Tuesday, 18 September 2012
Corporations and Financial Services Committee; Corrigenda to Report
On behalf of the chair of Parliamentary Joint Committee on Corporations and Financial Services, I present a corrigenda to the report of the Parliamentary Joint Committee on Corporations and Financial Services on the Australian Charities and Not-for-profits Commission Bill 2012 and related bills.
Ordered that the document be printed.
I seek leave to continue my remarks.
The Parliamentary Joint Committee on Corporations and Financial Services reported on the suite of Australian Charities and Not-for-profits Commission bills on 10 September. I am deputy chair of the committee. It is very rare that a corrigenda is presented to reports in this place, and I must acknowledge the very diligent work of the secretariat of the Joint Committee on Corporations and Financial Services in preparing this report.
The blame for any need to correct anything in this report to can be fairly and squarely placed at the government's feet. The correction relates to World Vision's views on the provisions in the bill aimed at combating terrorism and money laundering. World Vision pointed out that their comments related to the external conduct provisions in the proposed commission bill, not the paragraphs and provisions in the tax laws amendment bill associated with the draft.
World Vision are not the only people who are finding this legislation very complex and very confusing. The government seems to be doing it too. It is an area that has been inquired into almost to death. There have been different inquiries into not-for-profits going on for well over eight years, but it will come as no surprise to people that the government still has not got it right. It moved the legislation, despite having amendments suggested by its own House of Reps committee. Its own government majority House of Reps committee suggested that there should be amendments made to the legislation in the House of Reps. The government blindly went ahead and put it through, but we already know that there will be a significant number of amendments brought to the Senate when this legislation gets here.
We also know that there have already been 90 staff appointed or sought to run the Australian Charities and Not-for-profits Commission, despite the fact that the legislation has not gone through and despite the fact that the Attorney-General's Department assured us in a number of committee hearings that the commission would be a very lean organisation and that, in fact, all of the backroom services would be provided by the Attorney-General's Department. This just strikes me as bizarre given the fact that we already know of 90 staff who will be working there.
The preamble to the bill says:
It is important that a national regulatory system that promotes good governance, accountability and transparency for not-for-profit entities [so that it can] maintain, protect and enhance public trust and confidence in the not-for-profit sector.
The coalition certainly agree that that is an extremely good aim. We would ask: where is the system currently broken? Coalition members of the committee do not accept that the current Commonwealth regulatory regime based on the activities of the Australian Securities and Investment Commission and the Australian Taxation Office is broken. We do not accept the premise for this new regulatory megastructure.
The claims that the reform will reduce the regulatory burden faced by the sector are unpersuasive. The government would have us believe that there will be a great reduction in red tape, but the only organisations that will initially come under the commission are those that are already overseen by the Australian tax office. The government is yet to negotiate any sort of agreement with the states and territories, who have the oversight of the vast majority of charities and not-for-profit organisations in Australia. Clearly, until this happens there can be no guarantees whatsoever of any reduction in red tape.
Firstly, this adds a layer of Commonwealth regulation to many charities and not-for-profits that are regulated by the state and territory governments and there is no agreement at all for the states and territories to get out of this field. Secondly, even at the Commonwealth level alone we doubt that it will reduce red tape. It could be plausible that the ACNC will be a one-stop shop and other agencies could make grants to charities registered with the ACNC, relying on information already provided to the ACNC, but in practice this is highly unlikely because of the difficulty involved. It would be a remarkable change in bureaucratic behaviour to give up being the organisation that called for a report, even though the organisation in question, at federal level, may have already reported to the ACNC. We can look at dozens and dozens of areas where we can see that that just simply does not happen.
The representatives of long-established, large, reputable organisations have told the inquiry about their concerns that the promise of red-tape reduction will not be delivered. Father Brian Lucas of the Catholic Church told the committee:
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.
So what does the government's ACNC and related bills do? If it cannot deliver in this area, what is the use of it?
We on this side of the house will not support the creation of another regulatory body that will add to the red-tape burden for charitable organisations and that will, in most cases, simply duplicate what is out there for the states and territories. There was a suggestion made by witnesses from the Attorney-General's Department that this would all be done and dusted by February or March next year through the COAG process. I am sorry, but that is five months. I have no recollection whatsoever of COAG dealing with any suggestions put to it other than at a glacial pace, and I do not think this one is going to set any new speed records.
Several witnesses during our inquiry hearings also pointed out that the bills unnecessarily duplicate existing laws in key areas. There was a concern that the smaller charities that rely on the active participation of volunteers will be overcome by the approach that the package of the bill adopts. And there continue to be concerns from a number of areas—including directors such as Mr David Gonski—about what is going to be required of volunteer directors working in the not-for-profit sector. I think we all know how difficult it can be sometimes to find people prepared with the time, energy and enthusiasm to serve on not-for-profit boards so to create barriers that will in some cases have the potential to make directors of not-for-profits more liable than directors of companies registered and controlled under ASIC is, to my mind, just ludicrous. If we had had strings of failures, fraud and embezzlement et cetera occurring in not-for-profits, fine—but we have not. There is virtually no evidence that there have been problems in the way it has all been functioning. Certainly red tape reduction is something everybody wants but this legislation, these bills, will not achieve it. We want to encourage volunteers and we want a not-for-profit sector that is strong and effective.
We do not support the passage of these bills. As I said earlier, the corrigenda is simply a symptom of this government's to-ing and fro-ing on this legislation, which is complex but is being made even more complex and more confusing by the fact that the government cannot decide how exactly they want to proceed. Indeed, the real effect will not be to reduce red tape and there will be an additional costly compliance regime, and the sector already faces enough red tape. I seek leave to continue my remarks later.