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Tuesday, 30 October 2012
Page: 8386


Senator SINGH (Tasmania) (13:10): I rise today to speak to the Australian Charities and Not-for-profits Commission Bill 2012 and the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Bill 2012. There have been many reviews of the not-for-profit sector over the past 17 years, including the 2001 Report of the inquiry into the definition of charities and related organisations, the 2009 review into Australia's future tax system and the 2010 Productivity Commission report, The contribution of the not-for-profit sector. Each of these reviews has recommended the establishment of a national regulator, which would simplify regulation for the not-for-profit sector, which is why the Gillard Labor government made it an election commitment to do exactly this.

As the not-for-profit sector grows, we must help it consolidate its standing in the community. The reform of the not-for-profit sector is ambitious, and the government has undertaken extensive consultation to ensure that these bills address the issues facing not-for-profit organisations. Through both a public consultation process—to which 47 written submissions were received—and a public hearing held in Canberra in September, organisations such as the Smith Family, the Salvation Army, World Vision, Mission Australia, the Fundraising Institute of Australia and the Institute of Chartered Accountants Australia, to name a few, have contributed their views on the proposed reform of the sector.

From the beginning, effective and close consultation with the not-for-profit sector has been of vital importance to the Gillard Labor government. Issues raised during the public consultation period and through the committee hearing have been considered and the bills revised to ensure that they deliver the most effective outcome in light of the feedback that has been received. The sector has made it clear they want an independent regulator which can focus entirely on their needs, which is what these bills in fact deliver.

Australia's not-for-profit sector is very much diverse. It is made up of charities, charitable trusts, churches, religious groups, sporting organisations and clubs, advocacy groups, community organisations, cooperatives, trade unions, trade and professional organisations, chambers of commerce, welfare organisations and service providers. It is incredibly diverse. The sector currently consists of some 600,000 organisations, of which nearly 60,000 are economically significant, in that they employ roughly eight per cent of the nation's total workforce—some 890,000 people—and they contribute $43 billion to the nation's gross domestic product. The remaining 440,000 organisations are small, unincorporated organisations which have been traditionally exempt from reporting obligations. They do not have an ABN, and cannot be endorsed as charities or receive deductible gift recipient status. They can, however, self-assess income tax exemptions.

The not-for-profit sector performs a valuable role in our society as it very much endeavours to provide services that meet the needs and betterment of the Australian community. It is for these reasons that the government provides assistance to such organisations, both directly through the funding of programs and services as well as through tax exemptions and concessions. In seeing the immense value of the sector, everyday Australians also lend their support by volunteering their time and through financial and in-kind donations.

In the 2006-07 financial year, donations of more than $7.2 billion were made to the sector, and over 4.6 million Australians donated their valuable time. Increasingly, not-for-profits and their donors are influencing where community and government resources are directed. Regulation of the not-for-profit sector has traditionally fallen to the Australian Taxation Office. The ATO has been responsible for determining charitable status and for determining whether not-for-profit organisations are eligible for tax exemptions and concessions such as fringe benefits tax, deductible gift recipient status, refundable franking credits and goods and services tax concessions. This can potentially be seen as conflict of interest, as the ATO is ultimately responsible for revenue raising while also being charged with making decisions on whether not-for-profit organisations should be granted charitable status.

Regulation of not-for-profit organisations limited by guarantee has fallen to the Australian Securities and Investments Commission. Some not-for-profit organisations can also receive state or territory tax concessions or exemptions and therefore need to be registered with their own state or territory government. This means that, depending on their status and location, not-for-profit organisations have found themselves subject to a number of reporting requirements at both Commonwealth and state or territory level. Many of the reporting requirements have been designed with for-profit organisations in mind and are therefore unsuited to the not-for-profit sector, as they quickly become both time consuming and costly.

This is why the Gillard Labor government has committed to reforming the NFP sector. We want to ensure this sector is transparent and accountable while also ensuring that resources are directed to the most valuable outcomes rather than being swallowed up by excessive regulatory requirements. The Australian Charities and Not-for-profits Commission Bill 2012 will: establish the Australian Charities and Not-for-profit Commission, charge the Australian Charities and Not-for-profit Commission with registering not-for-profit entities and maintaining a register, provide powers for the commissioner in relation to the regulation of registered entities, establish a single national regulatory framework for not-for-profit entities, and set out the obligations and duties of registered entities.

The Australian Charities and Not-for-profits Commission will be a one-stop-shop regulator for the not-for-profit sector—something that the not-for-profit sector have been asking for and have been wanting for some time, to clear out the hodgepodge nature in which not-for-profits have been able to become regulated and receive those levels of status and recognition that they deserve and should have access to in a timely fashion. I note Senator Fifield's earlier comments, and I also note the opposition's position to not vote for this bill. In doing so, the opposition is not supporting the not-for-profit sector, because this bill very much reflects what the not-for-profit sector have been calling for. I noticed that Senator Fifield talked about the fact of this regulatory environment and his opposition to the new regulatory environment which will be created through this new commission. But already we have South Australia agreeing to align its own regulatory environment with the new commission that is being created. I congratulate the South Australian government for having the foresight to do so and I hope that other states follow suit fairly soon. Again, that shows that states also want to have a simplified, one-stop-shop process to this issue of regulating the not-for-profit sector. Senator Fifield fails to understand—or at least omitted, in his contribution in the debate on this bill—the fact that South Australia is already agreeing to align its regulatory environment with the new commission.

The new commission will act as an independent statutory agency, separate from the ATO. It comprises a commissioner, an advisory board and officers who are engaged under the Public Service Act 1999. The commission will report through the Treasurer to the parliament each year and will be held accountable for its work in delivering reductions in the regulatory burden. While registration is voluntary, it will be a prerequisite for those charities wishing to access certain Commonwealth tax concessions. The commissioner will be required to maintain the register and will be able to revoke the registration of those not-for-profits who, after being given written notice and the opportunity to contest, fail to meet the necessary conditions.

The Australian Charities and Not-for-profits Commission provides a framework for record keeping and reporting, requiring all entities to keep records which correctly record and explain the financial position and performance of each entity. In order to gain and maintain registration, not-for-profit organisations will be required to meet governance and external conduct standards set out in the regulations, keep financial and written records and, in the case of small not-for-profit organisations, provide information statements. In the case of large and medium organisations, they will be required to provide financial reports, audits or review reports, and of course they must notify the commissioner of relevant changes in circumstances.

While all registered not-for-profit organisations will be required to provide an annual information statement, the Gillard Labor government recognises that a one-size-fits all approach is not appropriate. That is why entities with revenue less than $250,000 will not have to provide financial reports. Entities with revenue between $250,000 and $1 million will be required to provide financial reports which will be reviewed, and large entities with revenue of $1 million or more will be required to provide audited financial reports.

The key purpose of these bills is to reduce the red tape requirements associated with running a not-for-profit organisation and enable those valuable organisations to focus on their true purpose, on their mission, on their values, and on the objectives that define what that community organisation is supposed to be doing and what it is all about. The evidence has long shown that regulatory reform of the not-for-profit sector is necessary and there is agreement that the establishment of a national regulatory authority and a national regulatory framework is an essential component of such reform.

I have long been involved with the not-for-profit sector—through my work in the past, as Director of the Working Women's Centre in Tasmania and, more recently, as a founding CEO of the Asbestos Free Tasmania Foundation, both not-for-profit community organisations, as well as being on committees and boards, having involvement in various other community organisations and seeing the work that they do. They often run on the smell of an oily rag. They have limited funding, staff, time and resources. They need to direct all of those resources as much as possible into their mission, into the values and objectives that define what that organisation is all about. For most, that is through supporting people at the grassroots level. They are not into overly burdensome regulatory reporting and all the red tape that has gone with seeking deductible-gift-recipient status through the ATO, which for some has taken many months, if not years, to finally receive, because it is such a cumbersome and difficult process.

Unless some of those not-for-profit organisations have accountants or people with a legal background or the necessary skills and expertise on their boards or on their committees, they simply find it very cumbersome and difficult to meet the necessary ATO requirements for them to receive that status, even though their mission statement and their objectives often fit very much in line with being able to receive that status. That is why these bills are so important to that sector. The bills very much allow them to ensure that the mainstay of their work and their workforce is focused on the things that matter, and that is delivering on their objectives, delivering on supporting people in our community, delivering on their lobbying, delivering on supporting workers, and whatever else that organisation may represent. I can see considerable benefits through this new regulatory body.

Of course, as we heard from Senator Fifield, unfortunately those opposite do not share the view of the government or the sector. By opposing the establishment of the commission, the coalition is very much ignoring the views of those who would be affected by these bills, they are ignoring the views of the thousands of workers in the not-for-profit sector and they are ignoring the evidence base, preferring instead to ground their policies in the negativity which we continue hear. As Senator Fifield shared with us, if, lo and behold, they do ever get into government, it is another example of good policy, good legislation, which they intend to repeal.

What I want the not-for-profit sector to hear loud and clear today is that an Abbott-led government would repeal this legislation. An Abbott-led government would ensure that the status quo of the burden of trying to apply for deductible-gift-recipient status, for example, would remain and this new regulatory regime, this new body, this new commission, would no longer exist. Organisations would no longer have a one-stop shop available to them to be able to ensure that they are being listened to and responded to in a timely fashion. They would no longer have their workforce able to focus on the things that matter, their objectives, because they would instead be going back to the dark ages, like other positions of the opposition, such as climate change and the like. They would be going back to the dark ages of a very cumbersome and awkward regulatory method for ensuring that an organisation is able to gain the necessary charitable status that they should be able to gain in a more timely fashion. That is incredibly disappointing.

One strong message that needs to be heard today as we debate these bills and as we vote on these bills is the fact that the Abbott opposition is not supporting these bills and, in doing so, is not supporting the not-for-profit sector in Australia. As I said, the sector currently consists of some 600,000 organisations across this country, of which nearly 60,000 are economically significant to this country, and they employ some eight per cent of our nation's total workforce. That works out to be nearly 900,000 people across this country who are contributing some $43 billion to the nation's gross domestic product. They are the workers, the charitable organisations and the community organisations that I listed earlier, and the opposition is not supporting them. Let's make it very clear: we know that the opposition supports the profit-raising of the biggest miners in this country, but, when it comes to the 900,000 community workers in this country, it decides to not support them at all and stays in the position of going back to the dark ages. Why? Because it is a sector that the opposition simply does not care about. The community sector does not even warrant any kind of presence on the opposition's agenda. It shows absolute disrespect for the community sector. With his lack of support for these bills, Senator Fifield should be ashamed to be in this place and not supporting the community sector. The Gillard Labor government very much believes in a strong, innovative and independent community sector. That is why we have brought these bills to the Senate—they deliver that aim. I commend the bills to the Senate.