Charities Bill

It is a pleasure to rise to speak to Part 1. Looking at the part, I find it very interesting to see how much of it the Government has changed. It is not often that one picks up a bill and finds that more or less an entire part has been rewritten, word for word. The only thing I can see that has not been rewritten is the definition of “chairperson”, which means the chairperson of the board. The rest of it has been struck out by majority, and new provisions have been put in. I am not surprised as to why, either, because after 753 submissions, all of which have said that the legislation as originally drafted was nuts, the Government did not like being bagged by charitable group after charitable group and being told that the bill was an absolute nonsense.

One of the first things to be struck out was the idea that if a body was not registered under the new Charities Commission, it would not officially be able to receive funds, and that groups, community trusts, or financial groups would not give one funding if one was not an approved donee. That was one of the major things that this bill created concern about. Members of group after group said that it was hard enough being a volunteer and being involved in a charitable group without the level of bureaucracy and registration required, plus the cost, which will make their work more and more difficult in times when it is harder, not easier, to collect funds. So the Government has done a total flip-flop.

The Government has rewritten this entire part. It has taken out the bits of heavy-handed regulation, because it knew they would be unpalatable in an election year, and it has put in a few clauses that it thinks will get the bill through, with the help of a few parties in this Parliament. I think that that will backfire. We have already heard the Minister introduce this part with as little passion as could possibly be used in such a delivery. That is because her heart is not in it, either. She knows that this bill will provide a level of regulation and cost that we have not seen before. Thousands and thousands of charities will find it harder, not easier, to do charitable work in this country.

A lot in this part was an absolute joke. My learned colleague Judith Collins told me in the House today that 37,000 groups will be looking to register through this new organisation. What a waste of money! It will not put one more volunteer on the street. It will not make their work any easier. It will not help one single New Zealander to get any better service. It is all about Government control. It is about the Government sticking its nose in so that it can collect more tax. That is all it is. That is what we are seeing here. The Government wants to collect more tax from some of those groups and get its hands on money that it does not actually earn. As to saying that the whole point of the bill is to protect people, I tell members that those organisations that rip off New Zealanders will not bother to register through the Charities Commission. They will not bother to go through the processes to become legitimate charities. That is the whole point—they are criminal. They will go ahead and rip off New Zealanders without getting the registrations and things that this bill requires. Even some of the reporting required in this part is just absolutely outrageous.

I wonder whether any members of the Government have been involved in a voluntary group of late, because if they have, they would have heard people saying: “What is the point of becoming a volunteer when we’re going to be in the gun if things go wrong?” So we have seen a total rewrite. Part 1 does not look anything like what was in the original bill, because the Government knows that the bill as first drafted was an absolute joke that was designed to create problems—and boy, it is not like the criticism from some of its mates when they turned up to give submissions on this part. Time and time again this legislation was bagged, and Government members sat like sad sacks—

💬 Judith Collins: Like they are now, really.

Like they are now, but they are probably thinking more about John Tamihere than anything else. It is interesting, though, that while we are talking about the Charities Bill, the Government has shown the ultimate charity to Mr Tamihere by allowing him to stay. So why is the Government being so charitable to Mr Tamihere when it is being super-uncharitable to those charities and organisations?

I want to take a brief call on Part 1 of the Charities Bill. Let me just say for a start, in response to the remarks from the member Katherine Rich, that I would have thought it was actually quite meritorious for the Government and the Social Services Committee that considered this bill to have changed the bill significantly in response to the genuine concerns of the many submitters whom we heard. I do not find it a very convincing argument that having heard those submissions, it is some kind of cardinal sin to change the bill accordingly.

The other point I make is that under this bill registration for charities is not compulsory. Indeed, because of my involvement in the sector a number of charities have already come to me and said they are not sure whether they really want to register, because of the compliance costs involved. I have said to a couple of them that they should think carefully about that. The purpose of registration in Part 1 is to enable charities to remain exempt from income tax. Many smaller charities do not have any taxable income as defined in terms of the Income Tax Act. For a lot of charities, whatever comes in on one hand in terms of income is immediately applied to charitable works on the other, so they do not actually have any taxable income.

So it is still an option for such charities to decide not to register. It does not make them some sort of second-class citizen. They are still legitimate charities—it is just that they will not get tax relief if they have some taxable income, which might be just a few bucks of interest, for example, that they have to pay tax on.

That is an option for charities. In contrast, the large, prominent public charities will certainly, of course, need to register and so forth in order to continue to access income tax relief, and also to ensure that money given to those charities is eligible for what we call donee tax rebates.

I really want to talk about just one aspect of the amendments to clause 4, as set out in Supplementary Order Paper 357, which changes the definition of “officer”. This is a very worthwhile amendment. It arose as a result of submissions received from the Inter-Church Working Party on Taxation, and, in particular, from the representatives of the Anglican and Presbyterian Churches. Those Churches are governed by bodies—in the Anglican Church referred to as synods—that comprise several hundred people.

It would be quite impossible to have all those several hundred people designated as officers of the charity. For example, we have to ensure that every one of those people is not disqualified from being an officer in terms of this bill, and it would be quite an impractical way to proceed. Accordingly, this amendment is aimed at ensuring that the Anglican and Presbyterian Churches, and to some extent the Methodist Church, will be able to register themselves and have a definition of “officer” that will fit the circumstances of their organisations. That is a very good step forward.

Furthermore, the Minister’s Supplementary Order Paper omits and substitutes a new definition of “officer” and adds subclause (c) and subclause (d) to do with regulations, just in case the submitters, the select committee, and the Government itself have missed something and a problem arises about registration to do with officers. Regulations may then be put in place to overcome whatever difficulty arises.

The intent is to give complete flexibility to the new commission so that it can register charities that come to it, having regard to their particular circumstances. Those circumstances vary enormously. For example, the situation as between the Catholic Church and the Anglican Church is quite radically different. This is a good step forward and I commend the Supplementary Order Paper to the Committee.

I note that Mr Copeland explained to the Committee why United Future is voting for this part and, indeed, for the whole bill—which is with some reluctance, as I understood his speech. It is because Michael Cullen has promised he will increase the tax-free threshold for charities if United Future supports the bill.

💬 Judith Collins: Did you check all the words!

I do not know whether Mr Copeland checked all the words. He has just said that to say “promise” might be a bit rich. But, to be honest, he has just explained United Future’s voting for this bill in a most unparliamentary way—that is, there will be a quid pro quo for charities, and that is why United Future is voting for it. It is not voting for the legislation because it thinks it is a good idea; it is voting because Michael Cullen, who—we know from John Tamihere—dupes and tricks United Future most days, has promised them, some time in the future, some more money.

💬 Gordon Copeland: Dream on!

I think that Mr Copeland is dreaming on about this promise from Mr Cullen.

I notice that Mrs Rich has explained just how much this bill was gutted at the Social Services Committee, so I do not need to go there. But I draw members’ attention to the functions of that commission, that quango, that Mr Copeland wants to vote for. It is truly extraordinary. There will be a quango of seven Labour Party flunkies and an army of bureaucrats, and when we see the calibre of the people that Labour has as MPs and JPs, we can imagine the sort of people that Labour will have on the commission.

The commissioners’ job will be to educate and assist charities in relation to matters of good governance and management. Can one imagine Helen Clark lecturing and educating anyone on good management and good governance, or John Tamihere lecturing anyone on good management or good governance? What a joke! The commission is there to make appropriate information available in order to assist persons to make registration applications under this legislation. So it sort of exists to teach charities how to fill in the forms that the commission requires to be filled in. Under clause 10(a), its function is to: “receive, consider, and process applications … and (b) compile and maintain a register of charitable entities;”.

I remind Mr Copeland that the charities sector has survived 400 years without that sort of bureaucratic nonsense. The commission is also to (e) “receive, consider, and process annual returns submitted by charitable entities … —thousands and thousands of them. It is to supply information and documents to the Inland Revenue Department, and to monitor charitable entities. So charitable groups that are getting on with doing the business will find an army of those types of people—the sort who run the Labour Party and whom John Tamihere described as narrow; who have no family life or outside life, but who just sit around plotting late at night—

💬 Judith Collins: Parlez-vous français?

Parlez-vous français? Those people will be crawling all over those charities to monitor them. They are to inquire into charitable entities, so we will suddenly find that they have nothing better to do but plot and plan when inquiring and investigating into charities.

What about this? Under clause 10(k) they are to: “stimulate and promote research into any matter relating to charities,”—

💬 Hon Member: Smarmy!

It is exceedingly smarmy; in fact, it makes one think that Steve Maharey must have had something to do with it—and “(l) carry out any other functions that the Minister may direct the Commission to perform in accordance with section 87;”.

I say to Mr Copeland that I think this bill proves what John Tamihere was saying about Michael Cullen and United Future. United Future is voting for this bill not because it agrees with it but because Michael Cullen has “promised” to increase the tax-free threshold for charities, and that is the quid pro quo. Well, there is a word for what Mr Copeland has just admitted to and I am not allowed to use it. But that shows us the sort of integrity that United Future members bring to this Parliament when they vote or do not vote for a bill. They are voting for this bill on a monetary promise that will never be delivered—and John Tamihere was right: they are so stupid they do not even know how duped they are; they do not even realise it.

If people want to know why charities are going to struggle in New Zealand, they have two groups to blame—United Future and New Zealand First. I say this about United Future: at least it was bribed to do it.

I thank Mr Hide for his contribution and just say to United Future—

💬 Hon David Benson-Pope: He visits Fiji regularly for a contribution.

That Minister should go back to sleep. I say to United Future to beware of legislation that sets up a commission. The Tertiary Education Commission was also created in a similar vein. That commission was to be a light-handed steering instrument to guide strategic priorities in the tertiary sector—whatever that means. Two hours and lots of paper later, I was none the wiser. The story with the Tertiary Education Commission is that it now has a staff of 324 people—

💬 Rodney Hide: No!

SIMON POWER:—that is the light-handed steering instrument—and cost $210 million to set up and run. It has been restructured once already—every job readvertised in a complete restructuring of a governance system that parties in this House said would not work. The Government was told at the time that commission was set up that it would not work. But, no, the Government members sat opposite and said that we did not understand that that was a light-handed steering instrument and was not designed to get in the way of the tertiary sector. The same thing will happen in the charities sector.

I say to voluntary organisations and charities to beware of clause 7 that sets up a commission. I will tell those charities what is coming with that commission—320 bureaucrats will storm down the doors of their charities to monitor work that the charities have always done unencumbered, without needing to seek the permission of the Government to do too much, and with their independence never compromised. I tell charities to beware of legislation that sets up commissions. That means one thing: that the pitter-patter of an army of bureaucrats is on its way to disrupt the good work that charities throughout New Zealand do.

Where is the hint in the legislation that that is what is coming? Well, members and those interested should turn to clause 10. There we have a page and a half of the commission’s functions. It is very reassuring that it will be a light-handed organisation that will leave the sector to get on with its business! There is a page and a half of things it will do—a page and a half of functions to interfere with the workings of charities.

But my favourite clause is clause 10(i)—it is a doozy. This commission will monitor charitable entities to ensure that the entities that are registered as charitable entities continue to be qualified for registration as charitable entities. Look out, here comes the commission with its clipboards and pens, both red and green, for initial checking and auditing. That group of bureaucrats will be on the march to disrupt the good, independent work that charitable organisations have done up until this point.

The real questions the sector should be asking the Government are why do they need that commission, why do they need more people interfering in the way they conduct their affairs, and why do they need clause 10, with paragraphs (a) through to (o), outlining the functions of the commission. I say to those organisations that the same thing happened with the tertiary education sector. It was promised a light-handed commission that would guide the sector gently. Look at what has happened! The commission has 324 bureaucrats and costs $210 million. I tell the sector to beware of legislation that sets up commissions.

The question was put that the following amendment in the name of Judith Collins to clause 10 be agreed to:

to add to clause 10, the following new subclause:

(2) When carrying out the functions of the Commission, the Commission must have regard to the need, where reasonably possible, to minimise the compliance costs of the registered charity.