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Tuesday, 18 June 2013
Page: 6043


Ms GAMBARO (Brisbane) (12:24): These bills seek to introduce a definition of 'charity' and 'charitable purpose' that would apply across all government legislation from 1 January 2014 and constitute yet another example of Labor's regulatory overreach. The definition of charity and charitable purpose has not previously been comprehensively legislated in this country. Since Federation, the definition of charity has remained clear and consistent. It has remained a cornerstone underpinning what constitutes a charitable endeavour and what constitutes a charitable activity. The definition is based on a legal concept from 1601. It is widely understood and it is unilaterally accepted, having evolved over a 400-year evolutionary period in a manner that properly reflects changing community and societal standards.

But now that definition that has served us so well is in this government's firing line. The government wants to abandon what works, what has been proven and what has been broadly accepted by society and replace it with the government's own definition. Not even charities are safe from this government's obsession with regulatory overreach and the ever-present need for it to create more and more red tape, and so it goes. Now it has charities in its sights.

Australian charities law has closely followed the definition of charity based on the preamble to the Statute of Elizabeth. English common law is the principal basis for charities law in Australia in both state and federal courts, and each of the state jurisdictions has retained almost identical interpretations of the common-law definition of charity. The government is now seeking to pretend that there is some desperate need to legislate in this area, acting as if it is charting new waters.

The great reality of all this is that the former, Howard government looked at the issue of creating a common-law definition of charity. Former Prime Minister John Howard announced an inquiry into the definition of charity on 18 September 2000. The inquiry reported in 2001 and it made 27 recommendations. Former Treasurer Peter Costello released draft legislation in 2003 which took the traditional four heads of charity and divided them into seven heads of charity, in line with the inquiry's finding—namely, the advancement of health, education, social or community welfare, religion, culture, natural environment and any other purpose that is beneficial to the community. The Board of Taxation reported on the workability of the draft legislation in 2004 and the then government, through the then Treasurer, announced that the common-law meaning of charity would continue to apply but that the definition would be extended to include certain childcare and self-help groups, as well as closed or contemplative religious orders. The government decided not to proceed with the draft charities bill. The former coalition government enacted the Extension of Charitable Purposes Act, which confined itself to enlarging the legal definition of charity for federal purposes to include childcare and self-help groups and closed religious orders. The Commonwealth's definitional extension has not been adopted by any state jurisdiction.

This bill would be the first time that legislation has sought to so comprehensively define it in statute for the purposes of Commonwealth law. Our concern is clear: why create statute where the common law has served and does serve us so well? Why depart from 400 years of clarity and consistency? There is a fundamental philosophical divide between the approach of the coalition and that of the government. The coalition's approach to charities is somewhat different to that of the government. Labor prefers unwanted, unwarranted intervention, and approaches the sector with distrust, demanding huge amounts of information and draconian reporting requirements, making it so tough for the volunteers and charities the government claims to support. They go along every day doing countless hours of volunteer work out there in the community.

The coalition's approach is all about empowering people, not exercising power over them. It is an approach that the Leader of the Opposition utilised when he referred to Abraham Lincoln's famous description of democracy as 'of the people, by the people and for the people'. It is not a new approach, but it is one which both the Rudd and the Gillard government have trashed beyond recognition. The coalition has confidence in civil society, and we believe that the political community should be of service to civil society.

Australian not-for-profits lend a hand to those in need and they make our country so much a better place through education, volunteers, sports, arts and welfare organisations. Every day Australia's charity and not-for-profit sector repeats countless hundreds and thousands of acts of kindness, and their generosity makes our country a much better place to live in. That is why the coalition is standing up for not-for-profits and charities in opposing Labor's proposed Australian Charities and Not-for-Profits Commission, which will result in the kind of regulatory overreach that has become so typical of the Gillard government—more red tape and more costs on a sector that is already under great pressure. Labor's proposed Australian Charities and Not-for-Profits Commission, the ACNC, is predicated on the belief that Australia's charities and not-for-profits are doing something inherently wrong and need greater government oversight. The coalition rejects this belief. The ACNC will make life harder for volunteers and it will discourage involvement in the voluntary and community sector. By failing to work with the states and territories to create a single national framework, the Gillard government will increase the costs of running a charity or not-for-profit organisation and give the government more say in how charities and not-for-profits are administered. Instead of reducing red tape and unnecessary costs, the ACNC will add more red tape for charities and for not-for-profits.

While the ACNC will initially only cover those charities with exemptions, Labor's framework will allow an eventual expansion. Under these bills, the ACNC will require more information from yet another agency of government: a new national charities and not-for-profits register will be created to include information regarding contact details, governing rules, financial and information statements of NFPs, and the information will be made available on the internet. It will increase reporting requirements. A new reporting framework will be established and all registered entities will be required to provide an annual information statement. Medium and large entities will also be required to provide annual financial reports.

What the government is calling the 'charities passport' is really a new 'red tape passport'; that is what they should call it. It will provide government with more powers to deregister charities. The ACNC will have the power to register and deregister not-for-profit entities. Registration would be required for organisations to access Commonwealth exemptions, concessions and benefits, including tax concessions. It will provide the ACNC with more powers than the regulators of Australian businesses. The ACNC will be able to demand information, search premises and inspect items on premises, and seize documents or electronic equipment found on premises. Enforcement of a range of laws will be the responsibility of the ACNC. The ACNC will have powers to issue warning notices; issue directions; enter into enforceable undertakings; apply to the courts for injunctions; suspend or remove responsible entities; and appoint acting responsible entities. The ACNC will also be able to remove responsible officers. It will give government a bigger say in the operations of registered entities. The ACNC sets up a framework for a set of governance standards which will apply to registered entities and have a set of external conduct standards which apply to all registered entities, regardless of entity type. These standards can cover such things as the content of a registered entity's governing rules, the conduct of the registered entity and the processes that the registered entity must have in place.

Nowhere are these unwelcome and unwarranted intrusions resulting from these bills more apparent than for schools and charities based in my electorate of Brisbane. Charities like the Red Cross, which is headquartered in Brisbane, Rosie's Friends on the Street, who work with homeless people, the 139 Club, and Communify in the suburb of Paddington, who work with refugees and the homeless, will all be impacted by these changes. In addition, the electorate of Brisbane is also home to many independent schools who have raised significant concerns with me about the impact of these bills.

In terms of the compliance and reporting regime prescribed by these bills, independent schools already report through the Department of Education, Employment and Workplace Relations on their full financial status, and they are already required to submit audited financial statements to DEEWR annually. Independent schools in Australia already have extensive information available to the public on ACARA's My School, and this applies to all independent schools regardless of which ACNC registered entity category they are in. Requiring independent schools to report similar but different data to ACNC is another addition to Labor's smorgasbord of red tape.

In addition, independent schools provide financial reports to the state government. These bills will result in independent schools requiring more administrative positions to fulfil all of the reporting requirements, taking away funds from much-needed educational positions. The proposed compliance prescribed by these bills rivals that of public companies, and we have to remember here that these are charitable organisations we are talking about.

Independent schools are also concerned about the reporting requirements when they receive donations. For instance, will there be an additional level of reporting when they fundraise? In terms of the proposed statutory definition of 'charity', the independent schools sector is concerned at the time and financial costs of having to prove public benefit, when it has been long established. It is important for these schools to remain charitable in order to be able to reduce compliance costs and instead be able to concentrate and focus on education and reduce fees to parents. As to governance of entities, the regulations are yet to be defined. So we do not know what they will be and how they will impact on schools.

Taxation of 'unrelated income' and its definition is another area of concern for independent schools when there is already legislation in place to tax unrelated income, and especially when no definition has been established and there has been no consultation whatsoever with the school community. I want the minister to answer whether or not P&C shops selling uniforms and books will be taxed if they are separately incorporated. Will tuckshops selling goods be taxed? And what happens when these schools hire out their facilities for extra income to reduce fees or improve facilities?

The bills also provide no clarity as to the meaning of the phrases 'likely to contravene' and 'likely to not comply', as set out in proposed section 35-10(1)(c). Quite reasonably, a number of independent schools have raised with me their concerns as to what those words likely mean and how they will impact on schools. Section 35(10)(c) refers to an apparently discretionary power of the commissioner whereby the commissioner may revoke registration where the registered entity has contravened, or is likely to contravene or not comply with, a provision or governance or external conduct standard. No guidance or assistance is provided in the bill as to how the commissioner is to determine the intent or the mind of the entity being 'likely to contravene or not comply' with the act and the consequences of revocation of registration are significant to the entity. This is an example of particularly poor drafting and constitutes further evidence showing how little the minister and the government actually understand about the impacts of this proposed legislation on the sector. The phrases 'likely to contravene' and 'likely to not comply with' should be removed from this section entirely.

The independent schools in my electorate of Brisbane, like the rest of Australia, do not mind being transparent. It is just very hard for them when they need to redo their numbers in four different formats depending on which level of government they are reporting to.

As I have said, these bills are a classic example of regulatory overreach by a government with a history of legislative and public policy failures—yet another case of the Gillard government in action, with their reverse Midas touch at work. They are bad and unnecessary bills. (Time expired)