Government Inquiry into Register of Environmental Organisations Reports

Thursday 12 May 2016 @ 10.11 a.m. | Torts, Damages & Civil Liability | Trade & Commerce

Previously we have reported on the House of Representatives Committee on the Environment (the Committee) and its inquiry into the Register of Environmental Organisations (the Register) (see our previous articles Government Inquiry into Register of Environmental Organisations, and Government Inquiry into Register of Environmental Organisations:Submissions and Hearings). Recently, (on 4 May 2016) the Committee presented its report into the Register, a government scheme enabling eligible environmental organisations to receive tax-deductible donations.

What the Committee Reported

The Committee's report focused on the administration of the Register, and how the Register supports communities in taking practical action to improve the environment and as part of the report the Committee identified some key areas of possible reform of the Register.

Some of the areas of reform identified included measures relating to:

the operation of the Register;
activities undertaken by organisations listed on the Register; and
the integrity of the current regulatory framework for registered organisations.

As part of its report the Committee acknowledged that there had been a ". . . high level of public interest in the inquiry" and that it had received more than 685 submissions. The Committee indicated that a large portion of the 685 submissions had come from organisations currently listed on the Register and to recognise the ". . . strong interest in the inquiry, the Committee undertook an extensive program of public hearings and site inspections around Australia, to hear firsthand about the range of environmental work being supported by the Register".

Committees's Findings Not Unanimous

The Committee’s report was not unanimous and was accompanied by a dissenting report from Labor members of the Committee, and additional comments from the Member for La Trobe, Mr Jason Wood MP.

Some Controversial Recommendations

The whole inquiry has had some controversial aspects. Perhaps most controversial has been the inquiry into the tax status of environmental organisations where the Committee has recommended limiting the amount of advocacy work organisations can do, along with the introduction of sanctions and fines for engaging in any “illegal” activities.

Further, the committee's report has recommended the introduction of administrative sanctions for environmental deductible gift recipients (DGRs) who “. . . encourage, support, promote, or endorse illegal or unlawful activity undertaken by employees, members, or volunteers of the organisation or by others without formal connections to the organisation” and also recommends fines for those found in breach of the legislation.

Another, recommendation is the limiting of the amount of time an environmental group can carry out advocacy work and includes a requirement to spend a quarter of donor funds on what is described as “. . . environmental remediation” work.

The committee also recommends that:

“. . . legislative and administrative changes be pursued by the Australian Taxation Office (the ATO) to require that the value of each environmental deductible gift recipient’s annual expenditure on environmental remediation work be no less than 25 percent of the organisation’s annual expenditure from its public fund”.

The Committee's report also recommended that charitable status be a prerequisite for environmental organisations seeking DGR status, and all environmental DGRs should be required to comply with Australian Charities and Not-for-profits Commission (ACNC) governance standards and be prohibited from having an illegal or political purpose.

A recommendation was also made that the current Register of Environmental Organisations be abolished and that the administration process for endorsement as a deductible gift recipient for environmental organisations be transferred wholly to the ATO.

The report also recommended that registration as an environmental charity through the ACNC be a prerequisite for environmental organisations to obtain endorsement as a deductible gift recipient by the ATO.

Reaction and Comment

In its report the committee said its recommendations were intended:

“. . . to ensure that tax deductible donations, which are a generous concession from the taxpayer, are used for the purpose intended and expected by the community”.

This however, has not played well with key Australian environmental groups who have called on the Minister to reject the recommendations and it is reported that World Wildlife Fund, The Australian Conservation Society, The Wilderness Society, Greenpeace Australia Pacific, Friends of the Earth and the Nature Conservation Council of NSW all issued a statement in response to the Committee's report recommendations as follows:

“The [Committee's] report contains a number of deeply flawed and dangerous recommendations, including an arbitrary requirement to spend a quarter of donor funds on ‘environmental remediation’ and a draconian attempt to clamp down on the type of work organisations conduct, . . . This flawed inquiry, initiated by the Abbott government and driven by a small handful of conservative MPs with the support of the mining industry, failed to uncover any evidence to justify removing the charitable status of any environment group. . . . We welcome the dissenting statements made by Liberal MP and committee member Jason Wood, raising significant concerns about the two most dangerous recommendations.”

The consequences of the recommendations being adopted are interesting to consider to say the least. As one news report states:

"Major donors to environment causes have previously warned that changes to the tax-free status of green groups would dry up funding for environmental organisations."

Groups on the other side of the debate have applauded the Committees report. The reaction of mining for example, being reported as follows:

"Minerals Council chief executive, Brendan Pearson, said the inquiry had heard evidence that a minority of environment organisations were 'misusing tax-deductible donations to fund or carry out activities that are unlawful, unsafe or politically partisan' and urged the Turnbull government to adopt the recommendations [of the report]."

The future of the report and whether its recommendations are adopted will now depend on the outcome of the next election.

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