Summary – The Commonwealth Labor Government intends to ban gag clauses in Commonwealth contracts with Not-For-Profits.            

On 19 September 2012 the Commonwealth Labor Government announced its intention to introduce legislation to ban so-called “gag” clauses in Commonwealth contracts with the Not-For-Profit sector.

The introduction of legislation to expressly ban the use of gag clauses which are considered to censor public debate is a move which will no doubt be welcomed by the Not-For-Profit sector as a critical part of the current reform process and the strengthening of the independence of the Not-For-Profit sector in Australia.

The use of gag clauses in Commonwealth contracts has long been a controversial issue since it was introduced by the Howard Government.  While in 2008 the Federal Labour Government removed gag clauses from existing contracts between the Commonwealth Government and Not-For-Profits which restricted those Not-For-Profits from engaging in policy and political debate, the contentious measure has recently been resurrected by the Newman Government in Queensland.

It is indeed a positive development to see that the current Federal Government sees the importance of officially banning these clauses from Commonwealth contracts.

The Government is making this move as a way of ensuring “ongoing positive engagement and open debate between the Federal Government and the [Not-For-Profit] sector” according to the 19 September 2012 joint Media Release from the relevant Ministers. The Labor Government sees this reform as an important change to reflect the fact that the Not-For-Profit sector is “a key partner in developing and delivering major policy reform and creating opportunities for all Australians”.

The new legislation will undoubtedly build on the current reforms to the Not-For-Profit sector, including the new Australian Charities and Not-For-Profits Commission (ACNC).  With approximately 600,000 organisations making up the Not-For-Profit sector and accounting for 8% of national employment, the reforms recognise the important role that the Not-For-Profit sector has in advising and developing public policy and advocating on behalf of the communities the sector serves.

We look forward to seeing the detail of the proposed legislation and the scope of the protections it will afford.  Hopefully the Government will move speedily to legislate this reform as part of the bundle of reforms currently before Federal Parliament.

The capacity for Not-For-Profits to speak out, contribute to policy development and advocate for their causes without being afraid of losing their funding is paramount to an effective and independent Not-For-Profit sector in Australia.  Ultimately, this reform can only assist the Not-For-Profit sector in achieving positive change in their communities by allowing their voices to be heard.