House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Productivity, Competition, Charities and Treasury, the Hon Dr Andrew Leigh MP)

Chapter 2: Australian Charities and Not-for-profits Commission review Rec 17 - Secrecy Provisions

Outline of chapter

2.1 Schedule 2 to the Bill amends the ACNC Act to provide two new exceptions for the public disclosure of protected ACNC information about new and ongoing investigations. The Commissioner may authorise ACNC officers to disclose information about a recognised assessment activity in relation to a registered entity in certain circumstances, subject to a safeguard of a public harm test.

Context of amendments

2.2 On 20 December 2017, the then Assistant Minister to the Treasurer announced a review of ACNC legislation to evaluate the performance of the legislative framework, the regulation of the Australian not-for-profit sector and to identify any improvements.

2.3 In 2018, the Review Panel (the panel) published its findings and recommendations in the Strengthening for Purpose: The Australian Charities and Not-for-profits Commission Legislation Review report (the report).

2.4 The panel identified that secrecy provisions in the ACNC Act prevent the Commissioner from publicly disclosing the Commission's regulatory activities (except to respond to or clarify issues already in the public domain). The panel found that expanding the Commissioner's power to disclose information would:

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increase public confidence that the regulator is actively pursuing misconduct, and

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provide salutary guidance to other charities about poor behaviour.

2.5 The panel made the following recommendation (Recommendation 17):

The Commissioner be given a discretion to disclose information about regulatory activities (including investigations) when it is necessary to protect public trust and confidence in the sector.

2.6 Schedule 2 implements Recommendation 17 in relation to ongoing investigations.

Comparison of key features of new law and current law

Table 2.1 Comparison of new law and current law

Detailed explanation of new law

2.7 Schedule 2 to the Bill establishes a new exception for the disclosure of protected ACNC information relating to a recognised assessment activity. 'Protected ACNC information' is defined in section 150-15 of the ACNC Act. The exception permits an ACNC officer to publish information about a new or ongoing recognised assessment activity if the ACNC Commissioner (the Commissioner) has authorised the disclosure. However, any disclosure is subject to safeguards including a public harm test. [Schedule 2, item 1, subsections 150-51(1), (3) and (4) and 150-52(1), (3) and (4) of the ACNC Act]

2.8 If an ACNC officer is to make a disclosure under this exception, the information must be published on the ACNC website to allow the public to access the information easily. The information does not need to be published on the ACNC Register. [Schedule 2, item 1, paragraphs 150-51(2)(a) and 150-52(2)(a) of the ACNC Act]

2.9 The disclosure may also be made through any other medium, provided that disclosure in that medium is authorised in writing by the Commissioner. [Schedule 2, item 1, paragraphs 150-51(2)(b) and 150-52(2)(b) of the ACNC Act]

Recognised assessment activity

2.10 'Recognised assessment activity' is defined in section 55-10 of the ACNC Act. It includes an activity carried out by the Commissioner involving the assessment of an entity's entitlement to registration as a type or subtype of entity, or compliance with the ACNC Act and regulations. It also includes an activity carried out by the Commissioner of Taxation involving assessment of an entity's compliance with any taxation law.

2.11 The amendments provide for disclosure of information relating to recognised assessment activities by the Commissioner. The amendments do not allow for disclosures about recognised assessment activities being carried out by the Commissioner of Taxation. [Schedule 2, item 1, paragraphs 150-51(3)(a) and (b) and 150-52(3)(a) and (b) of the ACNC Act]

2.12 In this way, the disclosure exception is limited to ongoing (or proposed) investigations by the ACNC into a registered entity's conduct.

General disclosure power

2.13 Under the general disclosure exception, an ACNC officer may disclose protected ACNC information only if:

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the Commissioner has authorised the disclosure;

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the Commissioner has notified the registered entity of the authorisation; and

•

the registered entity has not lodged an objection within the specified time period.

[Schedule 2, item 1, subsection 150-52(1) of the ACNC Act]

2.14 The Commissioner may authorise disclosure of information if the Commissioner reasonably suspects that a registered entity has:

•

contravened a provision of the ACNC Act; or

•

not complied with a governance standard or external conduct standard.

[Schedule 2, item 1, paragraph 150-52(3)(a) of the ACNC Act]

2.15 In this case, the Commissioner may authorise disclosure that describes the recognised assessment activity being carried out, or proposed to be carried out, in relation to that conduct. This means the Commissioner can authorise the disclosure of as much information as they consider necessary to describe the investigation. [Schedule 2, item 1, paragraph 150-53(3)(b) of the ACNC Act]

Limited disclosure power

2.16 A limited disclosure power is available to the Commissioner to promptly disclose protected ACNC information relating to a recognised assessment activity. The amendments provide for a limited disclosure power where the Commissioner is satisfied there is information available to the public which could reasonably suggest that a registered entity:

•

may have contravened a provision of the ACNC Act; or

•

may not have complied with a governance or external conduct standard.

[Schedule 2, item 1, paragraph 150-51(3)(a) of the ACNC Act]

2.17 The Commissioner may disclose any or all of the following information:

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the identity of the entity;

•

whether or not the Commissioner is carrying out a recognised assessment activity in relation to the entity;

•

any other information already available to the public

[Schedule 2, item 1, paragraph 150-51(3)(b) of the ACNC Act]

2.18 The limited disclosure power provides for the ACNC Commissioner or ACNC officer to confirm or deny that the Commissioner is carrying out a recognised assessment activity into a suspected contravention or non-compliance by a registered entity, where information about the suspected contravention or non-compliance is already in the public domain. The ACNC Commissioner must rely on the general disclosure power to disclose any further information with respect to the recognised assessment activity or relevant conduct of the registered entity.

2.19 Unlike the secrecy exception in section 150-50 of the ACNC Act, there is no requirement that the information must have been made lawfully available to the public. This is because the Commissioner is unlikely to be able to determine how the information became publicly available.

Authorisation by the Commissioner

2.20 The Commissioner may authorise an ACNC officer to disclose protected ACNC information about a new or ongoing recognised assessment activity if the Commissioner reasonably suspects, or there is publicly available information that reasonably suggests, that a registered entity contravened a provision of the ACNC Act or has not complied with a governance standard or an external conduct standard. The authorisation must be in writing. [Schedule 2, item 1, paragraphs 150-51(3)(a) and 150-52(3)(a) of the ACNC Act]

2.21 An authorisation made under this provision does not constitute a legislative instrument. This is because item 4 of the table in section 6 of the Legislation (Exemptions and Other Matters) Regulation 2015 provides that any instrument that authorises or approves a particular person to take a particular action or act in a particular way is not a legislative instrument.

Public harm test

2.22 Before the Commissioner authorises the disclosure of protected ACNC information in relation to a recognised assessment activity, the Commissioner must compare the harm likely to be caused by the disclosure to the harm that disclosure may prevent (the 'public harm test'). This operates as a safeguard, ensuring that the disclosure does not cause disproportionate harm. [Schedule 2, item 1, subsections 150-51(3) and (4) and 150-52(3) and (4) of the ACNC Act]

General disclosure

2.23 Before the Commissioner authorises the disclosure of protected ACNC information in relation to a recognised assessment activity, the Commissioner must compare the harm likely to be caused by the disclosure to the harm that disclosure may prevent (the 'public harm test'). This operates as a safeguard, ensuring that the disclosure does not cause disproportionate harm.

2.24 The Commissioner can only authorise a disclosure if satisfied that the disclosure is necessary to:

•

prevent or minimise the risk of significant harm to public health, public safety or an individual; or

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prevent or minimise the risk of significant mismanagement or misappropriation of funds or assets of the registered entity in question, or contributions to that registered entity.

[Schedule 2, item 1, paragraph 150-52(3)(c) of the ACNC Act]

2.25 The term 'contribution' is defined under section 205-40 of the ACNC Act to include the provision by an individual of their time or reputation to an entity. The public harm test therefore involves consideration of the risk of mismanagement of volunteers' time or reputation.

Limited Disclosure

2.26 The Commissioner must also consider the public harm test when authorising a limited disclosure. However, the Commissioner may consider an additional factor when considering whether limited disclosure would prevent public harm.

2.27 The Commissioner can only authorise a limited disclosure if satisfied that the disclosure is necessary to:

•

prevent or minimise the risk of significant harm to public health, public safety or an individual;

•

prevent or minimise the risk of significant mismanagement or misappropriation of funds or assets of the registered entity in question, or contributions to that registered entity; or

•

prevent or minimise the risk of significant harm to the public trust and confidence in the Australian not-for-profit sector, or to a part of the sector.

[Schedule 2, item 1, paragraph 150-51(3)(c) of the ACNC Act]

2.28 The broader public harm test allows the Commissioner to consider whether disclosure is necessary to protect public trust and confidence in the not-for-profit sector. For example, if there is significant public discussion about a registered entity's alleged misconduct, the Commissioner may consider that disclosing that the ACNC is investigating the matter is necessary to protect public trust and confidence that the sector is appropriately regulated.

2.29 The risk of significant harm to the public trust and confidence in the Australian not-for-profit sector is not limited to the entire sector, but also includes any part of it. This allows the Commissioner to authorise disclosure where this would prevent or minimise the risk of significant harm to trust and confidence in part of the sector – for example, in particular types of charities – even where the impact on the wider not-for-profit sector may be less significant. [Schedule 2, item 1, subparagraph 150-51(3)(c)(iii) of the ACNC Act]

Balancing factors

2.30 Even if the Commissioner determines that the disclosure of the information is necessary to prevent or minimise the risk of significant harm or significant mismanagement or misappropriation under paragraphs 150-51(3)(c) or 150-52(3)(c), the Commissioner can only authorise the disclosure of information if any harm that is likely to be caused to the registered entity (mentioned in paragraphs 150-51(3)(a) or 150-52(3)(a) as required) through the disclosure is not disproportionate. [Schedule 2, item 1, subsections 150-51(4) and 150-52(4) of the ACNC Act]

2.31 The Commissioner must also be satisfied that disclosure would not cause disproportionate harm to an individual who is:

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employed by the registered entity under a contract of service; or

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engaged by the registered entity under a contract for services; or

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being provided with services, or receiving benefits, under a program provided by the registered entity; or

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a volunteer of the registered entity; or

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a member of the registered entity; or

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otherwise connected to the registered entity.

[Schedule 2, item 1, paragraphs 150-51(4)(a)-(f) and 150-52(4)(a)-(f) of the ACNC Act]

2.32 In determining whether the harm likely to be caused to the registered entity or to an individual listed in paragraphs 150-51(4)(a) to (f) or 150-52(4)(a) to (f) is disproportionate, the Commissioner must have regard to:

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the risk and significance of harm (or mismanagement or misappropriation) under paragraphs 150-51(3)(c) or 150-52(3)(c); and

•

the seriousness of the contravention or non-compliance under consideration; and

•

the strength of the evidence available to the Commissioner; and

•

whether any contravention or non-compliance under consideration is likely to be the result of an act or omission of the registered entity, or of an individual who has acted without the authority of the registered entity.

[Schedule 2, item 1, paragraphs 150-51(4)(g) to (i) and 150-52(4)(g) to (i) of the ACNC Act]

2.33 Consideration of these factors may involve weighing them against each other. For example, if only limited evidence is available to the Commissioner, that may be a factor against disclosure. However, if the suspected contravention or non-compliance is very severe, the Commissioner may consider that the harm likely to be caused to the registered entity or an individual is not disproportionate to the public harm that disclosure would avoid, and therefore authorise disclosure even where there is limited evidence.

2.34 If the information being considered for disclosure contains personal information, within the meaning of the Privacy Act, the Commissioner must be satisfied that the disclosure is necessary to achieve the objects of the ACNC Act before deciding to make a disclosure. [Schedule 2, item 1, paragraphs 150-51(3)(d) and 150-52(3)(d) of the ACNC Act]

Notification and review

Notification before authorisation

2.35 The Commissioner may give written notice to an entity advising them that the Commissioner is considering giving an authorisation to publicly disclose information that concerns that entity. The entity the Commissioner may give notice to is not limited to the registered entity which is subject to investigation, but can include any other entity that may be affected by the disclosure. [Schedule 2, item 1, subsection 150-54(1) of the ACNC Act]

2.36 Any such notice does not constitute a legislative instrument, as table item 18 in section 6 of the Legislation (Exemptions and Other Matters) Regulation 2015 provides that a notice of a proposed decision is not a legislative instrument.

2.37 This optional notice applies to both decisions to authorise general disclosure and decisions to authorise limited disclosure. [Schedule 2, item 1, subsection 150-54(3) of the ACNC Act]

Publication of response

2.38 An entity that receives notice from the Commissioner of a potential authorisation may provide a response to the Commissioner if they wish.

2.39 The Commissioner may publish on the ACNC website a copy of an entity's response or any information included in the response as long as the entity has not requested the response (or information in it) be kept confidential. However, the Commissioner is not obliged to publish an entity's response (or information in it). [Schedule 2, item 1, subsections 150-54(2) and (3) of the ACNC Act]

Optional notification

2.40 The Commissioner is not obliged to provide notice to any entity before deciding to authorise the disclosure of the information. The Commissioner must notify a registered entity after deciding to authorise disclosure under the general disclosure power, and provide the entity with a chance to respond before the information can be disclosed (see [2.43]-[2.47]).

2.41 Therefore, registered entities will only be denied a right to respond to the authorisation if the limited disclosure power is being used. This allows the ACNC Commissioner to respond to suggestions of misconduct by an entity in a prompt manner, where delay would result in public harm. Information about the entity's conduct is already available to the public, so the Commissioner disclosing whether an investigation is occurring is unlikely to do substantial additional harm to the entity.

2.42 It is also optional (in both the limited and general disclosure cases) to notify entities other than the registered entity. This is appropriate as the Commissioner may not be practically able to identify or contact all possible entities that may be affected by the decision. As disclosure is necessary to prevent public harm, the Commissioner should not need to delay disclosing to try and obtain the contact details of all entities (including individuals) potentially affected by the disclosure.

Notification after authorisation

2.43 If using the general disclosure power, the Commissioner must give written notice to a registered entity advising them the Commissioner has authorised public disclosure of protected ACNC information about an investigation into the registered entity. [Schedule 2, item 1, subsection 150-53(1) of the ACNC Act]

2.44 The notice must:

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set out the information that is authorised to be disclosed; and

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state that the entity may object against the decision, in the manner set out in part 7-2 of the ACNC Act; and

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state that if the entity lodges such an objection before the day specified in the notice, the disclosure will not be made before the objection is resolved, where the day specified must be at least 14 days after the notice is given; and

•

state that the entity may provide a written response before the day specified in the notice, and that the response may be published by the entity unless the entity informs the Commissioner that the entity does not want the response published.

[Schedule 2, item 1, subsection 150-53(2) of the ACNC Act]

2.45 Any such notice does not constitute a legislative instrument, as table item 18 in section 6 of the Legislation (Exemptions and Other Matters) Regulation 2015 provides that a notice of a decision is not a legislative instrument.

Publication of response

2.46 An entity that receives notice from the Commissioner of the decision to authorise a disclosure may provide a response to the Commissioner if they wish.

2.47 The Commissioner must publish on the ACNC website a copy of an entity's response or any information included in the response, unless the entity has requested the response (or information in it) be kept confidential or the Commissioner is satisfied that the response is unsuitable for publication. [Schedule 2, item 1, subsection 150-53(7) of the ACNC Act]

Review and appeals

2.48 A decision by the Commissioner to authorise disclosure of information about a new or ongoing recognised assessment activity about a registered entity's suspected contravention or non-compliance is subject to review under Part 7-2 of the ACNC Act. [Schedule 2, item 1, subsection 150-53(3) of the ACNC Act]

2.49 To facilitate the process, the Commissioner must provide a registered entity with notice if the Commissioner has decided to authorise the disclosure of information about an investigation into the registered entity (see [1.44]). This notice must specify that the entity may object against the decision. [Schedule 2, item 1, paragraphs 150-52(1)(b) and 150-53(2)(b) of the ACNC Act]

2.50 The information cannot be disclosed until the time stated in the notice has passed. That must be at least 14 days after giving the notice. [Schedule 2, item 1, paragraph 150-53(2)(c) and subsection 150-53(4) of the ACNC Act]

2.51 If the entity lodges an objection against the decision under Part 7-2 before the end of the day specified in the notice, the information cannot be disclosed until:

•

the Commissioner has made an objection decision in relation to the objection; and

•

60 days have passed since the Commissioner made the objection decision; and

•

any subsequent merits or judicial review application has been finally determined.

[Schedule 2, item 1, paragraph 150-52(1)(c) and subsections 150-53(4) to (6) of the ACNC Act]

2.52 The decision by the Commissioner or an ACNC officer to make a limited disclosure is not subject to merits or judicial review and no notice is required to the registered entity.

2.53 The lack of merits review is consistent with the Administrative Review Council's guidance document, What decisions should be subject to merits review?, which states that decisions of a law enforcement nature, including decisions relating to investigations, are unsuitable for review. In the case of a limited disclosure, the Commissioner is only authorising disclosure of whether or not the ACNC is investigating the registered entity (any other information that may be disclosed must already be publicly available), and so the decision directly relates to the investigation. Additionally, the information relates to conduct that is in the public domain, and the information released is limited to whether the ACNC is investigating the matter. Any delay caused by a merits review process could lead to public harm. Therefore, allowing an entity to lodge an objection to delay the limited disclosure is not appropriate.

Use of offence-specific defences

2.54 Section 150-25 of the ACNC Act makes it an offence for an ACNC officer to use or disclose protected ACNC information. The ACNC Act contains a number of exceptions that allow for the disclosure of protected ACNC information in limited circumstances.

2.55 The new exceptions inserted into the ACNC Act by Schedule 2 are offence-specific defences and therefore reverse the evidential burden of proof. The Guide to Framing Commonwealth Offences states that the use of offence-specific defences will be appropriate in circumstances where the matter is peculiarly within the knowledge of the defendant, and it would be significantly more difficult and costly for the prosecution to disprove the matter.

2.56 A disclosure can only be made under the new exceptions by an ACNC officer where it has been authorised by the Commissioner. As a result, in this instance the defendant will be peculiarly well-placed to know whether the Commissioner has authorised disclosure.

2.57 Furthermore, in the case of a general disclosure, an ACNC officer can only disclose information if the Commissioner has given a notice to the registered entity and the entity has not lodged an objection within the specified timeframe. As this correspondence is between the ACNC and the registered entity, ACNC officers are peculiarly well-placed to know whether a notice has been provided and an objection lodged.

2.58 It would likely also be more difficult and costly for the prosecution to prove the matter, as obtaining information about ACNC investigations and decisions to authorise disclosure may involve dealing with protected ACNC information which can only be disclosed in limited circumstances. Therefore, it is appropriate to reverse the evidential burden of proof in this instance.

Commencement, application, and transitional provisions

2.59 Schedule 2 to the Bill commences the day after Royal Assent.

2.60 The amendments apply in relation to recognised assessment activity carried out by the Commissioner on or after commencement relating to conduct of a registered entity before, on or after commencement. This ensures that the ACNC may disclose information about investigations which are ongoing at the time of commencement. [Schedule 2, item 2]