Fair Trading (Soliciting on Behalf of Charities) Amendment Bill

on behalf of Michael Woodhouse (National): I move, That the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill be now read a second time. I want to begin by thanking the Hon Amy Adams for bringing this important issue to the attention of the House and congratulate her on the effort she has put in to what is such an important cause and a worthwhile bill. It is my pleasure to have this bill transferred into my name and I am pleased to be able to contribute to such an important piece of legislation. It is important that the public have faith that their donations to charities are going to the charities. I want to increase public confidence in charitable appeals. I want to improve transparency and accountability for those who work for charities, and I want to discourage third-party collectors from charging charities exorbitant fees for their services. This bill seeks to restore confidence in the charitable giving sector.

The purpose of the bill is to increase the transparency and public accountability of third-party businesses that collect funds on behalf of registered charities. There is a concern that a disproportionate percentage of donated money may be retained by third-party collectors to cover costs, and that the members of the public making the donations are not aware of this. The bill purposefully does not seek to address the issue of consumer confidence involving charities’ internal use of funds. That is not where the concern lies, and, indeed, donors are free to decide on the basis of information about a charity’s objects whether it is worthy of their philanthropy.

What is not available is the degree to which donations are made having the ticket clipped, or so to speak, by collection agents, and the proportion of the donation that is being retained by them. By way of example, I am aware of a recent news release highlighting a group collecting on behalf of two very well-regarded charities where, under that organisation’s retention model, the full first year of a donor’s regular monthly donation is retained by the collection agent. I believe the public have a right to know more about those arrangements in order to make an informed decision about whether, where, and how much one is prepared to donate.

Concern also exists around the professional telemarketing firms and the so-called “chuggers”, or charity muggers, who approach and occasionally hassle passers-by on the street to donate to a charity. I have spent many hours volunteering to collect money on the street for charities like Arthritis New Zealand, my Rotary club, and other worthwhile charities. I am sure many of my colleagues in the House have done the same. I am pleased to be able to contribute in this way to the fantastic work that our charities do. However, through forcing disclosure of improper practices, I am hopeful that worthwhile fund-raising campaigns will not suffer from growing public concern about how much of the money donated actually gets to those it is intended for.

I would like to thank the Commerce Committee of the 49th Parliament under the chairmanship of the Hon Lianne Dalziel for its hard work and the recommendations to ensure that this bill achieves its function. The committee received and considered 25 submissions on this bill from interested groups and individuals. One of these submissions was from Arthritis New Zealand, which, along with a number of other submitters, generally supports the aim of this bill. In its submission Arthritis New Zealand stated that as a charity it has been concerned by media reports on the lack of transparency in the collection and use of money by some charities. It said: “Our experience is that these reports make the donating public extremely nervous. This impinges on our good name and that of others.” Well, it is absolutely right. The lack of transparency around third parties has caused public concern towards donating to charities.

The Commerce Committee recommended the bill be changed so that the new rules be delivered through regulations, rather than by amending the primary legislation as originally intended. The first version of the bill added provisions to the Fair Trading Act to prescribe what can and cannot be done when soliciting on behalf of charities. It proposed amendments to the “Unfair practices” provisions of the Fair Trading Act 1986 that would require disclosure by collectors, in particular by providing that when a third-party collector retains more than 20 percent of the funds raised, this fact must be disclosed to the public. The bill also provided that where the retained portion is greater than 50 percent, the percentage proportion must be disclosed proactively. The committee concluded that the complexities involved could not be dealt with in the primary legislation, as there is no simple universal solution.

The bill has been changed to instead provide for a regulation-making power. This gives more flexibility to make the changes work. I thank those officials who supported the committee through the submissions and the deliberation process, and also those involved in redrafting the bill to give effect to the committee’s recommendations. The select committee’s recommendations uphold the purpose of the bill in its original form, in that they will create transparency and ensure that the public are in fact aware of their donations, where they are going, and just how much is going to the charity. I welcome the Commerce Committee’s recommendations, and I commend this bill to the House.

As the former chair of the Commerce Committee in the previous Parliament, I rise to support the passage of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I think the sequence of events in terms of who has had this bill in their name has added some interest in terms of the contribution of the member who has just resumed her seat, Louise Upston, because, of course, this bill was originally in the name of one Amy Adams, who quite rightly was promoted to Cabinet after the last general election.

💬 Charles Chauvel: She was so good in The Muppet Show.

I think my colleague here keeps getting her confused with the famous actor called Amy Adams. No, unfortunately she was not on The Muppet Show, and she was not in Doubt either, so I have to convince him that this is not the case. There is just a coincidence of name. Unfortunately, this member here is distracting me from a very serious contribution that I want to make, because this is an important matter. The reason I want to make these comments is because of the nature of the contributions of the various members.

When Amy Adams brought this bill in front of the committee we ensured that she became part of the deliberation process of the select committee, so she was able to sit in at a time we were hearing submissions and to contribute and discuss with officials the way that we were going to resolve the bill. I think she brought a bill to the House under a member’s bill process, and this, unlike some of the other bills we have dealt with tonight, is an extremely good example of how a private member can actually use the member’s bill process to advance good law and make some very positive changes that can gain the support of the whole House, and I do not think anyone will get up and oppose this particular bill tonight. One of the deficits of our current process in creating members’ bills is that we simply do not have the skill sets for drafting complex pieces of legislation. No matter how simple they appear on the surface, they can, in fact, be quite complex underneath. We have the secret weapon of one Charles Chauvel, a former very prestigious, well-renowned partner in a major law firm in Wellington, to call upon in order to enable us to get good members’ bills into the ballot, but this one suffered from a particular problem in that the intention was well-thought-through, but the mechanism for delivery was not. The select committee, in fact, had to do considerable work in changing this into a provision that created a regulation-making power, rather than trying to deal with the problem in the law itself. [Interruption] I am sorry, but I am being distracted by my very good colleague in front of me. The point that I am making in relation to this bill is that Amy Adams certainly had, in a very short period of time in this House, set herself apart and was an obvious choice for the Government when looking to introduce a new Cabinet after the last general election. This bill now sits in the name of one Michael Woodhouse. The fact that he was not speaking to his bill suggests that he may, in fact, be in consultation right now over his future, and it may well be that the name of this bill will transfer to somebody else in the very near future, and we congratulate him in advance if that is the case.

I want to comment on the substance of the legislation, because although we have had a very good contribution from Louise Upston on behalf of Michael Woodhouse, I think that there is something that has been completely missed. I just want to remind people of a case, and I downloaded this off the internet just before I came down to the House, because I had kind of forgotten what the name of this person was. I know that my colleague Ruth Dyson is going to remember this case very well: “A man accused of pretending to be disabled to ‘scam’ money is still selling pens for $20 on behalf of a charity that has told him to stop. John Peters, a Christchurch man who says he travels the country as a professional fund-raiser, was in Wellington last week selling pens bearing a Wheelchair Tennis New Zealand logo.” Well, I also know that he also sold pens for something called the Disabled Children’s Trust as well. Anyway, it goes on to say: “Wheelchair Tennis administrator Amanda Hill confirmed the charity had accepted money from Mr Peters in recent years but had written to him in October telling him to stop selling the pens.” The difficulty with Mr Peters was that he actually took money off people, selling these pens—and they were for a paraplegic organisation—with a rug over his legs to make it look as if he was sitting in a wheelchair, which is quite disgraceful when one thinks about it. But the interesting thing about Mr Peters that really sets him apart from most other people by that name is that he is a former ACT Party candidate. As a former ACT Party candidate who still owned nine rental properties while he was doing this, he said to the media—he told the Dominion Post—that he was asset rich, but cash poor. So I thought that this was a terrible thing to be allowed to get away with, and this bill will go some way to ensuring that he has to disclose the fact that he sells the pens for $20 but donates only $5 of that $20 to the charity of his particular choosing. He will have to disclose that under the regulations when they are formed, but there is nothing in this bill that will stop him doing that at all. I think that is a flaw in the legislation, which we were advised would be picked up in the consumer law review.

If one reads the commentary from the Commerce Committee, we concluded our commentary by saying: “We are advised that there is likely to be significant amendment of the Fair Trading Act resulting from the review of consumer law that the Government is undertaking. Consideration of whether to require disclosure by collectors would fit within the wider context of the part of the review looking at possible additional best practice enforcement tools for consumer protection and promoting business competition.” That bill is now finally in front of the House. It has gone to a select committee and submissions have been called for on it. We did discuss with the former member in charge of the bill, now a Minister, Amy Adams, whether we should hold this bill over for the process of the consumer law reform legislation. In fact, she felt passionate about this and said, no, we should carry on with this bill regardless of the advancement of the consumer law protection legislation rather than including it within it.

There is another bill on the Order Paper, further down—the Consumer Guarantees Amendment Bill—where the select committee and the member in charge of the bill actually decided exactly that course of action. I hope that when we finally do get to the Consumer Guarantees Amendment Bill that that will be discharged and basically withdrawn from the Order Paper. I mean, all credit to Dr Jackie Blue, but in that particular case it was agreed that it would not proceed and that it would be subsumed within the consumer law reform legislation, which it has been. This one, on the other hand—the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill—stands on its own merits, and it is to the credit of Amy Adams and, I believe, to the credit of the member’s bill process, that we are able to support its passage through the House. I am very pleased that we have had the opportunity, finally, tonight to debate a bill that is worthy of this House’s time, and I commend its passage to the House.

It gives me pleasure to rise and speak on this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, brought to the House originally by the very capable member of Parliament Amy Adams, who has now become a Minister, and it is to be directed through the House by our senior whip, Michael Woodhouse. Can I say congratulations to Ms Adams. She is another member who has been successful when it comes to members’ bills, the same as the last bill that was up, in the name of Mr Bakshi. I wish all members on the opposite side of the House success with their bids that may be in, as well.

💬 Chris Hipkins: How about voting in favour of some of them?

I say to the Government whip that I will be voting in favour of this one.

💬 Chris Hipkins: I’m not the Government whip yet.

In fact, this is the first time I have addressed Mr Hipkins since he became whip. I wish him more success than the last member who had the seat, who also had red hair. But can I say to members opposite that this is a very important piece of legislation—[Interruption] I see that my friends in New Zealand First enjoyed that last one.

Can I say that this is a very important piece of legislation for many reasons. Charities do a very important job in our communities and they are very active in many of our communities. For the majority of these charities it is volunteers who are involved. Every day New Zealanders get up and go out and help out. They do good in our communities. They do a wonderful job and our communities are richer for their efforts, and I want to, on behalf of all members on this side of the House at least, thank them for their efforts.

Where this stops and falls down is when people go out and impugn their good reputation and undertake some activities that charities do without the positive and good effects. We have seen in the newspapers, and we have probably all heard in our communities—at least those of us who have electorate seats will have seen in our communities when we speak to our constituents—that there is a great effort made to support these charities, but people are becoming increasingly concerned about those who may act fraudulently, who may not have the community’s or the charity’s best interests at heart, or who may take too much from the activity they are doing. If somebody provides some money they want as much of it as possible, if not all of it, to go to that good work.

Over the last couple of years, as the local member of Parliament for Rotorua, I have done a lot of work with the people from the SPCA in Rotorua. It is a fantastic charity and they do a wonderful job on behalf of us. Most people in the community have something to do with the SPCA one way or another. They go along and support them and donate to them, or they go along and look for animals with them, or, sadly, they abuse their animals and the SPCA has to pick up that slack and care for them and help out. I would hope that every single person who donates to the SPCA in Rotorua does so knowing that the funds will be used for the intent that they are given.

I think this legislation takes a huge leap forward. I congratulate Amy Adams again on researching this, on listening to her constituents, on drafting the bill, and on then having the fortitude and good luck to bring it through the bill process to this House so that there can be more clarity, but, more than that, some important rules and laws around this to control the conduct of those who may not have the best interests of these charities at heart when they go out and work on their behalf.

I want to finish here, and recognise the work of the last Commerce Committee and the last chairperson of the committee, Ms Dalziel, and say that I think the committee did a very good job with this piece of legislation. There were some 25 or 30 submissions, and the committee members took their time to make sure they heard them properly and got it right. I agree with Miss Adams that it is important that we deal with it now, rather than waiting for another piece of legislation. We have legislation before the committee around consumer law reform, so we will have an opportunity to consider it further, but I think this is a wonderful piece of legislation.

As the Hon Lianne Dalziel said, there are two Amy Adams to acknowledge in this world, one an actress and the other now a Minister. Can I say they are both very talented people, but one of them probably more talented than the other, and that is the Minister Amy Adams. Well done to her for bringing this bill to the House. Thank you.

I would like to make a few points about this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, as one of the members of the Commerce Committee who heard the submissions. As you have heard tonight, Labour supports this bill. It is a good bill, and I would like to commend the work of the member who originally brought this bill to the House, Amy Adams, and join with other colleagues across the House in commending the work that was put into it.

It is a solid bill. It deals with some important issues. It attempts to address some real issues of concern to the public. The issue is that if you make a donation to charity, it should be just that, a donation to charity, not to a telemarketer necessarily, and that people who are donating to charity should have confidence that they are donating to that charity.

I note the contribution from the previous member, Todd McClay, around the SPCA. Having just signed up two junior members to the SPCA from my own family, and it being the first organisation that I ever joined at the age of about 10, I know the importance for charitable organisations to try to have people who are committed to them, especially from an early age, and for there to be confidence in those organisations. So it should be that any member of the public should be confident that when they actually donate to a charity, they can be confident that the vast majority of that money is going to charity. That is what this bill is trying to address.

I would like to, I guess, reiterate what my colleague Lianne Dalziel just said to the House earlier around the importance of that, and also commend the work that she did as chair of the Commerce Committee. She is obviously very sorely missed on that committee—

💬 Hon Lianne Dalziel: I don’t think so.

—certainly by members on this side of the House. Actually I would say that the previous Commerce Committee was a very good committee and it dealt with some important issues. This bill that is now before the House is one of the significant members’ bills that actually came before that committee.

I do want to reiterate what my colleagues said around the intention of the bill being good, but that the mechanism did create a lot of discussion and a few headaches for the committee in terms of how to address it. We certainly acknowledged that the issue that it was meant to address was causing public concern, but that the current Fair Trading Act’s provisions regarding unfair practices provided for the prohibitions on conduct, but they did not include positive provisions such as the disclosure requirement that this bill proposes. That is why we had to go down the pathway of recommending that a power for the Governor-General to make regulations through an Order in Council was the mechanism that needed to be used, rather than what the original bill brought before the House.

I do just briefly want to make mention of some of the submissions, because we received submissions from some very large and reputable charities on this bill, and very passionate submissions—some very passionate submissions. They were passionate on both sides. Some really wanted regulations and for this issue to be addressed through a legislative mechanism, and some really passionately argued for self-regulation.

Just briefly, I want to mention that the Fundraising Institute of New Zealand certainly argued in favour of the self-regulation mechanisms, supported by Barnardos, which is a very reputable charity. It was mentioned before by a previous speaker on the other side of the House that Arthritis New Zealand argued strongly that it was not confident that self-regulation would be successful, based on its past experiences, and that there was a lot of confusion around coordinating awareness days, and the organisation felt that it was very difficult for self-regulation to be effective. Again, on the other side of the argument there was Greenpeace New Zealand. It brought a very passionate submission to the committee, which argued that although there was very good intent in this bill, organisations like themselves would be disadvantaged through such legislation. So there was a lot of juggling and argument and interesting discussion amongst the committee on this issue.

I think that what we have come up with is addressing the issue. It is acknowledging the issue. To reiterate what Lianne Dalziel said, this did demonstrate the importance of the member’s bill process, but there were issues with the way that the bill was drafted. I think that how the committee has addressed it did come down, on balance, on making this bill effective and workable, and it demonstrated how a committee like the Commerce Committee can work very effectively on a good piece of legislation that is brought before it. We commend the bill to the House.

New Zealand First certainly does support the purposes and content of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I do think that fund-raising for charities is something that needs regulation, and, of course, public confidence is the main reason why that is so. I think it is unfortunate that sometimes some professional fund-raisers are so slick in their methods that they turn people off. The reason for that is that they are not absolutely sure where the money is going. These regulations, when made, will have the effect of improving public confidence and, hopefully, ensuring that more people make donations to charity. I think that the methodology that has been adopted in this bill, by empowering the making of regulations, is the right way to go because, of course, there needs to be flexibility and we need to make sure that those organisations that are going to be affected by the regulations are, in fact, able to work within it properly.

It is a very complex area. Many of the organisations have quite different needs from others, and different attributes, so it is quite difficult to tailor-make all of that in an Act of Parliament, so regulations are the sensible way to go. I would say also that I often hear from some other members opposite—especially the ACT Party, I would have to say—why it is so important to have less regulation, less legislation, and less government, but here we see a situation where regulations are the sensible way to go. Of course, regulations are often very valuable ways for this country to govern itself, and in particular when you get situations of this sort of complexity.

It is very important that the Minister of Consumer Affairs should use the provision in the bill for consultation, because the people who are affected, as I have just said, do have very different needs, and there needs to be a very pragmatic approach to the way that these regulations are implemented. We must listen to the needs of the various organisations concerned to make sure that they are assisted in their objects and not hindered by the regulation that will come down as a result of this legislation.

The only other thing I would like to say is this: there is a possible problem, I think, with the definition of “fund-raiser” in the bill, which is that some charities exist for the purpose of raising funds for other charities. They may be caught—and maybe they should be caught—by the term “fund-raiser”, but it is not clear in the definition how those organisations would be dealt with. So it would have been preferable if there was a further provision under the definition of “fund-raiser”, especially in new section 28A(5), where it firstly says in paragraph (a) that a fund-raiser “means a person who, in business, makes requests”. Of course, charities that exist for the purpose of raising funds for other charities are not in business so would probably not be covered by that. However, in paragraph (c) under the definition of “fund-raiser” we see that it “does not include—(i) the charitable organisation concerned”. That probably does not apply to a charity that is raising funds for other charities, but that would be a matter for interpretation. In subparagraph (ii) it refers to “a volunteer (being a person who does not expect to, and does not, receive any financial benefit for his or her fund-raising activities)”. Perhaps charities that raise funds for other charities would come under the definition of “a person”.

I am just making a point that it is not perfectly clear in the bill what the situation is where a charity raises funds for others. I can tell you that I happen to be a member of a trust broad that does exactly that. It is a charitable organisation and its only purpose is to raise funds for other charities. It would be uncertain for its members, when they read this bill, how they would be treated under it. So I just raise that as a possible problem. I do not think it is a huge issue, and I do not think it is one that would warrant an amendment at this stage.

But, subject to those relatively minor reservations, New Zealand First is very happy indeed to support regulations when they are made under this legislation and, therefore, to support the legislation itself, which we think will assist charities in their objectives of raising funds by giving people confidence that the money will go where it is supposed to go and that there is adequate supervision in the way set out in the bill. So New Zealand First will be supporting it wholeheartedly.

It is a pleasure to stand and talk to this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I also want to commend the member who introduced the bill, Amy Adams, as well as our Commerce Committee, which worked quite diligently on the provisions of this bill. I just want to start by saying that the bill, as has already been explained across the House, is about increasing transparency and accountability for those third-party businesses, particularly, that make it their affair to collect funds on behalf of registered charities. To give you an idea about how important this part of our society is, not only does it support great charities, as Ms Upston has referred to in terms of Plunket, Greenpeace, and other charities, but also it is a billion-dollar industry. It is a billion-dollar industry supported by 25,000 registered charities across this country.

One of the issues, as has already been alluded to by members, is that people do not know how much is being given to the charity and how much is being taken by these telemarketing groups, or these third parties. We have had cases in the past revealed by the media, thankfully, where between up to 75 percent and 90 percent of funds donated have been going to these third parties. That leaves 10 percent. If you extrapolate that out over $1 billion, that would be $900 million going to third parties, which are really not adding much value and not actually donating to charitable causes. So it is a problem that many understand, and it is a problem that this bill addresses.

We also addressed within the original bill that came before us a provision that set up a disclosure regime such that over 20 percent of funds raised would be disclosed to the public, and it would be disclosed in a way that was general, but if 50 percent was used for the third party, or these telemarketing groups, then it must be disclosed proactively. We had a number of charities that actually came in and argued against this particular clause—this key clause of the bill as first presented. One of the reasons they said this was that often there was a huge amount of marketing up front in order to get long-term clients—clients who were not just donating on the street but who were prepared to pay moneys over a number of years. We took these submissions into account when we looked seriously at how this bill would be applied in practice.

We could not in good conscience, I suppose, impose the original regime as presented by Ms Adams, so we have put in the bill a regulation-making power that allows officials, through an Order in Council, as enabled by the Governor-General, to sign off on these regulations. Although everyone has said thus far that that is acceptable, I have got to say as a legislator that I do this with great reluctance. We should do it with great reluctance, because we do not know what those regulation powers are to date—we do not. We delegate a lot of that discretion to officials who work behind the scenes. My preference personally is for us as a Parliament to table the clauses, debate them, and put them into law, but we could not find that solution. I am surprised that members opposite did not make that point, because we struggled long and hard during the select committee submissions over that particular point.

Having said that, I think the mischief behind this bill is important. I think we have all agreed upon that. What it would do is increase the trust and confidence of those donating to charitable trusts. It would also discourage these opportunists who actually prey on others. I know that the last speaker referred to his own charity that he is on, but some of these charitable organisations are preying on the smaller organisations and taking large and substantial fees for their services. We are not here, I believe, to intervene in those transactions made by private parties; all we are asking for is a little bit of transparency and a little bit of disclosure, such that those donating understand where their funds are going—and I do not think that that it too much to ask. I think that once we get that trust and confidence back into the donating process that New Zealanders go about every day, you will see more funds, more of those billion dollars in funds that go to charities, actually go to those worthy causes to which people have originally donated their funds.

Wrapping up, I certainly support this bill. As I said, I do so with reluctance to make a regulation-making power, but it was the best solution that we came to at that point in time in the committee. I think that accountability and transparency will actually be a good thing for the sector and a good thing for those who prey on these charitable organisations. I am pleased that parties across this House are supporting this bill. I urge you all to vote for the bill, and certainly I am looking forward to this coming to pass, whether it be through regulations or an enactment in this Parliament. Thank you.

Kia ora, Mr Deputy Speaker. I would like to take a very quick call on the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I would like to acknowledge all the wonderful work that charities do in this country and also the fund-raisers, because it is not the most popular job. I take issue with Louise Upston calling them charity muggers or “chuggers”. I think they do a hard job in trying conditions. I did it for Greenpeace for years. It is good training for politics, but it is a very hard job.

We support the bill. We support the intent of the bill, which is increased transparency. We note there have been out and out abuses and deception by these third-party fund-raisers. However, it is not going to stop the pen example we heard about earlier on—those out and out fund-raisers masquerading as acting on behalf of a charity. We would like to thank all the submitters who submitted to the Commerce Committee. We note that a few large, reputable charities did submit against the bill. We hope their issues have been addressed.

We think there are continuing issues around the threshold, the 20 to 50 percent; those charities, the third-party fund-raisers, who face large upfront costs; and those charities that depend on an ongoing income, be it monthly automatic payment or direct debit, that basically do not recoup the initial fund-raising costs for months or, in some cases, years afterwards. We want to raise the question of those one-off charity events. How can you say what proportion is being kept by the fund-raiser, the third-party fund-raiser, if you do not know what it is, because it is a one-off event? You are going to find that out only once you do the round-up at the end of the evening.

But in the end, what the Green Party wants to see is a well-regulated, transparent, thriving fund-raising and charity sector, so we are very happy to be voting in support of this bill tonight.

I stand in support of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. One makes donations to charities in the hope that money donated will go to helping those in need, whether those requiring help are in New Zealand or elsewhere in the world.

Over the years the number of charities collecting money has increased. The Charities Commission indicated that New Zealand has got more than 25,000 registered charities. For a small nation State like New Zealand, that is a lot of charitable organisations. Either we have a lot of people who want to work towards the betterment of New Zealanders and people at large, or there are many people fishing out the money. In recent times, one hears concerns.

Debate interrupted.

The House adjourned at 10 p.m.