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Tuesday, 11 September 2012
Page: 10267


Mr FLETCHER (Bradfield) (20:28): I am very pleased to rise to speak on the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. It is an uncontentious proposition, a view shared by all in this House, that charities and not-for-profit organisations do vitally important work across so many areas of our community. Many schools, for example, are operated by churches and other not-for-profit organisations. Many great hospitals were established by religious orders and many hospitals continue to be run by charities and not-for-profit organisations. Charities support the poor, the sick and the disadvantaged, in Australia and around the world.

It is therefore clearly desirable to consider a change to the law so that charities and not-for-profit organisations face a less expensive, less burdensome and more efficient regulatory regime.

If such a regime were before the House this evening in the bills which the House is considering, then we in the coalition would be only too pleased to welcome it and support it. Unfortunately, the bills that are before the House this evening do no such thing. They are sold as delivering reductions in red tape and reductions in the regulatory burdens faced by charitable and not-for-profit organisations. Sadly, they do precisely the opposite. It is for that reason, amongst others, that on this side of the House we are unable to support the package of changes contained in the bills before the House.

In the time available to me, I would like to make three points. Firstly, while these bills clearly will, should they pass into law, add a layer of federal regulation to the charity and not-for-profit sector, they do nothing to reduce other layers of regulation, particularly at the state level. Secondly, it is claimed that, even if these bills do nothing to improve the position at the state level, they will deliver some efficiencies at the federal level, but on analysis these claims are quite implausible. Thirdly, contained in this package of measures is the imposition, in a number of ways, of onerous, challenging and difficult new requirements for charitable, not-for-profit and voluntary organisations which place burdens on organisations and people wishing to make a contribution through the sector.

Let me turn firstly to the question of how this package of measures imposes a new regulatory regime at the federal level when the government has clearly conceded that it has not secured any tangible outcomes in rolling back the regulation of charitable and not-for-profit organisations at the state level. This was a very clear message from participants in the sector who appeared before the recent inquiry conducted by the Parliamentary Joint Committee on Corporations and Financial Services as well as a number of other committees of this parliament which have looked at these bills. The national and state and territory peak bodies for volunteering highlighted the significant concern in the sector about the duplication and overlap between Commonwealth and state and territory laws governing the not-for-profit sector. They had this to say in their submission:

The ACNC—

the Australian Charities and Not-for-profits Commission—

is meant to relieve these compliance burden issues by providing a 'one-stop' regulation shop. However it is argued by some that red-tape reduction cannot be achieved without collaboration between Federal and State and Territory governments.

…   …   …

A number of NFP agencies expressed their concern about this matter … harmonisation between the two levels of government is some time away.

Mission Australia also commented on the disparity between what was promised to the sector and what is actually going to be delivered, having this to say:

We support the notion of the ACNC as a one-stop regulatory stop and support the notion of a Charity Passport that will see us provide our financial and governance information once, to be used often. Yet it is disappointing to see no evidence of how this is being achieved.

Our overriding concern is that rather than reducing red tape and compliance burden, the ACNC will add another layer of compliance and that nothing will be taken away.

Those are the words of one particular non-profit organisation analysing the practical impact of this package of measures on their activities. Their conclusion is that, despite the bold promises, the practical consequence will be no reduction in red tape but, on the contrary, an increase in red tape. In a similar vein, Father Brian Lucas of the Catholic Church had this to say, when he appeared before the committee recently:

Much has been said about the need for reduction of red tape. That was very much the rationale that led a number of the various government inquiries to recommend a national regulator. You will have heard, I am sure, that there is still concern in many sectors that particular legislation that we are now dealing with does not bring about the reduction of red tape that was envisaged.

The Australian Conservation Foundation had this to say:

ACF is concerned that rather than remove duplication, the ACNC Bills will duplicate reporting obligations.

We heard that these issues are of considerable concern to independent schools, who are worried that they will be required to report much of the same information that today they provide to the Department of Education, Employment and Workplace Relations to the ACNC as well. So far, there has been no indication of any information-sharing agreement having been reached between the ACNC and the Department of Education, Employment and Workplace Relations. We heard from the Catholic Bishops Conference that they are concerned about Catholic schools facing a competitive neutrality problem because this will impose new, burdensome reporting obligations on Catholic schools, obligations which will not be faced by the state school just down the road.

Against this backdrop of real and tangible concerns, what satisfaction has the government been able to offer that there will be a harmonisation between federal and state and territory obligations leading to the promised reduction in red tape? I am sorry to say that absolutely no satisfaction on this point has been given by the government.

In evidence to the Parliamentary Joint Committee on Corporations and Financial Services, the interim commissioner of the ACNC task force told the committee that no state or territory government has yet entered into a memorandum of understanding with the Commonwealth to participate in the new regulatory arrangements. There is no state or territory government which has yet entered into a memorandum of understanding.

We heard from Mr Ronalds, a senior official of the Department of the Prime Minister and Cabinet. He was asked about the progress of negotiations with the states, and he was also asked why it was the case that these arrangements with the states had not been put in place first before the imposition of this new layer of Commonwealth regulatory requirements. Here is what he had to say—with, I must say, a certain lofty disdain which perhaps only officials of the Department of the Prime Minister and Cabinet can display. He said:

Our view—and, I must say, with our considerable experience of COAG processes—is that that would take many years to do.

By that he means many years to arrive at a deal between the Commonwealth and the states. He went on to say:

Our perspective is that it was much better to begin the regulatory reform process, to make the improvements at the Commonwealth level and to then work very constructively with the states and territories, and that is in fact what is going on.

That is his claim. I must say that I was wholly unpersuaded by that claim, because, if you analyse what Mr Ronalds said when he said it 'would take many years' to achieve a deal between the Commonwealth and the states and territories, what he is in fact saying is that it is going to take many years before regulation at the state and territory level is likely to be wound back. That therefore means that for many years charities will now face the operation of this new Commonwealth level of regulation on top of, in addition to, the existing level of state and territory regulation which they face.

Let me turn, then, to the second point I want to address, which is that the efficiencies which we are told will be achieved at the federal level by reason of the introduction of the Australian Charities and Not-for-profits Commission are quite implausible. It really does strain the credulity of any objective observer that these benefits will be claimed. In practical terms, the benefits are going to require other Commonwealth departments and agencies agreeing either to hand over their own regulatory powers to the ACNC or, at the very least, to harmonise their regulatory requirements with the ACNC. For example, it was claimed that the charities would be able to lodge their details once with the ACNC and that, once those details were on the register maintained by the ACNC, then any other Commonwealth agency or department which is to grant them money under a contested grant process, for example, would be able to take the information as read. There will be no need to provide it separately, and so, rather than having to provide a 20-page application form, they will only need to provide a couple of pages because most of the information will already be on the ACNC's register.

Wouldn't that be a marvellous thing if it were in fact to happen? Wouldn't it be a marvellous thing if these efficiencies could be achieved? On this side of the House, we do not dispute that it would be a marvellous thing; we are just deeply sceptical that it is actually going to happen. There appear to be no tangible mechanisms to ensure that bureaucrats in other departments will cheerfully vacate the field when the ACNC comes along. I asked a question on this point, at the committee's hearings last week, of Ms Linda Lavarch, who is chair of the Not-for-Profit Sector Reform Council. This was her very reassuring answer. First she told me that there is a compact that has been signed to deal with these matters. Then she said:

A compact advocate at the deputy secretary level has now been appointed in each department. It is their role to take the leadership in their department to ensure that they not only are the principals of the compact but also have a shared vision with the sector about reducing red tape. The red tape is not just reduced for the sector; it is reduced for government as well.

I am deeply sceptical. In theory, of course, it is plausible that the ACNC could be a one-stop shop and that other agencies could wind back their levels of involvement and accept, for example, information that had been already lodged with the ACNC. In practice, this would require a remarkable and most unlikely change in bureaucratic behaviour.

Let me turn briefly to the third point I want to make, which is that the new law presents major difficulties for charities in a range of areas. First of all, it imposes onerous new requirements to deal with issues like the threat of money laundering. It is hard to understand why this needs to be dealt with in the ACNC Bill when there are already other regulatory regimes which address the issue of money laundering.

Another way in which this new legislation creates difficulties for charities is that it establishes draconian powers on the part of this new regulator. Just as one example, the new regulator will have the power to disqualify a director, whereas, by contrast, if ASIC, the corporate regulator, wants to disqualify a director, it must first seek a court order. In fact, this regulatory regime is extraordinarily intrusive, with enforcement powers and provisions—division 70, 'Information gathering powers'; division 75, monitoring powers; powers to gain warrants; powers to enter onto the property of charities; and so on. This is very far from being the so-called light-touch enforcement regime that we were promised by officials appearing before the committee.

In conclusion, the coalition stands for supporting not-for-profit organisations and volunteers. We believe that this onerous and intrusive package of regulation will do precisely the opposite, and that is why we oppose it.