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Tuesday, 30 October 2012
Page: 8463


Senator BACK (Western AustraliaDeputy Opposition Whip in the Senate) (18:04): I grew up in a family that said that you only introduce laws if common sense fails. In this particular circumstance, of course, we have seen the reverse of that. We have seen a circumstance in which laws are being introduced because there is no common sense pertaining to this issue associated with the proposed Australian Charities and Not-for-profits Commission. It is very disappointing that once again we see this Labor government adopt the sort of philosophy that can only ever be seen to push people down, to remove their innovation and to remove the very interest that attracts them to charities and not-for-profits in the first place.

The old saying with Labor governments is: 'If it moves, tax it'—although, with the Minerals Resource Rent Tax, that did not work to any great extent. But, if it still twitches, of course they try to regulate it and, if there is still any life left in it, they nationalise it. That is where we are with the National Broadband Network—or, as somebody said to me the other day, a term which I cannot use here in the Senate describing the fact that they were not getting much of a service from it. But, I can say in Melbourne Cup season—and Senator Payne should take note here—that, if Red Tape is running in the Melbourne Cup on the 6th, whatever you do, Senator Payne, you will not be able to get on it because, as we know, the Labor Party will have a huge amount of money on Red Tape.

The Australian Charities and Not-for-profits Commission Bill 2012 goes to the heart of what is essentially Australian—that is, volunteerism. If you take our country, opposed to most other countries in the world in which I have lived and worked, you will always find that it is volunteerism that stands Australians apart. Why is it that we are always able to shake ourselves off after an emergency or a disaster and get about and solve problems? It is not because of government. It is not because of red tape. It is not because of regulation, nationalisation or whatever else. It is the ultimate spirit of Australians, of the mateship that says there is a need and we will get on with it. The charitable and the not-for-profit sector in this country has been born out of that essential Australian spirit.

The one thing Australians will not accept is this across the board, one-size-fits-all approach, as we see in this particular case with the proposed Australian Charities and Not-for-profits Commission. What is it actually doing? It is forcing charities to adhere to a raft of new tax and compliance requirements, dissuading people from becoming involved in charities, as Senator Boyce was just saying, and turning them away from donating.

The timing is never good, but if ever there is a bad time to introduce this it is leading up to Christmas, when we know so many people are in desperate need of assistance and support from groups like Anglicare, St Vincent de Paul, the Smith Family and others. All of a sudden they see this whole new bureaucracy coming into existence, and for what purpose? Where is the demonstrated need across the board?

We all know very well that of the 600,000 not-for-profit entities in this country about 10 per cent of them—just under 60,000—are charities, and a significantly large number of them enjoy tax deductible status. Everybody is aware that if an entity enjoys tax deductible status then there should be processes in place to make sure that the taxpayer's interests are well met and that audit processes are in place. Those who are found to be in default either in the terms of reference under which they exist or in the collecting of funds enjoying tax deductibility, if they are not being spent for the purpose for which they are stated, or if there is evidence of fraud or corruption going on, then they must be dealt with, and everybody would expect them to be. But you do not vilify the vast majority of those organisations with this sort of legislation.

The ACNC will be forcing many charities to submit annual information statements for the first time. These are groups of volunteers—well-meaning people who might have come together to run an opportunity shop, for example. All of a sudden they are being required to submit annual information statements if they enjoy some form of tax deductibility status.

This goes to the whole question of governance. The cost to charities will be huge. The Baptist ministries initially estimated that the ACNC would cost Baptist churches across Australia an extra $1 million in compliance. They are, with deep respect, not the larger of the churches, and that $1 million should be going straight to the very people who need their assistance, and we know that in this world today that level of assistance is deserving and required.

Look at the penalties—the ACNC will ramp up penalties for things that go wrong. Australians currently donate $14,600 million per year to charities. Very often it is people's after-tax money. It is the funds they have available to them, and they donate them. It would be most interesting to try to calculate the actual dollar value of the time spent by volunteers in charities and not-for-profits around Australia. Somebody should do that work, because most of us in this place, or linked to it, are or have been involved in volunteer organisations—contrary to what Senator Singh had the audacity to say in this place this afternoon, vilifying this side because, according to her, we do not know what the volunteer sector is all about. Contrary to that statement, I would say, generously, that all of us in this place are or have been associated with volunteer organisations. We know how much time is expended, and we know the value of that time.

I come back to that $14,600 million. This legislation proposes that volunteer board members could be held personally liable in cases of management malpractice, and there will be the introduction of exorbitant fines as penalties on well-meaning volunteers. As others here this afternoon have said, who would donate their time and their expertise, possibly in their early retirement or in their transition to retirement, at a time when they can give the benefit of that expertise? Who is going to put their own family assets and their own wellbeing at risk when facing the possibility of penalties because they are a board member of a charitable or not-for-profit organisation? We all know that these sorts of measures are not going to stop the baddies from doing what they do. We know that decent rules applied to those who are at risk or who are found to be not compliant is the best way to deal with them.

This is about the damage that this will do to charities. It is about the bungling over the issue of getting the states and territories on board. After all this so-called consultation we have one state—South Australia, your own home state, Acting Deputy President Edwards—which has come on board. As we know at the moment, states and territories are intimately associated with the conduct of the charity and not-for-profit sector. I for one, being from a state well away from where the eastern states' decisions are made, fear the deterioration and the dilution of influence in the event that state and territory organisations are not associated with or involved in the process.

To take one example, according to what we have read in relation to this legislation the government will be increasing taxation of the earnings of not-for-profits that are deemed to be nonaltruistic—in other words, those who might not be doing something for the benefit of the heart, or for the good will. Who decides the altruism or nonaltruism of that not-for-profit organisation? It has not yet even been communicated to the charities what is considered to be nonaltruistic and what is considered to be altruistic. To make matters worse, the increased taxation is to be applied retrospectively. We are in the scale now where it is possible that these taxes are being elevated.

We all know that the role of government, if it has one in this at all, is to step well back and encourage the not-for-profit and charity sector to get on with the work in which so many people are so engaged and so committed—that is, to get on and serve those who are in need. As was put to me only this afternoon, the main concerns regarding the Australian Charities and NFP Commission Bill of those in the not-for-profit charitable sector are:

… that it will increase regulatory requirements, red tape on charities, concern that there is no clear evidence of achieving harmonisation with the states, no clear line of reporting, no clear definition of charities and unrelated business tax.

This person, who is well experienced in the industry where he has been for most of his professional life, goes on to say it is bad legislation.

… all those concerns need to be ironed out first. The feeling is that the government is trying to push through legislation just to be able to say it has done something.

This legislation principally goes to a lack of trust of those people who are involved in the sector.

Let me for a few moments reflect on who they are and what sorts of people they are. Reference has been made to groups like bushfire brigades and the State Emergency Service, lifesaving organisations, the Country Women's Association. Take the CWA and bushfire brigades out of the small rural communities of Australia, and I assure you the foundations on which those communities exist would fall apart. You ask whether it is reasonable that a person or people who volunteer their time for absolutely essential emergency and related services to their communities are now going to find themselves the subject of this sort of legislation and restrictions being placed upon them. We know of groups such as independent and Catholic schools. There is a circumstance in which this commission, with powers probably in excess of those of ASIC and other agencies of government, could potentially have directors removed. If somebody is a member of a school board, that person might find the commission starting to dictate who can and who cannot be a member of the school board.

I say to you again, Acting Deputy President Edwards, be under no illusion. Everybody on this side of the chamber and indeed the whole chamber would be of a mind that where there is corruption, where there is fraud, where there is misspending of moneys, particularly those relating to the taxpayer of Australia, we would expect the highest levels of probity and audit processes. But you do not get that with what you would have to call overkill, something that will destroy trust and add immeasurably to the cost of the not-for-profit and charitable sector. I come back to churches. The Uniting Church has said in regard to this legislation:

It is important to recognise that the introduction of any new reporting obligation on congregations, no matter how minor, will be another layer of legislative obligation and reporting for local members who are generally neither skilled nor trained for the burden.

Surf Life Saving New South Wales made the observation:

… reducing red tape by reducing duplication of reporting requirements and assisting the efficiencies of the sector, however this will not occur without the involvement of the states and territories to align reporting requirements with the ACNC reporting framework.

We have not yet seen that.

People listening might say: 'Is it a free-for-all at the moment? Is there no regulation? Is there no oversight?' Of course, there is. We have a group called the Australian Tax Office, a fairly important organisation in this country. It is a group with the most incredible powers, as indeed it should have. The ATO can make sure that those who are responsible for reporting do so in a timely and accurate fashion. The ATO has all the capacity in the world to chase any area of fraud or corruption. We also have ASIC, a second body, the Australian Securities and Investment Commission. This body has a smaller role in the regulation of the sector at Commonwealth level, nevertheless it is an agency that is already in existence. As we know, we have state authorities. I will not repeat this to any great extent, but we could find ourselves in a circumstance where an organisation has to report not only to several different agencies of governments of different scales, be they local, state or federal but also different government departments. It is simply untenable, it is unconscionable and we know how costly it is. We also know that every dollar spent on this sort of exercise is one that ultimately does not go to the people for whom it was intended.

I conclude my comments with some insights from the long- and well-established law firm Clayton Utz, made only in the last couple of days. They have raised concerns that despite several rounds of so-called consultation, a punitive tone has found its way through this consultation process. They say there is little assurance that the ACNC would work with charities to improve their operations. These are not my observations, they are not the coalition's observations, they are from the words of Clayton Utz. They make reference to the burden of responsibility of annual information statements and financial reporting obligations that would be prohibitive for many of these not-for-profit, volunteer, charitable organisations. They speak of the need for the public register which would increase transparency. That is all well and good, but where does it stop? Where do privacy laws come in? They refer to directors liabilities, the regime governing personal liabilities of directors of not-for-profit and charitable organisations. They raise some concerns in that space, as indeed they should. They talk about the Corporations Act amendments that would be necessary for this legislation to have effect. They speak of enforcement powers, the ACNC having extensive powers of enforcement to ensure compliance of registered charities, including the ability to give directions to charities and even suspending or removing directors or trustees.

The last point I wish to reflect on is that associated with what they have referred to as the 'in-Australia requirements'. These requirements relate to organisations whose main activity may be in Australia but these organisations contribute overseas, such as Red Cross, if we all think back to the natural disasters in Italy when vast amounts of money was paid to the Red Cross. I think of the tsunamis and the earthquakes affecting the countries to our north in recent times. I contribute—as many others do, I am sure—to an organisation called Caritas. Caritas, whilst it does great work in Australia, also expends funds overseas to assist those who are in need in the event of emergencies. So all of a sudden we are going to find a whole new raft of compliance because of the 'in Australia' requirements.

When Australians volunteer, when Australians donate, when Australians see support go to those who are in need, what they actually want governments to do is to help the process and not hinder the process. And I fear very much that this legislation, if it is allowed to pass in the fashion that it has been presented in this place, will only hinder rather than help.