Submission in relation to:
 
Australian Consumer Law Review

Consumer Affairs Australia and New Zealand

The Treasury, Canberra

May 2016

Introduction
This submission outlines issues relating to the Australian Consumer Law Review and the associated Issues Paper.  It has been informed by consultation with CCA members (listed in Attachment A) and key organisations in the charities and broader not-for- profit sector (NFP).  
It is important to note that this submission does not override the policy positions outlined in any individual submissions from CCA members.  
The content of this submission includes: a brief background to CCA; an overview of the current issues for the NFP sector; and a discussion of the issues associated with the potential application of Australian Consumer Law to the work of charities and the broader not-for-profit sector.
In principle, CCA supports the application of Australian Consumer Law to the activities of all NFPs, but not without further consultation and refinement of both the regulations and the enforcement of those regulations.
CCA welcomes this opportunity to provide input into the Australian Consumer Law (ACL) review and to engage in detailed discussion about any issues this submission raises. 

The Community Council for Australia
The Community Council for Australia is an independent non-political member based organisation dedicated to building flourishing communities by enhancing the extraordinary work undertaken by the charities and not-for-profit sector in Australia.  CCA seeks to change the way governments, communities and not-for-profits relate to one another.  It does so by providing a national voice and facilitation for sector leaders to act on common and shared issues affecting the contribution, performance and viability of NFPs in Australia.  This includes:
•	promoting the values of the sector and the need for reform 
•	influencing and shaping relevant policy agendas
•	improving the way people invest in the sector
•	measuring and reporting success in a way that clearly articulates value
•	building collaboration and sector efficiency
•	informing, educating, and assisting organisations in the sector to deal with change and build sustainable futures
•	providing a catalyst and mechanism for the sector to work in partnership with government, business and the broader Australian community to achieve positive change.
Our success will drive a more sustainable and effective charities and not-for-profit sector in Australia making an increased contribution to the well-being and resilience of all our communities.

Context: not-for-profit reform
The not-for-profit sector contributes over $55 billion to GDP per annum, encompasses over 600,000 organisations - from large to very small, and is estimated to employ over one million staff (or 8% of all employees in Australia).  Each year it turns over more than $105 billion.  It holds over $175 billion in assets.  In the last decade, sector growth has continued at more than 7% a year, greater than any other industry group.  
These figures tell only a small part of the story. The real value of the NFP sector is often in the unmeasured contribution to Australian quality of life.  NFPs are at the heart of our communities; building connection, nurturing spiritual and cultural expression, and enhancing the productivity of all Australians. Collectively, they make us a more resilient society.  
The importance of the NFP sector is now being internationally recognised with many governments putting in place measures to increase NFP investment and productivity.  Smaller government and bigger community is a common theme, driven in part by savings, but also by a commitment to greater civic engagement, social entrepreneurship and productivity within the NFP sector.
In Australia there are currently various initiatives seeking to: promote social enterprise; reduce compliance costs for NFPs; encourage a diversification of financing options to build a more sustainable funding base; streamline and refine the regulation of NFPs and charities; establish less bureaucratic reporting requirements while building community transparency; increase philanthropy; improve relationships between government and the NFP sector; promote impact investing; and increase sector performance measurement.  CCA supports all these activities. 
The establishment of the ACNC is the first time the NFP sector has had an independent regulator dedicated to serving their needs and enhancing their capacity.  It has already proved to be a positive step towards red tape reductions, increased transparency, and trust in the community by prospective volunteers and donors.  The national charities register has also provided invaluable information.
While the recent history of the NFP sector is framed by growth and reform, new issues are emerging.  The level of individual philanthropic giving has still not recovered to the highs of 2009.  At the same time, revenue available to governments is effectively falling in real terms against a backdrop of increasing demands and higher community expectations.   Competition for fundraising and services has increased.  In the context of recent changes, the NFP sector is slowly but surely finding its voice - building its collective power and seeking real reform that will provide substantial savings to government as well as tangible benefits to the community.  
Given the size of the sector and its critical role in our community, it is not surprising that it is coming under increased scrutiny, particularly in relation to performance.  This is not a new tendency.  As pointed out in the 2010 Productivity commission Report into Productivity in the Not-for-profit Sector, creeping micro management by funders is undermining the capacity of organisations to respond to the issues of concern for the communities they serve.
Fundraising is one of the main interfaces between the broader not-for-profit sector and the community.  There is increased pressure on NFPs to be able to raise money from the community.  The issue of misleading and deceptive conduct has been raised in relation to a very small minority of fundraising activities, and it is this issue that this submission largely focuses upon.

Issues for the not-for-profit sector in the review of the ACL
1.	Should Australian Consumer Law be applied to charities and not-for-profit organisations?
There is already some legal contention about whether the current Australian Consumer Law applies to the activities of NFPs, particularly in relation to fundraising.  CCA see this uncertainty as counter-productive.
CCA would argue that the current ACL only partly applies consumer protection issues in relation to fundraising in particular.  Where NFPs are providing goods and services there is clearly a consumer and a provider that can be subject to consumer law.  Where no exchange of goods takes place, but donations are made, there is less clarity around whether the donor is a consumer, and if so, what goods or services are being provided. 
The engagement of community members with a local charity could only rarely be described as a commercial trade, or the provision of services in a competitive marketplace.  There are, however, some principles that transcend the exact nature of the interaction and go to the values and principles informing organisational engagement with the community members.
CCA believes that any organisation involved in misleading or deceptive or conduct should be subject to consumer law.  This includes all charity and not-for-profit organisations.  
The appropriate application of consumer law can only increase public trust and confidence in the NFP sector, and help support the vast majority of organisations that operate ethically and transparently in all their dealings with consumers and the broader community.  NFPs deal in trust and are committed to maintaining and building public trust and confidence.
The real benefit of applying the ACL to not-for-profits is that it is relatively modern legislation (as opposed to the absurdly outdated fundraising regulations) and is currently administered by the same authorities that administer fundraising regulations.  ACL also at least partially applies to the activities of charities already.
CCA also understands that Fair Trading Ministers around Australia are interested in playing a more significant role in fundraising.  The ACL seems to be the appropriate legislative framework. 
While supporting the application of ACL to not-for-profits, CCA is very concerned that there may be unintended consequences if all the provisions of consumer law are applied in a catch-all way across the whole NFP sector.  
CCA is aware there may also be some technical issues in relation to a range of provisions including how donations and gifts are treated, etc. that may require further amendments to the ACL.
For this reason, CCA would like to see a carefully staged application of ACL to the NFP sector.  This must involve active and ongoing consultation with the sector itself, the Australian Charities and Not-for-profit Commission (ACNC), and the various regulatory bodies at all levels of government.
2.	Will the application of ACL increase the regulatory burden on NFPs?
No-one in the NFP sector wants to increase red tape, duplication and compliance issues.  As a sector it is already subject to over 100 different regulators (Productivity Commission Review 2010).  The current fundraising regulatory framework is not only onerous, but also completely counter-productive with eight separate fundraising regulatory requirements.
CCA believes that the application of Australian Consumer Law to the NFP sector has the potential to reduce the regulatory burden imposed on all not-for-profit organisations engaged in fundraising and other community based activities.  It is this reduction in regulatory burden that informs the CCA position in support of the application of consumer law to all not-for-profit organisations.
Achieving this reduction will require the various Fair Trading Regulators at a State and Territory level that currently administer fundraising legislation to adopt ACL and dispense with their existing fundraising regulations.  It would also require the national adoption of the ACNC charities passport.
3.	How can ACL provisions such as misleading and deceptive conduct provisions be applied to not-for-profits? 
There is often contention in relation to the application of broader principle based regulations such as the misleading or deceptive conduct provisions, particularly in relation to fundraising.  What are the goods or services being provided, what is the trade or commerce, what is a reasonable expectation, what is misleading in relation to marketing and how donations are being used?
CCA would be concerned if predetermined or set metrics around issues such as fundraising returns compared to costs were applied across the not-for-profit sector.   
The key to consumer protection is transparency.  CCA is happy for appropriate consumer disclosure, but not if such disclosures become onerous or impractical.  There is also the principle of proportionality.  A very small charity running a local fundraiser should not have the same regulatory burden as a major national charity running a multi-million-dollar event. 
Again, it is for this reason that CCA believes there should be a very carefully staged application of consumer law to all NFPs through a process that involves active and ongoing consultation with the sector itself, the ACNC, and the regulatory bodies at a national, State and Territory and local government level.

Conclusion 
There is genuine potential for the application of ACL across all not-for-profits to deliver real benefits to the community.  Realising this potential will require further regulatory reform and further work and consultation with existing regulatory authorities, the ACNC and the NFP sector.
Continuing with the current dog’s breakfast of duplicated and onerous regulations that applies to charitable fundraising is not an option, but the ACL offers a cleaner and more effective regulatory solution to concerns about fundraising and NFPs.
Applying the current Australian Consumer Law without appropriate consultation and engagement is not without challenges as it has the potential to create more issues than it addresses.  A staged approach drawing heavily on key players including the NFP sector itself, has the potential to deliver real improvements in regulatory controls and consumer confidence.
Protecting the community and building trust and confidence is not just about ensuring fair competition in the provision of goods and services, it is also about providing a meaningful level of information and transparency.  This can be achieved more readily within the framework of the ACL rather than creating separate regulations for the different levels of charitable activities (fundraising, donations, provision of goods or services, in kind donations, etc.).
CCA would welcome further discussion about the potential application of ACL across the NFP sector.

Current Membership – Community Council for Australia   Attachment A

Organisation							Director / CEO
2Realise								Rowena Stulajter
Access Australia's National Infertility Network			Sandra Dill
Alcohol Tobacco and Other Drugs 				Carrie Fowlie
Arab Council Australia						Randa Kattan
Australian Charities Fund						Jenny Geddes
Australian Council for International Development		Marc Purcell (Director)
Australian Healthcare and Hospitals Association		Alison Verhoeven
Australian Indigenous Leadership Centre			Rachelle Towart
Australian Institute of Superannuation Trustees			Tom Garcia
Australian Major Performing Arts Group				Bethwyn Serow
Australian Women Donors Network				Julie Reilly
Beyond Blue							Georgie Harman
Business Council of Co-operatives and Mutuals			Melina Morrison
Carers Australia							Ara Cresswell
Centre for Social Impact						Andrew Young
Church Communities Australia					Chris Voll
Churches of Christ Community Care Vic/Tas                             Gabriel Hingley		
Community Based Support					Murray Coates
Community Broadcasting Association of Australia		Jon Bissett
Community Colleges Australia					Don Perlgut
Compass Housing Co Ltd						Greg Budworth
Connecting Up Australia						Anne Gawen
Drug Arm								Dr Dennis Young (Director)
e.motion21							Claire Vissenga
Ethical Jobs							Michael Cebon
EveryMan								Greg Aldridge
Foresters Community Finance					Rhyll Gardner
Foundation for Alcohol Research and Education			Michael Thorn
Foundation for Young Australians				Jan Owen
Fundraising Institute of Australia					Rob Edwards 
Good Samaritan Foundation					Catherine Cresswell
Good2Give							Lisa Grinham
HammondCare							Stephen Judd
Hillsong Church		George Aghajanian				(Director)
Justice Connect							Fiona McLeay
Life Without Barriers						Claire Robbs (Director)
Lifeline Australia 							Pete Shmigel
Maroba Caring Communities					Viv Allanson
Mater Foundation							Nigel Harris
Mission Australia						Catherine Yeomans (Director)
Missions Interlink							Pam Thyer
Musica Viva							Mary Jo Capps (Director)
Opportunity International Australia				Robert Dunn
Our Community							Denis Moriarty
Palliative Care Australia						Liz Callaghan
Philanthropy Australia						Sarah Davies
Port Phillip Housing Association					Karen Barnett
Power Housing Australia						Julie Quass
Pro Bono Australia  						Karen Mahlab 
Reach Foundation							Trisha Squires
RSPCA Australia							Heather Neil (Director)
SANE								Jack Heath
SARRAH								Rod Wellington
Save the Children Australia					Paul Ronalds (Director)
Scope (Vic) 							Jennifer Fitzgerald
Settlement Services International					Violet Roumeliotis
SHOUT								Darryl Smeaton
Social Ventures Australia						Rob Koczkar 
St John Ambulance Australia					Robert Hunt
The Benevolent Society						Joanne Toohey
The Big Issue							Steven Persson  
The Fragile X Association of Australia				Wendy Bruce
The Non Profit Alliance						Kelly Beaumont
The Smith Family						Lisa O’Brien (Director)
The Ted Noffs Foundation					Matthew Noffs
Variety Australia							Neil Wykes
Volunteering Australia						Brett Williamson (Director)
Wesley Mission							Keith V Garner AM Mth (Oxon)
										(Director)
White Ribbon Australia						Libby Davies
World Vision Australia						Tim Costello (Chair)
YMCA Australia							Ron Mell
Youth Off The Streets						Fr Chris Riley