House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Housing and Assistant Treasurer, the Hon Michael Sukkar MP)

Chapter 3 - Incentivising charities to join the National Redress Scheme

Outline of chapter

3.1 Schedule 3 to the Bill amends the definition of basic religious charity in section 205-35 of the ACNC Act to provide that an entity is not a basic religious charity if:

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the entity is identified as being involved in the abuse of a person, either in an application for redress or in response to a request for information from the Operator;

•

the application for redress relating to the entity has not been withdrawn; and

•

the entity does not join the Redress Scheme by becoming a participating non-government institution in the Redress Scheme by the relevant day.

3.2 These amendments incentivise basic religious charities that may be responsible for past institutional child sexual abuse to join the Redress Scheme to retain their basic religious charity status.

Context of amendments

3.3 The Redress Scheme was established by the Redress Act on 1 July 2018 in response to recommendations by the Royal Commission into Institutional Responses to Child Sexual Abuse.

3.4 Under the Redress Scheme, survivors of institutional child sexual abuse may receive redress in the form of:

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a redress payment of up to $150,000;

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counselling and psychological care; and

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an optional direct personal response from the responsible participating institution.

3.5 The Redress Scheme operates on an opt-in basis where the responsible participating institution is liable to pay their share of the costs of redress payments and counselling and psychological care.

3.6 Survivors of institutional child sexual abuse cannot obtain redress under the Redress Scheme if none of the institutions responsible for their abuse have joined the Redress Scheme. If there are multiple responsible institutions involved and only some of those institutions have joined the Redress Scheme, the survivor may not be able to obtain the maximum amount of redress that would otherwise be available if all of the responsible institutions had joined the Redress Scheme.

3.7 The issue of institutions failing to join the Redress Scheme was recognised in a report by the Joint Select Committee overseeing the implementation of redress related recommendations of the Royal Commission into Institutional Child Sexual Abuse, Getting the National Redress Scheme right: An overdue step towards justice, tabled in Parliament on 2 April 2019.

3.8 Recommendation 3 of that report recommends the government consider mechanisms and their efficacy, including those available under the Charities Act 2013, to penalise all relevant institutions that fail to join the Redress Scheme. This includes the suspension of all tax concessions for, and the suspension of charitable status of, any institution that could reasonably be expected to join the Redress Scheme.

3.9 On 22 October 2020, the Prime Minister announced in his speech to Parliament that the Australian Government was finalising sanctions for institutions that continue to refuse to join the Redress Scheme, including the withdrawal of their charitable status.

3.10 The amendments in Schedule 3 partially implement the Government's response to this issue. These amendments will be supplemented by a new governance standard to be made for the purposes of subsection 45-10(1) of the ACNC Act, which will require registered entities to take reasonable steps to join the Redress Scheme in certain circumstances.

Summary of new law

3.11 Schedule 3 to the Bill amends the definition of basic religious charity in section 205-35 of the ACNC Act. Under these changes, an entity is not a basic religious charity if:

•

the entity is identified as being involved in the abuse of a person, either:

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in an application for redress under section 19 of the Redress Act; or

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in response to a request for information from the Operator under section 24 or 25 of the Redress Act; and

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the application for redress relating to the entity has not been withdrawn under section 22 of the Redress Act; and

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the entity is not a participating non-government institution in the Redress Scheme by the relevant day.

3.12 If an entity does not become a participating non-government institution by the relevant day, but does so at a later time, the entity may regain its basic religious charity status at that later time. However, there would be a period where the entity is not a basic religious charity and therefore would need to comply with additional obligations under the ACNC Act, such as the obligation to comply with the governance standards. Failure to comply with these additional obligations during this period could result in the ACNC Commissioner revoking the entity's registration.

Comparison of key features of new law and current law

Detailed explanation of new law

3.13 Schedule 3 to the Bill amends the ACNC Act to incentivise basic religious charities that may be responsible for past institutional child sexual abuse to join the Redress Scheme.

Which basic religious charities are affected?

3.14 To retain its basic religious charity status, an entity will need to join the Redress Scheme by becoming a participating non-government institution if:

•

the entity is identified as being involved in the abuse of a person, either:

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in an application for redress made under section 19 of the Redress Act; or

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in response to a request for information from the Operator under section 24 or 25 of the Redress Act; and

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the application for redress relating to the entity has not been withdrawn under section 22 of the Redress Act.

[Schedule 3, item 1, paragraphs 205-35(6)(a) and (b) of the ACNC Act]

3.15 These provisions capture the primary ways that officers of the Redress Scheme obtain information about whether a particular entity may be an institution that is responsible for abuse of an applicant under the Redress Scheme.

3.16 Many of these entities are expected to be identified in an application for redress made under section 19 of the Redress Act. This reflects that the application form currently requests that applicants provide as much identifying information as possible about each institution that is responsible for bringing the applicant in contact with the person or people who sexually abused them.

3.17 However, there may be circumstances where an application does not provide sufficient information to identify an entity. For example, this could occur because the sexual abuse occurred a long time ago. In those circumstances, the Operator may request that the applicant provide further information under section 24 of the Redress Act. In responding to that request, the applicant may provide sufficient information to identify an entity as being involved in their abuse. Information that is provided in this way is captured by these amendments.

3.18 Similarly, information provided by an entity that has already joined the Redress Scheme (that is, a participating institution in the Redress Scheme) that identifies another entity as being involved in abuse of the applicant is captured by these amendments if that information is provided in response to a request by the Operator under section 25 of the Redress Act. This could occur where an applicant mistakenly identifies a participating institution as being involved in their abuse, the Operator requests information from the participating institution as required under section 25 of the Redress Act, and the participating institution provides information that helps to identify the entity that was involved in the abuse of the person.

3.19 The relevant application for redress does not need to be valid under subsection 19(2) of the Redress Act. For example, if the application does not specify where the applicant lives, but identifies a basic religious charity as being involved in the abuse of the applicant, that basic religious charity would be affected by these new provisions. This ensures that the amendments apply to as many basic religious charities that may be responsible for past institutional child sexual abuse as possible. [Schedule 3, item 1, subsection 205-35(7) of the ACNC Act]

3.20 However, if the relevant application for redress is withdrawn by the applicant under section 22 of the Redress Act, the entity that was identified either in the application or in a subsequent request for information is not required to join the Redress Scheme to retain its basic religious charity status. If the entity has already joined the Redress Scheme, the entity is not required to continue to participate in the Redress Scheme to retain its basic religious charity status.

3.21 This is intended to ensure a balanced approach, so that entities are not unnecessarily required to join the Redress Scheme to retain their basic religious charity status, where there would be no benefit for survivors of institutional child sexual abuse.

3.22 Similarly, where a basic religious charity is mistakenly referred to in an application for redress or in a subsequent response to a request for information - for example, because of a typographical error - and the error is promptly corrected between the applicant and the Redress Scheme, it is not intended that these amendments would be enlivened. That is, the entity that was mistakenly referred to would not be required to join the Redress Scheme to retain its basic religious charity status, provided the entity has not been identified in relation to other applications.

When does an affected entity need to join the Redress Scheme to retain its basic religious charity status?

3.23 To retain its basic religious charity status, an affected entity will need to join the Redress Scheme by becoming a participating non-government institution by a particular day (called the relevant day). To work out the relevant day it is necessary to consider whether the redress application is made before, on or after 1 January 2021. [Schedule 3, item 1, paragraph 205-35(6)(c) of the ACNC Act]

3.24 If a redress application is made before 1 January 2021, and a basic religious charity is identified as being involved in the abuse of the applicant (either in the application or in a subsequent response to a request for information), the entity will have until the later of the following days to become a participating non-government institution before it loses its basic religious charity status:

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the day these amendments commence; and

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the day after the end of the six month period beginning on the day the application was made.

[Schedule 3, item 1, paragraph 205-35(8)(a) of the ACNC Act]

3.25 This timing gives affected entities at least six months from the date the relevant redress application is made to become a participating non-government institution. It reflects that officers of the Redress Scheme have been working closely with affected entities and will continue to do so to assist them to join the Redress Scheme. Further, many of these affected entities have had a significant period of time to join the Redress Scheme (that is, a period longer than six months from the date of the application). As there are a considerable number of applicants for redress of advanced age or ill health, this timeframe is considered to be appropriate in the circumstances.

3.26 For redress applications made on or after 1 January 2021, to retain its basic religious charity status, the entity must be a participating non-government institution on the later of the day after the end of the six month period that begins:

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on the day after the application for redress is made; or

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on the day that information is given in response to a request made under section 24 or 25 of the Redress Act.

[Schedule 3, item 1, subparagraphs 205-35(8)(b)(i) to (iii) of the ACNC Act]

3.27 Officers of the Redress Scheme will notify basic religious charities that are not participating non-government institutions that the entity has been identified as being involved in the abuse of an applicant, and the day by which the entity needs to join the Redress Scheme to retain its basic religious charity status. This notification would be given to the affected entity as soon as practicable.

3.28 This gives basic religious charities up to six months to become participating non-government institutions, regardless of whether they were identified in an application for redress or in a subsequent response to a request under section 24 or 25 of the Redress Act.

3.29 However, in practice, because the Minister responsible for administering the Redress Act must declare by notifiable instrument that an institution is a participating institution, entities will have slightly less than six months to take the relevant steps it needs to join the Redress Scheme. However, this timeframe is expected to be sufficient, provided affected entities engage early with officers of the Redress Scheme and do not delay the on-boarding process.

3.30 The amendments also contain a regulation-making power that may be used to prescribe a later relevant day (that is, a day after the six month period) for redress applications made on or after 1 January 2021. This regulation-making power is appropriate as it ensures there is sufficient flexibility for the Government to extend the period for entities to join the Redress Scheme before they lose their basic religious charity status if there are unforeseen difficulties with the six month period. Any regulations made would take into account the effect on survivors of institutional child sexual abuse and be subject to parliamentary scrutiny and disallowance. [Schedule 3, item 1, subparagraph 205-35(8)(b)(iv) of the ACNC Act]

3.31 If a basic religious charity joins the Redress Scheme by becoming a participating non-government institution by the relevant day, the entity will retain its basic religious charity status.

Joining the Redress Scheme after the relevant day

3.32 If an entity subsequently joins the Redress Scheme by becoming a participating non-government institution after the relevant day, the entity may be a basic religious charity again if it still satisfies the existing criteria in section 205-35 of the ACNC Act. [Schedule 3, item 1, subsection 205-35(6) of the ACNC Act]

3.33 This provision ensures there is an ongoing incentive for basic religious charities (or former basic religious charities) who have not joined the Redress Scheme to do so, even if they have failed to join by the relevant day.

3.34 However, there would be a period of time where the entity would not be a basic religious charity. During this period, the entity would be subject to additional obligations under the ACNC Act, including financial reporting requirements and the requirement to comply with the governance standards. These obligations currently apply more broadly to registered entities other than basic religious charities under the ACNC Act.

3.35 Failure to comply with these additional obligations during this period could result in enforcement action being taken by the ACNC Commissioner under Chapter 4 of the ACNC Act, or the ACNC Commissioner revoking the registration of the registered entity. If the entity's registration is revoked, the entity would need to reapply for registration under the ACNC Act.

3.36 Therefore, while it is possible for an entity to become a basic religious charity once more, there is a greater incentive for a basic religious charity to join the Redress Scheme by the relevant day so that it maintains its status (including its registration) without any gaps.

Basic religious charities that do not join the Redress Scheme

3.37 If a basic religious charity has been identified as being involved in the abuse of an applicant and does not join the Redress Scheme by the relevant day, the entity will lose its basic religious charity status.

3.38 Therefore, the obligations set out in paragraph 3.34 would apply to the entity from the day the entity loses its basic religious charity status. Additionally, the entity would need to answer financial information questions in its annual information statement to the ACNC and for medium and large registered entities, provide reviewed or audited financial reports.

3.39 The requirement to comply with the governance standards will include the new governance standard that is proposed to be made for the purposes of subsection 45-10(1) of the ACNC Act, once that standard commences.

3.40 It is proposed that the new governance standard will require registered entities to take reasonable steps to become a participating non-government institution in the Redress Scheme in specified circumstances. Failure to comply with any of the governance standards means that a registered entity is not entitled to be registered under the ACNC Act, which could result in the ACNC Commissioner revoking the entity's registration or taking enforcement action under Chapter 4 of the ACNC Act.

3.41 Necessary information will be exchanged between the Redress Scheme and the ACNC Commissioner to allow the ACNC Commissioner to effectively administer the new provisions. For example, information may be disclosed by officers of the Redress Scheme to enable the ACNC Commissioner to identify which registered entities are no longer basic religious charities. This will be important for the ACNC Commissioner in administering the ACNC Act and assisting registered entities to comply with that Act, as different obligations apply under that Act for basic religious charities and other registered entities.

Application provisions

3.42 The amendments in Schedule 3 commence on the day after the end of the period of three months beginning on the day the Bill receives Royal Assent. This ensures that basic religious charities that may be responsible for past institutional child sexual abuse are incentivised to join the Redress Scheme promptly, while also ensuring affected charities have sufficient notice about these amendments.

3.43 Under section 56A of the National Redress Scheme for Institutional Child Sexual Abuse Rules 2018, the last day for institutions to be declared as participating in the Redress Scheme is currently 31 December 2020. The amendments in Schedule 3 to the Bill will operate in respect of any period in which that date is extended.