Regulation Bonfire Offers Little Warmth for Not for Profit Sector

To abolish the ACNC on the grounds that it has failed in its first year to unravel the Gordian knot of Australia’s long legacy of regulatory hodgepodge amounts to policy vandalism, writes policy analyst at ANU, John Butcher.

On March 24, in his address to a seminar on community sector development, sustainability and strategic risk management convened by the ACT government, the CEO of the Community Council of Australia, David Crosbie, expressed cautious optimism that important elements of the Australian Charities and Not-for-profits Commission (ACNC) might yet be saved from the Abbott government’s regulatory ‘bonfire’. He cautioned, however, that discussions with Social Services Minister Kevin Andrews and his “special adviser” on the Not for Profit sector, Ted Lapkin, have not been “fruitful”.

On March 19 over 50 Australian charities called upon the Prime Minister in an “open letter” to re-think his government’s decision to scrap the ACNC. The government, however, is immovable.

In this light, the Explanatory Memorandum and Second Reading Speech attached to the Australian Charities and Not-for-profits Commission (Repeal) (No 1) Bill 2014 tabled on March 19 – the very day the “Open Letter” was published – makes for interesting reading.

The Explanatory Memorandum tabled by Andrews is an interesting exercise in sophistry. It is claimed that repealing the ACNC will remove “unnecessary regulatory control over the civil sector”, and allow the Commonwealth government to “move instead towards support for the sector to self-manage”.

The Explanatory Memorandum refers to Minister Andrews’ consultations with “a range of stakeholder groups” in the course of his “discussions with the sector over the last four years”. It cites “concerns by a number of charitable organisations such as Uniting Care” about the ACNC’s capacity to deliver tangible red tape reduction.

As David Crosbie observed in his address, those parts of the Not for Profit sector opposed to the ACNC are hardly in the majority – a point he made again on the ABC’s The World Today. One is therefore left to conclude that particular voices have been privileged above others in this debate.

The Explanatory Memorandum notes mixed views on the proposal to abolish the ACNC and states that “ProBono Australia recently featured the report by the Centre for Independent Studies (CIS) which has been highly critical of the ACNC”. This statement appears to imply that Pro Bono Australia supports the views expressed by the CIS – an implication I suspect to be a disingenuous misrepresentation of Pro Bono Australia’s editorial position.

The CIS paper is cited in the Explanatory Memorandum in support of the government’s position. Personally, I am not so sure that the CIS report passes the tests of objectivity or scholarship.

As concerns objectivity, it should be noted that the paper’s author, Helen Rittelmeyer, recently worked in the electorate office of the Federal Liberal Member for Mitchell, Alex Hawke who spoke against legislation to establish the ACNC. Hers are not the views of a disinterested scholar. And as for scholarship, one wonders whether Rittelmeyer’s BA in Religious Studies from Yale University equips her to comment authoritatively in the Not for Profit policy space.

That such views are privileged over those of scholars with relevant expertise, such as Curtin University’s David Gilchrist or University of Melbourne Professor of Law Ann O'Connell, reinforces the impression that the proposal to abolish the ACNC represents a triumph of ideology over rational policy.

The Explanatory memorandum also points to claims that “international experience shows charity commissions have not proven an effective way to regulate the sector” and observes that New Zealand abolished its own Charities Commission. These “facts” are offered as prima facie “proofs” of the government’s position. However, sober reflection on either claim reveals a far more nuanced picture.

The assertion that charity regulation regimes overseas have failed ignores the fact that the historical and institutional drivers for charities regulation can differ enormously between jurisdictions as can the policy problems charities regulation seeks to address (see Irvine & Ryan 2013, and Cordery & Baskerville 2007).

While it is true that in New Zealand the stand-alone charity regulator was disestablished, the state did not vacate the field of charity regulation. In announcing the passage of the enabling legislation in May 2012, New Zealand’s Minister for State Services, Dr Jonathan Coleman, said:

The Charities Amendment Act (No 2) transfers the functions of the Charities Commission to the Department of Internal Affairs (DIA). This law changes machinery of government arrangements for the charities sector; it does not change the current functions of registering and supporting charities under the Charities Act 2005. 

The New Zealand government has subsequently announced measures to “improve the quality of financial reporting among charities and result in greater confidence that financial statements are reliable”.

By contrast Irvine and Ryan observe that the US and Canada – two jurisdictions without national charity regulators – “will likely see the perpetuation of multiple regulatory regimes that add to confusion and uncertainty in the regulatory space”. And, although Minister Andrews has floated the possibility of a US-style “charity navigator” model for Australia, even the Charity Navigator has called for the establishment in the US of a federal regulatory agency to monitor and regulate charities.

Reform in the Not for Profit space has, until relatively recently, been a long neglected area of public policy. To abolish the ACNC on the grounds that it has failed in its first year to unravel the Gordian knot of Australia’s long legacy of regulatory hodgepodge amounts to policy vandalism.

To undo it all now, just as the ACNC seems to be hitting its stride, is shortsighted and ultimately to the detriment of the sector and the community.

About the Author: John Butcher  is currently a PhD candidate in the Political Science Program, Research School of Social Sciences at the Australian National University. He has worked as a policy and performance analyst in state and Commonwealth line and central agencies. He has a long-standing scholarly interest in the relationship between the formal institutions of government and civil society. He is especially interested in the political framing of the Not for Profit sector and its role as a vehicle for the delivery of public policy. For his PhD dissertation (ANU) Butcher undertook a comparative case study of cross-sector policy frameworks in Australia, New Zealand, the United Kingdom and Canada.