Tizard Judith: Charities Bill — Second Reading Instruction to Committee In Committee Third Reading 
Tizard Judith: Charities Bill — Second Reading Instruction to Committee In Committee Third Reading 
[Volume:625;Page:19940] 
Hon JUDITH TIZARD (Associate Minister of Commerce) 
: 
 I move  
That the Charities Bill be now read a second time 
. The Charities Bill will establish a new Crown entity the Charities Commission. One of the commission’s functions will be to administer a registration reporting and monitoring system for charitable organisations. The intent behind establishing the commission is twofold: firstly to improve public trust and confidence in charitable organisations and secondly to obtain better information about the size and scope of the charitable sector. 
A number of changes have been made to the bill by the Social Services Committee and I will shortly outline the scope and intent of those changes. In addition the Ministry of Economic Development wrote to approximately 25 umbrella organisations and other entities to seek their views on the workability of the bill. On the whole the feedback from those groups was positive. In addition to the changes recommended by the select committee the Government reaffirmed its commitment to the charitable sector by announcing in October last year that it would commit $9.8 million in funding to the commission. That means for example that registration with the commission will be free for all organisations. 
The select committee has recommended that the bill provide for the commission to be established as an autonomous Crown entity. That removes the requirement for the commission to establish and maintain a separate register of approved donee organisations. That function will continue to be undertaken by the Inland Revenue Department. Operationally however most charities will deal with one agency. With the agreement of the donee organisation the commission will have the ability to provide the Inland Revenue Department with any information contained in the public register including information that has been withheld from the publicly accessible register for public interest reasons. The Inland Revenue Department will be able to assess whether a registering charitable organisation also qualifies to be recognised as a donee. The notable exception will be charities with significant international operations that also want to be donee organisations. They will need to work with the Inland Revenue Department or obtain parliamentary approval to be added to the list of recognised overseas donee organisations contained in the Income Tax Act 2004 as is the current process. 
The select committee has recommended significant changes to the section of the bill outlining the commission’s functions. Many submitters expressed a concern that the commission’s functions were too focused on its registration and monitoring role. To make the bill’s intent clearer the commission’s functions are now explicitly set out as providing education and assistance on matters of good governance and management to charitable organisations. The bill gives the commission the ability to provide policy advice directly to the Government about issues faced by the charitable sector. For example the commission may want to make recommendations to the Government about whether a new type of corporate legal entity for charitable organisations needs to be developed. Under the bill as it has been reported back the commission will monitor and promote compliance with the legislation. The bill also now gives the commission express responsibility for taking prosecutions for offences against the legislation in appropriate circumstances. 
In many of the submissions received concern was expressed about the definition of a charitable purpose used in the bill. The test used in the bill comes from case law and the select committee has not recommended that that test should be changed. What it has recommended is that the bill codify for clarity reasons the common law on non-charitable incidental purposes. Throughout the select committee process the single biggest concern raised in relation to the charitable purpose test was the position of advocacy and whether organisations that undertook advocacy work would continue to be classified as charitable and be able to register. The committee has recommended changes that make it clear that the commission will not prevent an organisation from being able to register if it engages in advocacy as a way to support and undertake its main charitable purpose. 
The bill has been amended to increase flexibility for registration. A national organisation can now register on behalf of a number of entities where those entities are affiliated or closely related to it. That will enable charities with complex organisational structures to register once if they so choose. The commission will also have the power to grant a waiver so that registered organisations are able to comply with their regulatory obligations and duties in a way that best suits the organisation concerned. For example a parent organisation with 29 branches around New Zealand will be able to register and each of its branches will be able to use the same registration number and will generally need to file one annual return form that covers the organisation’s entire operations. Where that is not possible or practical an organisation can request that the commission allow each of the 29 branches to file its own return. I also propose by way of a Supplementary Order Paper to extend the commission’s power to grant a waiver to cover the registration requirements for charitable entities. The commission could then allow an umbrella entity to file a single set of rules on behalf of the group. 
I wish to thank the members of the select committee for their work in considering this bill and I acknowledge the invaluable contribution of the many hundreds of people and organisations that took the time to make submissions and present oral evidence on the bill. During the Committee of the whole House I intend to table a Supplementary Order Paper that will make the following changes to the bill: consequential changes due to the enactment of the Crown Entities Act of 2004 minor changes aimed at improving the workability of the bill and three other changes. The first empowers the commission where it deregisters a charitable entity to specify a period of time within which that entity may not reregister. The second of those changes empowers the commission when it does deregister a charitable entity to also disqualify an officer of that entity from being an officer of a charitable entity for a period not exceeding 5 years. Those provisions are also consistent with the provisions of the Companies Act. The third change removes from the bill provisions that exempted the commission from the laws of defamation where it issues notices and publishes details of possible breaches of the bill and other serious wrongdoings. I consider that such provisions are inconsistent with the broad Government policy in the Crown Entities Act. Also there are no special reasons why the commission should be treated differently from other Crown entities. 
I commend the bill to the House.