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Xenophon Second Reading Speech:
Tax Laws Amendment (Public Benefit Test) Bill 2010
May 13, 2010


Senator XENOPHON (South Australia) (9:50 AM) —I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

Senator XENOPHON —I table an explanatory memorandum and I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This Bill seeks to introduce a public benefit test for religious and charitable organisations seeking tax exempt status.

What this Bill proposes is nothing new. In the United Kingdom a public benefit test exists to make sure that organisations receiving support from the public through tax exemptions do more good than harm.

I make no secret of the fact that this Bill is prompted by the heartbreaking stories I have heard from victims of the Church of Scientology.

There is no denying that this organisation’s tax-exempt status needs to be examined. If the stories I have heard are true, and I believe they are, then the Church of Scientology does not deserve the tax-payer support it receives.

Scientology needs to be open and transparent, and to prove that the good they do in the community outweighs the harm.

But the public benefit test is not limited to the Church of Scientology. Under this legislation, all religious or charitable organisations will have to come clean about what they do—both the good and the bad.

After all, daylight is the best disinfectant.

Previously, the Government has responded to calls for a public benefit test with the line that they did not want to pre-empt any recommendations that may have been made in the Henry Tax Review.

Well, the Henry Review is out and, in line with a Productivity Commission report earlier this year, it calls for a National Charities Commission to monitor, regulate and streamline tax concessions for not-for-profit organisations.

But the Government has chosen to ignore this recommendation, and similar recommendations from previous reports saying the same thing.

In the United Kingdom, a Charity Commission has been in place since 2006. Part of this organisation’s role is to administer the public benefit test.

I quote from the Commission’s website:

To be a charity an organisation must have purposes or (‘aims’) all of which are exclusively charitable; a charity cannot have some purposes which are charitable and others which are not.

In a foreword on the Charity Commission’s website, the Chief Executive writes:

Perhaps more than any other sector of society, charities can command public trust. Charities are fortunate to be in this position and we, as their regulator, have a responsibility to ensure that this trust is maintained and even, if possible, increased. It is important for civil society that this trust is not taken for granted, but is actively valued, earned and continually renewed.

Part of being a charity, or not-for-profit organisation, relies on public trust.

The Commission goes on to outline the purpose of the test, which it says is to:

- explain the requirement that, to be a charity in England and Wales, an organisation must have charitable aims that are for the public benefit;

- raise awareness and understanding of that public benefit requirement amongst the public and the charitable sector;

- explain how the public benefit requirement operates in practice; and

- explain the new requirement for charity trustees to report on public benefit.

Offering tax exemptions says, on the part of the Government and on behalf of taxpayers, ‘we acknowledge the work you do, and support you in your aims’.

But the way things stand right now, we don’t know what those aims are, other than what websites and glossy brochures tell us.

When we’re dealing with our own money, we can look at those websites and brochures, look at annual reports and talk to people face to face before we decide to make a donation.

And if something doesn’t look quite right, we have the choice to walk away.

But when the Government is effectively making donations on our behalf through tax exemptions, we just have to take the organisation’s word that they’re working in the public good.

I’m not saying that all religions and charities out there are rorting the system.

Far from it.

Many of them provide vitally important services to the community, working in the areas of society most of us try not to think about too deeply, often for little more than the satisfaction of doing a good deed.

These are the organisations that deserve taxpayer support.

And they deserve acknowledgement that they are using that support in the way it is meant to be used.

The public benefit test is not new, it is not unheard of, and it is not a threat.

It is simply a tool to encourage public confidence in the not-for-profit sector, and a means for the Government to ensure its support is not being abused.

In the end, it is simply a way of letting in the daylight.


Senator XENOPHON —I seek leave to continue my remarks later.

Leave granted; debate adjourned.



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