Senator The Hon. Zed Seselja
Assistant Minister for Finance, Charities and Electoral Matters
Date: Friday, 2 August 2019
It’s great to be with you all here in Melbourne.
I don’t need to tell you that Charities, large and small, are extremely valuable contributors to communities right across the country — and, certainly one of the best parts of my job is to get out and see some of seeing the amazing work they do.
One of my first experiences of charities was growing up. Mum and dad when they were new arrivals got a bit of help from Vinnies. They were doing it a bit tough in those early days, and they never forgot that.
For our family every year it was the St Vincent de Paul door knock appeal. It was my first experience of being a charities volunteer – although when you’re a young kid and you’re dragged along you’re not really a volunteer – but it does teach you the value of giving something back.
In Canberra I’ve been an ambassador of a number of different charities, and one of those is Kulturebreak, which does very different work from St Vincent de Paul.
It’s dance and performance, but it’s actually about empowering young people from pretty tough backgrounds, and transforming their lives.
I’ve seen the work of a family in Canberra who lost their daughter to a brain tumour. Her name was Dainere Anthoney, and she died at the very young age of fifteen after a long battle with brain cancer.
They formed Dainere's Rainbow, which raises money for the Sydney Children’s Hospital, doing amazing work.
Just in those three charities I’ve had some contact with in Canberra goes through some of the breadth of charities, but of course we know right around the country, the work is far more diverse.
Whatever the work, we know it’s driven by passionate people; we know it’s driven by amazing volunteers and of course the many people employed in this very important sector.
The Prime Minister shares my passion for charities, and for this reason, he appointed me as the first Assistant Minister for Charities in Australia’s history.
This will ensure I can actively represent your interests in government, the community and with business.
The charities sector makes an invaluable contribution to the Australian community.
From the lawyers in the sector who do an exceptional job in not only ensuring our laws are understood, but also providing a practical voice in making sure regulations help rather than hinder, to the dedicated employees and volunteers of charities on the frontline who get the work done.
The Government values the work you do and the contributions you all make to our community.
So it’s an honour to be here today to outline the Government’s priorities in making sure our regulatory settings allow for a vibrant and innovative sector.
When looking at the value of charities, I think there’s good reason to be optimistic.
Measured by statistical ‘vital signs’ the sector is performing well.
The charity sector, and the not‐for‐profit sector more broadly, make an enormous contribution both in dollar terms, and to the lives of those associated with charities, including employees and volunteers.
In 2017, the ACNC commissioned a Deloitte Access Economics Report which estimated the economic contribution of the charity sector (in 2014‐15) was $129 billion, equivalent to around 8.0 per cent of Australia’s GDP.
To put that in perspective, the sector is roughly equivalent in size to the Australian retail sector, education and training, or the public administration and safety sector.
What’s more, the charity and not‐for‐profit sector employs 1.3 million Australians.
This means charity employees make up almost 10 per cent of all employees in Australia.
In addition, many Australians generously donate their time, be it on the sidelines of a local footy match or responding to a natural disaster.
In 2017, charities and not‐for‐profit organisations reported 3.4 million volunteers over the year.
This is millions of unpaid volunteering hours, making an amazing contribution.
Contribution to community wellbeing
While the value of the sector to the economy is clearly significant, the contribution to the wellbeing of our communities is equally large but not as easily measured.
One critical element not evident in the data is that charities contribute by offering services the public sector does not as efficiently, and the private sector cannot, or will not, undertake due to a lack of financial return.
Even where there is overlap in services provided by charities and government or for‐profit businesses, charities are often able to provide better services due to advantages, such as client relationships built on trust.
Most of our major charities rightly focus on the delivery of essential services such as emergency response work, supporting people in crisis, social services, particularly in schools and hospitals, and improving the environment in which we live and work.
By involving the local community in the delivery of these services, and providing connections through worship, social and sporting clubs, charities and not‐for‐profit organisations play a vital role in generating community cohesion and strengthening civil society.
Charities are also pivotal in enhancing community endowment for the benefit of future generations by creating and maintaining cultural and artistic assets such as galleries and museums, and maintaining natural assets by caring for the environment and wildlife.
Support for charities
Governments, at all levels, recognise this contribution to our national life, and we support the sector in many different ways.
In terms of direct funding from the states, territories and the Commonwealth, government grants to charities amounted to $68 billion in the 2017 reporting period, up from $61 billion in 2016.
In fact, government grants represent more than 46 per cent of total revenue to the 57,500 registered charities.
Government support also extends to providing generous tax concessions, including income tax exemptions, deductible gift recipient status, GST and Fringe Benefit Tax concessions, payroll tax, land tax and stamp duty concessions.
We know that Australians care deeply about their charities and are generous with their donations.
Over the ACNC’s 2017 reporting period, charities received $9.9 billion in donations and bequests, with 4.5 million Australians claiming tax deductions for gifts and donations.
It is small charities that are most reliant on individual philanthropy in delivering their purpose, with 37 per cent of revenue for small charities coming from donations and bequests.
However, it is notable that for a number of years, donations and bequests have been falling and there is some evidence, which should be a concern to all of us, of a decline in public trust and confidence in the sector in recent years.
Certainly, ACNC survey data indicates a decline in the level of trust in charities from 37 per cent in 2013 to 24 per cent in 2017. I think this s something we all need to work on.
It is obvious the Government’s strong support for charities, and the privileged position in Australian society that charities occupy, brings with it special responsibilities and a duty to ensure that the generosity of the community is not misused.
This has been one of the important roles the ACNC has played, and I would commend them on their role in building up confidence in the sector.
I know that all of you who have an interest in the sector would want to see those who do the right thing being commended and supported, and those in the sector who don’t always do the right thing, particularly when it comes to complying with relevant laws, being held to account.
There is no doubt there is always an active debate around advocacy of charities. I’m a big supporter of charities being able to advocate for causes they believe in.
That is a legitimate part of the public debate. There is always an interesting, and reasonable, debate about when that crosses over into becoming effectively political organisations, with all the different regulations political entities face in comparison to charities.
There are a number of fairly activist charities such as groups like Greenpeace Australia Pacific, and the Wilderness Society, who do spend a lot of time looking very much like political entities.
This is a current debate that I look forward to being a part of.
There is no doubt that when Friends of the Earth make a $262,000 donation to political activist groups like GetUp!, there are legitimate concerns people raise.
And most concerningly, I have concerns when groups such as Aussie Farms and the Save the Tarkine Coalition, whose operations involve encouraging criminal trespass on private property and the sabotage of legitimate businesses, abuse that privileged position.
Last year I raised my concerns about Aussies Farms with the Commissioner. The Commissioner acts independently of Government, but we as representatives are free to raise these issues from time to time.
Political activists and organisations condoning criminal activities masquerading as charities corrodes Australian’s trust in charities overall.
Charities form such a large sector, and to have groups like Aussie Farms given the same technical legal status such as groups such as Vinnies, the salvos and the Fred Hollows Foundation does cause me some concern.
Fostering a vibrant and innovative sector
Government has a role to play here. We need to make sure our regulatory settings are right.
We need to strike a balance in protecting the integrity of the sector and fostering a vibrant and innovative sector.
In recent years, the Government has announced reforms to deductible gift recipient rules which are currently being implemented.
Further, the Government‐commissioned ACNC Review contains a raft of ambitious reform options which have the potential to transform the regulatory landscape of the charity sector.
In developing a Government Response to the ACNC Review, I’ve sought to engage with the charity sector to hear first‐hand the areas that are causing you most concern, and what improvements you think need to be made.
I have heard a number of messages, but if I were to collate them into three consistent messages:
- You want a reduction in red tape for the sector so you can focus your resources on serving the community.
- You want to enhance transparency in the sector to build public trust and confidence.
- And you want the Government to support a steadfast, independent and effective ACNC.
I can assure you these three themes will be the foundation of the reform agenda for the sector over the term of this Government.
In particular, I have heard loud and clear the enormous burden imposed by different requirements across jurisdictions and levels of government, whether relating to corporate registration and reporting requirements, fundraising activities, or applications for grants and tax concessions.
I am sure you will acknowledge the ACNC has made good progress since 2012 to streamline corporate reporting requirements on charities in many states and territories.
For example, ACNC‐registered charities incorporated in NSW, Victoria, South Australia, Tasmania, the ACT and the NT now report once to the ACNC without needing to report separately to state or territory regulators.
Further, the ACNC has worked with the ATO to enable charitable ancillary funds to report once to the ACNC, replacing the previous system where ancillary funds were required to report to both the ACNC and the ATO.
But despite these modest improvements, much more needs to be done, particularly in the area of fundraising.
Accordingly, harmonising and streamlining regulatory requirements across jurisdictions will be a key focus for this Government, freeing up resources so charities can do what they do best, delivering tangible benefits on the ground.
The Government is also in the process of implementing DGR reforms that will reduce red tape.
For example, the Government is abolishing public fund requirements which are no longer required given ACNC governance and financial reporting standards.
This Government will also make transparency a priority, to help arrest the decline in public confidence in the sector.
Increased transparency will make it easier for the public to find information about charities that they wish to volunteer with or donate to.
As part of the DGR reforms, certain non‐charitable DGRs will be required to register with the ACNC for the first time and make annual public disclosures.
Finally, the Government is committed to ensuring the ACNC has the best tools to promote good governance in the charity sector and to consolidate its reputation as a respected and highly effective regulator.
The charities sector plays a critical role in our society, both for our economy, and in our community.
As Assistant Minister, my focus is to help ensure the sector continues to grow and strengthen.
We’re tackling red tape, we’re improving transparency and we’re increasing accountability in the sector.
In recent weeks, I have had the wonderful opportunity to move around the country and hear from some amazing charities doing extraordinary work.
I’m interested in continuing that process of engagement as we work through our reform agenda, particularly over the next few months as we work through our response to the ACNC review.
I look forward to your feedback overtime and thank you very much for the opportunity to be with you today.