In early May, submissions to a Federal Senate Commission examining the repeal of a the national charity regulation body — the 18-month old Australian Charities and Not-for-Profit Commission (ACNC) — will close. What follows will be a nervous wait for charitable organisations around the country, especially those with an environmental agenda. If the Coalition Government has its way and the ACNC is abolished, the regulation of charities will be handed back to the Australian Tax Office, brining some concerning memories back in focus.
Under the Howard government, the tax office was used to attack and pressure charities who were advocated for policies the government didn’t like. This was at a time of recurring public and parliamentary attacks on those charities by senior Liberal politicians like George Brandis, Brett Mason and Eric Abetz, echoed by industry groups and right wing think tanks. The pressure meant that between 2004 and 2007 The Wilderness Society, for instance, faced at least 20 different public calls for them to be stripped of their charity status. They passed the three Tax Office audits of their “political” activity, but other groups like AidWatch had long court battles to secure their tax charity status.
Given this tax attack, when the ACNC was established, environmental groups and other charities pushed for its governing legislation to ensure the independence of charities and their right to advocate for charitable causes. The push was successful and the objects of the Act include sustaining a “robust, vibrant, independent and innovative” charity sector. There is also a legislative provision ensuring that the governance standards required to be met by charities are not prescriptive and do not constrain advocacy.
With the abolition of the ACNC, the environment movement would lose the protections of an independent regulator and be brought closer to ministerial and political reach.
Legislation to abolish the ACNC was introduced into Federal Parliament as part of the government’s much vaunted “repeal day” in March. Some 10,000 regulations and legislative provisions were to be repealed in what was described as a “bonfire” of red tape reduction.
There was an irony in throwing the ACNC to the flames: one of its own objectives is the reduction of red tape. But when the legislation got to the Senate, the ACNC was saved, at least temporarily. The Senate Economics Legislation Committee is now inquiring into the ACNC and will report in June — in good time to inform the decision-making of the incoming Senators who will hold the new balance of power.
Given the long history of consultations and parliamentary inquiries that went into drafting the legislation only two years ago, and the results of surveys since, it is most likely that the Committee will hear yet again that most charities like the notion of a purpose-built, independent regulator and don’t wish to be returned to the regulation by the Australian Tax Office.
There will be some dissenting voices. The Catholic Church and the Financial Services Council (who represent the corporates who collect fees for administering philanthropic trusts) are anxious about increases in reporting and accountability that the ACNC might bring to hitherto secretive financial affairs.
It is true that there are added reporting requirements under the ACNC, with charities having to fill out annual reports (duplicating reporting required under state laws) and to inform the ACNC of changes to their management committees and constitutions.
However, as charities receive substantial public support via donations and tax concessions, it seems reasonable that basic things like what they do and who is in charge are on the public record (something the Tax Office failed to do previously). Furthermore, the reporting duplication could be removed simply by amending state legislation, and the existence of a national register under the ACNC opens up many other possibilities of red tape reduction.
The potential abolition of the ACNC is not, however, the only threat to registered charity groups whose campaigns offend the government. There is the obvious risk of loss of government funding for many environment groups, and for some there is also direct ministerial control of their deductible gift recipient (DGR) status. This matters because tax deductibility for donations is vital to fundraising.
For donations to be tax deductible environment groups either need to be listed in the Income Tax Assessment Act or be on the Register of Environmental Organisations. The later requires establishing a separate Gift Fund under an organisation’s constitution with its own bank account and management committee, and then applying to the Environment Minister to be placed on the Register. The Minister may sit on the application for years, grant it as a piece of political largesse for supportive charities, or threaten to deregister groups that transgress. All have happened.
If the government really wanted to reduce red tape for the charitable sector, it would pick up the recommendations of the recent Not-For-Profit Reform Working Group report which proposed that donations to all charities should be made tax deductible provided those funds are used for charitable purposes. In effect, this would extend DGR status to almost all environment groups and would remove one level of political interference and pressure.
It would also replace the current confusion whereby different types of charities have different tax entitlements, and it could remove the red tape around managing a separate Gift Fund. The result would be greater transparency for the public, less bureaucracy for organisations and a boost to fundraising as many small and local environment groups would be able to accept tax deductible gifts.
The NFP Working Group even made it easy for the government by proposing the changes be revenue-neutral, paid for by removing some Fringe Benefits Tax benefits enjoyed by the elite Public Benevolent Institutions.
The fact that the government is prioritising the abolition of the ACNC before removing more onerous and unfair regulation casts doubt on its red tape reduction credentials. The doubts are further heightened by the presence in the current government of leaders of the previous tax attack on environment groups, and by the recent defunding of Environmental Defenders’ Offices.
This government does not like campaigning and advocacy organisations, and the removal of the ACNC as an independent regulator simply exposes those organisations to attack.