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Tuesday, 11 September 2012
Page: 10273


Mr BUCHHOLZ (Wright) (20:58): In my opening remarks 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 would be remiss of me not to offer some advice to the previous speaker with reference to the intent of this bill. Whilst at face value, as it says in the preamble, the bill seeks to reduce red tape for our not-for-profit and charities sector, the coalition shares my great concern that this is just not achievable given the evidence we received at the hearings of the House of Representatives Standing Committee on Economics.

I represent the electorate of Wright. Earlier in my term, we suffered massive loss of life as a result of flooding. Those in my electorate were firsthand recipients of the generosity of charities from right across Australia who came to our aid.

So it is only fair that I return the favour to those agencies, who under this bill will be burdened with extra regulatory requirements. I will extrapolate from the Hansard the evidence that was provided to the House committee and leave the government in no doubt that the tack they are taking on this legislation will not reach its objectives; and, for that reason, the coalition cannot support these bills.

The not-for-profit sector plays a major role in Australian society. It comprises 600,000 entities that provide services in education, sport, welfare, arts, religion, culture and community wellbeing. By definition, the sector also engages heavily with volunteers, and much of its contribution to Australian society is outside the dollar economy, but it is estimated that volunteer time donated to this nation is in excess of $14.6 billion, a colossal effort by those who give their time freely.

These bills provides for the establishment of a new statutory office, the Australian Charities and Not-for-profits Commission, which would be the Commonwealth regulator for the not-for-profit sector. The bill provides the ACNC Commissioner with a range of enforcement powers, and those powers are modelled on those given to other Commonwealth regulators such as ASIC, APRA and the ACCC. The bills provide the ACNC with the authority, no less, to issue warning notices, issue directions, enter into enforceable undertakings, apply to the courts for injunctions on charities, suspend or remove responsible entities, and appoint acting responsible entities. These are enormous powers being given to this body under this legislation.

The bills specify the conditions that must be satisfied before the ACNC Commissioner can use enforcement powers, the scope and range of the ACNC's enforcement powers and the associated penalties for contravening enforcement powers issued by the ACNC Commissioner. The commissioner would be able to exercise enforcement powers only over registered entities. The commissioner may generally only use enforcement powers against federally regulated entities; however, the commissioner may revoke the registration of any registered entity. The ACNC Commissioner's enforcement powers in relation to external conduct standards apply to all registered entities.

Only the coalition's plan will help the sector. We support a much smaller commission, to focus on innovation, education and advocacy. Our intention is to cut red tape—genuinely cut red tape—as reflected in our proposal in the family services area, where contracting reforms will make it easier for agencies in civil society. The intention of the bills, we are told, is to reduce red tape, with the ACNC Commissioner to cooperate with other government agencies to oversee a simplified and streamlined regulatory framework for not-for-profit entities. When challenged, the ACNC said, 'Our plan to reduce red tape is to go to the states and have them reduce their regulatory burden on the sector.' In doing that, they would be creating another level of bureaucracy over the top of an already regulatory compliance laden sector. The bill should place a clear obligation on the government and its agencies to reduce the unnecessary duplicative and burdensome administrative reporting and compliance obligations on not-for-profits. Evidence provided to the House of Representatives Standing Committee on Economics in its inquiry on the draft bills revealed the serious concerns of stakeholders and that there is a lack of confidence that this legislation will reach its objective of reducing red tape.

The previous speaker, the member for Shortland, indicated that the legislation had wide-ranging support across the sector. That is just not true. There are many players in the sector who oppose this legislation and it is my intention tonight to highlight their concerns. ACOSS—an organisation mentioned by the previous speaker as showing undeniable support—was concerned that the benefits from minimising procedural requirements and duplication or cooperation between the commission and other government agencies do not provide adequate assurance that the sector will benefit from this reform. Their submission said:

Throughout the evolution of this reform, the sector has been assured of principles such as ‘light touch regulation’; and of the commitment to reduce duplication of reporting requirements and enhance the value of the reporting that is undertaken in terms of information for and about the sector. Yet these principles are not evident in the ACNC Bill. It is important that the legislation includes an explicit objective of reducing red tape. Yet these principles are not evident in the ACNC Bill. It is important that the legislation includes an explicit objective of reducing red tape.

That is firsthand evidence that ACOSS have serious concerns about this legislation, so it is fair to say that there is not support for it right across the sector.

The coalition acknowledge the wishes of the not-for- profit sector that the reduction of red tape should be made an explicit objective of the bill, but we are greatly concerned that these objectives will not be met. Mr Bill Daniels, Executive Director of the Independent Schools Council of Australia, said in his evidence to the economics committee inquiry:

… we would say that some of the proposals in this legislation are simply another layer of legislation and that reporting and accountability would add to the burden—

hardly the comments of someone supportive of the bill, I would suggest. At the same hearing, I asked:

One of the cornerstones of the proposed bill is that it will reduce compliance red tape. Do you have an indicative date or indicative opinion from the states as to whether or not they are moving towards reducing their compliance requirements?

From the Hansard, Mr Daniels response was:

I have been with this organisation for more than a decade. I have seen no reduction whatsoever in reporting requirements—in fact an increase in reporting requirements … There has been no discussion whatsoever with the states or, indeed, with the Commonwealth department that I am aware of that has involved the independent sector on any reduction in reporting requirements. The only discussion that I have had with the Commonwealth apart from the ACNC briefings we had received is a less-than-perfect understanding of what is intended by the commission. So there has been no discussion whatsoever of any reduction or any proposal to reduce reporting.

Perplexed by this response from someone who was supposedly a supporter of the bill, I asked him:

Would that be a concern of the organisation that you represent here today given that evidence that we heard earlier today was clearly underpinned and motivated by the fact that there was going to be a reduction in red tape in order to streamline funding and provide long-term stability to the sector? If that fundamental piece was not going to be there or is not evident before the legislation is put before the House, does that raise a concern with you?

Mr Daniels comment was:

It is a concern but it is just another added complexity that each individual school would have to deal with. It is likely to add a layer of reporting and accountability that is not there.

When the government says they are going to put mechanisms in place to reduce compliance and the expectation is that the compliance reductions will come from the states, can you imagine the state health departments reducing their level of compliance on their hospitals which would fall under this bill? Would you suggest the state education departments which would reduce their level of compliance because now there was another layer of bureaucracy in Canberra? I suggest not.

The states have not agreed to hand over any of their powers with respect to charities and not-for-profits to the Commonwealth—such as the powers with respect to incorporated associations, fundraising et cetera. S o the new regulator will be an additional layer of red tape and thus not achieve its primary objective of reducing regulation. We the coalition believe government should get out of the way of civil society and let them do what they do best—help people and help the community. Labor is creating a roadblock for the operation of charities and the not-for-profit sector and for people's involvement in civil society. The bill provides a tiered system of registration based on revenue thresholds. This has been done in order to minimise the compliance burden placed on registered entities.

Reporting requirements under the bill are proportional to the size of registered entities, based on revenue thresholds. There are three tiers: a small registered entity is an entity with annual revenue of less than $250,000; a medium entity is considered to be under $1 million; and a large entity is over $1 million or more . Revenue is calculated in accordance with the relevant accounting standards issued by the Australian Accounting Standards Board .

During the inquiry, the c ommittee received evidence that the proposed thresholds were too low. In its submission, the Anglican Diocese of Sydney expressed explicit concern that the revenue thresholds used to determine whether a registered entity is small, medium or large remain s ' unhelpfully low' —again, far from the support that the Labor government are saying there is unqualified support for. The submissions also noted that t he thresholds currently proposed are based on those used by states and territories under incorporated associations legislation and also under the Corporations Act for companies limited by guarantee. We understand it is conv e nient for these thresholds to be retained, particularly to ensure that that there is minimum impediment for s tate and t erritory agencies agreeing to report the ACNC as a one-stop shop. However, beyond convenience, there is no obvious basis as to why these thresholds should be adopted for the whole sector and, in our view, good reason to doubt their suitability as thresholds for the whole sector under the ACNC B ill.

In hearing this evidence we have the ACNC now aligning itself with the very organisations for which they claim they are going to reduce the thresholds. This is not what one would perceive to be a positive step to remove itself from state legislation . I nstead , we see Labor putting up policy which supports the parasitic behaviour of a growing bureaucracy, justifying its own existence.

The Independent Schools Council of Australia also protested against the probable impact of the threshold on the indep endent schools sector. M ost schools would qualify as large entities with the consequent reporting b urden that applied to that tier. I would like to take you to the directors' liability and the impact of those volunteers who give many hours around the nation. A provision of the b ill deals with obligations, liabilities and offences under the a ct, and provides that:

If an entity is subject to an obligation or liability, or commits an offence, certain entities that are responsible for managing the primary entity may also be subject to the obligation or liability, or commit the offences, in specific situations.

In effect, the bill imposes personal liability on directors of bodies corporate in certain circumstances. The bill establishes a regime for administrative penalties. These can be imposed by Commonwealth agencies without the need for court action—quite perplexing. However, appropriate sanctions are required for a deterrent effect and protect those who seek to cooperate with the commission.

The committee also received evidence that the Australian Institute of Company Directors questioned the value of placing liabilities on people who essentially are volunteers working for the community—comments such as:

It concerns me massively that we might be the first country in the world to make being a not-for-profit, as a director, more onerous than being a for-profit. That is what this bill does.

In conclusion , t his b ill is Labor to its boot laces . T he bill is presented to the H ouse with the intent of reducing red tape. I have provided evidence from the sector which shares my concern that you cannot reduce red tape by creating another layer of bureaucracy. The b ill provides unnecessary penalties on volunteer organisations wh ich are the backbone of our nation and it is unfair that penalties inflicted on them would be greater than that under the C orporations A ct.

My heart goes out to every single volunteer who assisted me in the electorate of Wright during those terrible floods. Again, it is my civic duty and my responsibility in this House to try to reduce the burdens on not-for-profits by opposing this bill.