Above: CHA chief executive, Martin Laverty

By Stephen Easton

Draft legislation set to go before parliament within the next few months creates unnecessary, heavy handed rules and will impose higher costs on not-for-profit organisations, according to Catholic Health Australia chief Martin Laverty.

Aged care providers, he said, already operate under a robust regulatory system and would be particularly worse off under the proposed legislation, which aims to reform the not-for-profit (NFP) and charitable sector and create a new regulator, the Australian Charities and Not-for-profits Commission (ACNC).

“It ain’t broke, so don’t fix it,” Mr Laverty said, summarising the extensive criticisms made by Catholic Health Australia (CHA) in a submission to Treasury on the draft bill, which was released for consultation in early December.

“This proposal doesn’t fit the aged care sector and unless it’s changed, this legislation is in no shape to pass the parliament in July this year.

“This is a solution to a problem that doesn’t exist.”

The CHA submission was largely duplicated in a separate submission on behalf of all NFP aged care providers from Aged and Community Services Australia (ACSA), which argued that the draft legislation’s release date and deadline for submissions left the peak body without reasonable time to consult its members or seek independent advice.

According to Mr Laverty, the draft bill would give the ACNC alarming new powers to “direct, control or shut down a charity on unclear legal grounds”, which most of the NFP sector was not aware of. 

“The reason you’re not reading about this on the front page of newspapers is that boards and management have been away for summer holidays, while the Treasury was proposing new powers that would enable [the ACNC] to take over, direct and control charities.

“That’s not in the spirit of what a not-for-profit is, and it’s for no obvious benefit.”

Both the ACSA and CHA submissions effectively accuse the government of Orwellian doublespeak. Rather than the Commonwealth’s stated aims of reducing red tape, eliminating duplication of regulatory requirements and creating a single national framework, Mr Laverty said the reforms would actually do the opposite.

“The opportunity for this new commission is to harmonise all state and territory funding requirements for charities into a single national framework,” he said. 

“Any charity or not-for-profit that works across state borders knows there are different rules in every state; this commission would ideally create a single set of rules but the commission is not proposed to do that and it’s a missed opportunity if it doesn’t do that.”

Mr Laverty, who steers Australia’s largest group of non-government, non-profit hospitals and aged care providers, said the legislation would also create legal uncertainties where currently there are none, and impose tougher regulations on NFPs than those that apply to for-profit businesses.

“At the moment there is crystal clear legal understanding of how not-for-profits operate and this legislation would create unclear legal principles.

“[… The ACNC] could control, direct or deregister an NFP and we think that power is unclear, which would leave it up to the courts to define it.  

“Many charities will have to go to court to get clarity and, most importantly, we don’t think that in Australia a government should have the power to take control, direct or shut down a charity on unclear legal grounds.”

The proposed legislation would also force profit-making enterprises owned by NFPs to pay tax on any revenue not remitted directly back to the parent organisation for its altruistic purpose.  

Mr Laverty said the Catholic Church owned many such businesses – like many NFPs, including aged care providers – adding that the practice of reinvesting their untaxed income was “absolutely essential” to maintain viability and reduce their reliance on government.