Dissenting Report by Labor Senators
During the 17 years prior to the establishment of the ACNC, there had
been 'six separate reviews of the charitable and NFP sector. They included: the
comprehensive 2001 report of the inquiry into the definition of charities and
related organisations; the 2009 review into Australia's future tax system; and
the Productivity Commission's 2010 report, Contribution of the
not-for-profit sector. The Productivity Commission identified clearly 'an
urgent need to bring together the multiplicity of governance, taxation and
fundraising regulatory arrangements, especially at the Commonwealth level'. The
While reducing compliance costs is one motivation,
improvements in the regulatory regime are important for maintaining trust in
the fidelity and integrity of the NFP sector.
The Commission proposed the establishment of a national ‘one-stop-shop’
for Commonwealth regulation in the form of a Registrar for Community and
Charitable Purpose Organisations to improve and consolidate regulatory
oversight and enhance accountability to the public.
During his second reading speech introducing the ACNC Act, the Minister
referred to the numerous reviews on the NFP sector, noting that they:
...recommended simplifying and harmonising taxation and
regulation for the sector, with a national regulator and a statutory definition
It cannot be disputed that the ACNC regulatory regime was a
well-researched and thoroughly considered reform with wide community and NFP
sector support. Indeed, Mr Robert Fitzgerald described the consultation period
leading up to the ACNC Act as:
...the most exhaustive period of policy development, inquiry
and consultation ever undertaken in relation to a policy affecting the not for
Making a similar observation, Ms Susan Pascoe, Commissioner, ACNC,
informed the committee that the ACNC was 'born from nearly two decades of
advocacy, formal inquiries and formal consultative processes'.
The establishment of the ACNC
The ACNC Act established a new regulatory framework for the sector and
created the ACNC as the Commonwealth level regulator responsible for
administering the legislation. The reasons for having a new regulatory system for
the NFP sector were direct and clear. The intention was to:
establish a robust and streamlined regulatory framework for the NFP
sector, including a 'report-once, use-often' reporting framework— the ACNC would
create a 'one-stop shop' for ACNC registration, tax concessions, and accessing
Australian Government services and concessions;
strengthen the sector's transparency, governance and accountability;
provide the public with information on the sector commensurate to
the level of support provided to the sector by the public.
According to the 2012 Explanatory Memorandum:
The move to the 'report-once, use-often' approach would reduce
the compliance burden associated with duplicative, ad hoc and inconsistent
The bill to repeal the ACNC
To appreciate fully the need for, and work of, the ACNC, an
understanding of the regime that existed before its establishment is necessary.
In this regard, the Community Council for Australia described the convoluted
and time-consuming process that charities were require to follow even for a
...to hire a local hall at a discounted charitable rate, gain a
concession on local rates charges, achieve a reduction in payroll tax, put
forward a submission for funding, participate in a government tender process,
register a fundraising activity or seek to claim a concession of any kind, the
organisation must be able to produce some kind of bona fides, a kind of organisational
passport. No such document existed—there was no public national register of
charities. Charities were forced to provide copies of letters from the
Australian Taxation Office that define their eligibility for taxation
concessions as proof of their charitable status. The situation was difficult at
When you consider the range of regulatory bodies, different
levels of government, different government departments all imposing their own
form of regulatory requirements on the sector, the cost of inappropriate
regulation becomes apparent.
In its view, there was overwhelming evidence that the previous system
for regulating charities 'did not work in the interests of the government, the
community and charities themselves.
Furthermore, since its establishment, support for the ACNC has remained strong.
According to the Commissioner:
Support for the ACNC or a national charity regulator is
consistently at around 80 per cent, as evidenced from an analysis of the
submissions to this inquiry and three independent surveys conducted by Grant
Thornton, Pro Bono Australia and Our Community.
ACOSS also referred to the strong support for the ACNC, citing the
recent survey showing that 80 per cent of the sector supported the ACNC:
It is unusual for an industry to be championing regulation.
However, as the recipient of ineffective regulation for many years, the
Australian NFP sector recognises the value of an effective, sector-centred,
streamlined and proportionate regulatory regime. In particular, the sector
recognises the positive role that regulation can play in supporting the work of
the sector. This includes:
maintaining public trust in the work of the sector;
working with the sector to raise the standard around governance,
accountability and transparency; and
working to introduce meaningful reporting of the sector and
reduce duplication of reporting.
Many submitters drew attention to the fact that ACNC had only been in
operation since the end of 2012. For example, ACOSS recognised that:
...it is still in the early stages of development. As such,
many of the objectives of the ACNC, particularly in relation to reducing 'red
tape' and duplication have not yet been fully achieved. However, work that has
commenced in a number of jurisdictions, particularly in South Australia and the
ACT, has shown progress towards these aims, and has given the sector an indication
of the usefulness of the ACNC in supporting a streamlining of reporting, and a
reduction of 'red tape'.
The ACNC also noted the significant progress that had already been made
in only 16 months, including setting up Australia’s first free, online, national
register of charities, a 'report-once use-often' framework to reduce red tape,
and a specialist sector-tailored approach. It explained further that if allowed
to be fully implemented, the ACNC model:
...has the potential for very significant longer term benefits
(such as simplifying and streamlining fundraising requirements and reducing
duplicative reporting across agencies and jurisdictions). Such opportunities
will be lost if the ACNC model is not given time for full implementation.
The Community Council for Australia listed some of the achievements so
far, which include:
over 3000 new charities have been registered with the ACNC—feedback
collected by the ACNC and other organisations indicates that these new
charities found the process of becoming a registered charity through the ACNC
to be a positive process;
over 60,000 charities are now listed on a publicly available
register—for the first time, Australians can look up a charity and there have
already been over 400,000 visits to this register;
the extent of information provided by this register is growing as
charities complete their Annual Information Statements (AIS)—already 83 per
cent of eligible charities have completed their AIS, 25,000 charities have
lodged their governing documents with 22,000 already published on the register;
686 complaints received which resulted in over 250 investigations—most
of these investigations have been resolved through various forms of mediation
and working with the charities themselves;
over 1.3 million visits to the ACNC website, more than 45,572
telephone calls answered with an average wait time of 33 seconds, and 55,000
mail items have been received;
216,214 visits to ACNC guidance (including factsheets, guides and
a 'one stop shop' for charities to register, report, and access Commonwealth
Government taxation and other concessions—the ACNC and the ATO have developed a
seamless registration process across both agencies;
a Memoranda of Agreement with seven government agencies/regulators;
close to finalising the Charity Passport to facilitate a 'report
once, use often' framework so that charities no longer need to report multiple
times to different government agencies (this passport will be supported by
Commonwealth Grant Guidelines) and other regulatory and funding agencies.
In the view of the Council, ACNC has made remarkable progress in a short
period of time. It stated the it would be difficult:
...to find any comparable regulator that has been able to
achieve so much in its establishment phase, especially when you consider the
political pressure applied on the ACNC since its inception.
According to the Council, the ACNC was 'not an instant quick fix, but a
long term structural change that will become increasingly important over time'. The signatories to an open letter to the Prime Minister reinforced this view:
In little over one year of operation, the ACNC has built a
strong positive reputation by establishing the first public national register
of charities, registering more than 2,600 new charities, responding to over
70,000 requests for information from charities and the broader community,
investigating and resolving over 200 complaints against charities, and
monitoring the extent of red tape and level of public trust and confidence in
our charities. The ACNC has done what few new regulators achieve—gained
widespread support across the sector it is regulating.
The Queensland Law society observed that the Regulatory Impact Statement
fails to acknowledge the progress made in setting up the framework.
As highlighted in the majority report, a number of groups within the NFP
sector have found difficulties with the new regime. Ms Pascoe accepted that some
of the concerns raised, including those expressed by Catholic Health Australia
and by the Association of Australian Medical Research Institutes (MRIs), were
understandable. The Commissioner assured the committee, however, that:
...the intention would be to adopt similar practice to that
agreed with the education sector; in other words...for very well-regulated
sectors to find a means of either linking to existing databases or extracting
from those databases and putting on the ACNC website.
It should be noted that I have advised relevant state and
territory ministers and local charities that the ACNC will accept their
financial reports prepared for jurisdictional regulators until 2015, to avoid
duplication—so in a similar vein.
ACOSS also noted that existence of a minority voice outlining opposition
to the ACNC on the basis of duplication of regulatory effort, over reporting
and costs of compliance. It shared the view of ACNC that:
These are issues that, with goodwill and effort can be
overcome, and in many cases relate to reluctance of regulatory bodies other
than the ACNC to explore efficiency and streamlining.
The Labor members note the willingness of the ACNC to work closely with
highly regulated bodies such as Catholic Health, Universities and the MRIs
to minimise duplication and to remove any complications arising from
interaction between the Corporations Act and the ACNC Act. The Labor members
believe that through their continued cooperation ACNC could develop mechanisms
that would remove the need for duplication in administrative tasks and
reporting, which would significantly reduce cost and time.
Lack of consultation
Many submitters complained about the lack of consultation regarding the
proposed repeal of the ACNC Act.
The approach to consultation stands in stark contrast to the comprehensive discussions
and reviews that took place before the ACNC was established. Mr Robert
Fitzgerald made an observation consistent with many others who opposed the
bill: He stated:
The process has lacked any open or formal consultation
processes. There have been no independent reviews or inquiries, no issues or
discussion papers, no call for submissions, no exposure drafts.
The Queensland Law Society was particularly concerned with the
Explanatory Memorandum and the Regulatory Impact Statement 'being less than
rigorous, and not meeting the usually high standards and disciplines of
Commonwealth legislative processes'.
In essence, the evidence from the great majority of submissions
indicated that the abolition of the ACNC would be counterproductive. A number of
submitters noted that the repeal of the ANC act contradicts the government's
own stated intentions.
In Mr Fitzgerald's opinion, the abolition of the ACNC would:
...not ultimately reduce red tape as it removes the very means
by which unnecessary red tape can be eliminated or reduced across the
Commonwealth and other jurisdictions; and eliminates important information
The signatories to an open letter to the Prime Minister reinforced the
message that removing the ACNC was a retrograde step:
The Australian Government intends to shut down the ACNC as
soon as it can, and in the meantime, cut its funding and capacity. It is
planning to return the key role of determining charitable status to the
Australian Taxation Office, re-creating a conflict of interest. This approach
is, at best, an unfortunate policy for charities across Australia and our
community. Red tape will continue to grow, the size of the bureaucracy will
grow, and services to the sector and the public will be reduced.
Furthermore, the ACNC pointed out that 'a return of regulatory functions
back to ATO and ASIC would mean a return to the same regulatory deficiencies,
the loss of a specialist regulator and unnecessary transitional costs for
charities'. It would also mean a significant loss of public transparency and
The Labor members found the evidence in favour of retaining the ACNC
compelling—not only because of the sheer numbers of charities and other
organisations that strongly supported the work of the ACNC but because of the
soundness of their arguments.
In its very short life, the ACNC has already registered impressive
achievements, maintained strong support for its work and has shown itself
flexible and accommodating through the transition period. It has been
especially willing to develop mechanisms to assist highly regulated organisations
to minimise their administrative burden.
The Labor Senators recommend that the bill not proceed.
The Labor Senators recommend further that the ACNC and the bodies that
are already highly regulated continue their efforts to establish ways to avoid
duplication of effort and to remove 'red tape'.
Senator Mark Bishop Senator
Deputy Chair Senator
for Western Australia
Navigation: Previous Page | Contents | Next Page