Brett Mason (Queensland, Liberal Party) Share this | Link to this | Hansard source

Australians are a generous people. Australians are also generous in their donations and bequests to charities. I am proud to be a member of a government which has made it possible and easier for Australians to be generous to charities like never before. As a consequence, by some estimates Australians give as much as $3 billion per year to charities. More broadly, the not-for-profit sector within Australia has become big business indeed. Though estimates as to its size vary, BRW magazine, which has done some excellent work on the not-for-profit sector, estimates that the sector is worth $70 billion and employs 600,000 people. The Australian Taxation Office estimates that the sector is made up of 700,000 organisations.

The generosity of Australians towards charities is with very good reason. Australian charities do a wonderful job, and the list of great work being done in the charitable sector is endless. Australia’s charitable organisations have a commendable track record of rolling up their sleeves and helping those who cannot help themselves. As such, they have justifiably earned the trust of Australians.

The difficulty with many of the figures that I have just referred to is that these are only estimates. No-one really knows how many charities there are, how many people they employ and what assets they own. Part of the problem is that many charities do not report on their activities to the public. Earlier this year BRW magazine listed what it believes are Australia’s top 200 charities. But it was thwarted in an analysis of this list because 72 of those 200 organisations do not have annual reports. I must confess that I was amazed by this. This lack of transparency threatens to erode the donating public’s trust in charities.

The importance of trust to the charitable sector is something that the Treasurer, Mr Costello, touched upon recently in a speech with the intriguing title ‘Is faith a lost cause’. The speech was made in the aftermath of a well-publicised controversy which engulfed one of Australia’s best and most respected charities, the Red Cross, over its handling of its Bali appeal for victims of the terrorist bombings. The problem as highlighted by the Treasurer is that the hard-won trust which the sector has built up is threatened by the type of inefficiency and waste that has given government a bad name. I am afraid that some in the charitable sector have not heeded the Treasurer’s advice.

Increasingly I find myself reading stories in the media about charities behaving in a manner that threatens this reservoir of trust among Australians. Stories which detail that commercial fundraising organisations or face-to-face fundraisers are asking for as much as 94 per cent of the proceeds they raise on behalf of charities pose a great danger to charities and the public’s faith in them, as do the findings of the Melbourne Herald Sun’s thorough investigation of the activities of these so-called charity muggers. Clearly, the sector must work more aggressively to improve itself and its efficiency in fundraising.

But it is unfair to place all of the blame upon charities. In 2003, during Senate estimates, I asked Mr Michael Carmody, the then Commissioner of Taxation, if the Australian Taxation Office reviews the status of a charity after that status has been granted to see whether it has been following the rules. Unfortunately, the answer was no. Effective reviews of charitable status are not regularly undertaken by the Australian Taxation Office. BRW’s Adele Ferguson put the potential consequences of this benign regulatory neglect more starkly, observing:

Without adequate supervision or transparency, the not-for-profit sector is a ticking bomb. It would take just two or three scandals to harm all the good that the other charities are doing. Even larger charities such as the Salvation Army concede that the sector needs reform ...

I have little doubt that the vast majority of organisations are doing the right thing and are doing great work. The problem is that we cannot sort out the many good not-for-profit groups from the handful of bad ones or those who are underperforming. It is my belief that this threatens the donor-charity trust relationship within the sector at large.

It is here that government needs to step in and provide clarity where confusion prevails. After all, the government does have a legitimate interest in the not-for-profit sector, as the sector is the beneficiary of a raft of taxpayer funded subsidies handed out by government. What is needed is a clear set of rules by which the charities sector must abide. At present, the not-for-profit sector is governed by a complex web of rules and regulations imposed upon it from a state and a federal level. Rules vary from state to state, and what rules there are are largely unmonitored and, sadly, rarely enforced. To put it simply, we must cut the red tape that currently exists and start providing structure and efficiency to charities law so that charities can do the same to themselves.

Attempting to fix up the charitable sector, however, is not an easy task. Any attempts are quickly subject to political demagoguery and scaremongering. When the government attempted to codify the charities law in 2003 with the seemingly innocuous charities bill, it was met with howls of protest from a vocal minority within the charities sector. Opposition to the bill centred on the misleading argument that it was a ‘gag on charities’. This depiction was enthusiastically adopted by the government’s political opponents and sections of the media who were largely ignorant of charity law in Australia or not interested in the facts at all. As the Treasurer pointed out in an opinion piece in the Australian Financial Review, though:

... if it—

the bill—

codifies the current law as laid down by precedent, how could this be a new restriction? How could this be a gag?

My suspicion is that it was not the law that was changing but that some charities had strayed from their original purpose, were operating at the edge of the law and were hoping that the law would change to fit their circumstances. This argument that any changes when mooted are simply about gagging charities, despite being incorrect, has been an effective tactic in suffocating debate. As a result, charities continue to operate within a framework of complex and conflicting rules and regulations because many in the community see necessary reform as detrimental to the charity sector. Three years later the same type of argument is still being pushed by those who would prefer to score cheap political points rather than engage in an intelligent debate about much needed regulatory reform.

On 12 July this year the member for Sydney, Ms Tanya Plibersek, wrote in the Sydney Morning Herald:

The Government threatened to introduce a bill to remove charitable status from organisations which engage in advocacy ...

Ms Plibersek needs to get her facts straight. The government did no such thing. The issue here is not one of whether charities can engage in advocacy but, rather, how much advocacy and lobbying charities might engage in while still retaining their taxpayer funded subsidies; that is the issue.

For example, I have here a photocopy of the annual report for the Wilderness Society for the year ended 30 June 2005. The Wilderness Society are supposed to be about protecting the wilderness. They have in the back of the annual report a list of their expenditure. They spent more than $10 million. I looked very, very hard for any indication of protecting the environment. I did not find any evidence of weed pulling or the planting of trees. Indeed there is no dirt under the fingernails of those who work in the Wilderness Society’s office in Hobart.

The best I could find, out of more than $10 million, was $341,000 spent on community campaigning—it is about 3½ per cent of their budget—and $295,000 spent on scientific research, which is about three per cent. But that indeed is less than the Wilderness Society spend on postage and packaging. The community campaigning I referred to is even less than they spend on travel and accommodation. The big expenses for the Wilderness Society, according to their own chart, are salaries plus salaries on-costs—which are about 45 per cent of their total budget—and legal costs and something called ‘branch subsidy’. There is not much evidence here of saving koalas or saving the rainforests. This is a shopfront for political advocacy.

If you doubt me, Mr Acting Deputy President Hutchins, and I am sure you do not, you only have to look at a media release dated 8 October 2004 from the Wilderness Society. They say:

The only chance to protect Tasmania’s great forests is if a Latham government is elected on Saturday.

Voters can help achieve this by voting 1 Green, 2 Labor and placing numbers in order of preference on their ballot papers.

The Wilderness Society will have a strong presence at booths in the seat of Bass and will be handing out how to vote cards. We will be supporting the Greens in Dixon, Deakin, Latrobe and McEwen. Print advertising will occur in Richmond and Bass.

There is no problem with charities engaging in advocacy; the question is the extent to which they do it. Looking through the accounts of the Wilderness Society in their own annual report there is so little evidence of actual engagement with the wilderness or the environment. This is a shopfront for political activity.

In sharp contrast to the contribution of the member for Sydney there is the work of Senator Murray, who has completed some outstanding work on this topic. In his discussion paper entitled One regulator, one system, one law he makes the case for a simpler, streamlined system of charities law governed by one, ruling, regulatory body. As we have come to expect from Senator Murray, his arguments are well researched and based on an intimate understanding of the issue. While I do not agree with everything that Senator Murray says in his paper, I do acknowledge that it is a substantial and thoughtful contribution to the debate. I commend that contribution to people in this chamber. Certainly we agree on one thing, Senator Murray, and that is the need for reform, accountability and transparency in the charity sector; we agree on that.

The only way to give Australians the information they need to judge the efficiency and effectiveness of charities is to clear the red tape and lay down a set of new rules which adds greater clarity and requires greater disclosure on the part of charities. The more that commentators and elected representatives deceptively turn public opinion against this type of reform, the more they jeopardise the future of Australian charities. In March this year the BRW magazine listed 10 ways to fix the not-for-profit sector. Aside from setting up an independent regulator, some of the other significant initiatives warrant thought. Near the top of that list is introducing common accounting standards to the not-for-profit sector. This would seem to be something that surely everyone might agree upon.

One suggestion I have is that the whole issue of state laws regulating fundraising be placed on the COAG agenda. There needs to be greater harmonisation among the states so that charities only have to comply with a uniform set of fundraising laws throughout the country. This would greatly ease the administrative burden of charities which fundraise in different states. Ideally, the states should consider handing these powers over to the federal government but, failing this, the harmonisation of laws is a good alternative.

As politicians we know what happens when trust is eroded: the public become sceptical and they disengage. Charities have a good reputation but trust can very easily be lost. It is vitally important that the sector makes itself more efficient and transparent, lest the sector experiences a decline in trust. There is a role here for government to step in and promote high standards within the sector and to establish a clear, transparent regulatory regime that will allow Australian charities to thrive in the 21st century.