Civil Society and the Role of Government

By Kevin Andrews - Australian Polity - Volume 2 (Number 2)

The Productivity Commission recently released a research report entitled Contribution of the Not-for-Profit Sector. Significant among the recommendations was the establishment of a new national Registrar for Community and Charitable Purpose Organisations, the pursuit of harmonisation of state and territory based incorporated associations legislation with more simple reporting requirements and rules, the pursuit of harmonised fundraising legislation, simplified reporting,
accounting and related requirements, more clarity about funding obligations, and simplified contractual arrangements.

The Not-for-Profit Sector

There are some 600,000 Not-for-Profit organisations in Australia representing a wide diversity of interests, groups, and services. The vast majority of them (about 440,000) are small unincorporated entities. Another 136,000 are Incorporated Associations, 9,000 incorporated by other means, including 2,500 indigenous corporations, and 1,850 are cooperatives. Just 11,700 are companies limited by guarantee. Of the 660,000, less than one tenth (59,000) are deemed economically significant by the ABS, that is, employ paid staff and /or have an active tax base; although this is a narrow measure. Excluding volunteers, the sector made up 4.1 per cent of GDP in 2006-07, a contribution of $43 billion. Almost 320,000 people were employed by the sector, which also attracted 4.6 million volunteers.

The expansion of the welfare state in the 1970s , and the increase in the demand for a range of services over the past two decades, and the outsourcing of services previously delivered by government has resulted in a significant increase in government funding to not-for-profit organisations.

While the Productivity Commission report relates primarily to the larger organisations and those in receipt of government funding, a proper consideration of the non-for-profit sector should include the extraordinarily diverse range of services involved.

The Coalition approach

In approaching this issue, I have been influenced by two different experiences. One was as a government minister responsible for funding a range of not-for-profit organisations in the ageing, employment and immigration portfolios. Equally significant has been my experience as an employee and a board member and volunteer in a number of not-for-profit bodies over more than three decades.

Drawing on this experience, I would like to outline an approach to the not-for-profit sector — or civil society — as I would prefer to name it. The description “not-for-profit” immediately connotes an economic framework, whereas civil society conveys a different, broader notion, of which the economic is one part. The Productivity Commission itself accepted this broader role for the sector, and noted the tensions that arise from the conflict between economic and other objectives.

Civil society

The institutions of civil society are important because they are neither created nor controlled by the state. Public funding requires accountability and services require training, skills, and a professional approach, but it is important that the independence and the volunteering ethos of the sector is protected and encouraged. We should guard against unnecessary state control of the civil sector.

There is a danger that government can seduce community groups into becoming its mouthpiece. There is also a danger that government will see the voluntary sector as just an extension of itself.

I was reminded of this concern when reading the speech of a former New Zealand Labour Government Minister to a conference on social inclusion in Melbourne. In it, Steve Maharey, now Vice-Chancellor of Massey University, Palmerston North, New Zealand, and formerly a New Zealand government minister for nine years, said:

Community organisations have to accept that they must have professional management and rely less on volunteers. Volunteering is still vital but the core of a community group of any size needs to be paid and accountable.

There are too many community groups. While new groups will always appear in response to a need, if real progress is to be made rationalisation of numbers is essential.

Local communities need volunteer centres where induction and training can be provided.

There has to be full funding of the work community groups are asked to do.

While aspects of these statements are unremarkable, taken together they raise a concern. There is a sense in these remarks that the voluntary sector is viewed as another arm of government, to be directed, regulated and funded like an agency of the state.

The essence of the third or voluntary sector of civil society is that individuals gather together to address issues that they perceive in need of a response. Most often this is at a local level. Surely there cannot be too many community groups. The suggestion that there are too many groups smacks of a command approach and bureaucratic control.

One only has to look to Britain to see how non-government organisations can morph into quasi-government organisations. According to the National Council for Voluntary Organisations, 25,000 British charities received more than three-quarters of their funding from government. Having courted a new constituency of charitable organisations, the danger is that government can politicise the partnership, to the point of crudely suggesting that only support for the party in government will maintain the massive levels of funding. When the civil sector accepts this arrangement, it effectively has lost its independence.

What does it matter if civic and charitable organisations become arms of government? A blending of the role of government and the civil sector risks the domination of the government sphere over all others. “Do not forgot that every State power tends to look upon all liberty with a suspicious eye,” warned the Dutch statesman, Abraham Kuyper. “The ancient history of all people replays a shameful spectacle. Despite stubborn, sometimes heroic struggle, the freedom of the spheres dies out and State power — become Caesarism — triumphs.

When the State directs the activity of civil society, it enfeebles the ability of citizens to take responsibility for their own community and society.

The practical outcome is all too familiar: a one size fits all approach to social problems, ensnared by contractual obligations, designed to fit governmental silos, which rob much of the individual initiative and personal initiative that should motivate charity. Worse, it endangers the vibrancy of the institutions that help to form citizens in the virtues. The act of giving, whether finances, services or counsel, becomes a professional activity and a function of the State, rather than an act of charity and love directed to fellow human beings.

This is not to say that the State has no role in the other spheres of society. Rather, it is to argue that free citizens should ensure that the State is an enabler of the other spheres of human activity, not the master of them.

The Coalition will remain mindful of this warning when assessing the Government’s approach to the Commission’s recommendations. However, it is pleasing to note that the Productivity Commission has recognised these tensions, albeit expressed in different language.

Cutting red tape and supporting family service providers

Last year I announced that the Coalition in government would simplify the relationship between government and family service providers. As I said then, Government contractual and reporting requirements cost family service agencies significant sums of money to administer. Much data is collected, but little of it is ever used. Many agencies have multiple contracts with government, with different requirements, different obligations, and different reporting.

The Coalition supports transparency and accountability in the use of taxpayer’s funds. It also supports simplicity and efficiency.

Accordingly, we should simplify the reporting and contractual requirements for family service agencies. In particular, we should:

Implement one contract with the Department for each agency, instead of multiple contracts;

Negotiate the content of the contracts with the agencies rather than simply imposing it upon them;

Replace the current system of rolling audits with an initial benchmarking audit and such further spot audits that are required from time to time;

Simplify the reporting requirements to an annual financial return; and annual governance return; and a simple quarterly data return for each agency; and

Support transparency by requiring agencies in receipt of government funding to place on their website details of all expenditure of government funds where the item of expenditure exceeds a certain amount. (The style of this reporting would be discussed with the family service agencies before being implemented.)

These changes would save on expenditure for both the Department and the Agencies. In particular, it would obviate the need for the costly, time-consuming FRSP online (the Department’s data collection system).

The measures would reduce reporting requirements by an estimated ninety per cent. The significant savings generated by agencies through the implementation of this measure could be retained by them for the provision of services.

Conclusion

While these remarks were directed to the Family Relationship agencies specifically, they indicate our approach to the appropriate relationship between government and civil society organisations in receipt of government funds more generally.

This article is based on an address to ACOSS in March 2011.