Reforming the Associations Incorporation Act

Certainly most members would be very aware of the details of the Incorporations Act simply because they are aware of and involved with their local community. Many times community groups have come to me, asking me for information about incorporation, the act and the model rules. I have assisted organisations to update the model rules, and there is no doubt that, over time, the rules for incorporated associations have improved to assist in their governance and to assist the democratic mechanisms which operate within these associations.

Ultimately they are small community entities which form part of a local democracy. People elect representatives in these associations, hold annual general meetings and to some extent have democratic conflicts which have to be resolved within the rules and the legislation. There is no doubt that that process has improved over time, but it is particularly important to see that we are undertaking significant improvements to the act.

The improvements to the act have come from two reviews, one of which was initiated in 2004 and which was followed up by an internal departmental review in 2007. This process led a review of the Incorporations Act being part of the Victorian Government Action Plan -- Strengthening Community Organisations. It called for an improvement to the act. As members of Parliament, we all know that often when the groups come to us it is because they have had internal tension or conflicts about certain things within the organisation and that these rules assist in resolving those conflicts.

These changes are part of what will be a two-stage process. Firstly, they will enhance the rights of members within an incorporated association, which is significant. The trend has been towards gradual improvement since the initial act. For example, the need for a mandatory dispute resolution system became obvious and was incorporated into the act. That demonstrates that there has been a gradual evolution of the act.

This legislation will implement significant improvements to the internal governance arrangements. It will improve the supervisory role of the registrar of incorporated associations. Various members have spoken about how that will work. The legislation will improve provisions for the winding up and external administration of incorporated associations, which is significant. It is fairly self-evident that these non-profit organisations have been set up for the benefit of their members. They have not been created so that their members can create profits, so there is prohibition on the distribution of surplus assets when organisations are wound up, except in certain circumstances and conditions, which are specific and defined in the legislation.

Those circumstances are very much in keeping with the idea that these associations are not for profit and exist for the benefit of communities, so we do not see them as organisations which people can join, wind up and profiteer from. That is certainly not allowed.

It is important to see this legislation as an update and simplification of the act. It provides for various mechanisms which will assist that to happen, but it is also part of a two-stage process. The second stage is about financial annual reporting requirements, including to ensure there is greater consultation, because ultimately we are dealing with community organisations. We want to work with them, and they have seen the importance of updating and improvement, so consultation around that process is occurring at the moment.

Another aspect is that this is part of a national harmonisation. As part of the commonwealth government's social inclusion agenda there is a desire to work and to ensure that the states have common legislation, particularly around the issues of annual reporting and finance across the states.

The changes in this legislation do a number of things to enhance the rights of members of incorporated associations.

We have already mentioned the merging of the role of public officer and secretary of an incorporated association. I have been a public officer of a local organisation. The Hope Street Youth Refuge is an excellent organisation which works with young people in distress. I have been an active member of the committee for a number of years, but in many cases "public officers become detached from their organisations and exist on paper. The secretary is constantly updated every year and re-elected, so I think it is very important that those positions are incorporated and merged. It makes it easier to work with the registrar, because that ensures there is a person to contact. It is a small but important reform.

There are further changes to the act to ensure that there are additional mandatory rules. Over time the model rules have become dated. Many organisations are working with rules that were written many years ago, so many mandatory rules apply regardless of whether they are written in the rules themselves.

The bill provides that members of an incorporated association must confirm termination of appointment of an auditor; so that in the case of an auditor being changed, the membership will have to know about that. It is very much about the transparency and accountability of an organisation.

There are improvements in ensuring that former members and office-holders return documents or any material they have in their possession to the incorporated organisation. Anyone who has been involved in community groups knows that as people leave their positions, they often disappear and fail to return those documents. The return of documents now becomes part of what is required.

The bill provides that members of incorporated associations can apply to the Magistrates Court to seek an order to remedy the effects of oppressive conduct. Other members have spoken about this. While we do not want to rely on the courts, there are circumstances when differences in organisations need to be resolved, and by the court system. I must say though that in most organisations, issues are largely dealt with fairly well, and I think the dispute resolution system within the model rules generally works very effectively.

As I was saying, the bill also enhances the supervisory role of the registrar, provides additional powers to the registrar to clarify the validity of lodged documents, clarifies what assessed, proposed or amended rules a registrar may accept -- the registrar may or may not accept certain rules that are put forward by organisations -- and also provides the power for the registrar to ask the Magistrates Court to appoint a temporary statutory manager if this is in the public interest. There are a small number of cases where things go off the rails, so this is necessary.

The thing about rules in a democratic organisation is that although organisations and rules generally work well, when there are major conflicts and major difficulties, you need to have effective remedies. I think that is what is being provided in the changes to this legislation. While we do not expect the registrar's powers to be used all that often, they are really important for the effective functioning of these organisations.

Like the member for Burwood, I am very proud of the various incorporated associations in my area, and I am a very active member of a number of them. They are very much the community; there is great social capital there in terms of participation and involvement of community members. We are very fortunate to have a rich tapestry of organisations encompassing different activities from sport to social to charity and from different ethnic communities and religious groups. They are very much the essence of the Brunswick electorate.