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Monday, 17 September 2012
Page: 10793


Ms OWENS (Parramatta) (19:03): I am very pleased to speak on this tonight. It is a bill which will do remarkable things for a very vibrant not-for-profit sector. I would like to take the member for Higgins to task a little bit. Sometimes I think members on that side and members on this side can listen to the same evidence and come to two completely different conclusions. I think perhaps that is what has happened in this case. I chaired the committee that the member for Higgins was referring to, so I sat with her through all of the evidence given in those days. The overwhelming impression I got was of overwhelming support for the creation of the Charities and Not-for-profits Commission. In fact, ACOSS said:

The establishment of a national regulator for the community sector has long been championed by ACOSS, which welcomed the government's commitment to this reform in 2011 and has worked closely with the government and our members towards its establishment. We strongly support the ACNC opening on 1 October.

The Community Council for Australia said:

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

The National Roundtable of Non-Profit Organisations, when referring to the ACNC bills, said:

Once again we are at the altar of the reforms we want and need and we ask for the support of our national parliament and of the states and territories to deliver for us better and smarter regulation. We do not want to be jilted again. The establishment of the ACNC under the terms of the bills represents a very good start down a better and smarter regulatory road.

That was in a submission to the Senate Community Affairs Committee and the Joint Committee on Corporations and Financial Services in August 2011. Philanthropy Australia supports the principles of the ACNC. They said they support the principles of the ACNC being an independent regulator to deliver smarter regulation, reduce red tape and improve transparency and accountability within the sector. Philanthropy Australia believes that this will foster a strong, growing and accountable not-for-profit sector, which is vital for a vibrant, inclusive and resilient civil society in Australia. The Smith family said, 'The Smith family would welcome the passing of this legislation and the establishment of the commission.' The RSPCA said:

RSPCA Australia supports of the Government’s reform agenda for the charities and not for profit sector. The Australian Charities and Not for Profits Commission is an integral part of the reforms and provides the enabling mechanism for future regulatory changes that should lead to the reduction of ‘red tape’, efficiencies and a ‘level playing field’ in the consideration of charitable status and mechanisms that will support charities and financial giving.

There are more but I think that gives an indication there are general statements of support from some of the major peak organisations in the not-for-profit sector.

The member of the Higgins very cleverly and quite selectively quoted some of the criticisms which were made of the draft legislation. We were inquiring into an exposure draft of the legislation, not the legislation in front of us now. There were a number of criticisms made. There were many recommendations made by the committee to address those concerns. I have to say that the government responded incredibly well and addressed all of the concerns that were raised by the committee. On the release of the report there was incredibly positive feedback from the community that the major issues they were concerned about had been addressed.

When we are talking about the not-for-profit sector, we are talking about a huge part of Australian life and of the Australian economy. It comprises some 600,00 entities that provide services in education, sports, welfare, arts, religion, culture and community wellbeing—really, an extraordinary number. It plays a major role in the Australian dollar economy. Total quantifiable Commonwealth tax expenditures in 2010-11 are estimated at $3.3 billion. Unquantifiable Commonwealth tax expenditures are of a similar size. Direct government funding in 2006-07 was approximately $25.5 billion and total public donations to the sector were approximately $7.2 billion. Therefore, even excluding fees-for-service, it comprises about $40 billion per year, and then when you add revenue for fees-for-services it is about $100 billion per year. It contributes five per cent of Australia's GDP and eight per cent of employment, so it is a sector which is incredibly important not just for what it does for the people it serves but for the extraordinary role it plays in our economy and in job creation.

The rationale for these bills has been around for quite some time. In fact, there have been five major reviews conducted into regulation and taxation of the sector since 2000: the report of the inquiry into the definition of charities and related organisations in 2001, a Senate Economics References Committee inquiry into disclosure regimes for charities and not-for-profit organisations in 2008, Australia's Future Tax System report in 2009, the Productivity Commission report on the contribution of the not-for-profit sector in 2010 and the Senate Economics Legislation Committee inquiry into the Tax Laws Amendment (Public Benefits Trust) Bill 2010. These reviews concluded that the sector's regulatory framework has added to its complexity and cost, and they all recommended that a single national regulator for the sector be established—and that objective has been taken up by the community and prosecuted. They, in general, have thought for quite some time that that would a very good thing for the sector.

I actually worked in the not-for-profit sector for a while. When representatives from the community talk about the burden of regulation, I have some idea of what they are talking about. In fact, I worked on both sides: I worked in a funding body and, for many years, in the not-for-profit sector. It is a sector that is both over-regulated and under-regulated. There are some 600,000 entities in the sector, and about 440,00 of those are unincorporated organisations that fall pretty much outside the regulatory framework. They do not have reporting obligations and cannot be endorsed as charities. So there are 440,000 little organisations, and some large organisations, that do good work in the community that essentially fall outside the regulations.

For many others that provide services across the six states and two territories and may receive funding from six state governments and two territory governments; that may receive federal funding as well; that receive funding from philanthropic organisations in Australia and from overseas; that receive sponsorship; and that receive funding from trusts, where they have to have tax deductible status, what you find is that every time they approach one of those bodies, or when they approach the local council for rate reductions, they have to prove their bona fides. So, you do not do it once; you do it over and over and over again—in fact, I know that there are some not-for-profits out there that produce their annual reports in glossy formats just for that purpose. Because, quite often, when a state or federal department asks you for your report, they ask you for six copies. So we all had, on the shelves of our cupboards, multiple copies of our annual reports for the last three years, multiple copies of our certificate of incorporation, multiple copies of our proof of insurance, multiple copies of our model rules and our constitutions—and, every time we submitted an application or a report, we got out a giant envelope, went down the road and pulled them all out, if we were organised enough to do that.

The amount of paperwork, if you like, that these organisations create in order to satisfy sometimes 30 or 40 different sources of funds is quite bizarre. Some of the things that the sector was looking for from these bills—and it does actually get them—removes some of that. They were looking, for example, for what they call the Charities Passport, which is to have a Charities Commission which recognises the charitable status of an organisation and provides it with this stamp of approval, if you like, which is called the Charities Passport. And once you have that Charities Passport it is used instead of all that repeating that proving of the bona fides.

For some of our charities that receive funding from, say, US charitable trusts, without that official government passport they cannot actually get through the door, because in the US it is actually a standard thing—you have your charities number and that is it. So for a lot of our charities it would dramatically improve their access to other sources of funds but it would also significantly wipe out a large part of that burden of proving who they are over and over again.

The sector is also looking for a more transparent mechanism for achieving tax-deductible status. That is currently managed through the tax office. There are obvious concerns within the sector that there are inconsistencies in the way those applications are assessed, that it is overly complex and that there are some organisations that are jumping through hoops and paying quite considerable fees in order to achieve that status. So these bills give the authority to provide tax deductible status to the Charities Commission rather than the tax office—and that, again, is something that the sector has been asking for for quite some time.

The education and training role that the Charities Commission would take on is an incredibly important one. There is not actually a single organisation in the country at the moment that can do that; it is something that is really needed. We would all have had community organisations coming into our offices from time to time saying that they wanted help in negotiating their way the myriad laws regarding fundraising, reporting, governance and all those things—particularly for some of the newer organisations that are involved in overseas aid. I know in my community I quite often get organisations that really are looking for basic information on how they can improve the way they do business. Again, that is an incredibly important part of it.

But perhaps one of the most significant parts is one that will take some time to work through, and that is the reduction of red tape. It is such an issue for the community that they asked that it be included in the objects. It was implied in the objects and was certainly in the explanatory memorandum. But one of the things the community asked when they presented to our committee, over and over again, was that it be explicitly stated in the objects, and that is because it is perhaps the biggest need for the sector at the moment. Again, you can imagine coming to the end of the year and submitting reports to your 24 different funding bodies. Sometimes it is the same reports over and over again—although not always the same report; in fact, if you are an aged care provider across several states there will be several sets of reporting requirements that you have to meet. But much of the information is actually the same, and yet organisations submit it over and over and over again.

One of the things they were seeking was this dream that they could submit to the ACNC and have other state and federal agencies take that report from the ACNC. It is something that the federal government has been talking to all the states about, and there has been considerable support for the reduction of red tape across the sector. One of the changes that my Catholic and independent schools will be quite pleased with—one of the more recent amendments to the bill—is that essentially reports from MySchool will be taken as reports given to the charities commission. That is, again, one level of red tape that will be removed straight away.

We will see very quickly, once the charities commission is in place, this dramatic reduction in the number of reports that have to be submitted, because it will be possible for one report to become the report for several agencies, particularly with the way new technology is. You should be able to lodge it online and have it flicked across to wherever it needs to be, or have whichever agency wants it get it from that source. So there is potential here for incredible reductions in red tape. Again, I know from working in the sector and from spending time on both sides of the fence that days of work every year—probably weeks of work every year—go into reporting but should actually be going into serving communities. It is literally days of work. People are employed in not-for-profits simply to deal with repetitive report making—probably, in the big ones, whole departments. There are people in the not-for-profits I know whose job is specifically to keep up to date with the regulatory burden—not the doing of the work and not the doing of the first report, but the repetitive reporting requirements as they meet the requirements of many, many funding sources.

So I commend the government for this bill. It is a good bill, and it will have a dramatic effect on the capacity of the not-for-profit sector to serve the community.