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Tuesday, 18 September 2012
Page: 11062


Mr ROBERT (Fadden) (19:02): I rise to support my friend and colleague the member for McPherson in opposing these outrageous charities and not-for-profits bills. These bills are not only unnecessary; they are also burdensome and they attach an enormous amount of red tape to volunteer organisations—those unsung heroes that are the glue that keeps our community together. It should not have been hard for this government. All it had to do was do nothing—stay away from it and let Australia's volunteers continue to do the great work they do. The Gold Coast, which the member for McPherson, Karen Andrews, and I proudly represent, does more volunteering than any other commensurate community in the country. We are the volunteering capital of Australia. Karen Andrews, the member for McPherson, comes into this place with a proud personal history of volunteer work. All we ask is for the government to get out of our lives, for the government to get out of the charity sector, in fact for the government to get out of most sectors. But they could not help themselves.

The Australian Charities and Not-for-profits Commission Bill and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill provide for the establishment of a new bureaucracy, new red tape—a new independent statutory office, the Australian Charities and Not-for-profits Commission. The ACNC would be a Commonwealth level regulator for the not-for-profit sector. There is nothing this government do not seek to regulate. If it is unregulated, they regulate it; if it is untaxed, they tax it. Ironically, they even call their taxation 'savings', which frankly I find hilarious.

The ACNC—the new regulatory body, the new burden of red tape for over 600,000 volunteers, the new onerous imposition on those who seek to serve our community—is set to start on 1 October 2012. We acknowledge that currently no single institution is responsible for the regulation of the not-for-profit sector. At present, Commonwealth, state and territory and local governments regulate different parts of the not-for-profit sector for different and overlapping purposes.

At the Commonwealth level, regulation governs access to taxation concessions and certain entity types such as companies limited by guarantee, Indigenous corporations and trustees. In the absence of a registration regime, the role of the de facto regulator at the Commonwealth level has generally been shared with the Australian Taxation Office, and if it is in the corporate sector ASIC is involved. The ATO deals with issues such as tax concessions, income tax exemptions, deductible gift recipient status, franking credits or the refunding of those, FBT, and GST concessions. ASIC deals with the approximately 11,000 not-for-profit entities incorporated as companies limited by guarantee, currently regulated under the Corporations Act 2001.

Not-for-profit concessions are regulated under law through the endorsement of the Australian Taxation Office. Thus the ATO, by default, is responsible for determining charitable status. There are around 600,000 entities in the not-for-profit sector—600,000 organisations made up predominantly of volunteers, hardworking Australians who want to serve the community and do not want government involved. If they did want government involved, they would belong to some quango or quasi-government organisation, but they have chosen to align themselves with voluntary organisations. Fellow men and women, boys and girls, are in their community to serve their community. Around 400,000 of them access Commonwealth tax concessions, as you would expect, either through self-assessment or through the ATO endorsement process. Just because they access those concessions does not mean they require the big hand of government coming down upon them.

These bills establish the new Australian Charities and Not-for-profits Commission and of course the commissioner for the body. Clearly, the commissioner has responsibility for the administration of these bills and has the rights, powers, responsibilities and obligations provided to the administrator of such laws under statute and common law.

The main bill purportedly aims to 'maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector' and to support and sustain a robust, vibrant sector. The thing is, I did not know that public trust and confidence in the sector had been undermined in any way. I do not see a media onslaught or anything else condemning the charitable sector. I do not see a need for a new regulatory body and a new commissioner to enhance the public's trust and confidence in the not-for-profit sector because I do not see any drop in confidence. I do not see that the community is disengaged or showing a lack of trust in the charitable sector. I do not see it. What I do see is a policy in search of a problem. I see a knee-jerk reaction by a Labor government to a High Court decision against a Christian organisation, but I do not see a problem. I am always nervous, and the nation should be nervous, about a policy change when there is no problem, especially when it purports to enhance something that already exists—the public's trust and confidence in the sector.

The bill will provide the commissioner with the power to register not-for-profit entities according to their type. It will allow those entities to access support in the form of Commonwealth exemptions and benefits. To be registered, charities must apply for registration, obviously, and operate consistently within the definition of 'charity' specified in law or the requirements of other law—all things they do now, all things that are required under regulation now in terms of statutory law, or by other bodies such as the ATO and ASIC. The bill also provides the commissioner with the power to revoke the registration of entities under certain circumstances—powers that already lie with the ATO and ASIC now.

The bill sets up a framework of governance standards and a set of external conduct standards which apply to most registered entities. The standards cover things such as governing rules, the conduct of the registered entity and the processes they must have in place, most of which exist now.

Reporting is a new part of the rules that these bills are putting in place. The entities will all be required to put in an annual information statement, the first in respect of the 2012-13 financial year, to be lodged with the ACNC by 31 December. The question is: when they each lodge their reporting statement—all 600,000 of them—who is going to read it, what will they read and what are they looking for? Is this for the purpose of enhancing the public's view of the charities sector, with which there is no problem that the government can point to? What purpose is this large volume of red tape designed to achieve?

If the only purpose the government can point to is the enhancement of the community's view and acceptance of a sector with which they are already in love, one has to question the government's real motive—and here it comes. The Commissioner of Taxation's unsuccessful appeal to the High Court, in the Commissioner of Taxation v Word Investments Ltd, is the impetus for the provisions in the bill that amend the 'in Australia' requirement that applies to tax exempt entities and DGRs. Word Investments, a tax exempt charitable organisation, carried on a funeral business. It also received donations. It paid its overseas profits to another organisation, which was also an income tax exempt charity, which used the funds in its overseas missionary activities. Income tax exempt status required each entity to be endorsed by the ATO as exempt from tax, which they dutifully did. This continues to be the process for charities to be treated as tax exempt entities.

The government announced its response to the court's decision in the 2009-10 budget, stating:

The Government will amend the 'in Australia' requirements in Division 50 of the Income Tax Assessment Act 1997 to ensure that Parliament retains the ability to fully scrutinise those organisations seeking to pass money to overseas charities and other entities.

This measure has an ongoing, unquantifiable revenue impact and will have effect from the date of royal assent.

A recent High Court of Australia decision held that charities may be pursuing their objectives principally 'in Australia' even where they merely pass funds within Australia to another charitable institution that conducts its activities overseas.

The measure will reverse the decision that charities and other income tax exempt entities can direct funds to overseas projects outside the current restrictions. The measure will reinstate the principles underlying the current integrity rules.

There we had a great Christian organisation that ran a low-cost funeral business so that people could bury their loved ones when they could not afford the usual high costs. It made a modest profit, in the hundreds and thousands of dollars. It was tax exempt and used that to assist its work, predominantly in Bible translation. Such translation, through the Summer Institute of Linguistics and other organisations, is one of the principal reasons why Indigenous languages have been preserved—because those languages were codified and the Bible translated into those languages. Some 2,000 Indigenous languages have received such support from the Summer Institute of Linguistics and Wycliffe Bible Translators, and those languages have been preserved and not lost.

The High Court decision was against the tax office, but the government decided in its wisdom that this was a bad thing—that a low-cost funeral home was providing low-cost funerals to people who could not afford them and that the income resulting from that, which would be tax exempt, was used to translate the Bible. That is the same Bible that is here in the dispatch box from which I speak. Sure enough, I have here in my hand the very word of God, the Bible, that this organisation seeks to translate. I will put it back in the dispatch box from which I speak—the same dispatch box that every member of the frontbench puts their notes on and stands in front of to speak. The organisation has the temerity to do that! And what is the government's response? 'We need to change the law to stop the likes of them behaving in such an egregious way under the tax exempt status that they enjoy.' There is only one degree of egregiousness here tonight in the House, and that is the Labor government seeking to stop such excellent work from occurring within the tax deductible regime of our tax law.

Stakeholder concerns regarding this process have been many, varied and loud. They have said it 'imposes high burdens on cross-border philanthropy' and that 'it is too onerous and unclear'—that is from World Vision, by the way. Concerns have been expressed as to the effect that this will have: 'it removes or impacts deeming provisions' and 'the donation of funds to other organisations should not jeopardise tax exempt status but this may indeed do that'. The criticism goes on and on and on. The inquiry by the House economics committee and a subsequent inquiry by the Parliamentary Joint Committee on Corporations and Financial Services exposed enormous concerns with the draft legislation.

Let me discuss a conflict of interest that I may have. I sit on the board of Watoto Child Care Ministries Australia. Watoto globally is the world's largest non-institutional orphan care program. In Uganda, where there are two million orphaned children—the highest number per capita in the world—Watoto takes in little orphaned children. Many of them we pick out of pit latrines. They are born and dumped in garbage dumps. We run three babies homes. We have 4½ thousand orphaned children and widows caring for them in our Watoto villages. A village will have a little home with eight orphaned children and a mother. We will put eight of these little home together in a cluster and we have eight or 10 clusters. We have our own schools, hospitals, educational facilities and vocational care. We now have hundreds and hundreds of university graduates. We believe that, by rescuing children, we can raise leaders and rebuild nations. Organisations across the globe, of which I sit on the international boards, raise funds on which they get an income tax exempt receipt. Those funds are used overseas to care for the most vulnerable children on the planet—children born and dumped in pit latrines. We dig them out, care for them and love them because everyone is of value.

This bill seeks to say that that work would not enjoy tax-deductible status. The government gave $140 million to Uganda—the same place Watoto works in—to assist poverty; and here we are, not leaning on the government purse, seeking to do great work in Uganda, and we are looking at having the tax-deductible status taken away. The bill is wrong. It adds an enormous impost. It adds red tape. It burdens organisations and takes away from the great work they are doing. Government should simply get out the way and let community-minded men and women get on with what they do.