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Tuesday, 30 October 2012
Page: 8379

Senator STEPHENS (New South Wales) (12:40): I am very pleased to see us debating the Australian Charities and Not-for-profits Commission Bill 2012 and related bill at last. From my perspective, they breathe life into the reforms that have been so long in coming for Australia's not-for-profit sector. The government's commitment to establish the Australian Charities and Not-for-profits Commission, the ACNC, also reflects the sector's advocacy for the establishment of an independent, one-stop shop, specialist regulator. This regulator will provide the framework to support the vital contribution that not-for-profit organisations make to Australia's civil society. Rather than reflect any lack of trust in the sector, as the Senator Cormann said last night, in fact the ACNC supports public and government trust and confidence in the sector, which in turn helps charities and not-for-profits achieve their mission.

The government, working with the sector, is delivering an ambitious not-for-profit reform agenda. This reflects two very exciting though challenging phenomena: the impressive growth of and the wide-ranging changes taking place in the sector in Australia today. Australia's not-for-profit sector comprises around 600,000 entities. About 400,000 of those have access to Commonwealth tax concessions and about 56,000 of them are endorsed as charities. The sector contributes about four per cent of Australia's GDP and it is growing rapidly, with one million Australians employed in the sector and about five million volunteers involved. The sector turns over about $100 billion every year and has a 10-year annual growth rate of about five per cent a year—that is second only to the mining sector in Australia. The sector is at the heart of our education, our health, our arts, our culture, our sport, our environment and our welfare services.

Thanks to much hard work for a decade, during which I have been proud to be a strong advocate, the sector is finding its voice. It has grown its voice and its presence in Australian society because it has taken on many new responsibilities in areas of service coordination and delivery, and it has contributed to good policy development, shaping Australia's future. This is a good thing because a robust, vibrant, independent and innovative not-for-profit sector is vital in every modern democracy, and Australia is no different. I say 'robust' and 'independent' because, as Senator Siewert reminded us, who will ever forget the insidious, creeping, gagging clauses of the previous coalition government's contracts and funding agreements and the overt threat to cancel contracts, and the cuts to funding for organisations deemed to be advocating for policy change and not compliant with the government's agenda.

After a decade of hollowing out capacity and stifling innovation, it was a privilege for me to lead the work which led to the national compact with the sector. It was signed in 2010 and gave life to a new, robust and respectful relationship with the sector. So much work, so much time and so much commitment have gone into the development of this reform agenda, which includes the establishment of the ACNC, whose purpose is to deliver smarter and more effective regulation of the not-for-profit sector. The ACNC is future focused, its structural reform recommended by six reviews, including the comprehensive Report of the inquiry into the definition of charities and related organisations conducted under the previous coalition government and, of course, the 2010 Productivity Commission report.

Under the current arrangements, the Australian Taxation Office has the dual and potentially conflicting duties of determining an entity's charitable status as well as having responsibility for enforcing the taxation law. It acts as gatekeeper and enforcer. At the Commonwealth level, the Australian Securities and Investments Commission also plays a role in terms of its oversight of companies limited by guarantee. But the not-for-profit sector does not want to be regulated by the ATO or ASIC. Organisations have made it clear over the years, time and time again, that they want an independent regulator, one that understands the sector, one that understands not-for-profit organisations. The ACNC will be that independent and dedicated regulator, enabling the sector to consolidate its standing in the community through improved transparency and accountability.

The not-for-profit sector has the confidence of Australian society, but the opposition, in opposing this bill, say that the current arrangements are just fine. Last night Senator Cormann said that the ACNC is a solution in search of a problem. That is patently unfair and it is absolutely untrue. The not-for-profit sector is burdened by the complicated and duplicated regulatory obligations that are imposed on the sector. I have to say that the coalition are great champions of business, campaigning for harmonising regulation and reducing red tape for businesses—for the finance industry, for mining, for agriculture—but not the not-for-profit sector, which is larger than all of these except, as I said, mining. They believe the sector should be in the service of government. We believe the sector should be serving the Australian people, especially those who have little voice or representation.

Senator Siewert outlined the detailed history of the bills in the amendments before the Senate, and we will get a chance to debate them. Those amendments include providing additional parliamentary scrutiny of governance and external conduct standards to be made under the ACNC legislation and to codify the process for public consultation in the development of the standards. The objects of the bill are to cut red tape and reduce the regulatory burden, not to impose greater stresses on the sector. The ACNC will administer a 'charities passport' and work to implement a 'report-once, use-often' reporting framework. This charity passport is the data that charities will report to meet the baseline corporate and financial reporting requirements of Australian government agencies. This will be supported by changes to the Commonwealth Grant Guidelines which will benefit the organisations that register with the ACNC.

The changes build on the introduction of the standard chart of accounts framework—another great piece of the government's not-for-profit reform agenda. Information will be in one place and, if an entity provides an annual audited financial statement to the ACNC, then a grant acquittal should not generally be required. It is light touch regulation commensurate with the risk involved in the funding agreement. The ACNC will report to the parliament and the sector by developing and publishing a red-tape reduction timeline and plan and reporting against that timeline. The ACNC taskforce is already hard at work, implementing these arrangements until the ACNC itself is established. An example of that is the work that is currently going on between AusAID, ACFID and the government, with AusAID staff working with the ACNC taskforce to improve the process of NGO accreditation and entry into the AusAID-NGO Cooperation Program, reducing the reporting burden on ACNC registered charities and increasing the focus of AusAID assessments on the effectiveness of Australian aid funds.

AusAID and the ACNC will also work together to educate and support overseas aid charities to understand their obligations. This partnership with the sector will free up significant resources for frontline services and is a great example of what the ACNC will be able to deliver. The ACNC will provide a platform for delivering a national approach to not-for-profit regulation. With no national regulator, there is no opportunity for that to happen—and that is why a harmonised, national approach to regulation has not been achieved to date.

Senator Cormann would like us to believe that the sector does not support this legislation. This is simply not true. Last night, he deliberately misquoted out of context evidence from UnitingCare Australia. The first quote addressed a proposed definition of 'basic religious charity'. At the time, the definition excluded religious charities that received government grants. UnitingCare Australia argued that receipt of a government grant should not be a trigger for additional reporting, an argument accepted by government. The second quote was actually preceded by this statement: 'The church is supportive of one-stop reporting and a regulation concept.' I warn coalition senators: every time that you misquote or misrepresent the views of people like Reverend Tim Costello, Patrick McClure, Martin Laverty, Anne Robinson, Father Brian Lucas, David Crosbie, Lin Hatfield Dodds, Ken Henry, Professor Myles McGregor-Lowndes and Productivity Commissioner Robert Fitzgerald, you are traducing the intellect and reputation of prominent Australians who have contributed to shaping this agenda over the past decade. It is you who are undermining trust and confidence in the sector.

Let me reiterate: this reform has been led by the sector itself. ACOSS, Volunteering Australia, Mission Australia, Anglicare, World Vision, UnitingCare, Catholic Social Services and Philanthropy Australia are some of the many not-for-profit charities and organisations that have helped shape the bill and support it publically and consistently. ACOSS said just recently:

The creation of the Australian Charities and Not-for-profit Commission is the culmination of a long process and has broad support from the community and social services sector.

Chartered Secretaries Australia, in the Financial Review, contributed this view:

If we really want to support the NFP sector, the best way is to establish the ACNC, fulfilling the promise of all those inquiries and the desires of NFPs.

The Community Council for Australia said it:

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

And Philanthropy Australia are supporting 'the principles of the ACNC being an independent regulator to deliver smarter regulation, reduce red tape and improve transparency and accountability within the sector'.

Last night Senator Cormann outlined the opposition's position, and I wondered, as I listened to him, whether he is not aware of or whether he is completely uninterested in the fact that the 2008 Senate inquiry brought down a unanimous report, the first recommendation of which was the introduction of an independent regulator.

So what has changed? I certainly hope Senator Mason's view has not changed. He was adamant when he spoke here in 2006, saying:

I have little doubt that the vast majority of organisations are doing the right thing and are doing great work. The problem is that we cannot sort out the many good not-for-profit groups from the handful of bad ones or those who are underperforming. It is my belief that this threatens the donor-charity trust relationship within the sector at large.

It is here that government needs to step in and provide clarity where confusion prevails. After all, the government does have a legitimate interest in the not-for-profit sector, as the sector is the beneficiary of a raft of taxpayer funded subsidies handed out by government.

…   …   …

Charities have a good reputation but trust can very easily be lost. It is vitally important that the sector makes itself more efficient and transparent, lest the sector experiences a decline in trust. There is a role here for government to step in and promote high standards within the sector and to establish a clear, transparent regulatory regime that will allow Australian charities to thrive in the 21st century.

Now we hear that the coalition not only is opposing the ACNC legislation but also will repeal the legislation and abolish the ACNC at the first opportunity.

The establishment of the ACNC is structural reform. It is about designing a regulatory framework which is suited to the not-for-profit sector and which addresses flaws in the current approach to not-for-profit regulation. The coalition's alternative charities commission is nothing more than an information and advice body, but that is not the key challenge confronting the sector in Australia. The key challenge is the need to address the deficiencies which currently exist when it comes to not-for-profit regulation—namely, the fragmented, inconsistent and uncoordinated approach to regulation of the sector.

If the coalition had their way there would be no ACNC and no regulatory reform. We would be back to the bad old days of gag clauses to silence dissent, as Senator Siewert said. We have already seen this occurring in Queensland. The National Compact would disappear. The work that has been done to develop a respectful relationship would be discounted and would disappear. Fundraising legislation would continue to be a nightmare for charities trying to raise money across borders or online. Volunteers would be subject to nonsensical cross-border rules that currently exist and which are part of the not-for-profit reform agenda negotiations. The sector would continue to be underpaid, underresourced and undervalued.

These bills before us today are about getting the balance right—promoting transparency and good governance while reducing red tape and supporting the capacity of the sector organisations. I congratulate the sector for its leadership and its persistence over more than a decade, and the Assistant Treasurer David Bradbury for his attention to this important agenda. He is someone with experience and connection with the sector who understands the importance of these reforms and who has championed them in cabinet. Senator Siewert made some important points about the role of the commissioner.

I commend to everyone the work of the interim commissioner, Susan Pascoe, who has done an amazing job in driving these reforms and in dealing with the consultation that has been part of the development of these bills. Starting with the original 2001 charities bill, the draft of which was rejected so soundly under the previous government, she has brought the sector and government to the place that we are today. It has been an amazing effort and she is to be commended for her leadership of her team and for the work she has done with the ACNC task force. All of this is a big-picture vision. It is about not-for-profit reform. It is about positioning our organisations for Australia in the future.

We need to come to a definition of charity. We are still working with the Queen Elizabeth statute common law provisions. We need to consider how all of this plays out in terms of workforce planning. We know the demands that are being placed on the sector. We know the challenges. We know where the compact is taking us, and the codes of conduct and of consultation that are being developed there. We know how much work is being done to understand the sector through funding the work of organisations like the Centre for Social Impact, another big commitment from this government to understand the sector and provide some intellectual framework around it. We know the work that has been invested in the Social Investment Fund, and the kinds of models that are being developed for enterprise opportunities. We know the work that is being done by organisations on capacity building for the sector.

All of those things were in a hiatus for a decade, and all of those things now need to be invested in and supported. They come quite clearly out of the recommendations of the Productivity Commission report, which outlined, quite succinctly and quite transparently, the agenda of five key pillars for this sector that are going to sustain them into the future. It is a seminal piece of work, and I recommend that it be on everyone's bookshelf. If you really need to understand what is going on in the sector that is a really good place to start.

I place on the record my thanks to Senator Claire Moore and Senator Siewert for their work in bringing this latest round of amendments to the Senate. It reflects good consultation and the way committees work best in this place. It is about improving legislation that is in the national interest. It puts party politics out of reach and that allows people to honour the commitment we have made to the sector through the national compact that we would develop and support a thriving, robust, independent sector into the future. These things which are now part of the COAG reform agenda in health, in ageing, in community services are things that we need to invest in now for the long term. I am quite sure that these bills before the Senate today will be part of underpinning good policy and good practice to carry us through into the 21st century.