Australia’s new independent not for profit regulator under threat

Future Wiolrd Giving

Australian not for profit regulator under threat. Image by JJ Harrison

The Australian Charities and Not-for-Profit Commission (ACNC), only established as an independent regulator in 2012, is facing the threat of closure after Tony Abbott’s Liberal National party Coalition swept to victory in last weeks general election.

 

In a speech at the Centre for Independent Studies in Sydney in April 2013, Kevin Andrews, then Shadow Minister for Families Minister Housing and Human Service, and now Minister for Social Services (a new portfolio that will hold wide ranging control over policy relating to not for profits), laid out plans to “return the regulatory powers that existed in the ATO, ASIC and other similar bodies to those bodies” citing a failure to reduce bureaucracy and his belief that such an organisation is incompatible with Commonwealth, State and Territory laws.

 

Whether Mr Andrew’s judgements on the ACNC turn out to be true we may never know as it is surely too early to judge the regulators performance. What is certainly true is that dissolving or radically curtailing the functions of the ACNC so soon after establishing it would show little regard for the long campaign that the not for profit sector have waged to bring about its creation.

 

A series of reports and consultations dating back to the mid 1990s have called for the creation of an independent not for profit  regulator in Australia and have helped to pin down its structure and responsibilities. Indeed, an official inquiry published in 2001 conceded that it was “ploughing well-tilled soil” in looking at the issue. The potential loss of the ACNC would be particularly regrettable given that its long development time has led to some innovative approaches to regulation.

 

A key concern for not for profits organisations was to create a regulator that simplified their reporting requirements, cutting out the burden of reporting to several different bodies. As a result, the ACNC acts as a central repository for all not for profit information for other government agencies. This “report once, use often” approach reduces the burden of reporting whilst improving accountability by ensuring that information on not for profit organisations is consistent. Combined with the increased public profile an independent regulator offers, this approach could, if allowed to continue, lead to more effective regulation, and crucially, improved public perceptions of regulation.

 

Australia’s position as one of the most generous societies in the world in terms of charitable giving (they were ranked first in the 2012 World Giving Index) may be partly explained by national cultural characteristics; but civil society does not exist in isolation from government. As the next Future World Giving report on building trust in giving will show, governments can have a determinate impact on the capacity of not for profit organisations to earn public trust through the spaces they create for organisations to demonstrate effectiveness, their political rhetoric, or the efficacy and stability of their regulatory policy. For the Coalition government to be tampering with all three components of a winning formula seems unduly risky.

 

But advocates of the ACNC will be buoyed by the words of Independent Senator Nick Xenophon who while addressing the South Australian Council of Social Service pre-election Forum said:

 

“Up until now, no one knew exactly how much charities and NFPs received in tax breaks, although it was estimated at over $1 billion. The Coalition talks a lot about financial responsibility, so it makes no sense that they’d want to shut down the very organisation that makes sure this money goes to legitimate organisations.”

Senator Nick Xenophon

 

Together with the support of the Green Party who are vying with Senator Xenophon for control of the Senate, the ACNC has political allies in high places that will ensure that it will not be straight forward for the Coalition to proceed with their plans to wrap up the ACNC.

 

As we will make clear in our soon to be published Future World Giving report on building public trust in giving, political consensus is vital for effective regulators. When politicians use regulators as a political football they undermine public trust in the regulatory system, and hence in the act of giving. It is to be hoped that the current uncertainty surrounding the future of the ACNC has not undermined public confidence in giving. We will know what effect it has had when CAF publishes the 2013 World Giving Index later this year.

 

Adam Pickering

3 responses to “Australia’s new independent not for profit regulator under threat

  1. This is a good article, although the heading is little worrying. The danger is that the more the community sector talks about the demise, the more likely it becomes self-fulfilling as it will appear the support for the ACNC is declining. The government does not have the numbers in the Senate now, may not have them on this issue come next July even if it was a high priority for them – which it is probably not. The sector really just needs to keep working with and supporting the ACNC, push for the states to remove duplication of ACNC regulation, and make it a much harder and more unpopular should the government ever move to return us to the top-down compliance-based regulation of the ATO.

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    • Thanks for your thoughts Greg. I take your point about the title. Perhaps what we need to focus on is the potential cost of abolishing the ACNC. Not only the costs of establishing and abolishing the regulator, but the potential losses in future earnings for charities due to diminished confidence in the sector. Given that many non profits deliver vital services, these are costs which may ultimately come back to the state. In this way we could say that any money saved in abolishing the ACNC might be a false economy.

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  2. Pingback: Gimme 5: the best stories for the week of 13th Jan | Giving Thought·

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