First Reading

Bill introduced on motion by Mr Anoulack Chanthivong, read a first time and printed.

Second Reading Speech

Mr ANOULACK CHANTHIVONG (Macquarie Fields—Minister for Better Regulation and Fair Trading, Minister for Industry and Trade, Minister for Innovation, Science and Technology, Minister for Building, and Minister for Corrections) (10:17): I move:

That this bill be now read a second time.

I am proud to introduce the Customer Service Legislation Amendment Bill 2023. The bill deals with three distinct matters. First, the bill will introduce a deemed recognition and compliance model for charitable fundraising in New South Wales. Second, the bill will introduce measures to deal with a significant licensing issue in the property and real estate sector. Third, the bill will enable the operation of retail outlets at the Western Sydney airport. I will now address these matters in turn.

The bill will amend the Charitable Fundraising Act 1991 and the Associations Incorporation Act 2009 to introduce a deemed recognition and compliance model. These amendments will significantly reduce administrative burdens for New South Wales charitable fundraisers that are also registered with the Australian Charities and Not-for-profits Commission, known as the ACNC. This model will allow entities registered with the ACNC to undertake charitable fundraising in New South Wales without having to apply for a separate New South Wales authorisation. The bill also removes duplication as these entities will only have to comply with the ACNC's reporting requirements. Once the model is implemented in New South Wales, it will be easier and more efficient for charities and not-for-profits to work across Australia. It will allow charities to focus more of their time and resources on delivering their services.

The nature of fundraising activity in Australia has changed significantly in recent years. Charities have expanded in size and are conducting activities nationally, using both traditional and online means. In New South Wales, charitable fundraising is currently regulated at the State level through NSW Fair Trading as well as at the Commonwealth level through the ACNC. This imposes a duplicative regulatory burden on these entities that must comply with complex, time-consuming and often inconsistent obligations across jurisdictions. Fundraisers operating in New South Wales must hold a New South Wales charitable fundraising authority if they raise more than $15,000 per year. While the authority is free of charge, authority holders must comply with reporting and auditing requirements under the New South Wales charitable fundraising laws. Registering with the ACNC is a voluntary choice made by the majority of charitable entities. Once registered with the ACNC, entities can apply for charity tax concessions such as income tax exemptions or GST concessions. They can also apply for tax deductible gift recipient status.

ACNC registration confers benefits for charities that operate on a national basis, but also imposes mandatory reporting and auditing requirements that are not fully consistent with obligations in New South Wales charitable fundraising laws. Many incorporated associations that are regulated under the Associations Incorporation Act 2009 are also active fundraisers and have a New South Wales charitable fundraising authority. Many are also registered with the ACNC. As such, many New South Wales charities and associations have separate reporting obligations for each regulatory framework. Unnecessary regulatory burden is counterproductive and detracts from the important work of charitable fundraisers. The Government recognises that this burdensome framework is detrimental to the efficient operation of the sector. This bill will deliver a resolution to this problem.

In November 2018, New South Wales agreed to lead a national working group to examine options for greater national harmonisation of charitable fundraising. This working group developed the deemed recognition and compliance model for fundraisers registered with the ACNC. Under this model, an entity will be able to rely on its registration with the ACNC to undertake charitable fundraising and meet its reporting requirements in each jurisdiction that adopts the model. During consultation on the model, stakeholders considered the ACNC's registration and reporting requirements to be appropriate for the size and activities of charities, as well as sufficient to ensure accountability and transparency.

In December 2020, the Council on Federal Financial Relations endorsed the model for charities. The model endorses the role of the ACNC as the single point for registration and reporting for charities and fundraisers. Unfortunately there was a lack of urgency from the former Government and legislative changes to implement the model in New South Wales were not brought to Parliament. Stakeholders are understandably sick of waiting. The Government is proud to introduce these important reforms to significantly reduce the administrative burden on charities. Other jurisdictions have already introduced laws to enable deemed recognition and compliance. For instance, Victoria, South Australia, the Australian Capital Territory and Queensland have all implemented a version of the deemed registration model with the ACNC. Tasmania is currently in this process. New South Wales was a laggard under the former Government. This Government will not make the same mistake.

With the reforms in this bill, New South Wales will take a vital step towards greater national harmonisation for charitable fundraisers that is strongly supported by the sector. In New South Wales, there are almost 5,200 charitable fundraising authority holders. Based on the ACNC data, it is estimated that over 68 per cent of these charitable fundraising authority holders are currently required to double-report. These entities stand to benefit from our reforms. The model will be supported by information-sharing arrangements between the ACNC and NSW Fair Trading to ensure compliance and enforcement.

I will now outline the key provisions in schedules 1 and 2 to the bill that will implement the model for charitable fundraisers in this State. The first part of the model is a deemed authority that will streamline the New South Wales registration process for ACNC-registered charities by making their existing dual authority automatic. The bill amends the Charitable Fundraising Act to provide that an entity is automatically taken to hold an authority to fundraise in New South Wales if they are an ACNC-registered entity and have notified the ACNC of their intention to fundraise in this State. This notification process is an existing feature of registering with the ACNC. This amendment eliminates the need for ACNC-registered entities to apply separately for a New South Wales fundraising authority. However, this reduction in administrative requirements on charities will not compromise New South Wales's ability to ensure charitable fundraisers in New South Wales are operating appropriately.

NSW Fair Trading will continue to have oversight on who is operating in this State. This is because the ACNC will provide data to NSW Fair Trading on charities that will operate in New South Wales, including any changes to the registration status of ACNC-registered entities. The information-sharing arrangements that NSW Fair Trading has with the ACNC recognise the importance of cooperation between these regulators to remove unnecessary burdens on charitable entities while retaining transparency and accountability measures. If a deemed authority holder ceases to be registered with the ACNC or loses their ACNC registration, they will need to obtain a New South Wales fundraising authority to fundraise in this State. If they re-register with the ACNC, the deemed authority will automatically come back into force.

The second part of the model is deemed compliance with New South Wales financial reporting requirements for ACNC-registered entities. This is achieved by amending the Charitable Fundraising Act 1991 and the Associations Incorporation Act 2009. Schedule 2 to the bill amends the Charitable Fundraising Act 1991 to provide that the New South Wales financial reporting requirements do not apply to deemed authority holders. These requirements relate to keeping records, preparing annual returns and auditing accounts for lodgement with NSW Fair Trading.

A deemed authority holder will only need to comply with the ACNC's reporting requirements to be deemed as having met the reporting requirements under New South Wales 's charitable fundraising laws. This will reduce the complexities that ACNC-registered entities currently face in meeting inconsistent reporting thresholds across the different jurisdictions. These changes will also better align New South Wales fundraising laws with the other Australian jurisdictions that have implemented deemed authorisation models. Deemed compliance will only apply if an entity remains registered with the ACNC. NSW Fair Trading can cancel or suspend a deemed authority if the entity does not comply with ACNC financial reporting requirements. Loss of the exemption means an entity must then comply with the registration and reporting requirements under New South Wales charitable fundraising laws. The bill also makes consequential amendments for ACNC‑registered entities that currently hold a New South Wales fundraising authority so they can automatically transition to and benefit from the model.

I now turn to the changes made under the Associations Incorporation Act 2009, which are also needed to implement the deemed compliance element of the model. Many charities registered with the ACNC are also associations incorporated under the Associations Incorporation Act. This means they also have reporting obligations to NSW Fair Trading under the Charitable Fundraising Act and the Associations Incorporation Act. Currently this is managed by allowing these associations to provide all required information to the ACNC. The ACNC then provides this information to NSW Fair Trading. However, this does not fully overcome variations in reporting obligations. To simplify these multiple reporting obligations, schedule 1 to the bill introduces deemed compliance with reporting requirements for associations if they are registered with the ACNC for the whole of the relevant financial year. This means that ACNC-registered associations will be exempt from lodging the required financial information under New South Wales laws if they comply with the ACNC's financial reporting requirements.

Another condition of this exemption is that the information an association provides as part of the ACNC's financial reporting requirements must be publicly available on the ACNC register. This is to ensure appropriate levels of public accountability and transparency. If any of the conditions of the exemption are not met for the relevant financial year then the association will be required to comply with the reporting requirements under the Associations Incorporation Act. I highlight that the proposed reforms will not remove any existing obligations an association has to its members, such as the requirement to submit its financial statements and auditors reports to the annual general meeting. This will ensure that associations remain fully accountable to their members.

The bill maintains safeguards against noncompliance by charitable fundraisers. For example, the compliance and enforcement powers found in part 2A of the Charitable Fundraising Act will continue to apply to deemed authority holders and grant express powers of investigation to authorised officers. These safeguards provide for a range of modern and flexible enforcement arrangements, depending on the level of noncompliance. This ensures that offending behaviour does not go unchecked and confidence in the fundraising sector is maintained among the generous people of New South Wales, who donate over $1 billion a year to charities.

Deemed authority holders will also continue to be subject to the New South Wales charitable fundraising standard conditions, such as what people must publicly disclose when conducting a fundraising appeal. As I have already flagged, the model is further supported by existing arrangements that provide for the sharing of information between the ACNC and NSW Fair Trading. These arrangements will be reviewed before the changes commence to ensure they remain appropriate and adequate.

Lastly, if a deemed authority holder fails to comply with the conditions of the New South Wales deemed recognition model, they will then have to comply with the relevant New South Wales registration and reporting requirements. I want to emphasise that the measures in the bill do not undermine the ability of NSW Fair Trading to deal with miscreant behaviour. The enforcement and compliance powers of NSW Fair Trading are retained. The key difference is that duplicative registration and reporting requirements do not apply to deemed authority holders. In addition, if donors want to know about the performance of a charity, the information will be available on the ACNC's public register.

The reforms to charitable fundraising that we are trying to achieve in this bill are exactly what the sector needs: greater harmonisation of State and Commonwealth regulatory frameworks. The model provided in the bill strikes the right balance between the need to minimise unnecessary regulatory burden with the need to maintain transparency and accountability in fundraising appeals and ensure that compliance outcomes are still met in this State. It improves the value per dollar of charitable funds being spent on actual charitable purposes, as less money is spent on overburdensome and inconsistent compliance obligations. In fact, stakeholder feedback noted a deemed recognition model had the potential to remove at least 40 hours of management time spent on registration and reporting annually.

Annual cost savings across the sector nationally were estimated to be about $15 million, which could be better directed to charitable purposes and appeals. Those are significant benefits to the charitable fundraising industry, which can lead to better outcomes for the communities where these activities work. Streamlining compliance will ensure that the regulation of charitable fundraising stays true to its core intent to provide an open, simple-to-navigate and transparent framework in which honest work and public trust are paramount.

I now turn to the amendments in the bill that will help avoid a staffing and compliance crisis across New South Wales property agencies in March 2024, when thousands of assistant property agents are expected to become unregistered and therefore unable to work in the industry. The bill will amend the Property and Stock Agents Act 2002 to allow a certificate of registration to be extended beyond the current fixed four-year term in exceptional circumstances. On 23 March 2020 reforms to the Property and Stock Agents Act 2002 placed entry‑level employees—known as assistant agents—on a professional pathway, requiring them to become fully qualified and licensed agents within a maximum of four years. Failing to become a licensed agent before the certificate of registration expires results in the assistant agent being prohibited from reapplying for a certificate of registration for 12 months and excluding them from the industry.

When the reforms commenced in 2020, more than 22,000 existing assistant agents transitioned to the current four-year fixed term certificate of registration. While more than 8,000 agents have since completed their qualifications and obtained a class 2 licence, there are still 14,000 certificates of registration held by assistant agents from the March 2020 transition date who have not obtained a class 2 licence. This cohort of assistant agents will either be excluded from employment or risk working in an unlicensed capacity from 23 March 2024.

A large majority of those agents are likely to be working in residential property management as leasing agents. Property managers assess and process tenancy applications, supervise open home inspections, facilitate the payment of rent, and manage repairs and maintenance of tenants' homes. Excluding these property managers from the industry due to their certificates expiring would result in a staffing and compliance crisis for the industry, reduced service to residential tenants and landlords, and a likely influx of complaints. Many residential property managers are employed as assistant agents and have been under stress since the advent of the COVID-19 pandemic in late March 2020. Those agencies still have difficulty attracting and retaining quality staff, even without the potential exodus likely to be caused by the expiry of certificates in March 2024.

NSW Fair Trading has engaged in extensive communications with real estate, strata management, and stock and station agents and their industry representatives about the requirements of the March 2020 reforms and options to address the approaching expiration of certificates. There is consensus amongst the stakeholders that the approach proposed by the amendments in this bill should be supported. Allowing certificates of registration to be extended beyond the current fixed four-year term in exceptional circumstances mitigate the risks to industry and the customers who rely on these services. The extension to the duration of a certificate of registration enabled by these amendments is intended to be used as a one-off measure only, providing an opportunity for assistant agents whose certificates expire in March 2024 to apply for a 12-month extension of their certificate.

The bill also amends the Property and Stock Agents Regulation to prescribe a definition of exceptional circumstances to include a real risk to the effective functioning of the property and stock agents industry. This definition captures the whole cohort of assistant agents who transitioned under the reforms of March 2020, for the reasons I have just outlined. This amendment is crucial as it allows holders of a certificate of registration with a March 2024 expiry date to apply for a 12-month extension if they are unable to obtain a class 2 licence before their certificate expires. Assistant agents, however, will need to make an application and pay the prescribed fee to extend their existing certificate of registration before it expires, or to restore an expired certificate of registration within the prescribed period of three months.

The certificates may be granted, subject to conditions, such as requiring the applicant to be enrolled in the qualification that—when completed—will make them eligible to apply for a class 2 licence. The amendments will also give NSW Fair Trading the discretion to grant a similar 12-month extension to other assistant agents who have entered the industry since March 2020, if satisfied they are in exceptional circumstances. This ensures that the certificate extension applies equitably to all assistant agents who may not be able to complete their qualifications and obtain a class 2 licence before the end of their fixed four-year term due to exceptional circumstances. These assistant agents should not be excluded simply because they obtained their certificate after 23 March 2020. Those other types of exceptional circumstances will be prescribed by further amendments to the regulation in 2024 and may include circumstances such as hospitalisation, domestic and family violence, and absence from the country or misadventure.

The property services sector is integral to the economic prosperity of our State. It is estimated that the direct contribution of the sector to New South Wales is worth more than $24 billion per year. This Government is committed to raising professional standards and improving customer confidence across the property sector. However, mechanisms to achieve those aims in the licensing regime have not adequately coped with the transition of thousands of certificate holders, so we need the bridging measures in this bill to ensure that the transition can be completed without widescale industry disruption.

I now turn to the amendments to the Retail Leases Act 1994. These amendments will extend a part of the Retail Leases Act to the Western Sydney International Airport. This will ensure the regulatory framework for lessors and lessees of a retail lease are consistent for Sydney's two international airports. Part 9A of the Retail Leases Act includes provisions that apply the Act to retail leases at Sydney (Kingsford-Smith) Airport. In particular, the provisions reflect the need for lessors to be able to implement airport and airline safety and security measures.

This also provides lessors with greater discretion on the granting of leases for retailers intending to operate in the duty-free zone, known as the airside setting, which competes with other international airport retail markets. This includes provision to disclose business turnover, which supports tendering processes for an airside lease. The Government understands that Western Sydney International Airport intends to commence lease negotiations with prospective retailers from early 2024, to support the operations scheduled for 2026. This amendment will assist the airport and prospective retailers in those negotiations by clarifying the regulatory framework for retail leasing. There has been overall support from key stakeholders for applying a level playing field to retail leasing regulatory arrangements at both airports.

I am confident that the measures in this bill are worthy of members' support and endorsement. The charitable fundraising reforms proposed in the bill will deliver practical changes that will be of clear benefit to the fundraising sector within New South Wales and across the nation. Comprehensive stakeholder input was provided during the public consultation on the model in 2020. Stakeholders in the charity, not-for-profit and related legal sectors strongly supported the model and its introduction in New South Wales. The changes to the property licensing framework are both sensible and vital and will ensure the ongoing operation of businesses in the sector. As I indicated earlier, there has been extensive consultation on the matter and stakeholders agree that the Government's approach is the best way to mitigate the risks to the effective functioning of the property and stock agents industry. The amendments to the retail leasing laws are simple and practical and will facilitate the provision of customer services at the Western Sydney International Airport. Key stakeholders, including the Property Council of Australia in New South Wales, the Australian Retailers Association and Sydney Kingsford Smith Airport, agree with and support the changes. I commend the bill to the House.

Debate adjourned.