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Standing Committee on Environment - 18/09/2015 - Register of Environmental Organisations

CROSBIE, Mr David, Chief Executive Officer, Community Council for Australia


CHAIR: Thank you for being here to support your submission.

Mr Crosbie : Thank you for the opportunity.

CHAIR: You are not under oath but please be aware that this is a proceeding of the parliament and legally that is the way it is. We have received your submission. Did you wish to speak to it or to make a statement at the start?

Mr Crosbie : Yes, if I could very briefly. There are a couple of things I want to make a point about. The first is that the charities and not-for-profits sector is a very big part of our lives and our economy. It turns over over $107 billion. It employs over one million people—1.1 million. It contributes four per cent to GDP. And it makes a huge difference in the lives of most of us across Australia, in so many ways across so many areas. But it is a really interesting sector in the sense that is has had an incredible period of growth for a decade. So, for over a decade, it has been growing at over seven per cent a year. Its turnover seven years ago was $46 billion; it is now over $100 billion. So you have this really rapid period of growth, up until the GFC, and, at the GFC, you have got a bit of a shift—a couple of shifts, really. Government increases in revenue stalled, and so the capacity to support new and more and more of the same diminished. Giving actually dropped significantly. If you look at the ATO DGR claims that are published each year, on average Australians were giving 0.45 per cent of their income around 2008-09; by 2011, it was down to 0.33 per cent. So it dropped off by around 20 per cent. And it has not recovered yet. It is now at around 0.35 per cent. So levels of giving, in terms of average income, have diminished significantly.

The sector has been operating—because it has been successful, in a sense: able to just do more of the same—in an environment where there has been little reform. And the regulatory environment is an absolute mess. You can take almost any area of operation of the charities and not-for-profits sector and it is confused and it is difficult. If you want to register to do a fundraising event on the internet, you have to go through eight different jurisdictions. There are all different requirements. The regulatory requirements around how you register and how you operate have been very confused. The micromanagement of charities and not-for-profits by government funders is bizarre. So they have been operating in a very difficult environment.

The vast improvement that has happened in recent times is that the Australian Charities and Not-for-profits Commission has come along and is actually serving the sector much better, in terms of registering charities, rather than having to work to the ATO, which, again, was a bizarre kind of situation. The ATO is a revenue collector; having to register there to be excluded from having to provide revenue is always a bit difficult. And the ACNC—and I have to declare: I am on the advisory board of the Australian Charities and Not-for-profits Commission—has been serving the sector very well and working to reduce the burden of this really messed up regulatory environment.

One of the things that charities need, the same as any organisation, is as much certainty as possible, in order to invest in itself, to improve and to make commitments. I have to say that in recent years there has been a lot of uncertainty in the charities and not-for-profits sector, and I think it has really impacted significantly on productivity.

It is important in the context of this inquiry to keep in mind that it is the purpose of a charity that matters. You cannot judge a charity solely by its activities. I know that there are groups that will be running car parks this weekend, but they are not car park runners; they are charities collecting $2 at the footy for each car that parks so that they can run a local service for people in need. If you judged that charity by its activity, you would say it is running a car park. You get all levels of that. The Australian Ballet owns a car park that is a very significant car park. Do you say that because it is a bigger car park and collecting more money it is not charitable? The test is: what is that money used for? What is the purpose? I think it is charitable purpose that matters. It is what matters in laws, what matters in registration and what matters in regulations. Advocacy is an acknowledged form of pursuing your purpose, as are a whole range of other things that people might do, including engaging in what we might call business activities or other activities. As long as you are pursuing a purpose and not breaking laws or your purpose is not about political campaigning, you satisfy the requirements to be a charity.

In our view, the deductible gift recipient system is well and truly broken. There are four different registers as well as the Australian Charities and Not-for-profits Commission. There is the environmental, the arts, the overseas aid and the public health. All of them have a kind of mixture of bizarre requirements. I was talking recently to St John Ambulance, who were told by the overseas aid group that they were not a charity and have taken over two years in trying to register. If you look at the time it takes organisations and the legal costs involved in going through the hoops of going through individual line agency ministries who under-resource those areas in terms of their capacity, and then they then have to get it signed off by Treasury as well, the process is just ridiculous. You would not expect a business to operate that way. You would not expect any other kind of entity that is making a contribution to our GDP or our community to operate that way.

Our argument is that the Australian Charities and Not-for-profits Commission is a fit-for-purpose regulator. It has been developed to regulate the sector. It should be allowed to regulate the sector, and DGR status should be attached to the ACNC, and the ACNC should be holding a register of all charitable organisations, and you should not be able to get deductions unless you are a charitable organisation. I might stop there.

CHAIR: Thank you very much, Mr Crosbie. I can assure you you do not have to have been in parliament for as long as I have to know that no level of government—including ours—can replicate, pay for and organise the things that volunteers, charities and service clubs do. I am sure no-one is more appreciative than everyone in this room of what they do. In your submission, you say that the DGR status is determined with respect to its purpose, not to its activities; however, in a historical sense, the charities and service clubs do not actually go out putting themselves, whether deliberately or inadvertently, into a legal situation costing taxpayer money, police and all these various things. That is where it gets a little different to most of what you represent. In that concept, do you still believe that a lot of these groups should have the status? I am happy to say most do not deliberately flout the law or whatever, but some do.

Mr Crosbie : That is a very good question, and for me the heart of that question is: what is the purpose of the legal action? Legal action is a very legitimate part of pursuing a purpose, depending on the purpose, and I will give you an example. As part of the board of a major foundation, I provided a grant to an Indigenous women's group to pursue legal action around a coroner's case in which the problem was the domestic violence that was associated with alcohol that had caused the death of a particular woman. Her death had not been found to be associated with those circumstances; I will not go into the details. They could not afford to pay a lawyer to mount a challenge to the coroner's finding, and we supported them in pursuing that in order to get the issues of domestic violence in this particular remote community, particularly the alcohol-related domestic violence, on the agenda. They were a women's group dedicated to safer communities, and it was a very good use of that money for that purpose.

I think spurious legal action is engaged in by lots of people—and I often find myself asking why you would do that. But if you can make a case that is pursuing a purpose, then I am happy. If you cannot make a case that is pursuing a purpose, then I think you have to question their charitable status. If people are doing things that are not consistent with pursuing their charitable purpose I think we should be asking questions. One of the great things about having the Australian Charities and Not-for-profits Commission is that they have had over 1,300 complaints about charities.

Previously you had to complain to the ATO, and I can tell you that that was a bit of a black box. You would make your complaint and never hear anything for years. No-one knew whether they were ever followed up or if action was ever taken. The Australian Charities and Not-for-profits Commission have a whole regulatory kind of enforcement framework that they are actually operating against and reporting against. I think it has made a huge difference to the sector. For the first time we are having charities deregistered at a significant level when they are using money not to pursue a charitable purpose—you cannot do it, you should not be doing it and it gives everyone a bad name. We want the public to have the kind of trust in our sector that you talked about. That means getting rid of those people who are not pursuing their charitable purpose.

CHAIR: I take it, though, that you are not saying that anything goes if it meets your objective?

Mr Crosbie : No.

CHAIR: Okay. That is really the question.

Mr Crosbie : There are very clear guidelines around charitable purpose. Your charitable purpose cannot be getting rid of a politician, for instance.

CHAIR: Some people would say that is a charitable purpose!

Mr Crosbie : I am a big fan of ratbags, I have to say. As I look across the table I am not sure that you guys are not fans of ratbags, either. Most people who assume leadership positions in our country get there because they are not prepared to accept the way things are. So I have no problems with advocacy and people pushing back and I do not always like what people do. But if they are pursuing their charitable purpose, good. I am not even sure we would have the Magna Carta if we did not have ratbags who were prepared to push back.

One of the great things about Australia—and you, Chair, have I think said this in the past—is that we are able to speak our mind in this country. You have said farmers come from a background where people tend to say what they think or what they feel. Having worked on farms in my life I am very aware that that is the case—it is not always what you want to hear from fellow farm workers.

I strongly believe that people need to be able to raise voices, and we do not always have to agree. That is one of the great things about living in Australia.

CHAIR: As long as they do it legally.

Mr Crosbie: Of course.

CHAIR: And I do not mean legally as in the purpose of the organisation. I mean legally as in not breaking the law.

Mr Crosbie: If there is a deliberate pattern by a charity of breaking the law I would immediately lodge a complaint with the Australian Charities and Not-for-profits Commission, as I understand have some been raised, and they would investigate it. That is the fantastic thing about having a regulator. I do not know if the same applies to the REO or any of the other regulators, because they are grossly understaffed and highly—I was going to say incapable, but it is not because of the people there but because they are just not resourced to do that work.

Mr ZAPPIA: Thank you for the example you gave a moment ago. I thought it was very good for trying to explain how it is never black and white. I have a couple of matters. In your submission you lodged a list of your membership. Does an organisation have to have charitable status to be a member of your body?

Mr Crosbie: Yes.

Mr ZAPPIA: Secondly, from my perusal of it I note that there are no environmental organisations. Is there a reason for that?

Mr Crosbie: We do work with environmental groups, but they have not chosen to become members. It is really interesting to me that in looking through the list you see arts, music, sport and all the different kinds of welfare, such as housing, mental health and drugs, but there is very little for the environment. I think it says something about the size of the environment movement in Australia. It is relatively small compared to the rest of the sector. There are not huge numbers of environmental organisations registered as charities. You are looking at over 50,000 charities and there are certainly fewer than 1,000 environmental groups. I also think they tend to be focused in a very narrow area. They tend to be focused on the environment. The kinds of organisations that become part of that collective advocacy around the broader sector tend to take a broader view. I am still in discussions with a couple of environmental groups about becoming members, and certainly we have environmental CEOs participating in our networks. But, you are right, they have not joined as members.

Ms CLAYDON: It is interesting, because we have taken evidence that there are over 600 organisation on the Register of Environmental Organisations. Evidence before this committee suggests that 75 per cent of those 600-odd organisations are on the ACNC. So it is not an insignificant number. But I take it that that is perhaps small in terms of the broader range of organisations with the ACNC. With your experience and you work with the ACNC, in your opinion might it be the preferred body to have? Do you think that all organisations that are currently registered with the Register of Environmental Organisations might go through that process, being part of the civil society in the broader not-for-profit community in Australia, and be subject to the same kinds of standards and rules of governance and reporting mechanisms? A number of people have suggested that might be helpful in terms of getting rid of some unnecessary administrative burden.

Mr Crosbie: I makes absolute sense to have all charities registered through the Australian Charities and Not-for-profits Commission. It makes absolutely no sense to have multiple levels of sub-ministerial decision making around whether somebody is a charity and whether they should get DGR. The processes around that are an absolute mess.

Ms CLAYDON: In your view could you then actually apply to DGR status to all people on the ACNC register?

Mr Crosbie: Yes. A major report was done by what was called the Not-for-profit Sector Tax Concession Working Group, which came out of the tax summit in 2011. It worked for over a year. It had over 200 submissions. It came up with a series of recommendations that I strongly endorse. I was not involved directly in that group. It was supported by Treasury, so it was based on the best data available. They made suggestions—except for all schools and all churches, because, once you get into all schools and all churches automatically being charities, the numbers get phenomenal. If schools and churches that want to be charities and want to set up foundations were allowed to do so, but not automatically give it to them, then everybody else who registered on the ACNC register was entitled to DGR, the total cost to government of opening up DGR was less than $115 million. The cost savings in capping the then, and still, uncapped meals card, as part of FBT, are over $120 million. So there was a revenue-neutral solution put forward that would have made the Australian Charities and Not-for-profits Commission register the register for DGR and the register for all charities, and it would have saved significant work within charities.

In my organisation we were quoted over $30,000 and 12 months if we wanted to be DGR. We are not going to spend over $30,000 and 12 months to become DGR. We became a charity through the ACNC in less than a month. You can get the ACNC to provide you with their processing times. I do not know them off the top of my head, but I would have thought that for almost every charity that applies the average amount of time to become a charity—because they talk you through and work you through things and provide draft legals and draft constitutions and support, as a good regulator does—is less than a month.

Ms CLAYDON: That would to a large part go to answering one of your criticisms of that, that being that the current DGR system is broken.

Mr Crosbie: Completely. It really makes no sense. Why on earth would have you have line ministers making decisions about whether someone is a charity, and then it goes to the Assistant Treasurer's office. You under-resource. You put one or two staff in that area. It is hardly a career-enabling move to be in the department processing claims for charitable status and DGR. I know that one organisation was told they would have to wait another three months because someone had gone on leave. To me the whole things is just bazaar. What really annoys me is that there is this kind of dismissive approach to the whole charities sector, as though their work does not matter, or they are not like businesses—we have to treat them like businesses or try to streamline their processes or improve their productivity or support getting rid of red tape for them, but we do for business. You want to have a look at the economic footprint of charities and not-for-profits in this country. They employ five times as many people as the mining industry. They are bigger than agriculture or communications and those kinds of areas, yet they are still offering on different rail gauges around fundraising in every state and territory. All of these impediments waste an incredible amount of human resources and time and energy.

Ms CLAYDON: I think you made the point very strongly. Like Mr Zappia, I want to thank you for your eloquent argument around the fact that the purpose really does matter—that activities should be seen through the prism of purpose, and indeed that advocacy is an integral part of pursuing your purpose. Thank you. It was very well articulated and very helpful for me as a member of the community.

Mr Crosbie: I should say that at one stage I was speaking with a member of the then Labor Party ministry suggesting that if the car park attendants wore tutus would they count their income as business or for the ballet? You get these ridiculous type of regulations.

CHAIR: Thank you. You are a good witness and a good advocate. I don't think anyone asked you for further information, but be aware that you will receive a copy of the draft Hansard to check. Thank you for your attendance.

Resolved that these proceedings be published.

Committee adjourned at 14:32