- Debate resumed from 13 June.
JONATHAN YOUNG (National—New Plymouth)
: I am very pleased to stand in support of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill in its third reading. This bill was originally brought to the House by the Hon Amy Adams of Selwyn in response to concerns that third-party businesses that are collecting on behalf of charities were taking proportions of the donations, probably far in excess of what donors were aware of. What this bill aims to do is to bring some transparency and accountability regarding that.
The bill has been through the select committee process. It has been through a number of readings, and we have had a number of submitters who have come and put their point of view across. We know that there is some degree of complexity around this, because there are organisations that do, in the first year of receiving receipts, have a large proportion of their donations going to those third-party organisations that are, in fact, bona fide organisations supporting very well-intentioned charities. There has been some concern that the extent of this bill would detract from those organisations’ funding processes. Because of that, there is a regulation-making power in the bill that is going to enable the complexities of those sorts of situations to be rectified. That is to be put in place so the bill does not act in detriment to the causes in which those charities are working, but at the same time it is also going to enable transparency and accountability.
I am happy now just to conclude my speech. Thank you very much. I do support this bill and the good work of the Minister, the member Amy Adams from Selwyn. Thank you.
Hon DAVID CUNLIFFE (Labour—New Lynn)
: It is a pleasure to join the discussion on this member’s bill from Michael Woodhouse and to confirm that Labour supports this bill. The Fair Trading (Soliciting on Behalf of Charities) Amendment Bill
is a good bill that addresses an area of concern for the public, and that is why we are supporting it.
The bill was rewritten in the Commerce Committee to enable regulations to be made relating to disclosure by fund-raisers making requests for charitable purposes. Currently there are no rules on what has to be disclosed, except that no misleading or deceptive statements may be made.
It does raise the question of why, given that this bill has widespread support in the House and given that its purposes are clearly in the public interest, this is not a Government bill. There is a tendency for the Government to pass to members to handle as members’ matters, matters that, from the point of view of the Labour Opposition, are worthy of the support of the Government in a more formal way. It is thus open to the interpretation, or perhaps the misinterpretation, that it is trivialising matters that are of some considerable value—in this case, to the charitable and non-governmental sector.
Consumer magazine conducted an inquiry into the Children At Risk Education Foundation, or the CARE Foundation, and found that 75c in every dollar was going to its telemarketing company. The issue was again raised in the media as a result of Epilepsy New Zealand’s decision to cut ties with the fund-raiser, the Epilepsy Foundation. In the last 3 years, according to Epilepsy New Zealand, the Epilepsy Foundation gathered $2.82 million in donations on its behalf, and approximately $2.1 million out of that $2.8 million went straight into the pockets of the telemarketers.
I think for the average New Zealander on the street, when they hear numbers like that, they just have to ask the question as to how that can be right, because they give generously to the purpose for which the telemarketing is being done, which is to help the vulnerable individuals who are the recipients of the care. They do not do it simply to patronise, in this case, some 75 percent of the margin going to the telemarketers. Another example: the telethon on TV3 for the benefit of the KidsCan charitable trust was in the spotlight for claims that less than 20c in the dollar raised was passed through to disadvantaged children. The trust recently announced that 80 percent of the proceeds were passed on to the charity.
In a former life I used to manage an overseas aid programme with the Ministry of Foreign Affairs and Trade. In fact, it was two former lives ago, but not so long ago that I have forgotten the level of the administration costs of New Zealand’s foreign aid. In those days it was 11c in the dollar, and 89c in the dollar went to the needy people in the countries—in that case, in the South Pacific—that New Zealand was seeking to assist. So if it is good enough for the New Zealand Government to manage its overseas aid endeavours on an 11 percent overhead, it is certainly incumbent on private marketing agencies to take less than 80 percent, and this bill is to be commended for shedding light on that issue.
Another example—and I hope the World Vision organisation will not mind me saying that I understand that its overheads are somewhat less than 20 percent. It is still not insignificant, but it is not at such a level that donors would feel aggrieved. In any case, those overheads are transparent in its accounts and are known to donors such as, probably, many of the members in this House who support children through that organisation. The Television New Zealand show
Dancing with the Stars was also caught up in the controversy, with just about 60 percent of the money raised for charities by contestants actually making it to recipients.
The bill recognises the right of people to know where their hard-earned money will go: to the charity of their choice or to some profit-making third party. It is consistent with sound consumer rights principles like transparency and informed choice, and we need the Minister of Consumer Affairs to start addressing the important transparency matters for consumers, such as the actions of loan sharks.
I recognise the presence in the House of Sam Lotu-Iiga, who has done some useful work in that area, much of it at the prompting of Carol Beaumont, the former Labour MP.
Hon Ruth Dyson: All of it.
Hon DAVID CUNLIFFE: I would say “all”, in response to my colleague the Hon Ruth Dyson. How can I put it—all the useful stuff in response to my former colleague Carol Beaumont.
Peseta Sam Lotu-Iiga: What’s she doing? What’s she doing right now?
Hon DAVID CUNLIFFE: Is it not interesting how Mr Lotu-Iiga was woken from his slumber by the actions of the Labour Party—woken from his slumber. Look, it is remarkable. It is remarkable how some members opposite can make controversy out of a universally supported bill, even when I was paying him half a compliment, certainly not the whole compliment. But there you go. That is Parliament. No wonder the public thinks it is an acquired taste.
Hon Trevor Mallard: Why are the Nats cutting up Sam’s seat?
Hon DAVID CUNLIFFE: That is a very interesting question, and I say to my raucous colleagues we ought to be decent to Mr Lotu-Iiga for as long as he is here with us, because with the boundary changes coming, that may not be that long. It is very nice to see Jonathan Coleman here from saving the Western World from whatever it is he has been saving it from, and we hope that he is here for not too long as well.
But I go back to public accountability for charitable giving. Surely that is something that all members of this House can agree on, provided that it is not too burdensome. We say only the following: that this should have been a Government bill. The Commerce Committee is currently working its way through the consumer goods law reform, and that is another area where I anticipate there will be broad consensus in this House. I guess the public watching or listening in will probably be reassured to see Parliament actually can cooperate on quite a lot of things, particularly in select committee, and often on members’ days, when a common-sense idea is brought to the House. I commend Michael Woodhouse for doing so on this matter. Thank you.
DAVID CLENDON (Green)
: I am very happy to continue the agreeable nature of this debate, which Mr Cunliffe has just referred to. This is a useful piece of legislation. It does some good and will do no harm, unlike some of the bills we see emanating from this Government.
Clearly the genesis of this Fair Trading (Soliciting on Behalf of Charities) Amendment Bill was a perceived need to protect charities that were employing third-party collectors, basically from being ripped off—to protect them against some of the more unscrupulous operators, recognising that some charities are run by some relatively unsophisticated people in a commercial or a business sense. It was important too—it was seen to be at the time and still is—that we retain the very high level of public confidence that when people make a donation to charity a substantial amount of that money will actually land in the coffers of that charity. We saw too many examples some years ago—and I note in fact that the first reading of this bill was in December 2009—when there did seem to be a spate of, and some visibility and some publicity about, some out and out rip-offs of charities by people who ought to have been working for them.
We note that there are something over 23,000 charities in New Zealand, registered charities, and somehow, I suspect, many of them at some stage have had a turn on Lambton Quay on a Friday morning. As a non-Wellingtonian, I have noticed with interest that whenever I am in Wellington on Friday I take care to have a few coins—inevitably there will be somebody gathering along the quay, and that is a good thing. They are all good worthy causes, and it is indicative of people’s willingness, both to
contribute money and to collect—the people doing the collecting very often are volunteers, people who are working in a voluntary capacity.
I think we have to acknowledge that the voluntary and charitable sector does an incredible amount of unpaid of work in this economy, in this society of ours, and without it we would be the poorer in many ways. Any of us holding portfolios as spokespeople—or, indeed, as Ministers—would be hard-pressed to find a portfolio area that, at some point, at some level, in some context, did not rely on the goodwill, and the contributed time, labour, energy, and skills of volunteers and people working not for personal gain, but simply because it is the right thing to do.
In my own area of corrections there are some extremely effective organisations, voluntary community-based organisations, none of which have deep pockets or significant wealth coming to them, that do a remarkable amount of very good work, and, indeed, pick up the slack that sometimes Governments and the private sector leave behind. In the business area we see Business Mentors, an organisation that actively works to support new businesses, and new start-ups, not for gain, but simply because that is the right thing to do. People have been through hard times themselves, and, remembering that, they want to assist others.
So it is important we have a high level of protection for the charities, which are absolutely dependent, in many cases, and increasingly dependent, on charitable donations, given that, unfortunately, money from government, both central and local government, has tended to dry up in recent years. There are fewer grants available; the bar has been raised. It has become much more difficult for charities of all sorts to rely on funding from government. And that is a two-edged sword. It is disappointing to see that worthy charities are underfunded, but equally it does encourage them to go out and generate their own incomes, so there is a degree of merit in that.
We are very happy to continue supporting this bill, as we have since it was first presented by Amy Adams. We should acknowledge it was her private member’s bill that she brought to the House, though several years ago.
Hon Trevor Mallard: Member’s bill. “Private member’s” went out in 1996.
DAVID CLENDON: Excuse me. I am corrected by one of the members with one of the longer memories in this House.
It is a good piece of legislation. We have supported it. We had some minor reservations initially and they have been recognised. There were issues about the apparent simplicity of the rule-making, to say we will cut in at certain levels, certain thresholds. Clearly once we delved into the complexity of the sector it became apparent that a more subtle approach needed to be taken. The regulatory approach involving ministerial discretion, if you like, certainly seems to be the best available outcome to us. So, yes, acknowledging then that this is a good piece of legislation, we will support it. We will also continue to support other legislation that seeks to improve fair trading and consumer rights in New Zealand. We do have reasonably robust protection for consumers. All of our fair trade legislation is reasonably robust by international standards, but some of it is also dated, and some of it has not kept up with modern forms of exchange, of sale and purchase—be it in the voluntary sector or just in the straight commercial sector.
We are very happy to continue to support legislation that genuinely gives consumers a better break, that protects people in the commercial sector, and that most certainly protects those working in the voluntary and charitable sector. We are very happy to give our support to this bill. Thank you.
Peseta SAM LOTU-IIGA (National—Maungakiekie)
: Malo le soifua. It is a pleasure to take a short call on this the third reading of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I want to support and acknowledge the chief
Government whip again for bringing this bill to the House, alongside Minister Amy Adams, who was the originator of the bill. I also note, as other speakers have said today, the constructive work of the Commerce Committee on it. We grappled with a number of issues in this bill, and I think we came to what is a good conclusion.
As we know, the Charities Commission data indicates that there are more than 25,000 registered charities in New Zealand. The sector is quite large. It receives in excess of $1 billion worth of donations. Many in our communities rely on these donations, and many spend countless hours standing on busy street corners raising money for what are worthy organisations. I include a number of MPs in that who raise money for Plunket, Daffodil Day, and many other charitable causes that are dear to our hearts. We do this willingly. We are happy to play a small part and contribute to the work that a number of charities do.
But, as has already been expressed in this House and across the country, there is concern that a disproportionate percentage of donated moneys is retained by third-party collectors to cover their costs, and that the members of the public making those donations are not quite aware of this. In fact, the other issue is that the concern has actually led to members of the public not donating, because of grave concern that their moneys are not going to the causes for which they are intended. Those concerns have increased. Media reports have shown that it is not uncommon for some collections to actually retain up to 90 percent of moneys donated by the public. That has led many to seek to bring this bill to the House. It is important that we have faith in the system of donations. It is part of our Kiwi culture. It is part of the way of life in New Zealand that we donate to charities and that we support charities with our free time. The bill is designed to increase the transparency and public accountability of third-party businesses.
As my colleague David Clendon has already said, the bill had to be altered in many ways during the select committee process. We came to the conclusion that the regulation-making power by Order in Council of the Governor-General was the appropriate way forward in determining how we would treat this area of the law. Regulations can be made prescribing different requirements, particularly around disclosure of information about fund-raisers, about charitable organisations, and the relationship between those parties. It also looks at regulation powers. It looks at the financial benefits of the fund-raiser or any person, other than a charity, who will or may receive moneys from those requests. It is quite a wide regulation-making power.
In itself, this bill I think has actually raised awareness of this issue, not just here in Parliament but certainly across the country. We had a number of submissions from charitable organisations that were fearful of the original provisions of the bill. They feared that they would be captured and there would be unintended consequences, particularly where charitable organisations had used professional marketers, who would gain trails for commissions from donations that would extend out into not just the near future but the long-term future. This bill raised the awareness of people out in our community, and it encourages members of the public to get more information when donating to the charities of their preference.
In summary, this is a sensible bill and it is a pragmatic piece of legislation that the many parties in this House came together to produce. In my view it will restore some level of public confidence in charitable appeals. People can be confident, once these regulations are put in place, that their donations will go at least to their desired causes. I want to again thank the two members who brought this bill to the House. I certainly, as a member of the Commerce Committee, commend this bill to the House.
DENIS O’ROURKE (NZ First)
: New Zealand First also supports the amended Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, as it now is. The original
bill clearly had some significant problems. It was, in particular, very complex, and it was difficult to work out how the various percentages would apply in various circumstances to organisations. I am a member of a charitable trust board in Christchurch that exists exclusively for the purpose of raising money for other charities. When I looked at the complexity of the original bill, I had to wonder where on earth we would fit in that particular regime. I think that was one of the main problems with the bill as it originally was. If it had been enacted as it was, I think that when some of the charitable organisations that exist in the community looked at it they would have had a lot of trouble working out where they fitted in and what their liabilities were. That, of course, means that it was bad law. It would have been bad law because it was not readily understandable, and people would not know what their liabilities were. It is very important that there be clarity and certainty around laws of this kind, especially when we are dealing with charities.
So it was that complexity, I think, that was the main problem with it, but it was also too inflexible. Any amendment would have had to come through the system of the Committee of the whole House, and that would have been time-consuming and difficult. There would have had to be some flexibility to deal with that whole array of different charities, with all their different needs and attributes that we find out there in the community.
I really do applaud the Commerce Committee for the current iteration of the bill, which provides for comprehensive regulation. I do think that is the way to go. I note that there are eight areas of regulation in the bill in new section 28A(1) in clause 4. Those include regulations for prescribing requirements for disclosure of information about the fund-raiser, about the charitable organisation itself, and about the relationship between those two parties, which can be very different in nature. Also included are the financial benefits the fund-raiser would receive, directly or indirectly, from the process, the amount of the donation included in the price of goods and also how the disclosure will take place, and how the financial benefit must be calculated and expressed. Finally included is the financial benefit that the fund-raiser would not be required to disclose. If there are good regulations on all of those eight subjects, then I think we will have a good and understandable regime for charities and their fund-raisers to comply with.
All of this is fine and will provide for a good outcome, but I do not really believe that it is enough in itself. I believe that what we really need in the future is also some actual limitation about what can be deducted from charitable donations for expenses and for profits. Perhaps that could be done by way of guidelines, and additional provision for other regulations along those lines could be made in the future. It is too late for that now, of course, but when the Fair Trading Act is revised, as it is intended to be shortly, then I would like to see some consideration given to that sort of concept. The reason for that is the same as some other speakers have said, and that is to give people confidence that when they make a donation, most of it will actually go to the charity rather than to profits or to expenses for those who collect donations on behalf of charities. When you think about the sophisticated ways that fund-raising happens these days—online donations, automatic donations, and all sorts of other methods—then it is very important that we have even more controls and regulations than we see in this particular bill. That will give people the confidence that I spoke of.
In making the regulations that are set out in this bill, great care will be needed to make sure that the needs of a great many different organisations are provided for. There is a whole array of different charities out there with different attributes and different needs. It will therefore be very important indeed for the provision in the new section 28A(2) in clause 4 for consultation to be comprehensively carried out, and it needs to be that outreaching sort of consultation rather than just waiting for people to come to the
Minister of Consumer Affairs or the Minister’s representatives. That consultation will be absolutely vital if these regulations are actually going to work in practice.
Lastly, I would like to mention just this: there are bound to be some issues with some of the definitions in new section 28A(5) in clause 4, and I will mention a couple of them that I think we need to keep an eye on. The first is the term “fund-raiser”, which is defined as being a person in business. I mentioned at the beginning of my speech that I am on a charitable trust board that exclusively raises funds for other charities, so I am not quite sure whether that charity would be a person in business for the purposes of this regulation. We will have to take a good look at that later on.
Another term that I think we will have to be careful about is the term “makes requests”. I see that the term “requests” is defined in the bill, as well. I think the definition should be wider to also include unsolicited receipt of donations, by providing a facility for people to make donations, rather than the definition that is there at the moment. However, when, as I said before, the review of the Fair Trading Act does take place, we can look at whether these definitions have provided any challenges, and, if so, we can refine them, as we need to refine the regulations themselves when we take a good look at how this has proceeded.
I look forward not only to the passing of this bill but, later, to the full review of the Fair Trading Act and, in particular, the new provisions that we might put in it to refine and improve the provisions of this bill. But the bill as it is, I think, is right in its direction in simply providing for a regime of regulations to be developed as a result of comprehensive consultation, and that is the key. Thank you.
KANWALJIT SINGH BAKSHI (National)
: Sat sri akaal, Mr Speaker. I thank you for the opportunity to speak in the third reading of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. During the first and second readings of this bill I shared my concerns, which I am sure are the concerns put forward by many ordinary New Zealanders each time they make a donation. The concern is about how much of the money we donate as generously as New Zealanders do to the charity actually gets utilised for the purpose that we donate it.
Other speakers in the House, including me, have shared statistics that advise of 23,000 registered charities in New Zealand, with billions of dollars flowing in in the form of donations for charitable purposes. These concerns, which most New Zealanders share, are not based on anything; these are based on some good investigative journalism. The media has, on a number of occasions, reported that charitable organisations end up paying a significant portion of their donation to the organisations or individuals engaged by these charities to generate donations.
Not just the media, but the Commerce Commission in its research too, found that individuals sought greater clarity and transparency in the amount of money that was collected by those on behalf of the charities. We all know that services that we engage must be paid for. However, one must acknowledge that when it comes to collecting donations, good-hearted people who donate have every right to know where and how much of their money is going.
The Fair Trading Act seeks to bring transparency to the system. This critical legislation seeks to address the process of raising funds using a third party on behalf of the charitable organisations. The legislation covers the activities of the third party, such as how much money was collected, and how much money then was handed over to the charity so that it can be spent on a worthy cause. Basically, this bill seeks complete disclosure of activities by the third parties that are engaged in charities.
The legislation is not about regulating the charities or charitable organisations. These are covered under the Charities Act. It is reasonably easy for anyone to undertake an audit or examination of the financial statements of the charity, if fund-raising and the
subsequent spending was taken by the charity. The legislation’s focus is clarity in the terms of transparency and disclosure from the third party undertaking donations collection on behalf of the charities.
Before I conclude, I would like to congratulate my colleague Michael Woodhouse on taking over this bill from the Hon Amy Adams. I commend this bill to the House.
Su’a WILLIAM SIO (Labour—Māngere)
: Malo le soifua i lau afioga le fofoga fetalai. Let me begin by saying some preliminary comments about the context that leads up to this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. There has been quite a lot of debate this week about the asset sales, public servants losing jobs and having to do more and more for less and less, and the proposed $1 billion cut from the Public Service, which is going to put a lot of pressure on people—
Peseta Sam Lotu-Iiga: I raise a point of order, Mr Speaker. I think you know where I am going with this. This has got nothing to do with this bill, this context that he is going down. He is obviously making some political statements about events unrelated to this bill. I suggest the member comes back to the bill.
The ASSISTANT SPEAKER (H V Ross Robertson): Although the member is technically correct, the member often is allowed a little bit of leeway in making counter-objections to previous speakers. But I am sure that the member is coming closer to the bill.
Su’a WILLIAM SIO: Thank you, Mr Assistant Speaker. I was bringing in the context of what is happening in the community. People are unemployed, and people are being squeezed left, right, and centre. So what I am saying is that, given that context, the context to this bill is that people are suffering under this Government’s leadership. [Interruption] With job losses—absolutely. All that this Government has been able to come up with is the sale of State assets. When I look at this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, I have to say that I agree with Amy Adams and I agree with Michael Woodhouse bringing this bill forward. When you consider the wider community who are suffering as a result of this Government, I am hopeful that this bill will give some light and support to the wider community. [Interruption]
Dr Rajen Prasad: Oh, come on, be charitable, you guys.
Su’a WILLIAM SIO: I am trying to be charitable. It has been my experience that in communities such as Māngere, communities such as in Manukau, and in South Auckland those who are suffering the most under this Government often contribute the most to charities. It could be $5, it could be $10, or it could be $20, but those people in Māngere, South Auckland, and Manukau consistently contribute to charities, year in and year out. Admittedly we could have a family out in Remuera, in the leafy suburbs, who contribute $1,000 in a year, probably. But what is $1,000 if you have $50 million in the bank account? For people who are struggling to make ends meet, a $5, $10, or $20 contribution is a significant amount. Most people who make that kind of contribution expect that that $5 goes directly to those charities, to those people who are seeking the donation. That has been our expectation. All I am saying—and I know the members opposite do not like that—is that I acknowledge Amy Adams for bringing in this legislation. It also makes you wonder why this bill is not a Government bill, because it just goes against the grain of doing something that benefits the community. I am saying that I am particularly pleased that this particular bill does now enable the full disclosure of how people’s donations are spent. It is of concern when you see that 25 percent of the money donated to charities is kept by those who are raising the funds.
Dr Rajen Prasad: More.
Su’a WILLIAM SIO: Or more—more in those cases. I am hopeful that this bill does provide some confidence to communities such as ours, who regularly donate a
huge percentage of their income. You have to look at the fact that they are earning less and less since this Government has come into power, so $5, $10, or $20 is a significant amount.
I want to say that I also share the concerns raised by the New Zealand First member Denis O’Rourke, and in particular with the new clause 28A. I am glad that it seems that this bill, compared with when it was first put in, has been completely rewritten by the Commerce Committee. I note that my colleague Lianne Dalziel was the chair of that committee, a wonderful chair, and no doubt it was probably because of her leadership that we have had this bill completely rewritten.
I am also concerned that the committee received submissions from large charities that, as I read the report, seemed to oppose this particular bill—
Peseta Sam Lotu-Iiga: Did you read the report?
Su’a WILLIAM SIO: —unlike members on the other side, who just follow blindly Mr Key and do not read that when they sell those State assets; they are actually selling Aotearoa and the rest of the future for our young people. So it concerns me that large charities, reputable charities, submitted against the bill. For me, I think it is important that this bill passes, to try to give confidence to those people who are contributing to charities.
I am also wondering about the regulation-making powers in this bill. I am pleased to see that regulations can be made by Order in Council on the recommendation of the Minister of Consumer Affairs, but I am wondering why that particular Minister is still sitting on his hands and has not done anything about the loan sharks that National has continued to say that it would do something about.
So although I am appreciative of the bill, I do still say that it should have been a Government bill. But I know how difficult it would have been for this Government to bring a bill that would support communities, because the track record of this Government so far has been to kick the community in the guts, and not give a damn. The Government has consistently lived a pattern of making promises that it could not deliver, and had no intention of delivering. Take, for example, the 170,000 jobs that it promised—none of that promise was kept at all.
I recommend to this House the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, and commend Amy Adams for having the courage to proceed with this bill despite any opposition that the Government may have had. Thank you very much.
MARK MITCHELL (National—Rodney)
: It is with great pride that I stand to support the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I think that the Hon Amy Adams and our senior whip, Michael Woodhouse, were actually taking a real lead in something that is a problem not just here in New Zealand. This is a global problem, where people are losing faith in charities because up to 80 percent of their money is getting tied up in administration fees. But I have to say that this bill is making sure that over $1 billion of revenue is actually getting to the people who need it most.
I would just like to address the previous speaker, Su’a William Sio, and say that today all I have heard from the Labour Party, the Opposition, is an attack on the Government because we have a plan—because we have a plan! Yes, we do have a plan, and a bill like this is actually part of that plan, in making sure that $1 billion of revenue finds its way to the people who need it. I would ask the Opposition to maybe take a leaf out of our book, and come up with a plan, even if it is a two-point plan. Give us a two-point plan. I mean, that would not be too much to ask. That would be interesting to see.
Kiwis are some of the most generous people in the world when it comes to donating to our thousands of worthy charities around New Zealand. I am sure that when they
make their donations there is an expectation that most of the money will be used to support the delivery of services to the people who need that support most. Unfortunately, that is not always the case when third-party businesses are being used on behalf of a registered charity. There is a real risk that a disproportionate amount of the money collected is retained by the collectors to cover costs. I am sure that there are many members of the public who are not aware of this fact. As I have said, Kiwis are the most generous people in the world when it comes to supporting charities. I would just like to use some figures to demonstrate how important this piece of legislation is.
We currently have over 25,000 registered charities in New Zealand. These charities are supporting a wide diversity of groups within our communities—animal welfare, religious groups, children, the elderly, and families. Kiwis have given over 444,000 hours of their time to charities over the past year, and our nationwide charities received income of more than $1 billion. So it is easy to see, looking at some of these numbers, just how much money, time, and effort have been donated each year to charities, and why it is important to give donors the piece of mind that the money they donate is finding its way to the people who need it most. This piece of legislation goes a long way to restoring confidence in charitable appeals that are so important and a real part of the fabric of this country.
The Commerce Committee received and considered 25 submissions. The committee heard seven of these submissions, and I commend the committee for its work, because it is apparent, listening to Mr David Clendon, that it has gone a long way to actually making sure that there is support in the House for this bill, which I think is very important. The bill will provide for a regulation-making power, which is very important. This gives more flexibility to make the changes that work. I was going to take only a short call on this bill, but it has been a pleasure to be able to stand and support it. Thank you very much.
Dr RAJEN PRASAD (Labour)
: Ni sa bula vinaka. Thank you for another call. I think it is a split call with the Greens.
The ASSISTANT SPEAKER (H V Ross Robertson): It is a split call. The member will be notified at 1 minute to go.
Dr RAJEN PRASAD: Thank you very much. I just want to respond to Mr Mark Mitchell, because he posed a direct challenge to this side of the House. We will not be following the best examples of his party in terms of coming up with targets of a type, because if we did, Mr Mitchell, we would be planning for 2017. That is called never-never time. Our party is much more in the present, which is what we are doing. This is a good bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, and it addresses an important problem that has occurred in our society.
I think the problem that has occurred is sad, and it is a commentary on our society as well. Charities do extremely valuable work. They go where many do not go. They take on tasks that many do not take up. And they do all of that by raising small amounts of money, often, and sometimes large amounts of money, to support their great work. These are often areas in which others do not go, but charities will raise this money. Of course, we have seen more and more larger institutions, like our universities, also doing collections of a type by raising funds as well for their own research programmes, etc. So they will also take advantage of this.
It is a shame that many of the supporters who put in long hours to collect this money for these charities are taken for a ride by unscrupulous people who think that it is OK to take a substantial proportion of the moneys raised for their own ends, and to run it almost like a business. Nobody objects to taking enough to meet your expenses, but when you are taking such large amounts as has been revealed to this House, I think this bill becomes important. I know that Mr Woodhouse objected to me using the word
“rort” in the Committee stage of this bill, but, in fact, that was the word that the Hon Amy Adams used when she brought this bill to the House. There was a sense of frustration in her voice that the rorts had to stop, and that was when this bill came into the House. So we should reflect on the fact that there are unscrupulous practitioners in our midst, and they take advantage in respect of funds raised for the most vulnerable. It should be guaranteed that that ought not to happen. I think this bill goes a long way towards doing that.
It is interesting where things start off and where they end. It was a bill on which we debated, in the first reading, the various clauses in the bill. Where that ended up in the Commerce Committee was somewhere quite different. This House was expressing concern in relation to as much as 80 percent of the money being taken by collectors. So the select committee, I think, did a great job in finding a way to meet the goals that the Hon Amy Adams had. I think that the select committee took a generous approach to this particular bill. [Interruption] I do not know what Mr McClay is chipping on about, because I am commenting favourably on the select committee process.
Todd McClay: I was congratulating you on your speech.
Dr RAJEN PRASAD: Oh, thank you. I appreciate the congratulations, Mr McClay. It was very different from the select committee you led on the asset sales programme. This select committee was very, very generous, and through that process the bill came back to the House in a different form. The challenge still is—and Su’a William Sio raised this as well—that we think time ought not to be wasted in developing the regulations that stand alongside this bill.
Hon Simon Bridges: This is nonsense.
Dr RAJEN PRASAD: Here is a member who has only just walked into the House, and the first word he has to say is “nonsense”. He has not followed anything. Mr Bridges, as a Minister you should be much more responsible than that. I do not know what he has had today, but perhaps he could be a bit more generous. But I do say that I hope those regulations will be developed with some urgency. Thank you.
DENISE ROCHE (Green)
: The Greens will be supporting this legislation, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, because we believe that there does need to be a lot more clarity and transparency around donations, and how much of those donations are spent on third-party fund-raisers.
In 2011 just over 1 million people in our country dug into their pockets and donated over $1.5 billion to charities, according to the Business and Economic Research report commissioned by Philanthropy New Zealand. We support this bill because that is a lot of money, and we need to make sure New Zealanders can trust the system—so that they can be sure that the money they donate in good faith is used to support the charity, not siphoned off to businesses. I am heartened by the generosity of New Zealanders. There are so many organisations that rely on the charity dollar. They include—and are not limited to—community social service providers, human rights groups, sports teams, education groups, environmental organisations, parenting organisations, community organisations across the spectrum, and the list goes on. There are over 20,000 registered charities in New Zealand—somewhere between 23,000 and 28,000 of them.
I love it that we live in a country where people care enough to put their hands in their pockets, or go online, or text to ensure that they will help out our communities. This bill is about protecting that. I guess that is why I have found the self-serving campaign that has been waged by the pokie industry to oppose the Gambling (Gambling Harm Reduction) Amendment Bill really distasteful. Submissions have just closed on it. The campaign is being led by Pub Charity chief executive officer Martin Cheer. Pokie trusts—although “not to be trusted” is probably a better description—currently have the
job of distributing the proceeds from pub pokie gambling back to communities. Many community organisations rely on those funds just to keep themselves afloat.
In my speech in the first reading debate of this bill I said that many community groups were forced into the arms of the devil to survive. This is happening more and more as Government funding dries up; as our public services are being run down and community organisations find their contracts with the Government under pressure. There have also been over 5,000 jobs lost in the public sector, so those community organisations are filling the gap.
Although some charities and community organisations can rely on the goodwill of donors, others have to stay afloat by taking pokie money. The Government is fuelling addiction to pokie money, and that fuels addiction for problem gamblers, because problem gamblers contribute the vast amount of money that goes back to community organisations. It really distresses me that although we are keen to address the rorts and the dodgy dealings of third-party fund-raisers with this bill, the attempts to address the rorts and dodgy dealings of the pokie trusts, with the passing of the first reading of the Gambling (Gambling Harm Reduction) Amendment Bill in Te Ururoa Flavell’s name, have met with such fierce opposition from the gambling industry.
Martin Cheer of Pub Charity is doing exactly the same thing as some of those third-party fund-raisers. In the last financial year his charity organisation—I use the word “charity” lightly—kept $43 million of the $69 million that was lost by gamblers on their Pub Charity machines. So it is no wonder that they are opposing the Gambling (Gambling Harm Reduction) Amendment Bill, which not only wants to reduce problem gambling but it also seeks—
The ASSISTANT SPEAKER (Lindsay Tisch): Order! We are not talking about problem gambling.
DENISE ROCHE: Coming back to the bill, this bill builds on the good work of the Charities Commission and the third sector to get their house in order. You are able to check—
The ASSISTANT SPEAKER (Lindsay Tisch): No.
Hon Members: No, no, no.
DENISE ROCHE: Sorry, Mr Speaker. One is able to check what funding is coming into a charity through the Charities Commission’s website database, and one can see how much is being spent on third-party fund-raisers.
We believe that this bill goes some way towards protecting donations, and donors, and charities in New Zealand. It is well-intentioned. There are some big gaps in it—we do know this. We know that that has been addressed through the Commerce Committee. Our only caution is that we are hopeful that the appropriate regulatory mechanisms will be developed in partnership with key players, and with those who are most affected. Thank you.
Dr JIAN YANG (National)
: It is a pleasure to speak on the third reading of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. Before I begin I would like to acknowledge the good work of the Hon Amy Adams, Michael Woodhouse, and members of the Commerce Committee for their recommendations.
The purpose of the bill is to ensure transparency and disclosure to the public so that they can make fair and informed decisions when donating money to registered charities. Currently, agencies collecting for charities may use names similar to the charity they are collecting for, and hence the public believe that they are actually donating money to the end charity. The problem has been that many third parties collecting for charities fail to fully disclose to the potential givers that a percentage of their donation will be taken to cover costs—sometimes very exorbitant costs.
This bill aims to control third-party businesses that collect on behalf of charities, and not the charities themselves or their volunteers. As there are currently no rules on what has to be disclosed, the aim of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill is to remedy that anomaly. There have been media reports in the past that have highlighted that sometimes just 2.5 percent of money given has ended up in the hands of the charity. This is scandalous and is harmful to consumer confidence.
This bill aims to protect charities and consumers. It will help restore faith in charities, which rely heavily on the kind generosity of New Zealanders, and ensure that their good work continues and that consumer rights are fully protected. The Charities Commission reports that $1 billion was given to the 25,000 registered New Zealand charities in 2012. It is this type of legislation that ensures that loopholes are closed, so that the utmost transparency and accountability are maintained when it comes to registered charities. The last thing we want, and which would be detrimental to the good work of charities, is putting off potential donors because they feel that their hard-earned cash will not get to those it was intended for. Although the change will not have much impact on charities themselves, it will, however, result in a more streamlined service but still offer charities the information and support they need.
The Fair Trading (Soliciting on Behalf of Charities) Amendment Bill is a good piece of legislation that will increase transparency and public accountability and restore public faith, to ensure that charities continue their good work as they make a valuable contribution to society. I commend it to the House. Thank you.