grants and other support from local, state and federal governments. So the government wants to ensure that there is a strong regulatory system that helps deliver good governance, accountability and transparency in the not-for-profit sector.

Which brings us to the government's introduction of the Australian Charities and Not-for-profits Commission Bill 2012, which delivers on the outcomes raised by the reviews I mentioned earlier by establishing a national regulator and a national regulatory framework for the not-for-profit sector. The Assistant Treasurer, David Bradbury, is on record outlining the aims of the ACNC bills. There are three objectives. The first is to maintain, protect and enhance public trust and confidence in the not-for-profit sector. The second objective is to support and sustain a robust, vibrant, independent and innovative not-for-profit sector. The third objective underlines the important role that the ACNC will have to promote the reduction of unnecessary regulatory obligations on the not-for-profit sector.

A number of features of the Australian Charities and Not-for-profits Commission Bill 2012 will establish the Australian Charities and Not-for-profits Commission which, as I have said, is the ACNC; it will give authority for the ACNC to register not-for-profit entities; and it will maintain a register of these organisations. It will provide the powers for the commissioner in relation to the regulation of these registered entities. It also sets out the obligations and duties of these registered entities.

I will just take a moment to examine in a little more detail some of these aspects of the bill. From the beginning of the bill, only tax endorsed charities will be regulated by the Australian Charities and Not-for-profits Commission; however, the bill establishes a regulatory framework to ensure that it can be extended to all not-for-profit entities in the future.

To register with the ACNC, and maintain registration, charities will apply directly to the commission and operate consistently with the definition of a charity, whilst also complying with prescribed registration conditions and requirements. The ACNC will also have the role to work with the not-for-profit sector to help provide education and guidance on their participation in the national regulatory framework.

The bill will establish an online, publically-available information register containing the details of the charities registered with the ACNC which, of course, is a very important reform. This register will be able to be accessed easily by the public to ensure that donors and volunteers will be able to rely on the information provided to help them make decisions as to whether to volunteer or donate to a registered charity. I know that is something that will ensure that life is much easier for those who are operating in this sector; there will be a one-stop shop so people will be able to access information about their organisation publicly and make an informed decision.

The bill will create the Office of the Commissioner of the ACNC. The commissioner will have the role to maintain general administration of the ACNC legislation and will have the power to register not-for-profit entities, and the legislation will provide the commissioner with the processes and grounds for revocation of the registration of a charitable organisational. Through this legislation the ACNC will also be required to report annually to parliament on its progress on red tape reduction. That is one of the issues that was raised by many of the submissions to the Senate Community Affairs Legislation Committee inquiry into this piece of legislation—the need for a reduction of red tape. The fact is that through this legislation, the commissioner, through the office of the commissioner will have to report its progress on reducing red tape for the not-for-profit sector.

The Senate Community Affairs Legislation Committee held an inquiry into this bill, and arising from the report the government has made a number of amendments to the bill. At our hearing, and through submissions, the committee heard that many in the sector wanted the government to ensure that this bill did not restrict the independence of charitable organisations. As outlined in the Community Affairs Legislation Committee report:

The committee believes the fostering of an independent not-for-profit sector is essential, and supports this as an object of the Bill. Gag clauses are an objectionable feature of contracts with not-for-profit entities. They are particularly inappropriate in those contexts where a monopsony exists: where the government offering the contract is the only purchaser of services. The committee believes such clauses should not be introduced.

I am pleased to say that through ongoing consultations the government has been conducting with the not-for-profit-sector, and after receiving the Senate Community Affairs Legislation Committee report, the government has made amendments to this bill to ensure the independence of the not-for-profit-sector.

The government has also announced that the legislation will be reviewed after five years to ensure that the ACNC is operating as expected and to see how the objects of the bill have been achieved—in particular the elements designed to reduce the unnecessary regulation on the not-for-profit sector. As I have said previously, this is a very important aspect for the not-for-profit sector.

The federal government will also be negotiating with the states and territories on national regulation for the not-for-profit sector because we recognise that the greatest reduction in red tape for the sector can only be achieved with national coordination. On 17 October 2012 the government announced further changes to the Australian Charities and Not-for-profits Commission that will see further reductions in red tape for the not-for-profit sector after the changes to grant guidelines. The government will be amending the Commonwealth Grant Guidelines to support the implementation of a 'report once, use often' reporting framework for the not-for-profit sector—again, another important measure. Once established, the ACNC will help reduce the regulatory burden, which can be quite onerous, imposed on the not-for-profit sector. The introduction of the 'report once, use often' reporting framework will essentially mean that Australian charities will not have to provide the same information repeatedly to the government. This is an important step to help reduce the regulatory burden on the sector and allows them to get on with the job of helping those who are most vulnerable in our community. If we can put in place measures that deliver good accountability, transparency and oversight of the not-for-profit sector whilst also reducing the regulatory compliance of charitable organisations, allowing them to improve the effectiveness of the services they deliver, then this can only be a good thing for the sector.

In closing, I am pleased that the government is enacting a commitment made at the last federal election and then built upon in the 2011-12 budget to simplify the regulatory burden of the not-for-profit sector by introducing a one-stop shop. The Australian Charities and Not-for-profits Commission has been a long time coming. The need for this commission has been long identified through a number of reports over the past 17 years, so this bill, I believe, is a step in the right direction.

I also think it is important that we acknowledge here, and I acknowledge here, Senator Ursula Stephens's role and the huge amount of work she has done in this area. I would also like to acknowledge the Assistant Treasurer, David Bradbury, who, through consultation with the sector and after receiving the Senate Community Affairs Committee report into this legislation, has made a number of amendments. These amendments address a number of concerns raised by the sector and the Community Affairs Committee, and ultimately help strengthen the bill. This bill will go a long way to supporting the not-for-profit sector now and ensuring that it is sustainable into the future and I commend the bills to the chamber.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

The coalition will be opposing these two bills, the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. When the legislation was first mooted, I went looking for the examples of charity fraud that would require legislation of this depth and breadth. Where were the cases involving billions of dollars being scammed and defrauded out of charities? Where were the cases of the boards and governance in charity groups deliberately siphoning off funds to terrorist organisations or to tax havens? There must be of course billions of dollars going into this area in the same way as we have seen fraud and poor governance in organisations like Trio Capital, Storm Financial and dozens of others that have required the strengthening of our governance rules with regards to corporations and investment funds. So there must be millions of dollars being scammed off all over the place in terms of charities or there would be no need for legislation of this magnitude and at this cost.

Of course there is not. There is the odd case of a problem gambler who has defrauded the organisation they work for. There certainly have been some interesting investigations undertaken by ASIO and others into how some groups are functioning. But we do not have an endemic problem within the functioning and the governance of their charity organisations.

Once again we have the ridiculous situation of this government announcing its reform, which will involve all the states and territories agreeing to hand over their power of course, and then telling us after the bills have passed that that is when they will go and check if the states and territories think they would like to hand over the legislation. Many, many small charities are more than ably governed by the current state and territory bodies and should remain so, except for the empire-building delusions of the government.

For example, let us look at one of the proposed amendments to this bill being put by Senator Xenophon. The bill of course is called the Australian Charities and Not-for-profits Commission Bill and it will set up an Australian Charities and Not-for-profits Commission. Yet one of the amendments being proposed is that we actually come up with a definition of charities. Wouldn't that be nice? No, no, let us set up the Australian Charities and Not-for-profits Commission and then decide what the definition of charities is and what the definition of not-for-profit is, and then we will go and ask the states and territories whether they agree to it. We will do all of that later, having invested millions of dollars in the establishment of the commission and in getting staff involved in the commission. It is another complete bungle of empire building by this government, which will achieve nothing except extra red tape and extra cost. We are not in any way persuaded by the government's argument that this is true reform. It is not. Certainly there is nothing to suggest that what this government is proposing to do will improve in any way the governance of charities in Australia. As I said, there is no overwhelming evidence to suggest that there is overall poor governance in this sector. Certainly, there are lots of volunteers doing their very best, and there may be some ignorance of governance, but in no way is it dishonest, fraudulent behaviour.

Debate interrupted.