LEON DELANEY:
Whenever we make a donation to charity, we do so with a high degree of trust and confidence that that money will go where it's intended. We have a tendency to trust charitable organisations here in Australia, but who maintains that trust? Who makes sure that we can have that confidence? Well, it's an organisation called the Australian Charities and Not‑for‑profits Commission, and the federal government is proposing to introduce legislation to improve transparency around the charity sector.
Joining me now is the Assistant Minister for Competition, Charities and Treasury and also Assistant Minister for Employment, Andrew Leigh. Good afternoon.
ANDREW LEIGH:
Good afternoon, Leon. Great to be with you.
DELANEY:
Now, charities, we do trust our charities, but the main reason we can is because of good regulation. Why is this change needed?
LEIGH:
Well, Leon right now, the situation is the charities commission is basically muzzled when it comes to telling us what investigations it's doing. Now, often that's important for due process, that it doesn't disclose the investigations on foot until it finds evidence of wrongdoing. But sometimes it can actually be useful to set the public's mind at rest that the watchdog is on the job. So, we're changing the law to allow the charities commission in exceptional circumstances to disclose that an investigation is on foot. We think that'll improve public confidence in the charity sector and it puts the charities commission on par with its counterparts in other countries and with similar agencies in Australia.
DELANEY:
Well, as a general principle, openness and transparency does help to promote integrity and trust. So, why did these secrecy provisions exist in the first place?
LEIGH:
Partly, it's workload. So, if you've got to make a decision about whether you go public with certain claims, then of course you've got to go through the lawyers and make sure that you've got your i's dotted and your t's crossed. Partly it's also just a recognition that early on they didn't want to put that burden on the charities commission. But now that it's had its 10th birthday, it's growing up, it's maturing into the sort of agency that is able to talk to the public about some of those investigations. Some of those high profile investigations have made their way into the media, which has left the charities commission in a difficult position, not wanting to say too much, before its investigations are concluded.
DELANEY:
So, at the present, if something does find its way into the public discourse, the commission isn't necessarily able to comment under the existing rules.
LEIGH:
Yeah, you’ve hit the nail on the head. So, this is about giving the commission just that little bit more flexibility, which, of course means they need a little bit more legal support, hence the additional funding that you mentioned in your intro.
DELANEY:
Okay, so the additional funding is $2.9 million. And that's going to do what, exactly?
LEIGH:
Well, it'll ensure that they can do the legal checks and go through the processes to decide if they're going to make a public disclosure. Some of these investigations are very complicated, Leon, and if you add to that the need to engage with the public, then that makes things more expensive. The charities commission is responsible for looking after some 60,000 charities and it's a relatively lean entity right now. Very well respected, though, across the sector and headed by Sue Woodward, who's had a long and distinguished career in the charity sector.
DELANEY:
Yes, when we think of charities, we tend to think of the big, well‑respected organisations, but obviously there are lots and lots. You said 60,000 charitable organisations and I guess some of them might be a little bit more opaque than others. Will this change that?
LEIGH:
It certainly creates the possibility, if a charity is not being open with the regulator, for the regulator to speak out about that. But as you say, Leon, most charities are doing the right thing, whether that's large, respected household names or just new startup charities or smaller charities, little mum and dad operations that are just continuing to do good works in the community.
DELANEY:
Now, also, you've once again come out swinging on the issue of non‑compete clauses. We spoke about that a couple of weeks ago, but you've published an opinion piece in the press today about these non‑competition clauses. Why have you got such a bee in your bonnet?
LEIGH:
Well, they are binding too many workers ‑ two out of five gig economy workers are bound by non‑compete clauses. In the community sector it’s 26 per cent of workers, and 14 per cent of clerical workers and labourers. Across the board one in five of us have a non‑compete clause that makes it harder for us to switch to a better paying job, and I'm concerned that that is potentially slowing down wage growth and productivity growth. I did also want to make the point in the opinion piece, Leon, that the place which has spawned more creative firms than any other on the planet, Silicon Valley, is located in a state that bans non‑compete clauses. And indeed, some people think that it's that very ban on non‑competes that's allowed smart engineers to leave one Silicon Valley firm, start up another and add to the productive capacity of the US economy.
DELANEY:
Why is it that these clauses have become so prevalent in the employment agreements of just ordinary, everyday workers? Because originally they were designed for top level executives and creatives who might, of course, have a long‑term contract and there might be a situation where the contract is terminated, but they get paid out and therefore they're required not to work for anybody else during that period. For an ordinary, everyday worker, once you've been terminated, you're not on the payroll anymore. What gives the company any right whatsoever to determine what you can and cannot do?
LEIGH:
Well, it goes back to that contract you signed, Leon. And to answer your question as to why there's so many of them in there, I think workers don't negotiate over a non‑compete because they feel a little bit like somebody negotiating a prenup on the eve of their wedding. It's just not the done thing to do to be talking about breaking up when you're tying the knot. So workers end up with these non‑compete clauses because employers just throw them into their standard form agreements. There's cascading non‑competes that say you're banned from working in competing firms which are 25, 50, 100 kilometers away for three, six, nine or 12 months. So then the employer covers the field. If the tighter restraint is found invalid by a court, the broader restraint will often be valid. It ends up quashing the ability of employees to move around. Mobility is not just good for the worker, it’s good for wage growth, and also good for the economy. If you're a startup firm, you really need new workers, and if the workers are bound by noncompetes, it'll be harder to get a new business going.
DELANEY:
Yeah, and I know we spoke last time about how this negatively impacts on the economy and on innovation and so forth, but I'm still kind of fascinated by the whole legality of this. You've said, quite rightly, that it's a contract and therefore it's legally binding. But I'd be keen to see somebody argue in court that it was a contract signed under duress because an unemployed worker is desperate to get a job and you'll sign anything to get that employment, wouldn't you?
LEIGH:
Yeah, that's right. And the funny thing is, Leon, you may well be right. When employees take their boss to court over a non‑compete, they win a lot of the time. But most employees aren't going to take a former boss to court over this, they're just going to wait out the time. They'll do what's known colloquially as 'gardening leave'; take that break in between jobs rather than spend the day ‑ go through the expense and the time and the headache of taking their former boss to court. The trouble is, now non‑competes are binding gardeners and yoga instructors and early childhood workers and the rest. They’re replete across the economy in sectors where I don't think we ever imagined there would be secret information that could somehow be protected.
DELANEY:
Now, you've been arguing this cause for a little while now. What are you going to do about it? Are you going to introduce legislation to outlaw these clauses?
LEIGH:
We're engaging in conversation with the community, with unions and also with employer groups to make sure we understand where everyone's coming from. The Albanese government has, as one of its hallmarks, consultations, so we won't be jumping to a conclusion on this. But certainly the more I look at the evidence, the more concerned I am about non‑compete clauses.
DELANEY:
Well, you know, it's just a simple no brainer, isn't it? I mean, you can't tell me what to do after you no longer employ me. That's as simple as that and I will die on that hill.
LEIGH:
That's what they do in California. In the place that has spawned more startups than anywhere on the planet, you can't have a non‑compete agreement.
DELANEY:
Indeed. Thanks very much for your time today.
LEIGH:
Always a pleasure, Leon. Thank you.
DELANEY:
Thank you. Dr Andrew Leigh, Assistant Minister for Competition Charities and Treasury, Assistant Minister for Employment, and, of course, our local member for the seat of Fenner on 2CC.