Bradford Sue: Charities Bill — First Reading 
Bradford Sue: Charities Bill — First Reading 
[Volume:616;Page:12113] 
SUE BRADFORD (Green) 
: 
 On the surface of it the Charities Bill is unexceptional legislation put together in response to long-held concerns by people in both the State and private sectors as well as in the voluntary sector that the existing law dealing with the registering of charities for taxation purposes is out of date and inadequate. The overall purpose of the bill is to establish a Charities Commission for the first time in this country which will register organisations for tax exemption purposes and monitor the financial returns and activities of groups. The bill has been a long time in gestation finally emerging after a 2-year review and consultation process and a drafting period first with Treasury then with the Ministry of Economic Development. One would have hoped that after all that time and work they would have got it right but I fear that that is not the case. 
First of all the definition of what constitutes a charity remains almost unchanged as my colleague Mr Jones said from that contained in the archaic 1908 tax legislation on which this bill is based—which in turn is based on very very old law from England. I take one example from clause 4 “Interpretation”. In subclause (2) “charitable purpose” is still principally defined as that which relates to “the relief of poverty the advancement of education or religion”—words that will be familiar to all the poor souls who have struggled to explain to the Inland Revenue Department why their trust or incorporated society should receive charitable status at any point in the last hundred years or so. Surely in preparing this bill the Government could have done more to modernise and update the wording in a political social economic and cultural climate that has changed significantly since 1908—especially when there is a lot of academic and political work happening in this area not only in New Zealand but also all around the world on which the drafters could have drawn for inspiration. 
Secondly the Green Party is concerned that as the bill is written there is a real danger that if any community group carries out any kind of political advocacy it will not be eligible for charitable status. That is highlighted in clause 26(1)(b) which states that an organisation can be removed from the register of charitable organisations if it “(i) has any purpose that is not a charitable purpose; or (ii) is not being maintained exclusively for charitable purposes;”. Because the bill as drafted relies so heavily on the existing legislation and on the history of how “charitable status” has been defined and interpreted by the Inland Revenue Department up to now which excludes political advocacy I am therefore very wary that if this legislation was passed as it stands it would open the way for Government to control and possibly kill off groups that carry out any kind of political advocacy lobbying or campaigning as part of their functions. I welcome the understanding of the National Party on that point. However its members themselves used that sort of thing against political groups I might say during the early 1990s. 
That danger becomes particularly apparent in an environment like the one we are in right now with things like the threats to the funding of groups that carry out any kind of health advocacy the Auditor-General’s report last year into the funding of groups associated with Donna Awatere Huata the current National and ACT attacks on many community sector initiatives and individuals and the Government’s response which includes for example the clamping down on Community Employment Group funding announced today. Most non-governmental organisations do have an advocacy role whether it is making submissions to select committees or local councils on relevant legislation or bylaws putting out newsletters that critique Government in their particular policy areas making statements in the local media or taking part in a host of other activities. I would contend that those and many similar functions are an absolutely valid part of community sector work and that the clauses that open the way for groups to have their charitable status revoked for carrying out a non-charitable function must be changed and clarified during the select committee process so that they cannot be used as a method of political control of the voluntary sector. 
Some people will say that what I am on about here does not matter because groups do not have to register for charitable status—it is entirely up to them. They can be free of all the controls this bill will bring if they simply choose not to apply to become a charitable entity. Although that sounds fair enough underneath there lies a further threat. I am really concerned that once the Charities Commission is up and running and all groups involved have their registration numbers—which they must by the way display on every written communication they send to anyone ever—donor organisations will use those registrations as a shortcut to decide who will get funding and who will not. I know that funders in this country are always under pressure to take shortcuts to decide which groups they will support and who is deserving and who is not for their particular purposes—especially in a climate where groups are chronically underfunded and there are usually far more applications than even the most well-intentioned of donors can ever meet. My worry is that once this bill is in force donors whether they are Government local government private philanthropists or community trusts will almost automatically exclude groups that do not have registration from eligibility for funding. Groups that do not fit the criteria under this bill or who want to maintain their independence from Government and do not wish to register could miss out altogether from most sources of funding and therefore in quite short order die. 
Thus I believe that the bill has much wider implications than might be immediately apparent. I hope every non-governmental organisation in the country will be considering the issues carefully and making submissions to the select committee over the next couple of months. I think it is critical that even those groups that might think they will never apply for charitable status give consideration to making submissions because of the possible implications of this legislation for them—which are substantial and threatening. 
For the majority of groups which will want charitable status under the new regime there is a further issue to consider. It now appears that key reporting requirements under the charities legislation will actually be introduced by regulation after the bill is passed. That means that neither political parties considering the bill in the select committee and in the House nor community groups making submissions will know what level of compliance will be required. I am beginning to wonder whether the Government is actually using this bill as a kind of Trojan horse to bring in a very high level of financial and organisational accountability with associated extra compliance costs to be dragged out of groups that are mostly substantially underfunded anyway and many of which are struggling right now for financial survival. I commend the National members for understanding this matter. It will be a perverse outcome if with the passage of this bill Labour introduces a compliance regime that is so expensive that it will further undermine the ability of groups to survive. 
That will be exacerbated by the ongoing attitude of most funders that they will not support infrastructure—only frontline services or projects—and that organisations should as a rule of thumb meet a substantial percentage of such costs by external fund-raising which again takes time away from the real work of the group. Ironically on top of this new reporting requirements could well compel groups to reveal more than they do at present about what proportion of the funds they raise themselves from the public are used for administration and infrastructure costs thereby risking in some cases even more difficulty in attracting external public support. 
I also question to what extent the compliance measures to be introduced in the bill and by regulation will be geared to playing a controlling role in the actual day-to-day running of organisations. There are already measures in the bill that allow the Charities Commission to examine and inquire into the activities and proposed activities of any group into any of the people involved into the management and administration of the group into the outcomes achieved and of course into its use of income and property. On top of this clause 87 says that the Minister may direct the commission to perform any additional function consistent with its broad objectives. People less paranoid than me may not be worried by this but I do urge awareness of the sensitive environment in which groups are currently operating and recollection of the traditional hostility of Governments towards the political advocacy functions of the voluntary sector. 
The way that this bill has been written and devised overall appears to fly in the face of a lot of the good work that has been done over the last 4 years through the Community-Government Relationship Steering Group the  
He Waka Kotuia 
 report and other processes that are still happening around the country. The bill does not reflect a particularly sound understanding of the principles that have been brought out through those processes or of how the sector works. It appears that the bill arises from Treasury and the Ministry of Economic Development not from the Ministry of Social Development which has actually been that part of Government engaged in the cooperative processes initiated soon after the 1999 election. I may be wrong but I think that perhaps if the Ministry of Social Development had written this bill it might have been a more creative responsive and courageous piece of legislation. 
However it is of course not too late to turn this bill round. The Green Party will be supporting the Charities Bill through at least its first reading in the hope that during the select committee process we will be able to work with other parties to improve the legislation in a whole range of ways. We are keen to work with community sector organisations to ensure that this bill ends up having a positive rather than a negative impact on a sector that has been incredibly politically battered over the last 14 years and does not need a Labour Government taking further steps to colonise and control what is left.