‘Unconstitutional, indefensible’: Lawyers bash proposed changes to charity sector

By Jerome Doraisamy|16 March 2021
‘Unconstitutional, indefensible’: Lawyers bash proposed changes to charity sector

If proposed amendments to Australia’s charity sector pass, the sector’s ability to provide access to justice will be diminished, and the capacity of corporate lawyers to provide pro bono will also be hindered.

The federal government recently issued proposed amendments to the Australian Charities and Not-for-profits Commission’s governance standard 3, together with an exposure draft that could, lawyers said, very significantly broaden the basis upon which the ACNC Commissioner could deregister a charity.

Should the changes go through, a charity may be able to be deregistered in cases extending beyond indictable offences and those attractive civil penalties of 60 penalty units, or for failing to take reasonable steps to ensure a charity’s resources are not used to promote or support unlawful conduct.

Senior lawyers working in or for the charity sector have slammed the proposed amendments.

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Foremost legal concerns

Greenpeace Australia Pacific general counsel Katrina Bullock (pictured) said that the changes being floated are “unconstitutional” and would restrict legitimate and lawful non-partisan policy advocacy.

“If the proposed changes proceed, it will have a chilling effect on freedom of speech in Australia and will hamper the ability of charities to fulfil their charitable purpose and continue their important public interest work,” she espoused.

Charities play an essential role in Australia’s democracy, she stressed.

“They educate the community about the impact of policies and they promote educated debate on issues of public interest. If the proposed amendments come into effect, charities like Greenpeace Australia Pacific could be deregistered for simply tweeting in support of a human rights protest where a protester accidentally and peacefully stepped on private land. We could be deregistered for providing support to whistle-blowers and journalists who speak out against injustice. We could be deregistered for providing legal observers at protests where protesters accidentally hinder foot traffic,” she detailed.

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“The infractions which could spark deregistration are so minor in nature that they could easily be used in retaliation against charities who raise genuine concerns about government policies in order to silence dissent or reform.”

Human Rights Law Centre senior lawyer Alice Drury identified other outcomes for charities: “They would be forced to remain silent on matters of national importance, and they would be forced to divert precious resources away from service-delivery, to unnecessary paperwork creation.”

“The proposed regulations are drafted so broadly, that a charity could face deregistration for tweeting in support of events like the women’s marches against sexual violence. This punitive response to dissent is not only completely inappropriate in a democracy, it’s quite possibly beyond the power of the enabling Act, and unconstitutional,” she argued.

Barrister Jennifer Batrouney QC pointed out that pre-existing laws are sufficient to deal with illegal behaviour, and therefore it is not necessary to add to the regulatory burden on registered charities.

“It is unjustifiable to impose a further burden on registered charities that, in addition to the penalty that other Australians face, they face the additional (and disproportionate) punishment of de-registration which will ultimately adversely affect the charitable purpose of the charity,” she said.

Implications for access to justice

The impact of the proposed amendments on charities, Ms Batrouney continued, is “indefensible”.

“The possibility of deregistration could undermine the important contribution to the public benefit of political communication recognised by the High Court,” she submitted.

The amendments are “arguably unconstitutional” on this basis, she said, and could “create uncertainty in the law and provide inappropriate and poorly-supervised discretion to the ACNC Commissioner”.

Oxfam Australia general counsel and company secretary Sari Baird, who also serves as a director for the Charity Law Association of Australia and New Zealand, said: “Charities are an important channel for vulnerable Australians to gain access to justice, services and protection of their human rights. It is conceivable that the legal risk of deregistration may inhibit charities’ engagement in legitimate public dialogue about better policies and reforms to the law for the purposes of protecting vulnerable Australians.”

Moreover, Ms Drury added, Australian charities are still responding to the effects of the pandemic and subsequent recession by providing much-needed aid to vulnerable persons.

“Every dollar spent obtaining legal advice and creating unnecessary paperwork is diverted away from our work housing people after the bushfires, responding to victims of family violence, and saving our endangered species. These regulations could lead to the charities that Australians know and love being shut down for failing to keep their paperwork up-to-date,” she said.

It cannot be forgotten, Ms Bullock noted, that registration with ACNC is a necessary precondition for access to a range of exemptions, benefits and taxation concessions, and “if a charity is deregistered as a result of these new onerous amendments, its income will be fundamentally impaired. For vulnerable Australians who rely on these charities, this will mean less access to justice and less support”.

Flow-on hurdles for charities and lawyers

Further to Ms Bullock’s comments, Ms Batrouney noted that a new regulatory landscape for charities could mean more cumbersome and complicated compliance registers, policies, procedures and internal training. “In short – more red tape”, she said.

The legal risks are currently high, Ms Baird posited, and charities may be forced into comprehensive approaches to compliance to avoid inadvertent non-compliance, and that may be disproportionate to the harm to be prevented.

“The sector may lose its appetite for collaboration and innovative sharing of resources and the efficiencies that can be gained from these, because of the risks and obligations for a charity to ensure compliance in a very wide range of contexts,” she hypothesised.

This is especially concerning, Ms Bullock said, given that the resources and capacities of many charities are already “incredibly thin” on the ground.

“They will divert resourcing away from impactful purpose driven initiatives to inefficient and excessive compliance activities. Most charities will need to seek expensive legal advice on a vast array of summary offences across each state, territory and federal jurisdiction in order to comply,” she determined.

What lawyers must do

Unfortunately, Ms Bullock outlined, the consultation period for the proposed amendments was “incredibly short”, having ended on Sunday, 14 March. Looking ahead, as charities rally to oppose “these draconian changes”, as she put it, the sector will need legal support from private practice lawyers.

“If the fierce opposition from charities, businesses, academics and lawyers isn’t enough to convince The Hon. Minister Michael Sukkar to withdraw these amendments, they will go before the Senate Standing Committee for the Scrutiny of Delegated Legislation,” she said.

“We urge lawyers to voice concerns to the Committee that such major changes and such an undemocratic power grab is not suitable for a disallowable instrument. What is proposed fundamentally changes the role and powers of the regulator and the proposed changes are not supported by the regulation making power in the ACNC Act.”

“If any changes are to be proposed they should not be concealed in an unlawful disallowable instrument which may not be subject to parliamentary scrutiny, debate or vote.”

The proposed amendments cannot be fixed by amendment, Ms Drury surmised – “they must be rejected in their entirety”.

“Whether it be by providing pro bono advice, sitting on volunteer boards or donating, many lawyers are heavily invested in the ability of charities to do their important work. Lawyers should join charities in calling for the Government to drop this push to silence charities and drown them in paperwork,” she suggested.

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‘Unconstitutional, indefensible’: Lawyers bash proposed changes to charity sector
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