Radhakrishnan Priyanca; O'Connor GregCHARITIES AMENDMENT BILLFirst ReadingHon PRIYANCA RADHAKRISHNAN (Minister for the Community and Voluntary Sector): I present a legislative statement on the Charities Amendment Bill.SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon PRIYANCA RADHAKRISHNAN: I move That the Charities Amendment Bill be now read a first time. I nominate the Social Services and Community Committee to consider the bill.Charities are vital to our social infrastructure and our nation's wellbeing stability and health as a democracy. The charitable sector is broad and diverse. It's made up of large national charities regional community entities and local groups such as whānau hapū and iwi bodies Pacific and ethnic community organisations churches sports clubs and so many more. They provide services that keep people safe help them in times of need and support them to live with dignity and to thrive. Charities make an important contribution to our society.I also want to acknowledge that it's been a particularly challenging few years and our community and voluntary sector has acted swiftly and often adapted the way that they work to support those who needed that additional support. I want to acknowledge that and the fact that there are lessons in their response for Government.It is also a large sector. There are over 28000 registered charities. Last year it was reported that the equivalent of more than 145000 people worked full time in the charitable sector. On top of that close to 50 percent of New Zealanders volunteer either with an organisation or directly into their community. Charities also contribute to the strength of our economy having spent almost $20 billion last year.This is also the sector where I spent most of my working life prior to entering Parliament. So it's an absolute privilege to read the Charities Amendment Bill for the first time.The bill amends the Charities Act 2005 which is a key piece of legislation for the charitable sector and it will make a meaningful difference to over 28000 registered charities across Aotearoa New Zealand. Before I speak a little bit more about that and explain the changes in the bill I'd like to extend some thanks and outline the history of this bill.In May 2018 Cabinet agreed to a review to modernise the Charities Act. I want to acknowledge my predecessors who started this work. Firstly the Hon Peeni Henare in 2018 and then the Hon Poto Williams. I thank them both for building the foundations of this mahi.Public consultation on a range of issues then occurred in 2019. However work was put on pause because of the COVID-19 pandemic and I picked it back up when I became the Minister in late-2020. This piece of legislation has been a long time coming.I'd also like to mihi to the sector for their input and passionate engagement with this work. To everyone who attended consultation meetings made submissions and engaged with my officials I extend my heartfelt thanks and also to officials who have worked on this for many years. Views from the sector have been fundamental to the development of this bill and I thank them for the time and effort that they've taken to share their experience and their expertise.As I mentioned the Charities Act is a key piece of legislation for the sector. It was established back in 2005 to provide a voluntary registration reporting and monitoring regime to ensure that entities receiving tax benefits continue to carry out charitable purpose. The Act has been in place for almost 20 years and there have been some pretty important changes over that period of time. In 2012 the Charities Commission was disestablished and an independent charities registration board was given the responsibility for registering and deregistering charities. The chief executive of the Department of Internal Affairs was also empowered with certain functions mainly around education and support for charities and monitoring compliance with the Act. In 2015 new requirements were introduced for financial reporting for not-for-profit organisations which meant that registered charities had to report to accounting standards when filing their annual return. Now is a good time to make sure that legislative settings are still fit for purpose. An Act that is working well for charities the regulator and the public will help ensure that the charitable sector is effective and enjoys the trust and confidence of the public. Charities do important work and they should be able to focus on this work but equally they receive benefits from being registered and with that comes an obligation to be transparent. Transparency builds trust and the public need to be able to trust that charities are responsible with their tax-free income.The bill keeps the current registration reporting and monitoring framework of the Act intact because these fundamental aspects are sound. Instead the bill makes practical improvements to reporting requirements for small charities the appeals framework governance requirements and the regulatory decision-making and compliance tools. It will ensure that legal settings are up to date fit for purpose and will support charities to get on with their important work while also safeguarding public trust and confidence in the sector.One of the most significant changes of this bill is introducing a new appeals body for charities. Currently if charities want to appeal a decision of the Charities Registration Board they have to go to the High Court. As you can imagine this can be costly time-consuming and difficult particularly for small charities that are often run by volunteers and with limited financial resources. It's important that our system doesn't just work for those who have the resources to navigate it. We need to ensure that the services that are available and access to them is equitable. We need to remove the barriers to justice for charities and so the bill empowers the existing Taxation Review Authority to hear Charities Act appeals. The authority will be faster less formal and cheaper than the High Court. Charities can represent themselves which reduces legal costs and they will have two months to lodge an appeal rather than the current 20 working days.Now you may be wondering: Why the Taxation Review Authority?" Tax and charities have long been linked. Prior to the enactment of the Charities Act charitable status was determined by Inland Revenue. The bill gives the authority new jurisdiction and it will be known as the Taxation and Charities Review Authority when hearing charities appeals funding has been made available through Budget 2022 to enable that change.The bill also allows more decisions to be appealed as part of the work to improve access to justice. Rather than just limiting it to Charities Registration Board decisions some of the more significant decisions of the CE can also be appealed.But access to justice isn't just about appealing the final decision; it's also about the decision-making process. The bill presents an opportunity to promote best-practice decision-making by the board and the chief executive. It requires certain decisions to be published for transparency and allows charities to be heard in person to state their case before a final decision is made.Of course charities wouldn't be much without the people who run them. The bill proposes several practical changes to clarify the roles and responsibilities of officers and promote good governance. Sometimes charities get off track and need education and assistance to comply with the Act. However when education and assistance has been exhausted and there is problematic behaviour within the charity the compliance and enforcement tools in the Act become important. The bill improves compliance tools by making it clear what constitutes problem behaviour and empowers the Charities Registration Board to disqualify an officer.Finally the bill enables very small charities to be exempt from reporting to the current financial accounting standards. The annual reporting obligations are a key feature of the Act and are important for achieving the Act's purpose. The reports are published on the public register. Complying with the reporting standards can be difficult for our smallest charities. The standards set by the External Reporting Board—or XRB—requires pages of financial statements. Charities often need the help of an accountant to complete them. The XRB is aware of the compliance burden and are finishing up consultation on a reduced standard for small not-for-profit entities and that should make reporting easier and less burdensome. However if the intended outcome of this work is not achieved or the standards change over time this bill provides a regulatory backstop to reduce the compliance burden for very small charities. To maintain transparency exempted charities will still need to report basic information about their finances and activities in a simple annual return form. To sum up this bill is simply about making things easier for charities and maintaining public support for charities. It's about making the Charities Act an accessible transparent and fit for purpose regulatory framework that avoids unnecessary compliance burden and can effectively target problem behaviour when it needs to. It means freeing up resources so charities can get on with the mahi that they're passionate about: delivering social services connecting communities to support and resources building resilience and contributing to social cohesion. I urge everyone who has an interest in supporting the sector to get involved in the select committee process. I commend this bill to the House. Thank you.DEPUTY SPEAKER: The question is that the motion be agreed to."