Qualified support for regulator

A PROPOSED national regulatory body for the not-for-profit sector is good on paper but more detail was needed, according to representatives of the sector in Western Australia.

The federal government’s scoping study proposes to create a single regulator for the purposes of governance, accountability and transparency of the sector and would amalgamate the current structure, which involves ASIC and the ATO.

It also proposes to conduct further reviews into areas with potential for further reform, including existing regulators and the legal form of NFPs, like the company limited by guarantee structure.

In its response to the initial consultation paper, Community Employers WA said the independence of the body would be crucial.

“It is not considered that the ATO is the appropriate location for such a function as it focuses on the monetary element of service and on compliance, rather than improving services to the community,” CEWA’s submission said.

Disability support services organisation Nulsen chief executive, Gordon Trewern, said the proposed reforms were a good start.

“The notion of a one-stop shop sounds good but it would have to be tested when it is set up,” he said.

“Anything that gets away from this dog’s breakfast arrangement across the nation for the not-for-profit and charitable sector is good.”

Rocky Bay chief executive Michael Tait said the disability support organisation currently had to provide financial reports to eight or nine different agencies, and that a system that lessened the administrative burden would be beneficial.

“It is truly onerous and unnecessary,” he said.

Mr Tait’s optimism for what the regulator could provide outweighed his concerns, though he did highlight some issues.

“One of the biggest risks is we don’t want to create another bureaucracy with limited benefits. If they go down the path of creating more forms and more red tape to justify their existence, that would be a major concern,” Mr Tait said.

“We would worry that suddenly we would have to become limited by guarantee, full public disclosure, ASIC-based reporting, all of which costs money in accounting and audit processes and isn’t necessarily funded.”

WA Council of Social Services director of social policy, Chris Twomey, said if extra reporting became a requirement then the government should provide funding.

“That needs to be factored in to funding and offsets, otherwise the model isn’t sustainable,” he said.

While the report outlines a case-by-case basis and proportional scale for governance requirements for smaller not for profits, Mr Tait said he hoped the government took a collaborative approach.

“There is going to need to be some assistance in terms of education and some understanding that these things have to be graduated,” he said.

Mr Trewern said the report’s intention to define ‘charity’ would be beneficial, and the intention to make the level of governance proportional to the size of organisations was a commonsense approach, but added concern for larger organisations.

“Whoever is designing this stuff will need to be tainted with common sense and the rule of thumb will be if it is imposing on the good works of the charitable entities, then it really should be looked at again,” he said.

Mr Trewern expressed concern over the government’s outlined intention to have the regulator funded by membership.

“It’s their responsibility, they should fund it,” he said.

Another concern was the optional membership, in which organisations opt in or out, with government support ceasing for those organisations that chose to opt out.

“The government has got to have the resolve to do this properly, or don’t do it at all. Don’t put one foot in and leave one foot out,” Mr Trewern said.

“My understanding is that Australia is lagging behind other countries that have already gone down this path. 

“Is the federal government going to take strong leadership and say ‘this is what we are going to do, there is no option, it applies to all charitable entities and away we go’.”

He said if the state and territory governments had concerns over federal funding control, a harmonisation model could be implemented in which the same legislation would be passed through states and territories in order to unify governance while allowing state administration.