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Nick Xenophon 2011 National Conference Speech FINAL Perspectives of the associations sector from the Australian Senate, Senator Nick Xenophon, Independent Senator for South Australia Presentation to Associations Forum National Conference, Brisbane Exhibition and Convention Centre, Wednesday 27 July, 2011 Thank you for inviting me to speak to you today. At the outset, I’d like to say how pleased I am to be invited to talk today at the Associations Forum National Conference. Being an Independent politician I'm not really used to the sorts of issues many of you would face. I have my party room meetings with myself in the morning while I am shaving. Strangely, I don't always agree with me. I once even cut myself. It was, in the language of political parties, literally a spill. I have been asked to provide my perspectives on the Not for Profit sector. Some of you may know that I have taken a keen interest in this area in the last few years and I have become convinced Australia has a desperate need for a Charities Commission and a public benefit test to be applied to all charities and religions. I came to this issue by accident. Three years ago, I was doing a fairly routine interview with 'Today Tonight' journalist Bryan Seymour – it was about poker machines. At the end of the interview, I was chatting to Bryan about other issues. I mentioned how, while I was waiting to take my seat in the Senate, I did a talkback radio gig, and I had interviewed author David Marr about a piece he’d written on Scientology and their tax exempt status. I said I had some concerns about how these tax exemptions were decided upon, and which groups were able to access them under current regulations in Australia. 1 A couple of weeks later, Bryan interviewed me on the issue, and a week or so after, the story went to air. Almost instantly, I was flooded with emails from people who said their lives had been affected by - most notably - the Church of Scientology, as well as some other groups. The stories were horrendous. The letters received by me, which were written by former followers in Australia, contained extensive and serious allegations of abuses that are truly shocking - abuses against them and their families, and abuses they say they were coerced into committing. There were allegations of false imprisonment, coerced abortions and embezzlement of church funds; of physical violence and intimidation, blackmail and the widespread and deliberate abuse of information obtained by the organisation. These victims of Scientology claimed it was an abusive, manipulative organisation. It didn’t sound like an organisation that should be receiving support from the Australian taxpayer in the form of tax exemptions because they claimed to be a religion. It’s hard to imagine any Government knowingly offering financial support to an organisation facing those kinds of allegations. And ‘knowingly’ is where we hit a snag. Because the fact is, we don’t know. We don’t know where these tax breaks are going. We don’t know what they’re being used for. We don’t even know how much we’re effectively subsidising them through generous tax breaks. Incredibly estimates range from one to eight billion dollars a year. That’s incredible, both because of the amounts involved, and the discrepancy in the estimated range. I for one think we should be finding out. And multiple past inquiries held by various organisations, from Parliamentary committees to the Productivity Commission and the Henry Tax Review, think so too. But for a long, long time Governments refused to act. 2 It should be said there was push-back from more mainstream religions who complained about the cost of compliance. Some questioned whether this was an attack on the 'Freedom of Religion.' It wasn't, and isn't, but for many years those arguments were persuasive enough for successive Australian Governments. Most recently, both the Henry Review and the Senate Economics Committee inquiry into my Private Senator’s Bill for a public benefit test for charities and religions to obtain tax exempt status have both recommended the establishment of a dedicated commission to oversee the not for profit sector. Internationally, the ideas for a public benefit test and a regulator for the sector are nothing new. Similar tests already exist in the UK and New Zealand, where organisations are required to show that they are acting, on balance, in the public interest before receiving benefits as religions or charities. Both countries also have regulators in place to oversee the sector and provide information to charities, religions and not for profits, as well as informing on Government policy. In a foreword to a document explaining the test on the UK Charities Commission website, the Chief Executive and Chair write: “Perhaps more than any other sector of society, charities can command public trust. Charities are fortunate to be in this position and we, as their regulator, have a responsibility to ensure that this trust is maintained and even, if possible, increased. It is important for civil society that this trust is not taken for granted, but is actively valued, earned and continually renewed.” That is a pretty solid benchmark. By offering tax exemptions on the part of the Government and on behalf of tax- payers we are effectively saying ‘we acknowledge the work you do, and support you in your work’. But the way things stand right now, we don’t necessarily know exactly what that work is, other than what websites and glossy brochures tell us. When you’re looking at giving a personal donation to a charity, you can look at those websites and brochures, look at their annual reports and talk to people face to face before deciding to make a donation. And if something doesn’t look quite right, you have the choice not to donate. 3 But when the Government is effectively making donations on our behalf through tax exemptions, we just have to take the organisation’s word that they’re working in the public good. Now I am certainly not saying that all religions and charities out there are rorting the system. Far from it. The overwhelming majority provide vitally important services to the community, often for little more than the satisfaction of doing a good deed. Of course, the flip side of not having solid figures on the value of tax concessions to the sector is that we don’t know how much charities and not for profits are worth to our economy. Imagine if governments and businesses had to foot the bill for everything charities do. Can you imagine how many public servants, Government committees, scoping studies and external reviews would be required to set up… a soup kitchen. During the Economics Committee inquiry, there was a lot of discussion about how ‘public benefit’ would be defined, and how it would be weighed against any detriment or harm. The jurisdictions I mentioned earlier – England and Wales, Scotland, New Zealand – each deal with this in slightly different ways. Essentially, each definition takes away the common law assumption that charitable and religious organisations are benefitting the public until proven otherwise, and instead requires organisations to weigh the benefits they provide against any possible harms or detriment. So how do we define ‘public good’? And, more importantly, how do we define ‘harm’? To define charitable purposes, and therefore a ‘benefit’, we need to go back to England’s Charitable Purposes Act 1601 – no one loves a good, solid precedent like lawyers, especially if it comes with cobwebs. This four hundred year old Act defines the following purposes as charitable: “The relief of the aged, impotent and poor people; the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools and scholars in universities, the repair of bridges, ports, havens, causeways, churches, sea-banks and highways; the education and preferment of orphans; the relief, stock or maintenance of houses of correction; the marriages of poor maids, the supportation, aid and help 4 of young tradesmen, handicraftsmen and persons decayed; the relief or redemption of prisoners or captives; and the aid or ease of nay poor inhabitants concerning payment of fifteens, setting out of soldiers and other taxes.” Give or take a few poor maids and bridge repairs, we use many of the same criteria today. (And not even Google could tell me what “payment of fifteens” were.) So how does ‘charitable purpose’ fit in with ‘public benefit’? In the UK, where a statutory, codified public benefit test has been in place since 2006, the Charities Commission outlines two principles of public benefit: 1. There must be an identifiable benefit or benefits and 2. The benefit must also be to the public, or a section of the public. The Commission then breaks these down into three sub-principles: Firstly, it must be clear what the benefits are. Secondly, the benefits must be related to the aims. And thirdly, benefits must be balanced against any detriment or harm. So, an organisation must have a charitable purpose, and in pursuing that purpose, must provide a benefit to the public that outweighs any harm it may cause. One example the Commission uses is that of an organisation that provides transport for people with disabilities. While the vehicles used by this organisation might add to traffic congestion and pollution, the clear benefit to their clients obviously outweighs the impact of a few extra vehicles on the road. But what happens when we start to look at serious types of harm? Let’s return to the example of Scientology. Scientology leaders say that their organisation provides benefits through spiritual support to its members, as well as through charitable works in the community.
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