Associations Incorporation (Miscellaneous) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 24 August 2021.)

Ms MICHAELS: Mr Speaker, I draw your attention to the state of the house.

A quorum having been formed:

Ms MICHAELS (Enfield) (12:21): I rise to make a brief contribution to the Associations Incorporation (Miscellaneous) Amendment Bill. It seeks to make some wholesale reforms of the Associations Incorporation Act, some of which are long overdue given the act has not been reviewed, from my memory, probably for 20 years, perhaps.

The Hon. V.A. Chapman: Since 1997.

Ms MICHAELS: Since 1997, the Attorney says, so over 20 years. Some of these changes we would support; however, through my consultation since this bill was introduced I have found that there has been a lack of consultation with various industry groups on this. I have sought feedback from the Law Society, which has not provided a submission on this. I have received submissions from SACOSS, which has serious concerns about how this will impact very small not-for-profits in terms of compliance costs.

Although the opposition support going through a process of reform, we do not support going through this process this late in the parliamentary sitting with such little consultation, and so I indicate that we will not be supporting this bill.

The Hon. V.A. CHAPMAN (Bragg—Deputy Premier, Attorney-General, Minister for Planning and Local Government) (12:22): I thank the member for Enfield for indicating her position in relation to the opposition's consideration of the matter to date. Our department, that is the Consumer and Business Services department (CBS), recently met with the Conservation Council SA and SACOSS, as has been referred to by the member, to discuss this bill and the feedback they had received.

Another aspect in relation to this, but perhaps in more legal terms, was received from MinterEllison, who are solicitors in South Australia with a very significant interest in this area of law. I thank them for their contribution. As a result some of the issues raised, in particular the impost in relation to very small associations, I indicate are foreshadowed in amendments that have been tabled by the government.

I thank the Conservation Council, SACOSS—the Arts Industry Council had also raised some issues, I think indirectly through SACOSS—and MinterEllison solicitors, who provided further feedback in respect of the bill. As I indicated, I will go into the detail of each of those matters that have been covered in the amendments during committee, otherwise I thank the member for her contribution.

Ayes 24

Noes 20

Majority 4

Committee Stage

In committee.

Clause 1.

Ms MICHAELS: Can I ask the Attorney about the origins of this bill. Was it something that the commissioner and Consumer and Business Services brought forward to you, or was it something that you and your department had been working on for some time?

The Hon. V.A. CHAPMAN: Consumer and Business Services, under the leadership of Commissioner Dini Soulio and his staff—Nerissa Kilvert in particular—have been working on this matter for a number of years, and this was a culmination of their work and a recommendation to me.

I have Damian Allison here as an adviser from the department to confirm that that is the origin of this recommended reform. As I indicated earlier, one of the parties in particular, after the consultation period for a month in June this year on what had been presented for comment, had two further meetings at SACOSS. That is the South Australian Council of Social Service for those who are following this debate. I am advised that a very large number of the issues that they had raised have actually been resolved, but those that have not are in the amendments I have foreshadowed.

Ms MICHAELS: Can the minister confirm that the proposal from Consumer and Business Services (CBS) is in the form of this bill? Have there been any changes to what they recommended?

The Hon. V.A. CHAPMAN: Not that I am aware of, but we can check between the houses if there were. This is not an area of reform that was initiated by the government: it was CBS's review. It had not occurred since 1997. I think it is fair to say that, in discussion with Mr Soulio and his concern about the compliance or lack thereof in relation to some associations, he singled out in his discussions the challenges that faced some of our Aboriginal communities.

In addition, there were some of our multicultural communities who were challenged by both process and their obligations in general terms under the associations act. Indeed, via me, the government listened to Mr Soulio's concerns about these matters to support funding initiatives to try to ensure that those two particular communities have some education and support in understanding their responsibilities and compliance obligations in relation to any associations law.

I should also say that very often it is not the large corporates, of course, who seek to have an umbrella of association via corporations law. In a way, they often have the financial position and expertise to ensure they are properly advised for compliance in relation to corporations law. I think it is fair to say that association incorporation is designed for those who wish to associate not in a corporate world but very often in an NGO world.

Sometimes it is for sporting activity. Sometimes it is for community activities. As we know, sometimes in the multicultural community these associations are established as an alliance between those who may have recently migrated to South Australia. One of the challenges has been when different groups set up their own associations within the same cultural group.

These are the sorts of things that have been raised with me. I think they are matters where we need to try to have a process that is as easy to follow as possible, is able to be complied with and is able to be operational for the purposes of the cohort of those in the community who wish to utilise this type of legislation for their assembly purposes.

Ms MICHAELS: The Attorney raised the issue of Indigenous incorporated associations and multicultural incorporated associations having to deal with these changes. What consultation have you done with these two specific groups and how much additional funding are you proposing be provided to CBS to be able to educate these groups?

The Hon. V.A. CHAPMAN: Aboriginal community-controlled organisations have also made submissions and they were consulted. I am not sure whether this list of consultation has already been provided to the member. There has not been a lot of interest by members. I am pleased that at least the member for Enfield appears to be interested in this reform. I think she was the only one from the Australian Labor Party who came to see us. The crossbench attended meetings also to be able to do that. Nevertheless, if they have not, I am happy to read them out.

The list includes South Australian Council of Social Service Incorporated, Southern Cross Care (SA & NT) Incorporated, Volunteering SA & NT Incorporated, St Vincent de Paul (SA) Incorporated, Fundraising Institute of Australia, Guide Dogs Association of SA and NT Incorporated, Clubs SA, The Returned and Services League of Australia (SA Branch) Incorporated, Klaus Becker, Arts Industry Council of SA, South Australian Sports Federation Incorporated, Football Federation South Australia Incorporated, South Australian National Football League Incorporated, South Australian Cricket Association Incorporated, and Women's and Children's Health Research Institute Incorporated.

It also includes the National Heart Foundation of Australia (SA Division) Incorporated, Eldercare Incorporated, Resthaven Incorporated, The Asthma Foundation of South Australia Incorporated, Meals on Wheels (SA) Incorporated, Royal Automobile Association of SA Incorporated, Motor Trade Association of South Australia Incorporated, South Australian Wine Industry Association Incorporated, Master Plumbers Association of South Australia Incorporated, South Australian Commission for Catholic Schools Incorporated, Conservation SA, Lutheran Church of Australia Incorporated, CPA Australia and Not for Profit Accounting Specialists.

It further includes the Law Society of South Australia, who did in fact put in a submission on 28 June 2021 and I imagine that is still available on their website—JusticeNet SA; Justice Connect (NFP Law); Australian Charities and Not-for-profits Commission; Department for Communities and Social Inclusion; Office for Recreation, Sport and Racing; Multicultural Affairs, which of course is in DPC; Aboriginal Affairs and Reconciliation, which is also in DPC; MinterEllison lawyers; and O'Loughlins Lawyers. In addition to that is ORIC, which is the commonwealth regulator.

Each of these issues has been raised, in particular by Aboriginal Affairs and Reconciliation, and Multicultural Affairs (DPC). There were several million dollars, but I cannot recall the exact amount that was allocated for the implementation of new reforms, general education and support, which I referred to. I will obtain that information between the houses.

Mr BOYER: Minister, in relation to the multicultural and Indigenous groups you mentioned, is there extra funding going to help with the education specifically of those two groups on the new proposed legislation?

The Hon. V.A. CHAPMAN: Yes. I think I made that point clear both in my reply and in the committee as to the money in relation to that. That was the question of your colleague sitting next to you as to the amount that is available for those two areas for the support and the education of the new model and to assist them in relation to what their obligations will be under the new act.

Mr BOYER: Sorry, minister, if I was not listening or missed you saying it, but what was the amount you referred to that has been given to those groups?

The Hon. V.A. CHAPMAN: For the third time, can I say that my recollection is several million dollars, but I will get the detail between the houses.

The CHAIR: The Attorney has agreed to seek the—

Members interjecting:

The CHAIR: Order! We are only on clause 1. The Attorney has agreed to get that information between the houses.

Clause passed.

Clause 2.

Ms MICHAELS: Can the Attorney indicate when she would expect this to commence and what transition would proceed from the commencement of this act?

The Hon. V.A. CHAPMAN: If this had not been evident during the consultation, I will make it clear to the parliament and this committee that there are regulations yet to draft, and it is expected they will have quite a lot of areas to cover. In fact, I think I referred to that provision at the time of my second reading. In any event, they are yet to be drafted and implemented. That is the first stage, and then, of course, we take advice from CBS as to when that should occur.

As I have indicated, subject to the parliament's endorsement of these reforms, I just assure them that there is some extra money available to be able to deal with that and assist those we are trying to regulate without unnecessary complication.

Ms MICHAELS: Would you anticipate 1 July next year as being a reasonable start date, or is that too soon, do you think?

The Hon. V.A. CHAPMAN: I do not have the detail of that at this point; I will rely on the CBS advice as to when they are ready. They are the regulator in relation to this area. They do it now under the current legislation. Certainly, it has been Mr Soulio's clear indication to me; hence, the submission to have extra funding to support a number of those who are covered in this area is so significant. Given his presentation to date that that should be accommodated before the new regime comes into place, I expect it would be some months, but I do not have any particulars or advice from him at this stage.

Clause passed.

Clause 3 passed.

Clause 4.

Ms MICHAELS: Clause 4(5), the definition of prescribed association, refers to revenue in excess of $500,000 or such greater amount that is prescribed by regulation. Has any submission been made to you that that amount should be prescribed at more than $500,000 by regulation, or do you anticipate doing so?

The Hon. V.A. CHAPMAN: No.

Ms MICHAELS: Subclause (7), the definition of revenue that is being inserted, talks about 'the total amount of the receipts of the association including any money received as a devise or bequest and any grant or subsidy', etc. If property was given, for example, real property was given—$1 million, $2 million—would that come into that definition?

The Hon. V.A. CHAPMAN: I will advise for the benefit of the committee that the definition of revenue has been raised previously at consultation by the member for Enfield as to the exclusion of money received from selling assets that had not originally been purchased for the purpose of resale from the definition of revenue. The example raised was of a motor vehicle or other large asset being gifted to an association and whether or not it should be captured.

The definition of revenue in the bill is consistent with the Australian Charities and Not-for-profits Commission (ACNC), which has been adopted from the Australian Accounting Standards Board (AASB). Briefly, the proceeds from selling assets not originally purchased for the purpose of resale would not be considered as revenue—the measure in relation to financial reporting requirements—but would form part of the total income; that is, total revenue plus other income equals total income.

The explanation that was provided to the member and that I give to the committee is as follows. The sale of an asset would result in a gross flow of economic benefit, and the inflow would result in increased equity, which means it is income, but it would not be revenue. The basic principle is that the gain—not necessarily the proceeds, if the charity paid something for the asset—would not be revenue because it arises outside the ordinary activities of the association, as it was not purchased for the purpose of resale.

AASB 116, property plant and equipment, is directly relevant to the example of an association's motor vehicle not purchased for the purpose of resale. I refer to section 67, which reads as follows:

Derecognition

…The carrying amount of an item of property, plant and equipment shall be derecognised:

(a) on disposal; or

(b) when no future economic benefits are expected from its use or disposal.

Section 68 reads as follows:

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be included in profit or loss when the item is derecognised (unless AASB 16 Leases requires otherwise on a sale and leaseback). Gains shall not be classified as revenue.

Section 71 reads:

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

I think now, specifically, the member has asked whether a piece of real estate—that is, real property, land—is in or out, and I think from the explanation I have provided that somewhat depends, but in the event, we will get some further clarification on it.

Ms MICHAELS: Just to clarify, that did answer my question that I put forward during consultation in terms of the sale of assets gifted to an association, but the receipt of property—car, real estate, whatever it might be—when that definition refers to total amounts of receipts, including money, does that particularly exclude real property, of the chattels?

The Hon. V.A. CHAPMAN: As I said at the end of the last explanation, having provided the information you had of the example in relation to a particular item of personal—namely, a motor vehicle—you now ask in relation to real property. Again, I indicate that I will take further advice in relation to that to give you a comprehensive answer.

Ms MICHAELS: Just to clarify, I understood your answer to be referring to the last part of that definition, 'the sale of any of the association's assets' in terms of any gains made. Would the receipt of an asset fall within 'total amount of the receipts of the association'?

The Hon. V.A. CHAPMAN: For the third time, I indicate that, the member having raised that, I will certainly take further advice and get back to the house on it.

Clause passed.

Clause 5.

Ms MICHAELS: In relation to the information the commissioner may make publicly available—'information from a register maintained under subsection (1)'—what would you anticipate would be the content of that information to be made publicly available?

The Hon. V.A. CHAPMAN: I have not been given much in specifics on the advice but it is expected to be similar to what is disclosed in relation to corporations law: who is in charge, where they operate from, who is the public officer—things of that nature.

Ms MICHAELS: In terms of what would be in the register, I understand that may be the members' register. Is that one of the things? Would we have publicly available a list of members if that is in a members' register or not?

The Hon. V.A. CHAPMAN: I cannot recall at all during any of the consultations that it would have sometimes thousands of members, but that is not proposed. As the member would know, at present they are not disclosed, but there has been nothing put to me to that effect that that would be asked for. It does not mean that it cannot be required for the purposes of assessment.

I imagine from time to time, in relation to the compliance of an association under the current act, that may be called upon. It is more likely to be specific with a specific person who might be a member, but that is a matter for enforcement. But nothing has been put to me and I have the adviser here. There has been no intention that it will be a list of all the members of an association for the purposes of public disclosure.

Ms MICHAELS: Would you anticipate that committee members would be made publicly available, given at the moment only public officers are made publicly available?

The Hon. V.A. CHAPMAN: That has not been determined at this point, but I would imagine that there would be some practical problem in being able to maintain a register with the change of all the committee members, but it may be called upon by the CBS to argue that. Of course, if that is meritorious and it needs to be put in regulations, then there will be a process of review of that.

For the benefit of the committee, we have not reached clause 6 yet but, in relation to the inspection of documents, it sets out a process by which the association retains its register of members and the process by which they can be viewed, so perhaps the member could read clause 6.

Clause passed.

Clause 6.

Ms MICHAELS: Can you identify what information would be required in an annual verification statement?

The Hon. V.A. CHAPMAN: There is a draft annual verification statement which is being worked out by the department and it is proposed, just looking at this, for the purposes of the completion of this by the association: name, registration number, date incorporated, and the public officer's name, email address and telephone number—as you would expect—the committee members and when they were appointed, and the annual general meeting, seeking when they last held their annual general meeting.

As the member would appreciate, probably more than most in the house, that is one of the difficulties in actual compliance. Then there are also two questions in relation to change to rules: have your members voted or proposed changes to rules since your last AVS, and have you lodged a proposed change of rules with the commission? That is a preliminary draft. Obviously, that has to go out to consultation as well.

I think there are two things I more commonly come across in relation to my own community. The first is the question of who takes precedence in relation to certain communities, because you might have multiple associations for the purposes of one group. If I were to pick a multicultural community, there are something like 72 associations, and that is great, but it does cause some challenges in relation to who trumps whom from time to time. The second thing is the compliance with the orderly management of those associations to comply even with the current schedule of having annual general meetings, obligation to give notices, time frames etc.

Unless any other members have any direct concern in relation to those, I think the member understands what we are talking about.

Ms MICHAELS: In terms of the maximum penalty and the expiation fee, is there any ability for the commissioner to waive that if there is a breach of providing the annual verification statement?

The Hon. V.A. CHAPMAN: The whole process here is one of enforcement by the commissioner. He has a role in a number of these enforcement processes. There might be breaches of codes of conduct that occur—that is, for trades and things—in relation to associations. He has responsibility for people who breach, who are retailers of petrol, if they fail to disclose a change of price on a display within 30 minutes. A number of these obligations that he has have a fine, allowing a maximum penalty, but he is the determiner as to who is prosecuted and what he is proposing that they be fined.

A subset of that is where there is an expiation fee—a bit like an on-the-spot fine—as a reminder to do the right thing but not wanting to go through the whole process of prosecution. That is something that he asked for, if I recall. On the last occasion, he asked to be able to have a power to deal with minor breaches in this way by having an expiation fee, when we debated the mandatory reporting for retail fuel operators. That is the last time I can recall he asked for that. He has powers in areas that he enforces.

Ms MICHAELS: In respect of an incorporated association that fails to give the annual verification statement, subsection (3) refers to the commissioner being able to record the association as being suspected of being defunct. Will there be any guidelines issued around when that can happen? Is it the first time an annual verification statement is not lodged that it is possible, or will there be guidelines about giving some of these very small not-for-profit associations some education?

The CHAIR: Attorney, I might have you answer quickly or move that the committee report progress.

The Hon. V.A. CHAPMAN: I move that committee report progress. It might assist my being able to give a more fulsome answer.

Progress reported; committee to sit again.

Sitting suspended from 12:59 to 14:00