If you're searching for a textbook case of the flaws inherent in a federal system, look no further than the labyrinthine world of Australia's not-for-profit and charity sector.
This vast ecosystem, comprising an estimated 600,000 organisations, is ensnared in a confusing patchwork of Commonwealth and state-based laws that stifle efficiency and burden volunteers with pointless bureaucracy.
A Kaleidoscope of Conflicting Legislation
The core of the problem lies in the sector's fragmented structure. Australian community groups exist in several legal forms, each falling under different regulatory umbrellas. Some are incorporated associations, regulated individually by each state and territory under their own distinct Associations Acts.
Others are companies limited by guarantee, overseen by the Commonwealth. A significant portion, often small, ad-hoc groups, are unincorporated associations, operating largely outside any formal regulatory framework.
This creates absurd scenarios. For an association operating nationally, simply having a website accessible in another state can be construed as "conducting business" there. This could theoretically force a local vintage car club to comply with eight different sets of state-based reporting requirements.
Sticky Plaster Solutions and Persistent Problems
Governments have attempted fixes, but these often add new layers of complexity. The Registered Australian Body (RAB) system allows a group to register federally and operate across state lines, reporting only to its home state regulator.
However, as Denis Moriarty, group managing director of OurCommunity.com.au, points out, most small groups are unaware of this option. Furthermore, it creates a disconnect where a group in Queensland answers to regulators in Western Australia who aren't present to oversee its activities.
The establishment of the Australian Charities and Not-for-profits Commission (ACNC) in 2012 was a major step, but its title hints at the ongoing issue. Charities, which receive tax concessions, fall under Commonwealth power and report solely to the ACNC.
But the multitude of other not-for-profits – the associations and unincorporated bodies – do not. As Moriarty wryly notes, the ACNC is effectively the ACC (Australian Charities Commission), because the states have retained control over the 'N's – the non-charity not-for-profits.
A Clear Solution Trapped by Political Inertia
The path to reform is well-trodden in other policy areas. Historically, Australian governments have resolved such impasses in one of two ways: by having states refer powers to the Commonwealth (as with income tax) or by achieving uniform state-based legislation (as seen in industrial relations).
These solutions, however, required immense political capital and were driven by central, unavoidable government functions. For the not-for-profit sector, while the problems and solutions are obvious and uncontroversial, the issue languishes. All states agree the system is broken, but it's never a top-tier priority.
There is no dedicated agency to facilitate the necessary cross-jurisdictional cooperation. Drafting a single, national Associations Act for states to adopt would be possible, but no one is tasked with doing it. Consequently, individual state attempts to tweak their laws often worsen the overall confusion.
This regulatory maze obscures the bigger picture, making it difficult to envision rational, 21st-century reforms for the sector. Moriarty warns that this constitutional and practical gridlock risks pushing more citizens away from communal action in frustration.
The call is for a reboot – for brave ministers and public servants to demand an end to the madness. Yet, as of December 2025, the prognosis is bleak. The era of disruptors appears over, replaced by a status quo where, in Moriarty's view, "the lazy blockers rule the roost." For Australia's vital community sector, it remains business as usual within a dog's breakfast of regulation.
