Senate debates

Thursday, 27 June 2013


Charities Bill 2013, Charities (Consequential Amendments and Transitional Provisions) Bill 2013; Second Reading

7:00 pm

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

I rise to speak on the Charities Bill 2013 and the Charities (Consequential Amendments and Transitional Provisions) Bill 2013. Acting Deputy President Bishop, I know that I do not need to convince you of the great work that charities do in our community and of the incredible contribution they make to the nation. It is fair to say that Australia would be unrecognisable if the charitable contribution of individuals and of organisations was withdrawn. These organisations really are—it is a cliche but it is true—the glue that holds the community together. They fill in the gaps between what government does, what families do and what businesses do. No government could ever seek to replicate the tremendous good that charities do in our community.

I think it is very important that we as a parliament and government more generally are at the service of charities, doing all that can be done to make life easier for charitable organisations rather than making life more difficult. It is for that reason—to avoid making life more difficult for charitable organisations—that the opposition do have misgivings about this legislation. At the heart of the bill is the attempt to seek to introduce a statutory definition of charity and charitable purpose for the purposes of all Commonwealth legislation. This bill in fact represents the first time legislation has sought to comprehensively define charity for the purposes of Commonwealth law. The current definition has been with us for a little while. It is not currently defined in our statutes. Rather, it is the product of over 400 years of common law based on the Statute of Elizabeth. Given the long history of the current definition, the opposition is of the view that if government believes there is good reason to change the definition then the onus is on the government to make the case for a change from the status quo. The opposition are yet to be convinced by the case that the government has put forward.

Our concern is that changing the definition risks disadvantaging some charities, potentially creating a wave of legal disputes and test cases at a cost to the sector. On this side, we share the view that the state should be doing all that it can to allow not-for-profits, charities and volunteer organisations to do what they do best and to get on with their business. But we start with the principle that the government should do no harm to the efforts and endeavours of charities.

You may recall that the previous coalition government examined in great detail the merit of introducing a statutory definition of charity. In September 2000 the Howard government established the charity definition inquiry to examine whether the common law definition of charity was still appropriate. The inquiry reported in 2001 and made a number of recommendations. After carefully considering the report, the former Treasurer, Mr Costello, released draft legislation in 2003, which took the traditional four heads of charity, I am advised, and divided them into seven heads of charity.

The Board of Taxation handed a report on the workability of the proposed definition to the former Treasurer in December 2003. In May 2004 Mr Costello announced that:

… the common law meaning of a charity will continue to apply, but the definition will be extended to include certain child care and self-help groups, and closed or contemplative religious orders. The Government has decided not to proceed with the draft Charities Bill.

The Howard government enacted the extension of the Charitable Purposes Act 2004, which confined itself to enlarging the legal definition of charity for federal purposes to include child care, self-help groups and closed orders. The approach of the Howard government enhanced the common law definition. It allowed charities to do what they do best without interference from the state, and it reflected the coalition's philosophical approach to charities—we believe that charities should be left to do what they do best. I think all of us recognise that Australian charities and not-for-profit organisations strengthen our nation through their contribution. The government needs to respect that and not do anything that might hinder that.

The government, I fear, has a slightly different emphasis in their approach to civil society. I think it would be fair to say that the Labor Party have more of an interventionist tendency. There is some evidence that they do view the sector, on occasion, with a little bit of suspicion. The Australian Charities and Not-for-profits Commission is an example of this. In the view of many organisations, it imposes some pretty significant reporting requirements, demands large amounts of information and makes doing their work that little bit harder.

Mr Gonski, of another fame, has stated that Australia is the first country in the world to make being a director of a not-for-profit organisation more onerous than being on the board of a for-profit organisation. That would be perverse and I would not contend that that was the current government's intention or the intention of the Australian Charities and Not-for-Profit Commission. Nevertheless, well intentioned governments do sometimes make life harder for these organisations.

As I said earlier, it is the role of the parliament and of government more broadly to be at the service of the charitable sector rather than the other way around. It is important that we always keep that in view when looking at legislation that may affect the charitable sector. These bills—and also the Australian Charities and Not-for-profits Commission—give a little bit of an insight into the different approaches of each side of the chamber in relation to the charitable sector. The coalition will be opposing these bills. It is our hope that the legislation is not passed into law.

As the shadow minister for disabilities and the voluntary sector in particular, I want to take a moment in conclusion to reflect on the role that charitable organisations play in my area of portfolio responsibilities. So many of the great organisations in the disability portfolio came about as the result of parents of children with disability who saw a need—they were not getting the support that they required—often back in the 1950s and 1960s. Those parents got together and founded many of the great charitable organisations in the disability sector. Many of those organisations had, at the time of their founding, names that we would raise an eyebrow at today, but the parents at the time were not terribly focused on political correctness or the names of their organisations; they just wanted to get things done. Often they took a fairly unadorned and functional approach to the names of the organisations that they established. It is so often the case that, today, when I meet with organisations in the disability sector, they can trace their foundation back to parents who got together because they wanted to do something positive for their children and set about fundraising.

In a perfect world that would not have been necessary, but it is one of the great strengths of our community that, still, where people see a need in Australia they do not wait for government to catch up to where they think it should be; they get about the job of doing what needs to be done. It is heartening that the launch sites of the national disability insurance scheme are going live in a matter of only a few days—on 1 July. How those parents who founded those disability organisations in the fifties and sixties would have loved something like the NDIS when their own children were young! But better late than never. The NDIS will make a huge difference. But even on the eve of a great social venture such as the NDIS, which will lift the burden from so many families and so many people with disability, it is important that we pause and take a moment to acknowledge that there will always be a place in the disability sector, and more broadly, for not-for-profit organisations—for charitable organisations—where people come together and see a need.

Even in the face of a great venture such as the NDIS there will always be a need. And it is important that there will always be a space for charitable organisations and voluntary contributions. So, even though we have good news on the horizon it is important to acknowledge the role that will continue to be played by charitable organisations, not-for-profit organisations and the voluntary sector.

7:13 pm

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

I, too, rise to speak on the Charities Bill 2013 and the Charities (Consequential Amendments and Transitional Provisions) Bill 2013, and indicate that the Australian Greens will be supporting these bills.

I have spent a lot of time working on this legislation and working on the suite of reforms for the charities and not-for-profit sector that have been achieved over the last period of time, particularly over the last 12 months. I believe that this is a key part of that legislation. It helps to cement in place the support, protection and—with the ACNC legislation passing—the regulation of this sector.

These reforms are absolutely essential for the vibrant, diverse and, I must say above all, independent, fearless civil society. These protections, these bills and this reform are essential to ensure that we have that fearless civil society. We know that in Australia we have a very vibrant civil society. We have a vibrant set of charity and not-for-profit organisations and we know that they strive tirelessly—often the face of significant self-interests—to serve, defend and promote the broader needs of our community.

The tax concessions that some of these organisations receive allow them to carry out this work, delivering important services to the community and often filling in the gaps where the government has failed to act or is in fact incapable of acting. They provide services such as emergency relief services, which are being called upon more and more in this country. They provide services to the homeless as well as other forms of community services. They provide environmental support services. They also provide services protecting, managing and restoring our natural resources. They are active across the full range of our society.

The representations that these organisations make on behalf of the marginalised and vulnerable members of our community are absolutely critical. Their contributions to the public policy debate are absolutely crucial. In fact, civil society not-for-profit organisations and charities are broadly leading public debate. This place follows their lead. We have no better example of that than the national disability insurance scheme, DisabilityCare. As I have said in this place before and as Senator Fifield was just commenting on as well, they had the concept and the dream about a national disability insurance scheme. If it was not for those groups, we would not have it. The politicians in this place—all of us—followed their lead. That is just one example of the changes that charitable organisations have been responsible for.

As a parliamentarian, I am indeed indebted to so many organisations that—despite being chronically understaffed and underfunded and despite facing a range of immediate needs from their clients or members—provide advice and contribute to debates. Importantly, they contribute to the debate in this place through Senate inquiries. Most Senate inquiries have a charity making submissions to them in some form. In doing so, they do not just bring problems to this place. More often than not, they bring the solutions—in other words, they again provide that leadership.

This bill is yet another piece of important reform in this sector and one that has been a long time coming. The proposal to introduce a statutory definition of charities was most recently first launched—and I say that advisedly!—in 2001, although having worked in the sector for a long time previous to coming into this place, I can say that one of the issues that we had been talking about on and off over all that time was the definition of 'charity' and whether a particular charity or not-for-profit gets tax deductibility et cetera. It was on the agenda a long time before 2001. This is an issue that has had significant consideration over a number of decades, in fact, and not just over the last decade.

On this particular piece of legislation, I have tried to consult widely with the sector. I have consulted with the lawyers of many charities. They have been very generous with their time and knowledge. Overall, I think that there is strong consensus in the sector that Australia needs to modernise its laws on charity. I know that some stakeholders would have preferred a definition that was a bit broader. But I can categorically say that I have had overwhelming lobbying to support the definition of charities—emails, phone calls, texts. They want to see this definition get up, because they believe that this is a significant step forward. This step, as I said, has been quite a long time coming. However, I must say that there were concerns raised with us, and I and the Greens had concerns when we first read the bill. I will go into them in a second.

We do not believe that we can any longer rely on complex and confusing definitions of charities that in part are based on 16th century law and arbitrary legislative interventions. The law as it currently stands really only recognises four heads of charity: poverty, education, religion and other purposes beneficial to the community. Other areas, such as the protection of the environment, are often considered in an ad hoc manner. This can have significant impact on charities. It can be very difficult and costly for a charity that does not fit neatly into this 16th century concept of public benefit to prove its charitable status. This diverts time and energy that could be better spent on the other much more important things that the charity is established to do.

While the definition has not been fully overhauled as some people, particularly in the past, have been advocating for, I welcome the explicit recognition of charitable purpose related to health, culture, the environment and human rights, including reconciliation. The bill clarifies key areas of legal uncertainty, including the relationship between government and charity and the application of the definition of 'charity' to native title. The bill also reflects the ways in which modern charities advance causes by preventing, educating, conducting research and raising awareness.

We also focused on how this legislation impacts organisations that work closely to address housing and homelessness. There were some concerns that the current work in the housing affordability area is not recognised by the bill. But I have sought assurances that this will continue to be possible under the bill, and the bill also grandfathers in existing arrangements so that any organisation that is currently charitable will not be at risk of losing its charity status in the middle of a project. These are all important and welcome changes.

But the most important thing about this bill is that it secures a right for charities to have a purpose that is focused on advocacy. All charities can undertake advocacy as a legitimate activity without the threat of losing their charitable status. Ensuring that this right to engage in advocacy, including political advocacy, was clear is one of a number of improvements to the explanatory memorandum that were introduced as a result of advocacy by the Greens to strengthen the bill. The explanatory memorandum now clearly spells out that this bill enshrines the High Court decision in the Aid/Watch case, which ensures that charities can advocate changes to laws, policies and practices without jeopardising their charitable status. The full wording of paragraph 73 of the 2001/4 tax ruling is now embedded in the EM. Other improvements to the EM clarify that advocacy and advancing public debate cannot of themselves produce a detriment, even if a change of public policy or legislation by government has a detriment to certain members of the public. For charities that fall under the category of advancing the natural environment, we have ensured that the category is classified in the EM so that it is clear that all work, whether it is in an urban landscape or a wild place, can be considered charitable and that promoting sustainable development includes promoting ecologically sustainable urban environments and resource sustainability.

With these clarifications in the EM, we will be supporting the passage of this legislation. These amendments to improve the clarity of the bill were critical, because we are concerned about the future of the sector. Speeches on this bill in the lower house demonstrate why there is a need to ensure that the important work of charities and the not-for-profit sector is in fact protected from interference by government that does not like to have its policies scrutinised. Tax on environmental organisations in the past has been particularly vicious and unnecessary and makes those groups extremely nervous. Maybe for some in this place the contributions of a strong not-for-profit sector are unwelcome. The Australian Greens do not share this view. We believe it is absolutely critical to acknowledge the important work charities do. They cannot be subject to harassment the way they have been in the past. In the past, organisations that spoke out became the focus for deregistration—or, in fact, became the focus for putting the famous gag clauses in. We believe their independence is essential. They should be fearlessly able to advocate for policy change, even if we in this place do not like it.

That is why we are very pleased that other steps have been taken to secure the independence of the sector. Other initiatives the Greens have supported or been involved with include, of course, establishing the Australian Charities and Not-for-profits Commission. We debated that particular legislation just late last year. In fact, we moved amendments that strengthened that legislation. Although I have been concerned—and I mentioned it in this place just two days ago—at the ACNC's heavy-handedness, the Greens chose to support the ACNC because we believe that putting in place appropriate regulation is a step towards a better, stronger and more vibrant not-for-profit and charitable sector and takes the sector a step further away from interference by government.

Through the ACNC legislation the Australian Greens secured a further commitment that freedom to advocate would be protected—a commitment that the government, to its credit, delivered on with the Not-for-profit Sector Freedom to Advocate Bill 2013, which protects the independence of charities and the not-for-profit sector by ensuring that government cannot use its position, often as a sole provider, to stop not-for-profit advocacy as part of any contracting clauses. Now adding to these improvements, this definition will ensure that the breadth of charitable purposes recognised in our contemporary community is in fact recognised in law and that all charities can use the tools of political and policy advocacy in furthering their charitable purposes without fear of losing that status or having retribution. The Greens will be supporting this legislation.

7:26 pm

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

I want to thank Senator Siewert for her contribution to this debate on the charities legislation tonight, because she has gone to the core—the nub—of this issue. And I want to reassure Senator Fifield that, rather than placing an onerous regulatory burden on our charities and not-for-profit sector, these bills before us tonight are going to enhance the capacity of those organisations that are going to be engaged so intimately in the DisabilityCare Australia process. They are actually going to relieve them of many burdens.

I am speaking this evening because I want to acknowledge the long history this suite of bills has had in this place and in previous parliaments—and Senator Fifield perhaps was working in the former Treasurer's office when the first discussions about this occurred. But of course it goes back even further than that, to the Industry Commission report in the 1990s. Many, many people have been involved, and I really want to thank everyone who has been committed to persisting in working to achieve an independent regulator for Australia's charities and not-for-profit sector. Everyone says the seminal document really is the Productivity Commission's report of 2010, which laid out the blueprint for change and reform that had to happen in the sector to modernise the sector and to ensure its long-term sustainability. That report created the snapshot that the sector contributes more than $40 billion a year to GDP, more than 600,000 organisations and more than one million staff—and that is the quantifiable contribution—but that the real value of the sector is often the unattributed contribution to the quality of life that we all experience in Australia.

I would like to place on the record the important work of the Community Council for Australia. In their submission to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into these bills they make this point—and this is the nub of why we need this suite of bills:

If an NFP wants to hire a local hall at a discounted charitable rate, gain a concession on local rates charges, achieve a reduction in payroll tax, put forward a submission for funding, participate in a government tender process, register a fundraising activity or seek to claim a concession of any kind, the organisation must be able to produce some kind of bona fides, a kind of organisational passport. At present no such document exists. Charities are forced to provide copies of letters from the Australian Taxation Office that define their eligibility for taxation concessions as proof of their charitable status. This situation has proven to be very problematic, costly and counterproductive.

That is it, in a nutshell. What is being achieved through these bills is the establishment of an independent regulator. And I want to commend the work of the ACNC task force and the first ACNC commissioner, Susan Pascoe, and her team. They have done the most amazing job in working through the mechanics of how the ACNC will operate as a light-touch regulator and as an enabler of our charities and not-for-profits. Their work through the last six months has been extraordinary, and I would really like to congratulate the staff and the commissioners for their efforts.

The passport will be extraordinary. The consequences in savings in time, energy and resources will be amazing, and there will be flow-on reductions to red tape rather than any sense of a regulatory burden. Duplication and compliance costs will be reduced and they will translate into better frontline services for our communities.

In the six months the ACNC has been operating, the ACNC team has actually taken over 11,000 phone calls, received over 17,000 email requests for information and had face to face consultations with over 1,000 not-for-profits in workshops and presentations across the country. At the same time, more than 250 new charities have been registered on the new website, more than 10 new guides and fact sheets have been prepared and been released and the ACNC has received over 150 complaints about charities, resolved mostly through various forms of mediation. Not one charity has been deregistered, because that is not what the ACNC is taking as its first line. Its first line of approach is to mediate and resolve and remediate by educating and enabling the organisations.

So we have a very effective ACNC in place, and I really do call on the opposition to reconsider their objections to the ACNC and to these bills. The shadow spokesman has already indicated to the sector that it is his intention to wind back the ACNC, to actually reverse the progress that has been made in this important space. So I really do call on the opposition to reconsider that position.

I would like the acknowledge the work of the Assistant Treasurer David Bradbury and his staff, Minister Butler and his staff and the many groups and organisation who have worked so hard to advise the ACNC advisory council and bring common sense to the debate.

This package of bills is being lauded around the world as the most progressive and substantive not-for-profit governance package of bills, a best practice model for other jurisdictions. They deserve our support.

7:31 pm

Photo of Sue BoyceSue Boyce (Queensland, Liberal Party) Share this | | Hansard source

Once again I will speak very briefly so that there is some vague hope of others having a chance to speak on this bill. I am sure that every senator who has taken and will take part in this debate, truncated as it is, has the best interests of the charities of Australia at heart.

But I must admit that I continue to look at the large charities and the smaller charities and I see a vast difference. In many cases it is like the comparison between Myer and the local milk bar, such that recently a Victorian advocate for the not-for-profit sector has established a peak group for not-for-profits that employ two or fewer people. They found that necessary because whilst we have the government telling us how every charity in Australia thinks this is wonderful, the only people who have really been spoken to are the corporate charities, the big ones—the Red Cross, the Salvation Army et cetera. These people do great jobs but they are not the representatives of every entity that should be considered a charity in Australia. I have real concerns about how the government has consulted, if at all, and how the government has heard, if at all, the message coming from small charities.

There are also concerns about how this has been put together. Areas have been left out of the human rights aspects of the bill. ACOSS, for example, talked about the lack of clarity when an entity lacks the element of public benefit, and the idea that the way you decide on public benefit is in the absence of evidence to the contrary. If part of this bill is about taking these issues out of the courts and back into the legislature, I have no idea how a section that talks about 'in the absence of evidence to the contrary' assists in this matter.

We also have a section put together by Treasury that looks at the amendments that were accepted to this bill. But they do not look at the amendments to the bill that were not accepted, and nor do we have any explanation as to why they were not accepted. We just have to look at the definition of a charity:

charity means an entity:

(a) that is a not-for-profit entity; and

(b) all of the purposes of which are:

(i) charitable purposes (see Part 3) that are for the public benefit (see Division 2 of this Part); …

No-one has explained quite how op-shops and other enterprises, profit-making enterprises providing profits to charitable organisations, are to work.

Section 6 of this bill talks about public benefit. It says:

(a) the achievement of the purpose would be of public benefit; …

And must be available to:

(i) the general public; or

(ii) a sufficient section of the general public.

What does a 'sufficient section' mean? The bill also refers to 'tangible' or 'intangible' benefit. What does that mean? One imagines that all these matters could be something that will be the matter of court action if people do not like the reasons that a 'sufficient section' is involved or that a benefit is 'tangible'.

As Senator Stephens alluded to, a coalition government would repeal this bill and would set up a body that was simply designed for educative and training purposes. I am sure they could answer all the questions that Senator Stephens has pointed out are there, without a massive new regulatory burden that undermines 400 years of case law around the definition of 'charity'.

7:36 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Because of the limited time available for this bill because of the guillotine I will truncate my remarks significantly. I indicate my support for this bill. I believe it is overdue, and, as Senator Stephens has pointed out, there have been multiple past inquiries in relation to this. I see this bill as helping the charities sector. I take into account what Senator Boyce has said about having unnecessary red tape for smaller charities, and I believe this bill does have a tiered approach in respect of that.

I think we need to define 'charitable purposes' and therefore a 'benefit for the public'. At the moment, we go back to England's Charitable Uses Act of 1601. It has been around for more than 400 years, and we actually need to have some sensible, codified reform in relation to this. We have seen in New Zealand recently and, for a number of years, in the UK that they have had charities commissions in place. I believe these have worked effectively to support organisations and to hold the very few rogue organisations to account. I direct members of the Senate to some of the decisions of the charities commissions in respect of that.

I draw senators' attention to the excellent work done by Professor Gino Dal Pont of the University of Tasmania and to his paper on the uniqueness of charity through the prism of public benefit. I was lucky enough to hear his presentation earlier this year. I cannot, because of time, discuss what Professor Dal Pont said, but, basically, he gives a very good explanation of the history of this. I believe it strengthens the need for legislation such as this. It is important to note that a similar test of public benefit exists in other countries—UK, New Zealand, Singapore and a whole range of jurisdictions around the world.

Why do we need it? Because, occasionally, there are organisations that abuse that tax-free status. This is not about belief. This is not about advocacy. This is not about impinging on anything like that, but it is about making sure that an organisation that abuses the privilege is held to some measure of reasonable account. Having a public benefit test is important in relation to that. Let us make it very clear, the benefits that we give to charities are between $1 billion and $8 billion a year, according to a Senate economics inquiry that I instigated and was part of in relation to looking at the tax act and the public benefit test.

Imagine where we would be, as a nation, without the benefit of charities? I dread to think how many bureaucrats it would take—no disrespect to bureaucrats or those from large corporations—to set up a soup kitchen. The work that charities do is invaluable. The cohesiveness of our society—our social fabric—would be torn without it.

I believe that this bill is an evolving measure. Let us see how effective it is. Let us see if it needs to be fine-tuned in years to come, but I believe the principles are sound and I believe that what we see here is a useful piece of legislation that will hold organisations to account. It would be remiss of me not to say, in the remaining 20 seconds, that I became interested in this field because I was approached by a number of victims from the Church of Scientology. I believe that all organisations, if they are behaving in an abusive manner, ought to be held to some measure of account. A public benefit test is a useful measure of that.

Photo of John HoggJohn Hogg (President) Share this | | Hansard source

The question is that the bills be now read a second time.