HOST:
To tell us why the law is needed is David Bradbury, the Assistant Treasurer. Good morning David Bradbury.
BRADBURY:
Good morning Ian.
HOST:
Now look, South Australians have heard a bit about this in recent times. I don't know if you've been following what's happened to our zoo here – have you been watching what happened here? A not-for-profit organisation here in Adelaide?
BRADBURY:
I haven't been following it that closely, I'm broadly aware of the issues, but it's not any particular charity or any particular incident on its own that's driving this need for reform, but I should make the point that this is actually a set of reforms that have been advocated and called for by the sector themselves and I think it's worth just reflecting upon that. If you take someone like Tim Costello from World Vision, he has been a great advocate of this because he recognises that it is important that there be robust, transparent and accountable systems in place to give the public the confidence and the trust that they need to continue supporting these organisations and that support can come in the form of financial donations, financial contributions, but it's also in the form of volunteerism. For people out there wanting to volunteer their time, I think it's important that they have some sense of confidence that the organisation they're giving their time to, or their money, that it's an organisation that's being properly run and is meeting certain standards.
HOST:
And of course these organisations have a mutual obligation, as you say, because they're getting tax-free status for this, aren't they? They're being allowed special conditions by the government to be able to take this money in, they're not being taxed on it, so therefore you'd want to make sure that that money was being used for the purposes that it was supposed to be used for.
BRADBURY:
Absolutely, and I think that it is worth noting that this effectively will introduce a national regulator for the first time of the charitable and not-for-profit sector.
HOST:
It seems pretty amazing that we would get to 2012 and not have this, because we spoke to Paul Barnes recently, Professor Paul Barnes, who said that this has been put in place in Britain some time ago because they had concerns over there about a number of charities which have been involved in, let's just say, less than perfect practices there so the British have done it. Was it in response to a particular incident in Australia?
BRADBURY:
Look, this is something that has been advocated for for decades and to be frank, there have been more inquiries than I've had hot dinners in relation to the charitable and not-for-profit sector, advocating precisely what we are doing. I'm very proud that we've actually taken this challenge on. It's been quite a challenge because this is a hugely diverse sector and we're dealing with a huge number of organisations.
HOST:
And schools too, I understand. We're talking to David Bradbury, the Assistant Treasurer, about the new legislation that will, for the first time, set up a regulator to look at charities and not-for-profit organisations. It's passed through the lower House of Federal Parliament, it looks like it will become law. We heard an extraordinary reaction from the Opposition though. I mean they were screaming louder than I've heard in a long time in Parliament, saying they would fight this and throw it out. Is there any particular reason why they're so upset? Is it, for example, I heard someone talking about the schools, what it will do for schools?
BRADBURY:
Look I'm puzzled, I was left scratching my head last night. Christopher Pyne was making certain assertions about the impact on schools. We've looked very closely at those schools that might be affected by this legislation, and it's worth noting that not every school will be affected, but certainly charitable entities that have school building funds, they will be affected but we've sought to largely quarantine its impact on them, certainly through a transitional period by the way in which we've structured the legislation.
HOST:
Well let's take a school building fund for example. Let's take for example a very wealthy school that decides to build a ski lodge at Mt Hotham so their students can go to the ski lodge and when the ski lodge is not being used they rent it out to the public. Would that, for example, be an appropriate use of not-for –profit organisations' charitable status? I mean, is that the sort of thing you're looking at?
BRADBURY:
Well we have to be clear about this, that in terms of what an entity can do in order to continue to enjoy their tax concessions, they're matters that are set out in the tax laws and they've been set out in the tax laws in the past and nothing that we are doing at the moment is altering that.
HOST:
But you hear about schools doing that, you hear about schools setting up very, very, I suppose you could say extraordinary facilities on the basis that they've got a school building fund. And then they get charitable status for that and this is something that is causing a divide between public education and private education.
BRADBURY:
Well there are very strict conditions around what the proceeds of a building fund, a school building fund can be applied towards and if there are – and that has always been the case, schools have always been required to maintain these funds in a separate account. If there's a suggestion that schools are out there misapplying those funds, then they've been doing the wrong thing.
HOST:
Well as Assistant Treasurer can you give a ruling on that? What is an approved building project, for example could it be a ski lodge, could it be a swimming pool, could it be, you know, a mountain retreat for the students?
BRADBURY:
Well the system of enforcement of tax laws that we have in Australia means that you don't have a politician like me out there enforcing the tax law, and I think there are good reasons for that because it needs to be independent of the political process, but the Australian Taxation Office and the Commissioner of Taxation, they are completely independent of the government. We set out the laws and they're out there like the cop on the beat enforcing those laws. If there are suggestions that people are doing things of the sort that you are suggesting, setting up ski lodges with school building funds, then that would strike me as being beyond the scope of what the legislation allows, but the ATO would need to enforce that.
HOST:
What about, for example, a charitable organisation where they say they approved for the people that ran that organisation the use of very expensive four-wheel-drives, for people running the charity? They're the sort of things that people worry about, they say, I mean there was a list of charities recently in the paper and I think one of them was the Royal Flying Doctor Service, more than 90 cents in the dollar went to the charity; some of the others on that list dropped down to 30 and 40 cents in the dollar going back to the charity and the rest was being used up in administration costs.
BRADBURY:
I want to make the point that I take the view that the overwhelming majority of charities are doing the right thing and an important part of what the new national regulator will be charged to do is to work with the charitable sector to improve the way they do what they do, but for those cases, the odd rotten apple that may be out there, then it is important that we have a regulatory regime in place that allows for action to be taken where people are engaged in excesses.
HOST:
The regulator would be able to go and look at the books of a charity and saying, look, that is wrong, that is in breach of the law and would that be criminal sanctions applied to anyone involved in the misuse of funds?
BRADBURY:
There are some very strong sanctions that are available if individuals are involved. There is a very high threshold, but if individuals are involved in acts of gross negligence, recklessness or dishonesty then there are strong personal sanctions that can be applied to them. But I think it is also worth noting that we are dealing with a sector that by and large is based on volunteer labour and we want to strike a balance here between making sure that we've got a transparent system in place with all of the accountabilities that donors would expect but also to make sure that any response would be proportionate to the nature of the organisations that we're dealing with.
HOST:
Look, we're talking to David Bradbury, the Assistant Treasurer, about the new regulations, the new regulator, in fact, that will look after charities and not-for-profit organisations. It's passed through the lower House of Parliament. A couple of calls, if you could just briefly answer these, David Bradbury, one caller wants to know will it do something about the amount of phone calls that non-for-profit charities make to elderly people that are constantly being hounded for donations, and another one regarding, will these new laws apply to unions and the way they run their organisations if they're considered to be not-for-profit organisations?
BRADBURY:
Look, in terms of the first question, no this does not regulate the phone call canvassing activities of charities, but I can say that there are unsolicited selling consumer protections that are already in place in terms of the consumer law and most importantly at a practical level there is the do-not-call register and that is something that people should be encouraged to log their name onto because by putting their name on that register they can ensure that charities are not constantly contacting them. This obviously – we want to strike a balance here to allow charities to make their charitable cause available to people to donate, but we want to make sure that people aren't being harassed as well and that's where things like the do-not-call register do assist.
HOST:
And what about the other matter?
BRADBURY:
The question of unions, traditionally most of the regulation of unions has been done through the industrial laws, I think that's fair enough. It's important to note that whilst the new regulator will ultimately be responsible for the not-for-profit sector generally, in the first instance it's targeted directly at charities and unions are not charities. Charitable organisations, there's a definition that's been set down over the years in common law. Generally they're organisations established for the purposes of advancing religion, advancing education and also delivering welfare benefits to those in needy circumstances.
HOST:
The Opposition says it is going to fight this and throw it out if they win the next election, what's the chance of this becoming law then? How quickly will it become law?
BRADBURY:
Well it now moves onto the Senate; we're hopeful of securing passage through the Senate. We had hoped to have this up and running by 1 October, we obviously are now in a race against the clock in the Senate, but we're certainly trying to have this matter dealt with this week. In terms of the implementation of this and what happens beyond that, I'd simply say that this is an idea that's logic will become so evident once it's up and running that I think it's just astonishing that Kevin Andrews would be saying that the Liberals would repeal this. But can I make this point, that one of the other things we've announced today is that we are seeking to eliminate these gag clauses that we see governments sometimes put into contracts with the charitable sector, like we've seen with Queensland.
HOST:
What's the gag clause?
BRADBURY:
The gag clause is basically where the government, because the government's providing some government funding to a particular entity, they silence that entity from speaking out on general issues. This is something that the Howard Government did when they came into office, Premier Newman's doing it in Queensland. We think it's important that the sector maintains its independence and be free to advocate on behalf of the causes that they stand up for, but we also think it's important to have a national system of regulation that gives the public a sense of confidence that their tax dollars, through these tax concessions, are being well-targeted towards the most appropriate causes.
HOST:
David Bradbury, just before you go, lots of callers saying that charities are still able to call despite the do-not-call register, so perhaps that's worth checking out, because a lot of people seem to think that and also someone is wondering whether you would make this law retrospective. I doubt it, we don't make laws retrospective in this country do we?
BRADBURY:
Look, that's not the intention, the intention is from day one, those organisations that are currently receiving tax concessions would be brought into the new arrangements, so it's not intended to be retrospective but we're very keen to get this up and running because we think it will make a big difference moving forward.
HOST:
Thanks very much for your time this morning, David Bradbury, Assistant Treasurer.