A One-Stop Charities Regulator

I spoke in parliament tonight about the proposed Australian Charities and Not-for-profits Commission.
Australian Charities and Not-for-profits Commission Bill, 17 September 2012

It is my pleasure to speak on the Australian Charities and Not-for-profits Commission Bill 2012. Strengthening Australian community life is a great passion of mine but it is an area which, in recent decades, we have sadly seen go backwards. I am going to do a little auto-citation, for which I apologise. In a book called Disconnected that I wrote a couple of years ago, I said that pretty much whichever way you cut it Australians are less involved in formal organisations than they were a generation ago. If you ask individuals whether they are active members of an organisation, you find that in 1967 33 per cent said yes but by 2004 just 18 per cent said yes.

If you look at the Directory of Australia Associations, the so-called bible for Australian associations, you find that the raw number of Australian associations has not kept pace with the Australian population. From the 1970s to 2010, the number of associations in that directory fell from 7,000 to 4,300. Put another way, there were about seven associations per 10,000 adults in the late 1970s and less than three associations for every 10,000 adults by 2010. That means that the associations we have are older than they once were. In the late 1970s, the typical association was about 22 years old; now, the typical association is about 39 years old.

We are not growing new associations the way Australia traditionally has—the way we did in the 1950s and 1960s, when we saw the birth of the Endeavour Foundation, Community Aid Abroad, Brisbane's Blue Nursing Service, World Vision Australia, UNICEF Australia, the Scout Association of Australia, Choice and International Pen Friends, to name just a few.

If you ask the associations themselves, they tell you they are shedding members. The RSL, Scouts, Guides, Rotary, Lions, the Mothers' Union—if you put together what these organisations are reporting back, it is possible to track an index of organisational membership. Compared with 1950, membership was down by 14 per cent in 1980 and was down a full 67 per cent by 2009. So it is vital that we as policymakers do what we can to increase the strength of Australia's organisations.

As a member of parliament, I take great pleasure in being involved in the associations in my local community. Just looking back through my diary for the last fortnight, I have been involved with Micah Challenge; People Power; the Canberra Times Fun Run, which raised money for a range of different charities; the University of the Third Age; and Care Australia.

Australia's associations need a system of regulation which is as good as we can provide for them. The Australian Charities and Not-for-profits Commission is aiming to be a one-stop shop for Australia's charities. The notion of the Australian Charities and Not-for-profits Commission is that charities and not-for-profits will provide their information once to a single organisation. That organisation which will then pass that information on to other Commonwealth agencies, including the tax office. Once we get buy-in from states and territories, it will also be passing that information on to state and territory government agencies as well.

This is what past reviews into the sector have called for. As the inquiry into the bill by the House Standing Committee on Economics noted, there have been five major reviews into regulation and taxation of the sector since 2000—the inquiry into the definition of charities and related organisations in 2001, the inquiry by the Senate Standing Committee on Economics in 2008, the Henry review in 2009, a Productivity Commission review in 2010 and a Senate Economics Legislation Committee inquiry, also in 2010. All those reports recommended a single national regulator for the sector. It is a straightforward approach and one which would bring Australia into line with other jurisdictions. As the report points out, the United Kingdom, Canada and New Zealand have this same sort of single regulator. Moving towards a single regulator is good for the growth of the charitable sector. If we want to, we can squib this reform, as previous parliaments going back to 2001 have—that was when the first inquiry recommended such a one-stop shop for charities. But, if we do that, we would be doing Australia's charities a disservice and we would be continuing the red-tape burden which falls upon them.

As was pointed out by witnesses to the inquiry, the not-for-profit sector already has a regulator—by default. It is called the Australian Taxation Office. The Australian Taxation Office is not particularly pleased about this and many charities are not particularly pleased by it either. It has strained the relationship between charities and the Australian Taxation Office. But let's not pretend, as the member for Menzies has attempted to do, that there is no additional red tape being imposed upon Australia's charities. We heard a great deal of evidence from charities about the burden of having to provide the same information to multiple government agencies and about grant requirements which are subtly different and so require charities to employ people to provide information to government agencies—when they could otherwise be increasing their expenditure on front-line services.

So this notion of the charitable passport is enormously appealing and will allow us to continue to grow the sector. As the report notes:

‘The current regulatory framework for the sector is fragmented, inconsistent, and uncoordinated across a range of government agencies.’

The report went on to note that it is vital we cut the level of red tape within the sector. The Treasury submission to the inquiry said:

‘For some entities the reductions [in red tape] will happen immediately, particularly those entities that are regulated at the Commonwealth level.’

The Treasury submission went on to say that those entities will see a reduction in their red-tape and compliance costs.

Reducing multiple reporting is absolutely critical. The Community Council of Australia said:

‘I do not think people quite realise how often charities have to demonstrate their bona fides, and the capacity to do that, by having the equivalent of a charities passport, has incredible appeal’

In summarising the situation I referred to earlier—the Australian Taxation Office becoming the default regulator for the sector—ACOSS said:

‘… it was never intended (nor has it wanted) to be the sector’s regulator; and the relationship between the sector and the ATO is less than positive as a result.’

If we are able to provide a more streamlined reporting arrangement for Australia's charities, that will provide great benefit to these charities.

Some have asked why the states and territories have not signed on already, but I think this is putting the cart before the horse.

It is vital that we build the ACNC and then allow states and territories to look at exactly what they will be signing up to. I fully expect that states and territories will do just that. It is strongly in their interests not to be collecting data that is already held by an ACNC. It is in their interests to be able to simply encourage charities to use a charitable passport. That ought to free up public servants in states and territories to focus on service delivery, not on requiring not-for-profits to provide information they have already provided to other agencies.

I commend the member for Parramatta for her excellent chairing of the committee. The report made a number of recommendations. It suggested, for example, that in the case of private ancillary funds, a tax-effective mechanism for individuals to pursue philanthropy which requires at least five per cent of the wealth of the PAF to be distributed annually and that the government investigate ways to strengthen protection in the bills for private donors who wish to keep their philanthropy anonymous. Recognising the desire for anonymity is an important feature in the bill. The committee also referred to the director's liability regime. The report said:

‘The committee is concerned that either the directors' liability regime is unduly onerous, as suggested by a significant portion of expert evidence presented to the committee, or that, as presented in the Bill, it is not sufficiently comprehensible for people to understand its intent or purported mode of operation. … Placing an unnecessary burden of liability could be seen as … a disincentive, which is opposed to the purpose and objects of the Bill. The committee therefore recommends that Treasury read draft this section of the legislation with a view to clarifying its intent and operation.’

The committee went on to note that the penalty amounts in the bill were roughly comparable with state and territory provisions but there was uncertainty among some witnesses as to the amount of discretion that would be available to the commissioner. The committee recommended accordingly that the explanatory memorandum to the bills clarify that the commissioner has the discretion not to impose an administrative penalty.

The committee scrutinised the bills thoroughly but the majority of the committee came strongly to the view that this is an important bill, that this bill will cut through red tape for the charitable and not-for-profit sector, a bill which will reduce frustrating and unnecessary duplication. I could see in the eyes of many of the witnesses the sheer sense of frustration at having to write the same details on the same forms. We have all had it from time to time when dealing with an agency that requires us to provide back to it information which it knows already. But how much more frustrating must it be for many of these charities and not-for-profit to have to remit information to a second government agency which it knows is already held by the first government agency.

I am surprised that the coalition are not supporting this bill. I know there is a strong tradition in the conservative parties of supporting the charitable sector and of reducing regulation. I am disappointed that the member for Menzies has chosen to run something of a scare campaign on this bill and has chosen to suggest that the government is increasing regulation; whereas, in fact, we are in fact simply doing what so many inquiries, going back to an inquiry under the coalition in 2001, have recommended—that is, to take the approach that Britain, Canada and New Zealand have taken, to cut through the duplication by allowing the equivalent of a charities passport. The member for Menzies has been selectively quoting from the sector and has not recognised in many cases that organisations he has quoted strongly support the bill. For example, ACOSS, the Community Council for Australia, the National Roundtable of Nonprofit Organisations, Philanthropy Australia, the Smith Family, the RSPCA and Chartered Secretaries Australia are all supporters of the Australian Charities and Not-for-profits Commission. I commend the bill to the House.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.