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Additional Comments by the Australian GreensIntroduction
1.1
This package of Bills provides a framework for reform in the
Not-for-profit sector, by introducing an Australian Charities and Not for
Profit Commission (ACNC) with powers to both register and regulate charities
for the purpose of ensuring that they use their assets and income effectively
and efficiently as well as powers to reduce the burden of regulatory
compliance.
1.2
Following an inquiry by the Joint Committee into the Government
amendments to the package of Bills, the Australian Greens support the
recommendations in the majority committee report, however there are still some
other keys elements that need to be addressed before these Bills are passed and
therefore make these additional comments to that report.
1.3
There has been limited time to adequately review this legislation and
the Australian Greens are likely to make further comments in the Senate
Community Affairs Reference Committee inquiry that has run parallel to the
Joint Standing Committee Inquiry.
Reducing Red-tape
1.4
One of the significant opportunities present by establishing an ACNC is
the possibility of reducing the regulatory burdens on our not-for-profit sector
by providing a mechanism by which charities can use reporting to the ACNC to
satisfy other reporting obligations.
1.5
Not-for-profit organisations currently have to report across a number of
Commonwealth Departments and comply with State legislation; depending on the
size of the organisation and how many jurisdictions it operates across, the
reporting and compliance burden can present a significant administrative cost
to the organisation.
1.6
As it presently stands, this Bill sets the framework for greater
harmonisation and the 'report once, use often' charities passport but also
introduces a new level of compliance for many not for profit entities by
including a new requirement to report to the ACNC without having yet removing
other obligations.
1.7
While Section 130-5(2) refers to the annual reporting obligations of the
ACNC, which reflect current practice for Government agencies to provide
detailed reports of their annual expenditure and achievements, and the
Government has amended the Bill to provide a five year review of the ACNC's
performance, it is the view of the Australian Greens that the ACNC should also
be required to report its progress against an established timeline for
harmonisation both across federal departments and with states.
Recommendation 1.1
1.8
That the ACNC develop a timeline for reducing red-tape and that the ACNC
provide a yearly report to the Parliament that details its work towards
reducing the regulatory burden on not-for-profit entities
Governance Standards and External
Conduct Standards
1.9
45-10(1) specifies that that the Governance Standards, which registered
entities must abide by in order to maintain their registration, shall be
determined by regulation.
1.10
50-10(1) specifies that that the External Conduct Standards, which
registered entities must abide by in order to maintain their registration,
shall be determined by regulation.
1.11
The Australian Greens believe that these standards should be contained
within legislation rather than devolved to regulations.
1.12
In recognition of the significant work to be undertaken to establish the
Governance and External Conduct Standards, it would be appropriate to develop
and bring forth a separate schedule with these details after the ACNC has been
established and has had an opportunity to undertake further consultative work.
1.13
This is reflective of the position of ACOSS who submitted that the Bill
should include a requirement to conduct a certain amount of negotiations in
good faith with the sector with the aim of producing a mutually agreed set of
governance standards.
1.14
The Australian Greens also support the ACOSS recommendation that the Bill
should require these governance standards to preserve the independence of
charities and not-for-profit organisations to decide how to run themselves, so
long as those decisions do not infringe the ACNC’s capacity to operate and
fulfill its functions.
1.15
ACOSS propose the following be inserted at provision 45-10, along the
following lines:
(6) However, the governance standards must deal only with
the minimum standards required to meet the objects of the Act and must:
(a) be principle-based, specifying the outcome to be
achieved, rather than detailing how an entity must meet the standards, in its
particular situation;
(b) be in proportion to the size of the organisation and the
level of financial, organisational and reputational risk;
(c) preserve the independence of charities and
not-for-profit organisations to decide how to run themselves, so long as those
decisions do not infringe the ACNC’s capacity to operate and fulfill its
functions;
(d) not prevent or constrain not-for-profit organisations
from carrying out advocacy functions in pursuit of their purpose; and
(e) where possible, not duplicate any regulatory requirement
already in place.
Recommendation 1.2
1.16
That consultation with the not-for-profit sector is a condition of
establishing and subsequently changing the Governance and External Conduct
Standards.
Recommendation 1.3
1.17
That the ACNC establish in the Bill a requirement to consult in good
faith with the not-for-profit sector about the Governance and External Conduct
Standards.
Recommendation 1.4
1.18
That these standards become a schedule of the legislation rather than as
regulations.
Recommendation 1.5
1.19
That the current Bill insert an additional section after 45-10 (5) that
reflects the suggestions made by ACOSS for this section.
Recommendation 1.6
1.20
More-likely-than-not as a factor in triggering the Commissioner's powers
Revoking registration
1.21
The Commissioner has the power to revoke registration under section
35-10(1)c, which can be triggered by a belief that a not-for-profit is
more-likely-than-not to contravene the governance or external conduct
standards.
1.22
There is also a statement of factors to which the Commissioner must have
regard when revoking registration, including the provision at 35-10(2)e which
requires the Commissioner to have regard to the extent to which the registered
entity is conducting its affairs in a way which may cause harm to, or
jeopardise, the public trust and confidence in the not-for-profit sector.
1.23
Similarly, Section 15-10 of the ACNC Bill outlines matters that the
commissioner must have regard to when exercising their powers and functions,
which includes 'the maintenance, protection and enhancement of public trust and
confidence in the not for profit sector.'
1.24
The Australian Greens are concerned that these provisions give the
Commissioner too much power to take pre-emptive enforcement action when an
organisation has not as yet breached the conduct standards, and to look beyond
specific breaches of legal liability and responsibility toward subjective
judgments about how the not-for-profit sector should operate.
Other Enforcement Powers
1.25
The Commissioner also has the power to issuing warnings, directions or
undertakings as per 40-5(1)f, which can also be triggered by a belief that a
not-for-profit is more-likely-than-not to contravene the governance or external
conduct standards.
1.26
The more-likely-than-not terminology provides the Commissioner with
excessive powers and should be removed, particular if other concerns regarding
the establishment of governance and external conduct standards are not
resolved.
Recommendation 1.7
1.27
Remove the more-likely-than-not terminology and the have regard to
public trust and confidence section from the Bill.
Publishing enforcement actions online
1.28
The Commissioner must publish online all warning notices and directions
and undertakings, as well as suspensions of registration. The published notices
remain on the website for 5 years and have the potential to result in serious
reputational damage for the organisations they were issued against,
particularly if the more-likely-than-not triggers for enforcement action remain
in the legislation.
1.29
While the more-like-than-not provisions remain in place, the Australian
Greens consider this to be a power that has the potential to undermine rather
than build public trust in the not-for-profit sector.
Tax Bill
Definition of Not-For-Profit
1.30
The Australian Greens are concerned with the definition of
not-for-profit that is set forth in this Bill.
1.31
The Australian Greens have particular concern with the wording in
Schedule 1, Provision 3, Section 44, which refers to not-for-profits 'not being
carried on for the profit of gain of its members'. Evidence submitted to the
committee suggests that this can potentially undermine the capacity of
organisations, such as disability service organisations, to recruit members who
benefit from the services of the organisation to the organisation's board.
1.32
The Majority Committee report also acknowledges the difficulty of this
wording, and recommends that the tax office issue additional advice regarding
the interpretation. The Australian Greens are concerned that the definitions
are insufficient and should be amended within the text of the Bill as well as
being supported by additional treasury advice.
1.33
The Australian Greens acknowledge that additional work is being
undertaken to review and reform the statutory definition of a charity, and
recommend that the elements of this Bill that can be deferred until that
legislation is completed should be deferred and then reviewed in light of that
legislation.
Recommendation 1.8
1.34
Defer the elements of this Bill that can be deferred until the
complimentary Charities definition legislation is completed in order to review
the not-for-profit definition in light of that legislation.
In Australia Provisions
1.35
The Australian Greens retain some concerns about the application of the
In-Australia provisions. These concerns include, but are not limited to, the
application of these rules to touring arts organisations and the
responsibilities of a registered entity to ensure that monies distributed to
another entity are not subsequently sent overseas.
1.36
The majority Committee report also acknowledges some of these
difficulties and recommends that the tax office issue additional advice
regarding the interpretation of these provisions. The Australian Greens are
concerned these issues should be resolved within the text of the Bill as well
as being supported by additional treasury advice.
Recommendation 1.9
1.37
Resolve and clarify the in-Australia provisions within the text of the
Bill
Senator Rachel Siewert
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