Submissions Slam ACNC Repeal Bill

The first submissions to the Senate inquiry into legislation to repeal the Australian Charities and Not-for-profits Commission (ACNC) have condemned the proposed legislation and argued that the Australian Taxation Office is not fit to regulate the sector.

Now available on the inquiry’s online portal, the submissions come from a broad cross-section of organisations and individuals, including legal peak bodies, a grants foundation, a social impact analyst, a small charity, a finance and compliance consultancy, and individual community members.

As previously reported by Pro Bono Australia News, legislation to abolish the ACNC was referred to the Economics Legislation Committee for inquiry in late March. Not for Profits and other interested organisations and individuals have until May 2 to make a submission.

In its submission, the Queensland Law Society describes the ACNC as “…a nimble, focused and fit for purpose regulator”.

Conversely, the Society believes the ATO’s systems are primarily designed for their core responsibilities and “do not appear to accommodate the particular profile or needs of the charities sector”.

The Society also questions the legislative repeal process, which involves two consecutive parliamentary bills, stating that “such a convoluted legislative process inevitably creates uncertainty amongst charities” and “makes good administration by the current ACNC extremely difficult”.

“Informed debate on the No. 1 Bill is effectively impossible as many of the issues necessarily raised cannot be considered in isolation, and cannot be adequately addressed without analysing the No. 2 Bill,” the Society states.

“This appears to add ‘red tape’ to a sector already suffering from reform fatigue.”

In particular, the Society calls into question the Explanatory Memorandum (EM) and the Regulatory Impact Statement (RIS) for the proposed legislation, describing them as “being less than rigorous, and not meeting the usually high standards and disciplines of Commonwealth legislative processes”.

The Society asserts that the comment in the RIS about the ACNC being established with the intention that it be a single reporting point for charities, and that this has not eventuated, “fails to acknowledge the progress made in setting up a framework for streamlined reporting in the ACNC's first 15 months”.

“The RIS does not refer to the other objects of the ACNC Act, and whether these are being achieved. Nor does it refer to the timeline for achieving these objects,” the Society states.

“Given that the ACNC Act has a legislative review period of five years, it is not unreasonable to work on the basis that 5 years rather than 15 months may be a reasonable period within which to evaluate outcomes and achievements of the ACNC.”

The Society points out that the RIS fails to mention the “regulatory gaps and inconsistencies associated with regulation by the Australian Securities and Investment Commission (ASIC) and the Australian Taxation Office (ATO) and makes no assessment of the consequences of returning regulation, piecemeal, to these agencies”.

In regard to the government’s intention to return the functions transferred from ASIC and the ATO to the ACNC back to these bodies, the Society quotes the ATO’s submission to the Inquiry into the Definitions of Charities and Related Organisations in 2001, which stated: “It is also our view that administration would be better served by a single, independent common point of decision making on definitions leading to conclusions about whether organisations are charitable or non-profit, such as occurs with the Charities Commission in the UK for example.”

The Fielding Foundation, a private ancillary fund that donates funds to charities, submits that for the past 10 years it had invested “a considerable amount of time and energy conducting due diligence on the charities we are considering making a contribution to”.

“The introduction of the ACNC and in particular the Annual Information Statement (AIS) has significantly reduced this workload on The Fielding Foundation – thereby making it easier to identify and donate to well performing and transparent charities,” it states in its submission.

“The loss of a central register and the AIS system would be a major retrograde step in terms of making grant making more effective and efficient.”

In an individual submission, Social Impact Analyst Emma Tomkinson expresses her concern over the bid to repeal the ACNC, saying it has been “making unprecedented progress on open access to Australian not-for-profit sector data”.

“The potential for research based on aggregated data or de-identified micro-data from the not-for-profit sector is huge,” Tomkinson states. “The knowledge arising from this research could be used by the sector and their stakeholders to improve services to the Australian population.

“Better data on the sector could help the Government identify trends related to people in need and respond more effectively,” she states.

“When it was regulating the sector, the Australian Taxation Office did not prioritise open data and given its purpose and scope, perhaps it shouldn’t have.

“The arrival of the ACNC and its goal to improve access to not-for-profit data was welcomed by the research community.”

Tomkinson said the ACNC research team convenes regular teleconferences with researchers, which helps them collaborate and build a better body of research.

Boutique financial consultancy Westworth Kemp Consultants’ submission suggested that rather than abolishing the ACNC, the NFP sector would be better served by the Commonwealth working through COAG to design a streamlined system and remove regulation at the State level, so that the ACNC can become the “one stop shop” it was intended to be.

“The Tax Office is not the right regulator for the sector. Their focus is on revenue-raising and their interest in the nfp sector is therefore driven by a desire to ensure that deductible gift recipient status is strictly regulated and tax revenues are protected,” the submission states.

The consultancy argues that the ACNC’s broader brief to educate the sector and raise standards of governance also makes it a more favourable option to the ATO.

“…the ACNC’s focus on education as well as regulation was designed to reduce the very real risk of accidental non-compliance with the law and raise standards of governance in the sector. These proposals do not appear to take into account this vital function.”

The Shepherd Centre, a small charity supporting children with hearing loss, also strongly supports the retention of the ACNC, on the basis of “transparency” and reducing the “regulatory burden”.

It said the charitable sector has already undertaken a large amount of work to transfer information across to the ACNC and put systems in place to support providing ongoing information to the ACNC.

“In future, State regulation will hopefully be handed over to the ACNC – and as most charities operate for many decades, for those charities that operate over multiple jurisdictions…there is a significant future saving in administrative load which would be lost if the ACNC is repealed,” The Shepherd Centre states.

Submissions to the Senate inquiry can be lodged and viewed here.