Senate Report Divided on ACNC Future

A divided Senate Committee report into the legislation to abolish the charity regulator, has the Liberal Senators favouring the ACNC’s repeal, and Labor and the Greens opposing the legislation.

The Australian Charities and Not-for-profit Commission (Repeal) (No 1) Bill 2014 was introduced into the House of Representatives on March 19 and referred to the Senate Economics Legislation Committee on March 27 for inquiry and report.

Liberal Senator and Chair of the Senate Committee David Bushby said the committee had considered the evidence and formed the view that the abolition of the ACNC would, as intended, relieve the regulatory burden from many charities.

“Furthermore, it fully endorses the establishment of a National Centre of Excellence as an advocate for the sector and a leader in innovation and as a means of providing education, training and development opportunities,” he said.

“Since the enactment of the Act, there has been uncertainty as to the future of the ACNC. Passing this bill would give some certainty to the sector. On 13 May 2014, the Minister informed Parliament that while the government had committed to remove the ACNC, it would further support charities and the NFP sector through a new National Centre for Excellence (NCE).

“In his view, the abolition of the ACNC and the establishment of the NCE would move 'the focus from the stick to the carrot'—'from coercive regulation to collaborative education, training and development'.”

Senator Bushby said on numerous occasions the Minister had made plain the Government's intention to abolish the ACNC.

“He has also indicated that he would continue to consult with stakeholders about the establishment of the NCE,” he said.

“The Bill is intended to provide certainty to the Not for Profit sector, the ACNC and other regulators, by making it clear its intention to abolish the ACNC. It is better to provide this certainty now, rather than delay while the details of the No. 2 Bill are worked out in consultation with the sector.”

The Liberal report said that “the ACNC Act has significantly and unnecessarily increased red tape for many charities, thereby creating a burden with no apparent benefit either to those they serve or the wider community. Given the Commonwealth's limited legislative powers in this area, and the low probability of achieving nationally consistent regulation, the Act should be repealed.”

However, the Labor members in their dissenting Senate report said they 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,” the Labor report said.

“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.

“About 80 per cent of the submissions favour the retention of the ACNC; about 10 per cent express support for the principles underpinning its establishment but are agnostic on the question of whether the ACNC or some new entity carries out the regulatory function; and only 10 per cent advocate its abolition.”

The Labor Senators recommended 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.

WA Greens Senator Rachel Siewert said in her party’s dissenting report that before any decision on the ACNC’s future was made, the Government should have undertaken a full and proper open process of consultation that reached out to the sector and encouraged their extensive involvement.

“This should have included the opportunity for providers to prepare and lodge submissions and for hearings and consultations to be undertaken around the country,” she said.

“This has not occurred, and because the Government has not yet developed a replacement for the ACNC, any move to scrap the regulator will only lead to confusion and instability across the Not for Profit and charity sector.

“This disregard for the input of the sector and lack of process or planning is a key reason why the Australian Greens are opposed to this legislation proceeding.”

Community Council for Australia CEO David Crosbie, who gave evidence to the Senate Inquiry, said the resulting report was not unexpected.

However, Crosbie said it was amazing to see how the Liberal Senators could create a case for repealing the ACNC when the weight of evidence was substantially in favour of retaining the regulator.

“The government acknowledge some benefits of the ACNC, but uses a very selective and non-representative minority view to support repeal, while both the Labor Party and Greens Senators provide dissenting reports recommending keeping the ACNC and working towards further red tape reductions,” he said.

“According to the government section of the report, Peter Hersh, a private accountant, is apparently the most important expert on charity regulation and knows much more than the many legal and accountancy experts at the ACNC or elsewhere.”

A business advisor to charities and Not for Profits, Andrew Marks, from accounting and advisory firm William Buck, believes the sector will face significant uncertainty if the proposed abolition of the ACNC goes ahead.

“If the ACNC is scrapped without a suitable replacement to fill its role, charities would be left without vital support and guidance,” he said.

Marks said the removal of the sector’s single independent regulatory body would regress the gains already made and confuse and frustrate charities.

“Charities I’m talking to are puzzled by the move,” he said.

“They finally have a national regulatory body they support and view as effective, and it is being taken away.”

The ACNC has responded to the Senate report saying it will continue to regulate the sector and perform its legislative functions until future arrangements are known.

“There is no doubt the Repeal Bill and the Senate inquiry has caused confusion and uncertainty for parts of Australia’s charity sector over the past few months,” Australian Charities and Not-for-profits Commissioner Susan Pascoe AM said.

“What is certain, however, is that the ACNC remains Australia’s charity regulatory body until the Parliament votes otherwise,” Pascoe said.  She reminded charities that they were still obliged to meet the immediate reporting requirement to submit their Annual Information Statement, due by 30 June.

“We will continue to build Australia’s first credible, free public national charity register; and we will continue to ensure public trust and confidence in the sector is maintained while the ACNC Act is in force.

“Our approach has always been to ask ‘what constitutes good charity regulation’ and we are confident the public national Charity Register, the report once, use often Charity Passport, the  Charity Portal, as well as the  ACNC’s advice and education services have created a solid foundation for charity regulation in the future.”