Charities Amendment Bill

Members, we come now to further consideration of the Charities Amendment Bill. When we were last debating this bill, we were debating Part 1. Part 1 is the debate on clauses 3 to 30 and the Schedule: “Amendments to Charities Act 2005”. The question is that Part 1 stand part.

Thank you, Madam Chair. Just wanting to ask the Minister in the chair about clause 13A and specifically what was envisaged in terms of the information that could be prevented or restricted from being released, just so that there is clarity around what was intended from the inclusion of this clause, please?

So I would like further clarity of that section, and perhaps—to allow the Minister time to consider that, if I can just bring to the committee some of the issues that have been raised in this process and why there is some significant frustration with the charity sector with this legislation. Of course, I do want to put on record that it is National Volunteer Week, and it is predominantly volunteers who are involved with the charitable sector that will be on the receiving end of this somewhat disappointing piece of legislation. And volunteers—21 percent of New Zealanders volunteer in some way, shape, or form, and they really add to the richness of the communities that we live in. So I do want to specifically just put on record from Sue Barker Charities Law, who is a specialist in this field, and the view that there is a very large disconnect between how the Department of Internal Affairs views the Charities Act and how the vast bulk of the sector actually views it.

The submissions—and we heard from many organisations—made it very clear that the fundamentals of the Act are not sound, and that the definition of “charitable purpose” is not working well, and that was why when the Labour Party announced a first-principles review, or promised it, in 2017—it was welcomed by the sector, and their view was that the first-principles review is very much needed if the intent was to support charities to continue their vital contribution to community wellbeing. The National Party definitely wants to put on record that we want to ensure that charitable organisations are able to focus on their charitable works as opposed to another regulatory burden; an oversight that it is unclear whether it will add any value.

So the question that Sue Barker Charities Law put in her submission, which is perhaps the question I can ask the Minister in the chair, is: how can we determine whether the Act is fit for purpose when we do not have agreement on what that purpose is? And that’s fair to say, so it would be good to have a view from the Minister in the chair about that, as well as my earlier question, very specifically about 13A and about the intention of that particular inclusion: what was envisaged, what problem was going to be solved, and is there any appeal if information should be disclosed that is not?

Thank you, Madam Chair. Firstly, I’ll just say very quickly—I totally agree with the member’s sentiment around the amount of valuable work the volunteers do and that it is National Volunteer Week. In fact, it’s over 50 percent of New Zealanders who volunteer, and I’ll just say a very huge thankyou to them all.

The point that the member raised—or the clarification that was sought—was around clause 13A, which amends section 25 of the Act. That gives the chief executive (CE) discretion to remove information from the register if the CE considers there would be, for example, safety implications therein. So if it is considered to be in the public interest that information is either prevented or restricted, the CE has the ability to do so, and that’s what clause 13A is about.

Thank you, Madam Chair. I would like a response to the very clear comments from Sue Barker Charities Law. Of any of the submissions, I think hers was the most substantial—and also the time and energy that went into making recommendations and drafting to assist officials and to assist the Government alternative options. So I would ask the Minister in the chair: how is it that we can determine whether the Act is fit for purpose when there’s no agreement on what that purpose is?

I have said this previously, as part of this committee of the whole House stage—that we are here to debate clauses of the bill and not to re-litigate the review that was done some years back. I will state that there is considerable support from many within the sector for what we’re trying to do here through this bill, which is to support small charities to do their work—to reduce, for example, the compliance burden—but to strike a balance between that and ensuring the public continues to have trust and confidence in the sector.

Thank you, Madam Chair. It’s not really answering the question, but there we go. I want to now turn to new section 42G inserted by clause 20, which is the “Duty to review governance procedures”. And again, rather than just use my voice, I want to bring some of the submitters—and some of them are well-known organisations and they do exist with lots of volunteers. In terms of the two different statistics that have been quoted in the House, for those who are wondering, the 21 percent is kind of registered, if you like, or quantifiable volunteering, whereas the 50 percent is much broader than that. And that’s why there’s a difference of figures.

OK, coming to Age Concern, for example, their view on the annual review of governance rules and procedures—and this is why I made the comment about none of us really wanting charitable organisations to be bound up with further rules and regulations that prevent their ability to do the job. And several of them really questioned whether or not the annual review of governance procedures was necessary, because it would be onerous and place an additional burden on charities. I know this was amended to at least three years, but there did seem to be in the submissions a view that perhaps these charitable organisations and the governance didn’t really understand what their role was. And I think, with the tone of some of these submissions, it was that they weren’t trusted to govern their organisations well or to know what they needed to do to meet the terms of its rules and purpose of their trust. And I refer in this instance to the Breast Cancer Foundation of New Zealand and whether or not the intention is, as proposed by the Breast Cancer Foundation, to support the development of a best-practice guide that could include a governance framework for charities, as opposed to adding yet another duty or responsibility on to the charitable sector.

Thank you, Madam Chair. It’s the struggle of a Green MP to have to juggle between different committees, being here and on Standing Orders. I just want to quickly have an intervention and ask about the appeals rights. Because what we’ve heard is that part of the selling point of this bill is that it enables charities to be able to have an appeal process for decisions of the commission. And yet my understanding, and what came through in submissions, was that actually there have been three previous attempts to prescribe appeal rights. And in every single instance, this Parliament has rejected attempts to prescribe appeal rights.

I’d like to quote from the select committee that considered this previously, which noted, “It should be possible to appeal all decisions of the commission that adversely impact on a particular entity. So, in fact, it is the view of many submitters that the prescription in this bill, while being presented as an extension, is actually a limitation on appeal rights.” And I’d really like to hear the Minister’s response to that.

I understand again that when the commission was disestablished in 2012, the Department of Internal Affairs tried to limit appeal rights and failed at that point in time to do that again, and again in 2016 there was another attempt that this Parliament rejected. And I understand that the feedback from the sector was almost unanimous that all decisions by charity services should continue to be subject to appeal and that comparable regulatory regimes allow an appeal against all decisions. So I would really like to understand how, in the name of building better relationships and trust, this Government would present a bill, and a provision in the bill that’s been rejected by this Parliament three times, that actually limits appeal rights rather than extends them.

While we wait for the Minister to address the concerns, and I am sorry that my colleague also is waiting for an answer on her questions—the Green Party, the ACT Party, and the National Party have worked closely in the select committee to try and get some improvements on this bill, and we will continue trying.

So I now turn to the Queen Elizabeth the Second National Trust, another favourite community organisation or charitable organisation.

💬 Hon Scott Simpson: Love those trees.

Absolutely love those trees, and I love those protected areas and the landowners that then put their land into the Queen Elizabeth the Second National Trust for future generations are incredibly generous in their gift to the nation. So with that generosity, how does the Government repay them? By expecting that they undertake a review of their governance on a regular basis, which, in the words of the Queen Elizabeth the Second National Trust, “create[s] an unnecessarily heavy administrative burden.”

Unfortunately, what happens when legislation has changed, the two winners are the lawyers and the accountants—and that’s not to have any negative say about lawyers and accountants; there are sufficient in my extended family to embrace them with loving kindness. But I do think when we are talking about National Volunteer Week and all of the amazing work that our volunteer organisations and our charitable sector do, it is a bit rough to then, in their words, “to create an unnecessarily heavy administrative burden.”

And the other point that they made very carefully, and I’m interested in the Minister’s answer to this, is when there is another legislative framework that governs an organisation such as this one, which legislation takes the priority? Which one is the superior legislation? Because the Queen Elizabeth the Second National Trust say, “A further layer of regulatory requirement has the potential to duplicate or conflict with our existing legislative requirements.” So I’d like the Minister in the chair to answer the question: if there is another piece of legislation that governs the charitable organisation, does that take precedence over the Charities Amendment Bill or not?

There have been a few questions or comments that have been made that I will clarify. Firstly, to the final point made by Louise Upston, the changes that are being made here only pertain as far as the decisions or the issues under the Charities Act. So that’s one.

Secondly, the member’s question around new section 42G inserted by clause 20 and the requirement: there was, of course, an amendment that was made from annual to at least within a three-year window. And I think the member did acknowledge that that was a select committee recommendation and a change that we made subsequently. It basically goes to the point that I made already in this Chamber, which is around the need to ensure that the public continue to have trust and confidence in the sector. Part of that is also supporting organisations, particularly small charities, in terms of continuing with their good governance journey and improving capability there. And so new section 42G creates a duty for the charitable entity to review its governance procedure at least every three years. I don’t consider that that will be particularly onerous.

When conducting that review, the entity must consider whether its governance procedures are fit for purpose. So it’s really about the fact that good governance in the charitable sector is important, as I’ve mentioned, in terms of the public interest in charities and public accountability as well. Governance capability, we know—and I know, coming from the sector myself, that sometimes it can be limited, particularly with small volunteer-run charities. And that’s why the change was made to at least within a three-year window.

Finally, on the point made by the member Jan Logie around appeals, we have expanded the decisions that can be appealed. Previously it was—under the current legislation, it’s decisions made by the Charities Registration Board. That has now been expanded to include some decisions made by the chief executive as well. It would not be efficient to allow all decisions to be appealed, because charity services, for example, will need some decisions to enable them to carry out their compliance and enforcement function, particularly when they need to commence an investigation.

It’s my first opportunity to take part, and I would signal that I haven’t been part of the select committee process. But, having actually looked at the bill, I have a question, starting from new section 12A, inserted by clause 6 in Part 1, where the bill says, “Chief executive to consult on significant guidelines or recommendations”. In the amended version, I’m actually wanting to find out from the Minister whether “The chief executive must consult persons or representatives of persons that the chief executive considers reasonable to consult”—how different that will actually impact on the charities, compared to the previous version, where it says, “The chief executive must consult persons or organisation that the chief executive considers to be representative of the interests of charitable entities”.

The reason I ask that is, when a chief executive of a charitable trust will be working to make sure that the work that they deliver to the entity is of benefit to the charitable trust, they would consult people who would actually help the chief executive. But I’m trying to find out who this person may be that the Minister thinks is actually reasonable for the chief executive to consult. Could it be the cleaner? Could it be the priest at the local church? Could it be the cab driver or any other person that could potentially benefit the charitable trust? I would have hoped that the person that the chief executive consults is somebody that has expertise, who would actually benefit the charitable activity of that charity.

Thank you, Madam Chair. It is somewhat frustrating not to have an answer to that question that was asked by my colleague Melissa Lee. So we will keep going. I want to ask the question of the Minister, still on this vein of what was an annual, now three-yearly, review of governance procedures, to understand, if she sees the intended purpose of the bill or objective of the bill being to remove unnecessary red tape for charities, why then, on the other hand, additional red tape for charities is introduced by this legislation; and whether or not—I think there are 114,000 registered charities—the one-size-fits-all, prescriptive approach that has been taken by this legislation actually enables or supports charitable activity or not.

Thank you, Madam Chair, for giving me this call. I spent a bit of time with the Waikato-Tainui charitable cobweb, or charity web, for many years, so it was pleasing to see their submission. One of the points that they raised was why this bill has not addressed the issue of charities being able to advocate for their charitable purpose without fear of losing their charitable status—for example, Waikato-Tainui advocating for the resolution of outstanding claims and Treaty claims and Treaty redress. So that’s a specific question I’d like to ask the Minister. Kia ora.

On new section 12A, inserted by clause 6, and the point around consultation that Melissa Lee raised, it’s pretty obvious that consultation should be driven by those who will be impacted by the guidelines, and that’s what the chief executive will do.

The Hon Louise Upston. If members want to take a call—I’m just on the brink of shutting down the debate and moving on. So if members want to call—

💬 Hon Louise Upston: We’re just waiting patiently in the expectation—

CHAIRPERSON (Hon Jacqui Dean): No, no, no, we don’t argue. The Hon Louise Upston.

Point of order, Madam Chair. The committee of the whole House, with the new Standing Orders, was to allow for a conversation between the Minister and the member. I think when the Opposition members are making pithy questions to engage that discussion and the Minister doesn’t stand up, that creates a silence.

Yes, thank you. I get the gist of what the member is trying to say, or wanting to say. It is indeed the case that the committees are now being run as more of an inquisitorial forwards and backwards Q and A. It is, however, entirely up to the Minister in the chair as to when and whether they stand to answer a question, and that is my problem: that it is the will of the House whether the debate keeps going, but into a silence I can only conclude that the House is finished, and that is why I am trying to suggest to members that the most helpful—if members still have questions, don’t wait; go ahead and bid.

Thank you, Madam Chair. So I think instead, I’ll just make a speech, because that might be more useful, if the Minister is not going to answer the questions.

I do think, because of the timing—and I don’t know if it was by accident or deliberate that the committee of the whole House stage is being debated in National Volunteer Week. I went and met with a number of volunteer organisations yesterday, and let me see if I can name them. Project Tongariro, Greening Taupō, Red Cross, St John’s, the Tokoroa Fire Brigade, trustees from a couple of my local schools, Breast Cancer Awareness, Bellyful, Plunket, assistance dogs, hearing disability dogs—who also represent the only dogs assisting in emergency management scenarios—these are organisations that are wide and varied in the service they provide to our community. There are also the hospice and Care NZ, which is predominantly a cat rescue. Those two alone, the hospice and Care, in Taupō, have 370 volunteers—370 volunteers—whose time and energy that I would like to see the Government support.

I don’t want the hospice shop in Taupō to be worried about raising another $20,000 to pay an accountant to ensure that their governance—let me get the words—

💬 Tama Potaka: Sausage sizzles for accountants.

Absolutely! That’s a great expression—“sausage sizzles for accountants”—because what is pretty clear from the submitters, which is why I have consistently gone back to put the voice of the submitters in this committee of the whole House stage, is that they’re quite bewildered in terms of whether or not the Government values their work in terms of defining the problem. Originally, the problem was that the charities bill wasn’t fit for purpose, and that’s why there was a first-principles review that the Labour Party had promised in their election in 2017.

So then the submitters are somewhat puzzled by what the problem is now, because if the bill is fit for purpose, why would you then just lay on more red tape for charities and treat them all as one size and type, knowing that some are incredibly complex and others are not? Others have governing legislation—like, as I mentioned before, the Queen Elizabeth the Second National Trust—and others don’t. Waikato-Tainui is a very wideranging charitable organisation who do phenomenal work in the community, and it might actually be that they’ve got accountants that can support their work, but I’d be very surprised if some of the smaller charities do.

So the Government wants those organisations to raise money through sausage sizzles to pay for that, and that’s why I’m going to ask another question. Is that the intention, that funding that has been raised for charitable purposes will now be spent on accountants and lawyers to ensure that the governance review that is required on a three-yearly basis—and I’d like to know if there’s been an estimate of what that will cost the charitable organisations. Yes, I accept that in the select committee it was changed to push it to three years, but what is the estimated cost, Minister, of the duty to review governance procedures every three years for every charitable entity?

I find it incredibly interesting that that member waxes lyrical about the cost that is imposed on charities when it was that member’s party in Government that brought in a change in 2015 that meant that very small charities had to hire accountants because they then suddenly needed to report against the External Reporting Board standard. That is one of the changes that we are proposing through this bill because so many small charities were unable to afford that cost. So it’s a little bit rich, coming from that member.

So what are the changes, the member asks—are we just increasing red tape through this bill? No. So small charities will have their reporting requirements reduced if they fit into specific criteria—which is very small charities—such that they just provide a narrative report and don’t have to report against an onerous standard. That is one of the changes that will be made, which has gone down very well, might I add, with small charities. That’s one.

Secondly, the rules document in new section 42G, inserted by clause 20—again, I’ve already addressed this issue. It’s not a compliance burden. Charitable organisations already have a rules document. This is a point I’ll make because this is an issue that’s been brought up again and again, and I suspect there’s a lack of clarity around the fact that the current Act already requires charities to have a rules document. The only change here is the fact that many have rules documents that are out of date because there hasn’t been a requirement to keep them updated. This goes towards driving better governance.

All this bill does is to ensure that there is a requirement that regularly, charities will continue to comply with what they’re meant to be doing, and it gives them an opportunity to be able to do so. Initially, we thought that perhaps annually would be a good fit, along with reporting requirements, but given the submissions to the select committee, we decided that perhaps we’ll change that to a three-yearly requirement, so there’s a threeyear window for charities to be able to do that within. It’s already there, so there shouldn’t be an additional cost at all or an increase in compliance burden there.

In terms of advocacy, the point that was raised about charitable organisations being able to be involved in advocacy—now, that is out of scope of the bill. But what I will say is that there have been rulings through the Supreme Court on that. Family First comes to mind in terms of the ruling around advocacy, and I’ll leave that there.

I will also address, for the final time, the issue around first principles, because that has come up time and again by members from the Opposition. That is out of scope for this bill. We are here to discuss the clauses that are in this legislation, and not re-litigate a review that took place in 2019 where the consensus then was that the foundations of the legislation were sound, and what we would do was to make tangible changes that would actually benefit the charitable sector while also striking a balance to ensure that the public have trust and confidence in the sector.

Thank you, Madam Chair, and I’m going to acknowledge my colleague Jan Logie has been the one doing the brunt of the work on this bill; I’m going to do my best to channel her in my contribution and questions. So just touching on new section 42G, inserted by clause 20, regarding the “Duty to review governance procedures”, and following the Minister’s comments, we’re interested in getting a clearer understanding on how does the Minister expect that the charities will be able to demonstrate these reviews have been met when it comes to governance. And then also getting a better understanding of what does the Minister expect to happen if these duties are not fulfilled and are breached. Those two things, I guess, are things that have been fed to me in terms of concerns that exist, and are priorities. So if there’s any comments from the Minister around this that would be helpful, thank you.

One of the more exciting dynamics of my last three months here in Parliament is listening to all the impressive expectations in legislation—new legislation around Treaty compliance and Māori compliance. And what I thought to ask the Minister was what specific assessment has the Government done to quantify the extra costs and/or voluntary hours for the many Māori organisations who are going to have to comply for this new regime?

Thank you, Madam Chair, and I would like to continue along that vein, because we all know in this House the benefits that voluntary organisations provide to our communities. So my question is following up on my colleague Tama Potaka and my earlier question: what is the anticipated cost to each charity of these changes? And if the cost per charity hasn’t been worked out, or is not provided today, what is the cost for the duty to review the governance procedures? And, again, bringing the words of the submitters—so when the Minister, quite disparagingly, commented about the Opposition’s contributions, I would just remind the Minister that I am reading from submitters’ concerns, and it is the submitters who were concerned about the lack of the first-principles review.

This one, though—coming back to what the costs are, because there is a real interest in what those costs are—from Community Housing Aotearoa is very similar to the earlier one which, in terms of the review of procedures, says: “Rather than regulate,” wouldn’t it be more beneficial to have “an educational approach”, or a best-practices approach? Because, as this organisation identifies, “It is already very challenging and timeconsuming to meet the present and ongoing requirements of many legislative reforms. Legislating to enforce this review is excessive.” So those are the words of Community Housing Aotearoa; they are not my words. I am speaking them on their behalf because it is really important that submitters know that their submissions are taken seriously, and although they may not have been in the select committee process, the committee of the whole House is another opportunity.

So I am asking the Minister for the costs, because, obviously, a cost-benefit analysis has been undertaken otherwise this wouldn’t have got through the gate to have even been put before the House. So what are the costs anticipated, on average, for a charity? And if that answer isn’t forthcoming then at least what is the estimated cost to review the governance procedures? And is there a post-implementation review of these costs to identify whether or not they line up with what was anticipated in the original cost-benefit analysis? And if those costs are seen to be excessive, then with any contract the Government has with a charitable organisation, will they cover those costs?

I will say firstly that I do take submitters’ views into consideration, and seriously. I will also say that there are over 100,000 charities in New Zealand, and 28,000 registered charities as well. To the question around cost as a result of clause 20 that inserts new section 42G, I have already addressed this today in the House. I will say again, for the member’s benefit, that there is no anticipated additional cost as a result of this, because the rules document already exists and charitable organisations already have to meet annually and this is not expected to be onerous.

To the point that was made, or the question that was raised earlier in terms of the penalty if organisations don’t comply, I would expect the charities services would work from an educational point of view with charities who require that, and that is something they already do.

I’d like to thank the Minister for her answers, and I hope that she will bear with me, considering the fact that I’ve actually initially said, right at the beginning, that I wasn’t part of the select committee and so I’m going with it quite fresh.

The thing that really intrigues me, and the Minister actually said we’re not re-litigating the review, but I just wanted to ask the Minister’s opinion: considering the fact that the review was led by the Department of Internal Affairs (DIA)—so, effectively, the review was reviewing itself—when this legislation is looking to create transparency in the charitable sector, is it right that this legislation, this work, is actually based on a review that was done by DIA on its own self, instead of an independent review? Does that actually speak to transparency that this Government is actually talking about?

So I’d like to seek the Minister’s opinion on that, considering the fact that there is actually a huge charitable sector, and my colleague Louise Upston actually listed some of them. But I know that even within the ethnic communities, there are many charitable organisations, too, who do amazing work, particularly during the COVID era, where they were the ones who were providing people faced with difficulties because they couldn’t actually get to do grocery shopping or whatever; they were actually feeding the communities and providing the lifeline that they actually required.

So I’d like to ask the Minister: could she possibly answer whether this actually provides the transparency, especially when the review was done by DIA on itself?

Simon O’Connor’s tabled amendment to Part 1 is out of order as being outside the scope of the bill.