Future of the ACNC Under a Federal Coalition

A Federal Coalition Government would restructure the Australian Charities and Not for profit Commission into a smaller educative and training body returning its regulatory powers to the ATO and ASIC after the election. Kevin Andrews the Shadow Minister for Families, Housing and Human Services outlined his plans in a speech to the Centre for Independent Studies in Sydney recently.

Kevin Andrews -Shadow Minister for Families, Housing and Human Services

The description “Not for Profit” immediately connotes an economic framework, whereas civil society conveys a different, broader notion, of which the economic is one, albeit important, part. The Productivity Commission in its report on the sector accepted this broader role for the sector, and noted the tensions that arise from the conflict between economic and other objectives.

I would like to begin by giving you an insight into the Coalition’s approach to civil society more broadly. The institutions of civil society are important because they are neither created nor controlled by the state. Public funding requires accountability and services require training, skills, and a professional approach, but it is important that the independence and the volunteering ethos of the sector is protected and encouraged. We should guard against unnecessary state control of the civil sector.

The essence of the third or voluntary sector of civil society is that individual’s gather together to address issues that they perceive in need of a response. Most often this is at a local level. It needs to be able to be flexible in response to changing and emerging needs.

Governments of all persuasions have supported the institutions of the civil sector for half a century, increasingly through the funding of services and programs. This is critical. But we must also guard against government treating the civil sector as an agency of government

A blending of the role of government and the civil sector risks the domination of the government sphere over all others. “Do not forgot that every State power tends to look upon all liberty with a suspicious eye,” warned the Dutch statesman, Abraham Kuyper. “The ancient history of all people replays a shameful spectacle. Despite stubborn, sometimes heroic struggle, the freedom of the spheres dies out and State power – become Caesarism – triumphs.

When the State directs the activity of civil society, it enfeebles the ability of citizens to take responsibility for their own community and society.

The practical outcome is all too familiar: a one size fits all approach to social problems, ensnared by contractual obligations, designed to fit governmental silos, which rob much of the individual initiative and personal initiative that should motivate charity. Worse, it endangers the vibrancy of the institutions that help to form citizens in the virtues. The act of giving, whether finances, services or counsel, becomes a professional activity and a function of the State, rather than an act of charity and love directed to fellow human beings.

This is not to say that the State has no role in the other spheres of society. Rather, it is to argue that free citizens should ensure that the State is an enabler of the other spheres of human activity, not the master of them.

The political community should be of service to civil society, which is the collection of the relationships and resources, culturally and associative, that are relatively independent of the political and economic spheres of activity. Government should be for the people’s benefit.

There is a danger that government can seduce community groups into becoming its mouthpiece. There is also a danger that government will see the voluntary sector as just an extension of itself.

One only has to look to Britain to see how non-government organisations can morph into quasi-government organisations. According to the National Council for Voluntary Organisations, 25,000 British charities received more than three-quarters of their funding from government. Having courted a new constituency of charitable organisations, the danger is that government can politicise the partnership, to the point of crudely suggesting that only support for the party in government will maintain the massive levels of funding. When the civil sector accepts this arrangement, it effectively has lost its independence.

I say this today to give you some insight into the philosophical approach the Coalition would take towards the civil sector in government, and it is this approach that will inform our thinking broadly in terms of the way that both government and the civil sector should interact with the community.

Unfortunately, the current government has taken a very different approach.

The Charities Commission

Under the pretext simplifying and easing the regulatory burden on civil society, the Government has established the Australian Charities and Not-for-Profits Commission. Unfortunately, what was initially promised, and what has emerged from the bureaucracy and has since been legislated are poles apart.

A primary concern of the current government’s reform was that the ACNC should reduce administrative compliance and duplication of reporting by agencies, enabling them to direct more of their limited resources to their charitable and related activities.

Yet the final product of the legislation fails to meet this objective. It has become yet another Great Big New Bureaucracy, focused on assessing compliance rather than streamlining it.

Furthermore, the Australian Charities and Not-for-profits Commissioner has been vested with a range of powers to interfere in and remove responsible office-bearers in a manner that is unprecedented. As it stands, the government is still yet to satisfactorily make out the mischief it sees as warranting such extraordinary overreach.

In contrast to the current government, the Coalition will not seek to treat charities and not-for-profit agencies as arms of government.

The Coalition supports transparency and accountability of public funds. We also support simplicity and efficiency. The charity and not-for-profit sector has a long history of responsible governance and management. The Coalition will respect this.

We recognise that there is a place for a national body to enhance the role of the institutions of civil society. Accordingly, we will support a small organisation as an educative and training body. We will work with the sector to ensure that it represents the sector. We will work with the sector to transfer responsibility and governance of the Commission to the sector over the next few years.

Under the Coalition, the independent organisation will:

• Provide education and support services to registered charities
• Provide information to assist with the process of registration for new charities and Not for Profit agencies
• Act as a ‘one-stop shop’ for information on charitable organisations and agencies operating within Australia
• Advocate for the rights of charities and Not for Profit agencies
• Represent the interests of charities and Not for Profit agencies to government
• Help facilitate the interaction between government and the charitable and Not for Profit sector
• Undertake research and cross-sector evaluations on issues of concern to the sector
• Help foster innovation within the sector

We will also ask the new body to co-ordinate with the sector, the Commonwealth, the States and Territories to propose a new, common financial and other reporting standard that will negate the practice of numerous reports being prepared each year for different funding and regulatory bodies.

We will return the regulatory powers that existed in the ATO, ASIC and other similar bodies to those bodies.

Until and unless there is harmonisation of various Commonwealth, State and Territory laws, the proposed Commission simply adds yet another layer of regulation and bureaucracy on to the sector. We will respect the role of the States, but work with them to achieve harmony in relation to fundraising codes and other regulations.

Secondly, we will retain the current Common Law definition of charity, and maintain the Public Benefit Test. This is consistent with the evidence based reviews of the 2001 Charities Definition Inquiry, the 2008 Henry Review, and the 2010 Productivity Commission report.

We will examine any particular issues that are the cause of concern. It has at times been suggested that the Charities Sector needs review and regulation because the sector receives substantial tax concessions. Arguments about tax concessions for charities and NFPs do not belong in the consultation and formulation of policy on the definition of charity, the ACNC, NFP governance arrangements and charitable fundraising.

The issues should not be conflated. Instead, tax reforms should be considered in specific responses such as the “unrelated business income test” (UBIT) and “in Australia” proposed reforms.

Consistent with the approach I have outlined today, the Coalition will work with the sector to address any particular issues that arise regarding the taxation treatment of charitable organisations. We will not use discrete taxation issues as a Trojan Horse to impose a burdensome new regulatory system on the sector.

Encouraging philanthropy

Furthermore, if elected, the Coalition in government will seek to encourage a culture of philanthropy and giving in Australian life through re-establishing the Community Business Partnership to assist Australian charities and community groups by removing unnecessary red-tape and costs.

Philanthropic endeavors strengthen and empower communities, harness the inherent virtue of Australians and encourage a greater sense of purpose and belonging across communities and incomes.

Our volunteer services, welfare, environmental, sporting and community groups are living testimony to the Coalition’s belief in empowered communities. We believe that a community that freely gives of its time and its financial resources is a community with a stronger social fabric and more social capital.

We don’t necessarily want government to do less for people but we certainly want people to have the capacity to do more for themselves because that’s the way that stronger communities are built.

Increasing reporting obligations, rising cost of living and the impact of the GFC on investments, have all had an impact on the charitable and volunteer sector, with philanthropic contributions tapering off in recent years.

A Coalition government would, within six months of election, re-establish the Community Business Partnership to advise government on encouraging a culture of philanthropy and giving.

The Partnership, like its earlier incarnation, will encourage prominent Australians from the business and community sectors to work together for the benefit of the community.
One of the great successes of the previous Community Business Partnership was its initiative to create a new structure for planned giving in 2001.

Almost 1,000 Prescribed Private Funds, now called Private Ancillary Funds, have been created since 2001 with $2.7 billion committed irrevocably to the community sector. In 2009-10 almost $200 million was directly distributed to charities and other worthy organisations by these funds.

The Coalition will also reduce the regulatory burden on charities and has charged the Coalition Deregulation Taskforce with reducing the regulatory burden on charities and community groups. The Taskforce, headed by Senator Arthur Sinodinos AO, will reduce red tape across business and community groups by $1 billion each year.

The ever-increasing regulatory burden faced by the charitable sector means more resources are needed in the back office, to fill out forms and to engage in what the sector calls “reporting for reporting sake.”

As I have already stated, charity and Not for Profit sector has a long history of responsible governance and management. The simplification of reporting and contracting arrangements will mean agencies will be able to redeploy resources from the back office to the front line, where they can deliver the vital services the community needs.

Relations with family service agencies

In 2011, I announced that the Coalition in government would simplify the relationship between the government and family service providers. I will not repeat what I said then, but refer you to my previous remarks.

The measures would reduce reporting requirements by a significant margin and the savings generated by the agencies through the implementation of these measures would be retained by the agencies — something which is important at a time where there is obviously very tight constraints so far as Commonwealth finances are concerned.

Let me add to those comments a couple of further things in terms of administrative detail.

Firstly, we will allow up to 10% of program funding to be used for innovative projects as determined by the agency. In other words, in whatever area the funding is provided we believe that innovation is important in this area, there shouldn’t be a one size fits all across the entire country and you, the people at the coalface know best what works and we should be encouraging you to find new creative and innovative ways to actually deliver programs of need to the community and say up to 10% — at least initially — and we will monitor how that goes, but 10% of funding will be available to be used for innovative programs — as I said, determined not by the government, not by the Department, but by the agency itself.

Secondly, we will introduce at a departmental level a policy grid, as I proposed in my recent book Maybe ‘I do’. In that, I discussed how we should ensure not just legislation but programs, policies and various other ways in which we implement programs can be assured to meet the sort of standards of what we are trying to do. Are we actually trying to preserve families where we can?

Are we trying to, for example, to help step families do the best job they can? I proposed a policy in Maybe ‘I do’ and it may not be the exact format of what we take in government, but we will implement a family policy grid to apply to all proposals coming forward. It’s something, which may in fact, be picked up by the sector itself in terms of the way in which it actually operates.

It’s been done in other countries around the world. Family impact statements have been shown not to work for a variety of reasons, but I believe this is a way in which we can address these issues.

In part, it will reflect a renewed emphasis on prevention and early intervention.
Lip service is paid often to prevention and early intervention, but when you see where the prominence of funding goes, it tends naturally to go to the problem areas where you must spend funding.

The problem with that is that we are not taking, therefore, a medium to long-term view about how we resolve social issues and I believe that the best way to do that is to put more emphasis on prevention and early intervention programs.

Whilst I am not in a position to announce this morning the breakdown how we would do that, it is something which we are closely studying at the present time and I’ve had consultations and discussions with people in the sector about how we do that, but you can take it from me that the catch cry — if you like — the buzz words of what we would be trying to do in the future if we’re elected on September 14 will be to ensure that there is a greater emphasis on prevention and early intervention and that in line with giving you more responsibility as to how you can actually deliver those programs and meet the needs of the community.

These are just some of the ways that a Coalition Government will work to empower communities and civil society.

Conclusion

I have taken time in this speech to outline not only some specific policies that the Coalition will adopt in my area of responsibility, but also our underlying approach. There are two approaches to the central task of politics, which is to help determine how we can live together. One approach is summed up in the opening words of the Maiden Speech of the former Prime Minister, Kevin Rudd: “Politics is about power. It is about the power of the State. It is about the power of the State as applied to individuals, the society in which they live and the economy in which they work.”

The other approach is about empowering people, not exercising power over them. It is the approach that the Leader of the Opposition utilised when he referred to Abraham Lincoln’s famous description of democracy as “of the people, by the people, and for the people.”

The political community should be of service to the associations of civil society. That is what the Coalition will endeavour to achieve in government.