Late last year, Australia proposed a repeal bill that could see the Australian Taxation Office and Australian Securities and Investments Commission take charge from the Australian Charities and Not-for-profits Commission (ACNC). ACNC is the body that regulates and maintains a database of all registered charitable entities in Australia.
 
What should New Zealand take from the reassessment of the Australian regime?
 
The Centre for Independent Studies’ Helen Andrews argues in Don’t Save the Charities Commission that the public trust in the sector, a key responsibility of the ACNC, showed “no signs of declining” before ACNC existed. Charities scored higher on these surveys than the Reserve Bank of Australia did. So if trust was already high, the question might be asked why enact a regulatory body that has the potential to increase red-tape?
 
Dr Andrew Leigh, Labor MP and economist, is a major opponent of the Australian repeal proposal. In Don’t abolish the charities commission he cites research showing that about 90 percent of charities submitted against it.
 
However, would it be in the long-term interests of charities to argue against the body that regulates it now?
 
In New Zealand, the charities sector is regulated by Charities Services under jurisdiction of Charities Act 2005.
 
To safeguard against tax-evasion and maintain public trust, decisions made by Charities Services regarding registration are often accepted by the Inland Revenue Department (IRD) and tax-exemptions are approved. In saying that, IRD still presides over all verdicts relating to taxation. The regulator maintains an online database of all these entities, analogous to ACNC in Australia. Registration means filing papers which could duplicate with current IRD requirements.
 
Could New Zealand’s Charities Services powers be brought under IRD's scope?
 
The IRD, with potentially more complete data on charitable giving, may be better placed for much of this work and has the capacity to do it.
 
In fact, during the early 2000s the National Party opposed the Labour-led government’s Charities Bill which formed the governing Act. The Charities Act established the Charities Commission, which was disbanded in 2012 and its core functions were reassigned to Charities Services, an arm of the Department of Internal Affairs. The objections to the initial Bill included that it may upset most of the voluntary sector with extra regulation, it was like using “a hammer to crush an ant”, and there was no empirical evidence purporting impropriety in the sector.
 
The state ought to encourage philanthropy but there needs to be a balance between regulation and discouraging bureaucracy. Australia’s repeal proposal suggests that we too might ask whether our regulations strike the right balance.