The Assistant Treasurer, Bill Shorten, and the Minister for Human Services and Social Inclusion, Tanya Plibersek, released a consultation paper on 21 January calling for input from stakeholders in the not-for-profit (NFP) sector. The paper’s release fulfils an election commitment by the Federal Government and effectively launches a process of engagement with the sector intended to result in an agreed design for a new national regulator that will act as a "one-stop shop" for the sector. It is intended to gauge stakeholders’ views on the precise role, functions, feasibility and design options for the proposed regulator.

Reducing the burden on the NFP Sector

It is commonly agreed that the sector’s current regulatory framework suffers from several critical deficiencies; what’s more the rapidly growing NFP sector is groaning under the burden of complying with regulations.
A key driver of the proposed new national regulator is to reduce this burden by reducing red-tape, streamlining reporting requirements, reducing compliance costs, and increasing accountability and transparency within the sector.
The paper argues that in order to promote a strong and sustainable NFP sector, regulation of the sector should:

• Place minimal compliance costs on NFPs to allow them to use their resources to do what they were established to do - help people;
• Remove regulatory duplication, particularly in reporting requirements;
• Streamline and standardise requirements to provide consistency and minimise costs;
• Provide a ‘one-stop shop’ to improve the ease of accessibility, comprehension and compliance for NFPs;
• Be simple, transparent and flexible;
• Provide NFPs with certainty as to their rights and responsibilities; and
• Be proportionate to the size and complexity of NFP entities.

Key elements we’ve noted

The paper makes some specific recommendations and raises some key issues to address. We have listed three elements from the paper that we believe are particularly worth noting.

1. The paper recommends new reporting regulations, including implementing a new mandatory standard chart of accounts (SCOA) and applying a new Standard Business Reporting (SBR) initiative to the NFP sector. The SBR will enable reports to be drawn from business accounting, payroll and other records, compiled, and (through the use of SBR-enabled software) submitted electronically through a single channel. The paper suggests that SBR could be extended to include reporting requirements specific to the NFP sector to reduce the regulatory reporting burden.
2. The paper suggests that the new regulatory framework would play a significant role in addressing the failure of current governance and accountability arrangements to keep in step with heightened community expectations, particularly when it comes to the governance requirements for organisations that receive public funding. This framework could well include a public information portal, making the activities of NFPs more transparent.
3. The paper identified two options for the structure of a new regulator, and two options for improving regulation in the interim, however, the broad consensus is in support of one of these options, that is, the new national body to act as a national regulator. Such an arrangement would be similar to that of the New Zealand Charities Commission.

If you would like to find out more you can read the consultation paper itself by accessing the Treasury website or following this link: http://www.treasury.gov.au/contentitem.asp?NavId=037&ContentID=1934

Prolegis welcomes the opportunity to have input into the process of sector reform that this paper offers, and encourages all who are able to make a submission to do so. Submissions in response to the paper close on 25 February 2011; the process for making a submission is explained on the Treasury web site.