Charities Bill

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.

I was a member of the Social Services Committee who looked at this bill, and I heard a tremendous number of submissions from a lot of people who came along to give their time to talk about what a silly bill it was. But there was a good thing about that committee that Georgina Beyer chaired, and she chaired it very well, too, I should say—I like to give credit where it is due; I do not often get the chance to give credit in this place. [Interruption] Mr Hide asked me to say nice things, and I tell Mr Hide that I am going to do that.

One thing that happened was that the Labour Party members on the select committee were very shocked that everybody who came along to submit on this bill submitted against it. Those people submitted against it for the very reason that this bill, which is called the Charities Bill, is not particularly charitable. It is all about trying to remedy a wrong that does not actually exist. The Government, of course, thinks that the great wrong is that there is not enough money going into Government coffers, or enough people being employed to regulate the ordinary, everyday lives of people who volunteer their time and money—and, many times, their family’s work—to be able to help people in need.

We know there are lots and lots of charities in this country. There seem to be thousands of them. Most charities are not huge organisations. Many charities are actually very small organisations, and the provisions for charitable purposes have been determined by the Inland Revenue Department ever since there has been an Inland Revenue Department. There cannot be a more powerful body in this country than the Inland Revenue Department when it comes to having powers to investigate, look at, and take money out of people’s bank accounts, wages, and almost everything else.

Yet this Government, which is utterly driven by a politically correct agenda, and utterly incapable of seeing the wood for the trees, is utterly incapable—as Mr Tamihere has said—of being able to relate to ordinary New Zealanders who go about their business, who do not commit crimes, and who pay their taxes. The Government is utterly incapable of understanding that. This Government feels that any people in charge of any money not actually their own must be about to steal it.

That is the way this Government has acted. It has acted by wanting to over-regulate those bodies to the point, we found out, that even someone like Sue Bradford, who is a very good, hard-working member of the select committee, would not be able to be on the board of one of those charities because of her previous time as an almost professional protester—no, not professional, but a person who would have been protesting.

💬 Sue Bradford: Radical protester.

She was a radical protester, as she likes to be called. Well, this is a House of Representatives, and everyone can be represented here, even radical protesters. She is someone whom I would not mind having on a board I was on, and I think she would be quite happy to be on that board, but we found out that she would have been stopped by this silly Government that simply wanted to say it did not trust anyone.

Now, of course, we have found out the real reason for it all. Apart from the fact that the Government wants to rip money out of the system and take money out of the little charities that pay for things like school uniforms or sports equipment for kids who need it, and for poor schools in poor areas, the Government wants to rip money out and control the system itself. The Government wants to get rid of those little charities and organisations. [Interruption] I ask that member opposite, who keeps screaming out, why she did not give her speech as though it actually had some meaning. I really did think, before, that I should have been seeking a point of order and suggesting that maybe the Minister could stand up and be given the chance to redo her speech. But next time she should sound as though she means it, because the speech she gave earlier sounded as though it had been written by some flunky who did not know any better.

Of course, we understand that this Government is so much better at talking about charity and about what it wants to do for people than it is at actually doing it. And there is no other example, really, that is quite as good at the moment as the example of the attitude of Government members in their charity towards Mr John Tamihere. That is certainly an act of charity towards Mr Tamihere—and it is one of those stunning acts of charity that the women members of the Labour caucus will stand by and support a man who has referred to them in such a disgusting way as Mr Tamihere did. Those members do not have enough in them to stand up and fight for their rights, so they leave it to me—a National Party MP—to have to stand up for them. Well, what sort of attitude is that? Fortunately, I am a pretty charitable person, and I am happy to stand up for them if they are too weak and emotionally crippled to be able to do it for themselves. I will stand up for them, because they definitely need it.

💬 Peter Brown: Are you charitable to tossers?

Mr Brown is asking me whether I am charitable—and under this bill, I am thinking in a charitable way—to tossers. Well, I say to Mr Brown that it is not really a term I would normally use. I would not like to call any member of this House by such a term but, unfortunately, Mr Tamihere does. We have to understand that there is a certain amount—

💬 Rodney Hide: Who said “tosser”?

I think there are a couple of members who did, but I tell Mr Hide that we will not go into that.

I will seek in the Committee stage to bring about a change to some parts of the bill. One of the changes I will seek to deal with is the fact that the Charities Commission—which will, of course, be made up of Labour Party flunkies—will have to try to minimise compliance costs. We know, as people who have been involved in small businesses, that it is the compliance costs that grind people down in business, and they will grind people in those charities down. Generally, the people we are talking about are not people who are financial wizards. They are often mums and dads who help out at Scouts and all sorts of organisations like that. Yet, here they are, being treated in this bill as if they are some form of great, big business.

The compliance cost in the bill is something that Mr Tamihere has talked a lot about. He has said a lot about small-business compliance cost, yet the Government will not see its way to be charitable towards the very people who spend their time and money raising money for other people—which is a very charitable thing to do.

I cannot understand why this Government thinks that the Charities Commission will have more power and ability to deal with the deceit or criminal actions of people involved in charities than the Inland Revenue Department and the police have. We know there is a shocking shortage of police, particularly in south Auckland and particularly in Manurewa, which is in the Hon George Hawkins’ electorate. There is a shocking shortage of police there, yet we have a bill here that says maybe that is why the Government is going to have a Charities Commission.

We know that the Charities Commission will always be full of Labour Party flunkies while Labour is in power—but fortunately that will not last long—and we will see a huge amount of cost. We can just imagine how many trips overseas there will be for those commissioners to look at charities. How many little people will be paying for that? How many school uniforms will be lost because of those costs? How many people will be told: “I’m sorry; we won’t be able to fund your child going to Scouts this year, because the money has had to go in compliance costs.”? Charities and the Charities Bill should be all about getting the money out to the people who need it, not about building a huge administration in order to stop money going where it needs to be going.

I think that almost every—in fact, every—submission I heard on this bill was against it. Government members eventually listened to some of those views, but what they could not get their head around was the fact that it was a bill nobody wanted except for themselves and their officials.

Unfortunately, the Minister who was previously in charge of this bill simply could not understand what was actually in the bill or how it would work. I understand that the Labour Government may have some trouble with understanding how charities work, but if the Greens can understand it, why can the Government not understand it? I mean, everyone else here can understand it.

The exception is United Future members, I think, who will do what they always do and help out the Government on anything tricky. That is a real shame, because I have received submissions from interfaith people saying: “Please—we’ve got a bill here that’s going to set how we have a board. We don’t always have boards.” Yet the Government will be dictating through this Parliament who will be in charge of the very church charities that United Future says it is happy to support.

In essence, this bill is unnecessary. It imposes a load of extra compliance costs on charities, and the money should be going where it is needed.

I am very pleased to take a short call on the second reading of the Charities Bill. I will focus primarily on my gratitude to members of the Social Services Committee, which I am proud to chair and which I chaired during the course of the hearings on this bill. I thank the members who served on the select committee: Dr Muriel Newman, Paul Adams, Sue Bradford, the Hon Taito Phillip Field, Bill Gudgeon, Moana Mackey, Katherine Rich, Dr Lynda Scott, the Hon Judith Tizard, and Gordon Copeland. I also thank Judith Collins, who on occasions was present as well.

The committee received 753 submissions, of which we heard 161, and we held hearings in Auckland over 2 days. It became very apparent to the select committee very early on in the hearing of submissions that some points were consistently raised by the submitters we heard. So we devised a list of the eight concerns most often raised by the submitters we had seen, so that those who came after them could look at that list and agree that those were the points they had concerns about. That was provided particularly because of the very short amount of time submitters had to have their voices heard, and it allowed submitters to get the best they could out of the process in that time. That was achieved because they were able to eliminate the eight points and go on to other matters that concerned them that they otherwise might have had little time to express.

I believe that the select committee process worked as far as our democracy is concerned—to the point, indeed, where the submissions we read and heard had a profound effect on how the committee felt it should deal with the bill. As the Minister mentioned in her speech, most, if not all, of the eight concerns consistently raised by submitters have been addressed and rectified in the bill that is before the House now. That should send a strong and clear message to New Zealanders that the select committee process is of value, that what is of most value is their opinions and submissions on particular bills, and that they are indeed listened to by members of select committees. Quite often we are told that they are not valued and that we do not listen to them. Well, here is an example of a bill on which they were listened to and to which they added some significant changes—there has been a virtual rewrite of the original bill.

In the House this evening we are on to the second reading of the bill and we will, I hope, speedily continue through to the Committee stage. I conclude by acknowledging the select committee again but also, importantly, the officials who worked with the select committee. They included officials from the Ministry of Economic Development, the Inland Revenue Department, the Ministry of Social Development—particularly the Office of the Community and Voluntary Sector—Treasury, and the Parliamentary Counsel Office. They had hours and hours of work to do as the committee went through its considerations.

Also, I would like to acknowledge Gordon Copeland, in particular. He, of course, worked some years previously with the working party towards what became a draft of the Charities Bill. I look forward to his speech later on. He will be able to enlighten the House and anybody who happens to be listening on the details and perhaps the gestation of this bill. With that—

💬 Darren Hughes: Oh, no!

Well, I should carry on; I am getting rounds of applause here. I wish the bill a speedy passage through the House.

Taking into consideration the serious concerns of the many charitable organisations throughout the country, New Zealand First supports the intent of the bill. Clause 15 disqualifies a number of classes of people from serving as officers. New Zealand First supports in particular the exclusion of people who have been convicted of an offence punishable by a term of imprisonment of 2 years or more, or of 2 years or less when a person has been sentenced to imprisonment.

The Charities Bill establishes a new Crown entity, the Charities Commission, responsible for running a registration, reporting, and monitoring system for charities. It is also important to note that only those charities that are registered with the commission will be able to retain or gain tax-exempt status, while any unregistered charities will not be income tax exempt. That will ensure that the sector becomes more accountable and transparent to the donating public, and that fraudulent activities can be eliminated.

New Zealand First believes that this bill will assist in the ongoing provision of important services to the community, that confidence in the charitable sector will increase as a result of the activities of the Charities Commission, and that this confidence will encourage the Government to consider a more generous tax rebate.

What is the definition of “charitable purpose”? Part of the criteria for registration as a charitable entity is that the entity must be maintained for charitable purposes. The bill defines “charitable purpose” as including every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter that would contribute positively to community advancement.

The commission will have a number of enforcement powers available to it to address any situations involving deregistration. In the first instance, the commission is more likely to use its lesser enforcement powers or its education function to encourage and help the charitable entity to comply with its obligations.

New Zealand First believes that this bill will encourage more responsible activities and more accountability to public donors. It does not pose a threat to democratic process, because it is only when laws are in place that democracy can function. The voluntary sector is much appreciated by New Zealand First for the service it renders to the general public. The sector’s independence is firmly in place without being jeopardised by the fly-by-nighters who, as we are only too aware, are getting a free ride under the guise of being charitable organisations. New Zealand First supports the bill, because charitable organisations have been part of the landscape of New Zealand communities and are a reflection of a service-rendering society.

During the hearing of submissions, as the chairperson mentioned, a list of eight points was agreed to by the select committee under the stewardship of the chairperson and with the supporting vote of the committee. The list reads: (1) general concern that compliance costs imposed by the bill will be onerous; (2) concern about the definition of “charitable purpose” that is used and the position of organisations that undertake advocacy; (3) the commission’s status as a Crown agent and its lack of independence from government; (4) the fact that registration numbers will need to be displayed on all correspondence and fundraising materials, general concern about compliance costs of this; (5) disqualification of officers clause too onerous and may prevent people from volunteering to be officers; (6) inability to indemnify officers is too onerous and may also discourage people from becoming officers; (7) filing claims specified in the bill for providing information and annual returns to the commission are sufficient; (8) commission’s functions need to include a general education and support role, and not be limited just to providing advice and support about regulatory duties and obligations.

Listing those eight points assisted us to cut down the time spent listening to submissions. As submitters read those points, they were able to get past them. I now realise that the bill covers those points, to the advancement of charitable organisations in the country. I am sure that many submissions listed concerns outlined in the list I read out. Those submitters will now be happy with the result in the final bill.

New Zealand First has concerns, but we are looking at the overall picture of charitable organisations throughout the country. We support this bill to the House.

I rise on behalf of the ACT party to oppose this bill. It surprises me that New Zealand First is supporting it.

💬 Peter Brown: Show a bit of charity. Where’s your charity?

Mr Peter Brown calls out that I should show some charity. In fact, to New Zealand First I do, because do I think that party is a charitable case. Mr Peter Brown, in particular, I think is a charitable case so I will not be too hard on him. I will just point out that I think he is mistaken. In fact, I can understand New Zealand First being mistaken. What I cannot understand is the United Future party being so mistaken, particularly Mr Copeland, who has some experience of the charitable sector. I am astonished that he, with his experience, would come along to this great House—[Interruption] Mr Copeland calls out that he has had quite a bit of experience. He cannot have learnt much. I am astonished that he comes to this great House and proceeds to socialise charities in New Zealand.

The whole point of the charitable sector is that it is private. The whole point of the charitable sector is that it gets on and does the business. The whole point of the charitable sector is that it does not have to worry about busybody politicians coming along and making charities pay registration fees. That is the success of the charitable sector. Anyone who believes in charity in New Zealand has to vote against this bill. Anyone who believes in the charitable sector and the importance of a civil society has to vote against this bill. Why? Well, what, I ask Mr Copeland, is the purpose of this bill? It sets up a new Crown entity. How, I ask Mr Copeland, will a new Crown entity help a charity? It is the charities that pick up the flotsam and jetsam that falls out of the welfare State that Mr Copeland supports. Now he is turning round and wants to hobble the charitable sector with a Crown entity that the charities themselves will have to pay for. I ask Mr Copeland: what is this Crown entity going to do? It is going to sit there, and this Charities Commission will be responsible for running a registration, reporting, and monitoring system for charities.

I ask Mr Copeland: how many charities are there? There are 37,000 charities. So Mr Copeland and New Zealand First are voting for a quango to look after 37,000 charities—to monitor them, to register them, and to keep an eye on them. There will be an army of bureaucrats doing that. [Interruption] Sue Bradford laughs. How many people does she think it will take to register, monitor, and run 37,000 charities? [Interruption] Is the member going to vote against it?

💬 Sue Bradford: Absolutely!

Oh, thank God! I love the Greens! Sanity from the Greens. Why cannot New Zealand First see it now? ACT and the Greens are agreeing. The great National Party will be voting against the bill. And here we have that basket case New Zealand First voting for it. God only knows why Mr Copeland is voting for it.

💬 Peter Brown: God does know.

God does know, I know. God only knows why New Zealand First would vote for this. I ask Mr Copeland: what is the mischief that we are trying to fix?

💬 Gordon Copeland: If ACT and the Greens are against it, we must be right.

I have to say that that is the definition of the logic from the United Future party. Mr Copeland just called out that we are going to set upon the charities of New Zealand a charitable commission, set up by the Labour Party, with seven Government appointees running it, all on the public tit, paid for by the taxpayers, that will require charities to register. Mr Copeland was asked: “Why are you voting for it?”. His answer was: “Because the Greens and ACT are voting against it.” That is the logic of the United Future party.

💬 Peter Brown: That’s a pretty good reason.

I have to say that they are no longer poodle power, because they do not even have a poodle brain. The logic of it is that there are some charities that run off the rails. Charities have been around for 400 years, and they are forever running off the rails. What is the mechanism that we have to pursue them? Section 58 of the charities Act. I ask Mr Copeland: who is in charge of that? The Attorney-General of New Zealand is in charge.

💬 Dail Jones: The charities Act?

No, section 58. Under that section we can pursue a charity for fraud.

💬 Dail Jones: Of what?

Section 58 of the Charitable Trusts Act.

💬 Hon Matt Robson: What about Fiji?

Mr Robson, the deputy leader of the Progressive Party, leading the left-wing faction of the Progressive Party, calls out: “What about Fiji?”. If they want to talk about charitable trusts, they have an expert sitting on their side of the House in the name of Mr John Tamihere. We know that Prime Minister Helen Clark has forgiven him. All is forgiven. She will know all about the charitable trusts that Mr Tamihere has set up, where the money has come from, and where it has gone to. Do not worry, we will be revealing that, for the delight of—

💬 Hon Paul Swain: What about the pyramid selling schemes?

Mr Swain is calling out about the pyramid selling schemes. Let us get back to the point. Why do we have 37,000 charities having to be registered and monitored by a quango?

💬 Darren Hughes: Stop ripping them off.

Now we have whatever that guy’s name is, Darren Hughes, calling out, saying that the Attorney-General has not been doing her job. I agree with him. If the Attorney-General did her job and pursued those people who ripped off the charities and used them for personal gain, we would not be debating this Charities Bill tonight—because the Attorney-General would be doing her job.

💬 Gordon Copeland: Now it’s a “he”.

Well, when she was the Attorney-General. Now it is a “he”. What is he doing about the charitable sector? Is he pursuing them? [Interruption] Mr Copeland now agrees with me. God knows what he is thinking. I say to Mr Worth—he will understand this—that if the Attorney-General was doing his job we would not need this bill. Is that correct?

💬 Dr Richard Worth: Quite right.

He agrees with me.

💬 Gordon Copeland: I don’t disagree.

Mr Copeland now does not disagree. So now he is saying that if the Attorney-General was doing his job, we would not need this bill. I look forward to United Future’s contribution to this debate.

💬 Peter Brown: Well, sit down and get it.

I will. We will get it after this, and I want to hear some logic about why they are voting for this bill. I ask Mr Copeland to tell us in his contribution to this House how many civil servants it will take to monitor, register, and promote the research in the charitable sector. He does not know. He is voting for the bill, and he does not know. I ask Mr Copeland: how much will it cost? [Interruption] I have no idea, but I am not voting for it.

💬 Darren Hughes: It will be a lot less after ACT has gone.

It will be a lot less when ACT is in power; that is true.

💬 Darren Hughes: When ACT has gone.

How much will it cost? The member is going to vote for it.

💬 Gordon Copeland: No, you are right. I have no idea.

The member has no idea. Mr Copeland has no idea what it will cost. He has no idea how many people it will take, yet he is going to vote for the bill. Who is going to miss out? It will be the poor and the downtrodden—the people whom these very charities have been set up, going back hundreds of years, to serve. They are the people who will miss out. Why would we load charities with extra cost? Why would we load charities with extra bureaucratic hassle when we could simply demand that the Attorney-General do his job and pursue the ratbags who are ripping off their own charities—pursue them to the nth degree? If we did that and, indeed, lowered tax, we would have more charity, not less. This bill is about having less charity in New Zealand, and for that reason the ACT party is voting against it.

I have to say, on behalf of the Green Party, that it is a real pity that we are seeing the Charities Bill come back to the House tonight for its second reading and all further stages under urgency. The community and voluntary sector has seen this bill as a really significant piece of legislation, and I think it is unfortunate that we now have to deal with it in such haste. A complex bill such as this deserves the time and care needed for last-minute consultation and discussion, especially during the Committee stage, yet with such short notice it is virtually impossible to do that. I apologise in advance to the groups and individuals in the sector with whom I usually work for not having had the time to consult them on the final phase of the bill.

In a way the fact that we are dealing with the bill with such unnecessary despatch in the House tonight typifies the whole unsatisfactory process on the bill from its conception to its delivery. The facts that the bill was conceived, evidently, in Treasury, and was designed by the Ministry of Economic Development show just how out of touch the originating Minister or Ministers were with the realities of the community sector in this country today. The officials who worked with us on the Social Services Committee had a really tough job on all fronts, and I have a lot of sympathy for them. They should never have been put into such a position in the first place. A bill that deals in such detail with issues of critical importance to all types of community and voluntary sector groups should have been, all along, within the purview of a ministry with substantial experience of the sector, with the most obvious examples of such ministries being the Ministry of Social Development or the Department of Internal Affairs. The bill should not have been the responsibility of a ministry far more accustomed to working with “for profit” business than with the vast diversity that comprises the world of non-governmental organisations.

The Government has very belatedly decided to hand the Charities Commission over to the Department of Internal Affairs, with input from the Office for the Community and Voluntary Sector. That is a good step forward, but it should have happened right at the start. A lot of the problems in the gestation of this legislation could have been avoided if the people who put it together had had the kind of substantial and hard-won experience of working with community groups that is needed when dealing with a whole series of complicated and sensitive issues. And any public servants with decent experience of working in this area would have known that the bottom line, in terms of getting buy-in and acceptance, would be widespread and detailed consultation locally and regionally, as well as nationally, rather than reliance on a limited and carefully selected task force to do the job for them. The history of this bill through Parliament exemplifies why and how even a well-meaning Labour Government still has a long way to go in terms of understanding not only how best to work with the third sector, but also of understanding the need for the Government to treat all parts of the sector with the respect of an equal towards an equal, rather than acting as a superior towards an inferior.

I now turn to some of the details of the bill itself. I sat on the select committee, which received many hundreds of submissions that critiqued in fine-tuned detail many, many aspects of the legislation as drafted. I was as impressed as ever with the integrity and passion of community sector submitters in all their variety, and with the fact that right across the spectrum people were almost universally committed to either major reform of the bill or throwing it out and starting again. I do not accept the comments made by several previous speakers, including our committee chair, Georgina Beyer, that the eight points put forward to the submitters by the chair were the only ones they were concerned about. In fact, there were hundreds of points of concern, many of which were not touched on in the list of eight that was presented to the submitters. I am sorry that the Labour and United Future members of the committee chose to take the path of least resistance and to make a series of hodgepodge reforms of the bill, rather than having the clarity of vision to actually throw it out and start from scratch, learning from the overseas experience readily available to us and also utilising far more comprehensively the wisdom of all the groups that care about these things.

There have been improvements made to the bill, and I am glad of that. Some pleas from the sector were listened to and heard. We are pleased, for example, to see changes that mean compliance costs have been reduced, that the prohibition on indemnifying officers has been removed—a totally ridiculous provision—that umbrella groups can register all their constituent bodies, that the blanket disqualification of officers with certain convictions has been taken out, and that the absurd requirement to have the group’s registration number on all written communication is gone. However, serious concerns remain. For example, we still have big issues around the definitions of “charity”, “charitable purpose”, and “public benefit”. The select committee, in its wisdom, decided not to expand or update the definition of “charitable purpose”, which the Green Party believes is a missed opportunity to update a concept rooted in the law of early 17th century England. We are, indeed, truly immured in our colonial past.

We also continue to have queries about advocacy, and about the extent to which the advocacy function of community organisations can, and should, be regulated through the mechanism of this bill and of the Charities Commission, once it is established. The Government has attempted to improve the bill by the addition of a provision to clarify that an organisation with so-called non-charitable secondary purposes, such as advocacy, will be allowed to register with the commission if its advocacy is in support of the charitable primary purpose. However, I am still really apprehensive about the extent to which that allows the State to define what is, and is not, acceptable to itself as advocacy, and what exactly is, and is not, charitable. That takes us back to the original definition problem. In the argument around advocacy I also remain as concerned as I always was, right from the start, that some groups with substantial advocacy functions will not even bother to try to obtain charitable status, and the fact that they do not have it will have a downstream negative impact on their ability to gain funding. Funders will be looking for that registration number, even if it is on fewer bits of paper, and if a group does not have that number I fear the consequences. It will be far easier for funders just to say that if there is no number, they will provide no money.

Another area of disquiet for us, even in the amended bill, lies in the fact that although very limited appeal rights have been established, there will still be an inability to develop common law that relates to the sector, because those rights are so restricted. And from a more overarching point of view, I remain completely unconvinced that this bill will actually, or adequately, address the need to find ways to expose and extinguish bogus and corrupt activities within the not-for-profit sector. The Government talked a lot at times about that being the trigger for the development of the bill—as Mr Hide did earlier tonight, as well. But, in fact, I do not think that this bill will make much difference at all, if any, in that area. The worst levels of corruption and theft in the sector happen because some people are simply determined criminals, and I do not see how the bill will aid in stopping that, any more than the State sector legislation that we recently passed can, in itself, stop determined theft by public servants from Government departments. At another level the best way to deal with internal fraud, abuse, and other problems such as that in the community sector is actually through things such as good employment practices, and the willingness of groups, for example, not to give false or misleading references for employees who move on to another organisation, having left a trail of disaster behind them. Again, that is not something that the bill can hope to solve. The answers lie in more willingness to share information when necessary between groups, and in not leaving others to carry the can for a poor employment decision or for someone feeling sorry for a desperate job applicant.

Beyond the amendments made during the select committee process, the Government has also tabled further extensive changes to the bill this week. Those changes are mostly minor and beneficial in nature, but none of them demonstrates the kind of major improvement that might have led the Green Party to change its position on this bill. We are voting against the Charities Bill tonight because we do not have confidence in the process by which it has been developed, and because we do not think the amendments made by the Government go far enough towards solving the problems that the bill creates. We also lament the lost opportunity here. If the Government had had the patience to start the process over again, and had worked cooperatively with the sector to draft a really exciting and positive bill, Labour would have had our enthusiastic support from beginning to end. As it is, this bill leaves a sour taste that all the minor amendments in the world will not fix.

My involvement with this matter goes all the way back to 17 December 1987, when, in a now somewhat infamous line-up in the Beehive, Roger Douglas announced to the nation his proposal for a flat tax. He then went on to say that would mean charities would, henceforth, be paying taxation. Many twists and turns have occurred in the saga in the more than 17 intervening years that have brought us up to this day.

This is the second attempt by a Labour Government to establish a Charities Commission. I opposed the first attempt in 1989, but then tried with successive Ministers of Finance for the next 10 years to get the Government to allow greater tax rebates for gifts made to charities, from the maximum level of just $500 resulting from a total gift of up to $1,500 per year. That was the rate that existed through that whole decade. In fact, it was not until Dr Michael Cullen became the Minister of Finance in the year 2000 that that limit was adjusted for inflation from $500 to the current level of just $630 by way of tax rebate, based on giving up to a maximum of $1,819 per annum. That amount of $1,819 is incredibly stingy when compared with the amounts allowed in other OECD jurisdictions.

The USA has long allowed virtually unlimited tax deductibility for charitable gifts. This, amongst other things, sees the super-rich giving literally billions of dollars to charity, in the case of people like Bill Gates and Ted Turner. It also means that the great universities like Harvard and Yale have enormous endowments, whilst charities that work to alleviate poverty and addictions, and do other good works, flourish to the benefit of all.

The United Kingdom, under a Labour Government, has adopted similar policies because it recognises, in this most tangible and motivational of ways, the importance of encouraging both philanthropy and generosity amongst the citizens of their countries.

The ASSISTANT SPEAKER (H V Ross Robertson): Would the member relate the issue to the bill, please.

Members should remember it is more blessed to give than to receive. The good that charities do in our community is very significant. Indeed, I go further in saying that charities are the most efficient organisations known to humankind. It is estimated that $1 of social services delivered through a charity would cost $2 if delivered through a Government department. Encouraging charities to flourish, therefore, is just common sense.

New Zealand charities have high hopes for this bill. Their hope is that once the commission to register, monitor, and ensure that charities prosper is established—a task that we are likely to see completed very soon—the tax rebate will be lifted substantially and significantly in the 19 May Budget this year. In that regard I hope they will not be disappointed.

It is true that this bill will mean that charities face new and additional compliance costs. There is no getting around that reality. This bill is therefore somewhat reluctantly accepted by charities as being necessary in order to bring about the benefit of a higher tax rebate for gifts given to charity. I am pleased to record that the Minister of Finance, Dr Cullen, is already in the public record as saying that once the Charities Commission is established by this bill, which will be passed into law hopefully this evening, he will be giving consideration to a significant increase in the rebate level for charitable gifts.

I am also bolstered in my hope for this bill and its outcomes by the experience of both the United Kingdom and the USA. The United Kingdom has for many years had a Charities Commission. In recent years, again under the current UK administration and Chancellor Gordon Brown, the ethos of that commission has been changed quite significantly, so that now its role is to ensure that philanthropy, charity, and generosity flourish in the UK, for the reasons that I have mentioned. As a result, charitable activity, and charities themselves, are now flourishing once again in the UK to a greater extent than they have for many, many years.

A similar situation exists in the USA. The USA does not have a Charities Commission, but it is necessary in order to have tax-free status for a charity to complete an annual return to the Inland Revenue Service. This is quite voluminous, and imposes compliance costs on charities in that nation that are far greater than will result from this bill. Not unnaturally, when the Internal Revenue Service provisions were introduced by legislation in the United States, charities strongly opposed them. But they now say quite openly that they were wrong. That is as a result of the increase in public confidence that has flowed from the fact that people know that they are dealing not with cowboy charities but with genuine, bona fide charities. Charitable giving, in fact, has grown in the United States by several billion dollars. So that gives me the confidence and the hope that we will see a similar result in New Zealand.

This bill, therefore, for me is just—if one likes—the first step in an ongoing process. I hope that it will lead to charity, philanthropy, generosity, and that the good works our many, many thousands of charities undertake, often unsung, on a day by day basis in this country, will flourish and grow in the years ahead. If they do, then all sectors of society, including the Crown accounts themselves, will greatly benefit and we will see far greater social services and good, strong, robust social outcomes for the citizens of this country.

With those remarks, I signal that United Future will support this bill both in its second reading and through all remaining stages.

I want to follow the comments made by Rodney Hide and Judith Collins during the course of this debate. It is very appropriate to ask why we need some legislation. Rodney Hide said during the course of his contribution that we should look at the Charitable Trusts Act, because the answer is there. Unfortunately for Mr Hide, that is not the case in practice.

As I said in the first reading, the call for the regulation of charities has been a longstanding one in New Zealand. In fact, it goes back even as far as 1967 with a call made by Justice Gresson in the case of Re Goldwater (deceased) [1967] NZLR 754. There was a call for a review of charities and that Act.

When I was in practice in the late 1980s and the early 1990s, I set up charitable trusts under the Charitable Trusts Act. I asked, having looked through the Act, what controls there were on all those charitable trusts. Really, there were no controls on any of them, although it would be fair to say that Mr Hide was correct to say the Attorney-General could look at them. But by the time a complaint is laid with the Attorney-General on anything, all the evidence has gone, all the money has gone, and it is far, far too late.

The Charitable Trusts Act has not proved to be very good in practice in so far as control of charitable trusts is concerned. I wrote to the Minister of Justice about that matter and I received a copy of the Property Law and Equity Reform Committee report on the Charitable Trusts Act issued in 1979. The report referred in paragraph (1) to the request to consider the comments made by Justice Gresham in Re Goldwater (deceased). The report went on to state: “Subsequently it was suggested that the whole of the Charitable Trusts Act 1957 called for a general examination. In particular, the question was raised of the desirability of establishing more effective means of control of charitable trusts, perhaps by means of a charities commission along the lines established in the United Kingdom.”

The report, in paragraph 13 of page 7, stated: “The committee was asked to give particular consideration to the questions raised by the Rev. R M O’Grady, the associate-general of the National Council of Churches, in a newspaper article in which he said: ‘The public has no protection against charities in New Zealand. It would not be difficult for a skilled promotional person to raise $10,000 or more for almost any appeal one cares to name. Simply by national advertising and a small mailing to selected persons, any charity can get itself established in a few weeks. Raising really big money for a charity requires time and planning. By far the best method is the house-to-house collection.’ ” That quotation is taken from a report written in 1979. We were talking about $10,000 then. Taking inflation into account, we would be talking about a bigger figure that could be raised by a skilled promotional person who could end up fleecing all the people who thought they were giving the money to charities. So I was very pleased when this bill came before the House.

The need for this legislation has clearly been established a long, long time ago. As Rodney Hide has said, the legal basis for a charity goes back to 1601 and, of course, that Act just confirmed what had been happening prior to that. The Statute of Elizabeth 1601 confirmed the basis on which one could establish a charitable trust. So the whole concept has been going for a while. But in England—since before 1979, obviously—there has been a charities commission, and in New Zealand, since before 1979, we have had complaints about the way in which charities have been run. So that is the reason, if we need a reason, in answer to Rodney Hide’s question as to why we need a charities commission, or some control on charities, and this bill is the best bet that I have seen so far.

I note what Mr Copeland said. Rather than looking to the past, he is looking ahead to what might happen in the future. If much more money could go to charities, that would be well and good.

New Zealand First did not make a minority report on this bill, but we were concerned—I was present at the select committee on the day we did the deliberation—that the Government was watering down the provision for the disqualification of officers, as the commentary states on page 10. Clause 15(2) identifies which persons are disqualified from being officers of charitable entities. The original clause 15(2)(c) and (d) stated: “(2) The following persons are disqualified from being officers of charitable entities: … (c) a person who has been convicted of an offence punishable by imprisonment for a term of 2 years or more: (d) a person who has been convicted of an offence punishable by a term of imprisonment of less than 2 years and has been sentenced to imprisonment for that offence:”. Paragraphs (c) and (d) were taken out by the select committee, which put in, instead: “(c) an individual who, or a body corporate that, has been convicted of a crime involving dishonesty (within the meaning of section 2(1) of the Crimes Act 1961) and has been sentenced for that crime within the last 7 years:”.

So the committee was trying to bring into the provision that “Nandor Tanczos Clean Slate Bill” type of thing—that nice, warm, green, fuzzy idea. The committee has changed the provision into a nebulous type of thing, which means that anyone who has been convicted of an offence punishable by imprisonment for a term of 2 years or more can be a trustee, and a person who has been convicted of an offence punishable by a term of imprisonment of less than 2 years and who has been sentenced to imprisonment for that offence can be a trustee. New Zealand First cannot support that. How can anyone who supports law and order, or who wants to make sure that the trustees of a trust function properly and are not criminals, possibly support that amendment? That is why I have lodged an amendment on the Table reinstating the original clauses 15(2)(c) and (d).

After all, the criticism of trusts and charities is that they are being fleeced by fly-by-nighters, criminals, or people who may get on the board and do away with the money—and this bill is promoting that. It is promoting criminals being on the board. It is nonsense to strike out those two paragraphs and to put in a nebulous provision about whether those people were sentenced for that crime within the last 7 years. The whole thing is a nonsense. I think that we need to be tougher on law and order. We need to make sure that charities have a stronger ability to refuse to accept people who have criminal convictions of 2 years’ imprisonment or more, or who have been sentenced to imprisonment for less than 2 years for an offence.

I cannot understand how United Future or Labour would have agreed to those provisions concerning persons being convicted of an offence punishable by imprisonment for a term of 2 years or more being struck out. The mind boggles. Of course, the Greens, in a strange sort of way, opposed this legislation. But when I said that New Zealand First wanted this provision to be reinstated, they then changed their mind and now they support this part.

💬 Sue Bradford: We certainly don’t support what you are putting up now.

What I am putting up is what was in the original bill. The Greens do not support what was in the original bill, because there might be a member in this House who falls within the definition of the original clause 15(2)(c) and who would not be eligible to be a trustee on a charity.

💬 Judith Collins: He’s on stress leave, isn’t he?

No, I say to the member that such a member is sitting in the House at the current time. There is a female member of this House who has been convicted of an offence punishable by imprisonment of a term of 2 years or more who might be affected by this legislation.

I just raise the point that if a person has been convicted of an offence punishable by imprisonment for a term of 2 years or more—that means just a conviction, without the person going to jail—he or she can still be a trustee on a charity and be involved in working for a charity. If the person has been convicted of an offence punishable by a term of imprisonment of less than 2 years and has been sentenced to imprisonment for that offence, he or she can still be a member of that charity and be working for it. I think that is nonsense.

As I said, the commentary states, under the heading “Disqualification of officers” on page 10: “The New Zealand First Party supports the intent of the original bill.” As we support that intent, we want to see that intent retained in the way that the Government originally wanted it—and I believe the Government was absolutely right on that occasion. So I have put forward an amendment to reinstate the original provision into the bill. We want honest people working for charities, and the new clause 15(2)(c) is totally contrary to what was intended in the formation of the Charities Bill and the Charities Commission.