Ms Ruston said the government was “looking at every option … and if that means that we have to take a big stick approach to it, that’s what we’ll be doing”.
However the government will not make a unilateral decision on charities and churches, but will talk to the states and territories to make sure there are no unintended consequences of strong action.
The scheme was set up two years ago after the five-year royal commission into institutional responses to child sexual abuse revealed 4000 institutions faced allegations of abuse. But the government was left naming and shaming organisations to get them to sign up last year after a joint select committee was set up to oversee the process.
The federal government has now responded to the committee’s 29 recommendations, agreeing to 11 and supporting three in principle.
The government “noted” the suggestion to penalise groups that fail to join the scheme. If this is agreed to in future it could see schools, churches, missions, sports clubs and orphanages hit with measures like the suspension of tax concessions and charitable status should they not sign up.
The Catholic Church, Anglican Church, Uniting Church, Salvation Army, YMCA and Scouts Australia have signed up, while other organisations like Swimming Australia have come under pressure to join the scheme.
Ms Ruston said the inquiry had revealed a clear need to improve how the scheme interacted with survivors and none of the changes had been rejected with some requiring other approvals before they could be accepted.
She said taking away charitable status was “absolutely” reasonable and something the government was considering, adding state and territory governments were also looking at ways to pressure organisations to sign up. This could include removing state funding.
Fewer than 1000 people have received compensation under the scheme and about 700 are on hold, she said, because there is not an organisation signed up they can be matched with.