MICHAEL WOODHOUSE (Senior Whip—National)
: I seek leave for all questions on the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill to be taken as one question.
The CHAIRPERSON (H V Ross Robertson): Is there any objection to that course of action being taken? There is none.
Clauses 1 to 4
The CHAIRPERSON (H V Ross Robertson): I call the honourable Minister—the honourable member Michael Woodhouse.
MICHAEL WOODHOUSE (National)
: Thank you for that Nostradamus-like faux pas, Mr Chairman. It is my great pleasure to give just a broad overview of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill and to perhaps remind the Committee of the long gestation that we have had in coming to this point. The bill was introduced and then drawn from the members’ ballot in the name of my friend and colleague the Hon Amy Adams. I want to acknowledge her not only for her initiative in bringing this bill before the House and now the Committee but also for her rapid progress into Cabinet, which, of course, prevents her from progressing the bill further.
The bill had its first reading as long ago as December 2009, and having been referred to the Commerce Committee for its consideration, that committee reported back in March of—
- Sitting suspended from 6 p.m. to 7.30 p.m.
MICHAEL WOODHOUSE: During the dinner hour I hosted a function. Members may notice that I am wearing the bright orange gerbera, which is the symbol of Arthritis New Zealand, a group with which I have quite a bit to do. We were hosting a function to launch a study that has been done in conjunction with Pfizer about the day-to-day issues that people with chronic pain face. Of course, Arthritis New Zealand is one of the many, many charities around New Zealand that rely very heavily on the great generosity of New Zealanders. I cannot remember the exact figures, but I think somewhere approaching $1 billion is now being donated to registered charities in this country, according to the Charities Commission. That says two things to me. Firstly, it says to me how very generous we are in our giving, and, secondly, how heavily those organisations rely on that charitable giving. It is important, I think, that those people who do give are fully informed about what they are giving to and the manner in which that money is being applied, including whether a percentage of that donated money might be being retained by third-party providers. That, indeed, was the intention of this bill when it was introduced.
I want to acknowledge the select committee, the Commerce Committee of the 49th Parliament, which was ably led by the Hon Lianne Dalziel. Quite some time ago now it considered the bill, and, as that committee will know and as I am pleased to inform members, the bill has undergone something of a rewrite from its form when it was first read. The intention of the bill when it was first introduced was to add to section 26 of the Fair Trading Act. Section 26 is really a section that has more in the nature of prohibitions—what people should not do—rather than direct reference to specific performance, which is what the intention of this bill was. So on the advice given to the committee and after submissions, the committee has recommended that the bill, rather than amend and add to section 26, add a new section 28A—just to be clear about which sections they are. Section 28A is inserted, which will actually provide the Minister of Consumer Affairs with the power to recommend to the Governor-General by Order in Council that there be regulations made in respect of the regulation of fund-raisers. That, indeed, is the question being faced by the Committee tonight.
I think that is quite a significant change, albeit that the specific intent of the bill is very much maintained. There were a number of questions and comments around that in the second reading debate, and I certainly look forward to addressing them as I can. I look forward to those comments.
CLARE CURRAN (Labour—Dunedin South)
: I too, being the first speaker on this side of the Chamber to speak to this bill in the Committee stage, would like to
acknowledge the work that the Commerce Committee did on this bill under the chairpersonship of the Hon Lianne Dalziel. It was very well chaired, and there were some really interesting discussions and some good submissions. As I always do, I would like to acknowledge the work that the Commerce Committee does, as it is a very effective and functioning select committee. I would also like to acknowledge the work that the member who originally brought the bill to this House, Amy Adams, did, and the good work she put into it.
Hon Phil Heatley: And thank you, Clare.
CLARE CURRAN: You are very welcome. I would like to reference some things that were said during the second reading of the bill and talk a little bit further about them. I think it was Louise Upston who actually spoke first in the second reading of the bill. She said that the purpose of the bill was to increase the transparency and public accountability of third-party businesses that collect the funds on behalf of registered charities, because there was a concern that a disproportionate percentage of donated money may be retained by third-party collectors to cover costs. We reiterate that those views were very important. Ultimately, this bill is about recognising the right of people to know where their hard-earned money goes when they choose to donate to charity: to the charity of their choice or to profit-making third-party collectors.
There is always—or there should be—an underlying principle behind any bill. Sometimes in this House I wonder whether there is, but certainly in this bill there is actually an underlying principle, which is a worthy principle. It is that it is consistent with sound consumer rights principles, like transparency and informed choice for consumers. I have a lot of commitment to those things, as do the members of the party who sit on this side of the Chamber, and I consider that those things are actually pretty damn important.
I too went to a function during the dinner break. It was a function about polling, about truth telling in polling, and about how polling is reported and actually conducted. That is also an issue that is quite dear to my heart, as evidenced by the background that I have and the work that I have done for the past 20-something years. Truth telling in polling and reporting is really important, just as it is in debate, discussion, policy, and legislation that is conducted in this Parliament. I would like to talk in relation to those principles of consumer rights and transparency and informed choice in relation to this bill—if I do not finish, I am sure I will get another chance during the debate in the Committee stage of this bill.
In the last 4 and a bit months of this year, a series of debacles in the House have come from that side of the House that are certainly not about truth telling, are not about consumer rights, and are not about transparency or informed choice. I actually wrote a list of them—I am sure some of my colleagues would certainly come up with a few more—and there are some very significant ones that are not about transparency. The point is how can you trust a piece of legislation that is brought in the name of truth telling, consumer rights principles, transparency, and informed choice, when there is not any being demonstrated from that side of the House? [Bell rung]
The CHAIRPERSON (H V Ross Robertson): I call the honourable member Clare Curran.
CLARE CURRAN: Thank you, Mr Chair. I am just getting started. I would like to list them, because they are all to do with dirty deals, cronyism, and background, backroom discussions that really are not about informed choice or discussion with the public of New Zealand, and the public of New Zealand does not really know what is going on. They have to cop what is being decided by that side of the House. We will start with the Crafar farms. Then we had the asset sales and the asset sales legislation. And as part of the asset sales, we are now seeing, in relation to consumer rights and the
principles of transparency and informed choice, which lie behind this particular bill, the Skycity issue, which is essentially selling the law; the Ministry of Foreign Affairs and Trade debacle; and the teapot tapes, the cup of tea with John Banks—
Peseta Sam Lotu-Iiga: I raise a point of order, Mr Chairperson. We are talking here tonight about the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. The member, who is an experienced member of the House, should know better and should bring it back to the relevant legislation that we are discussing tonight, not some sordid allegations that she is dreaming up.
The CHAIRPERSON (H V Ross Robertson): Thank you. First of all can I say that I did actually indicate to the member on my left to narrow it, and she did so, and then she moved out again. I just warn the member to try to talk to the debate. Can I also say to the member on my right that points of order are terse and to the point. Thank you.
CLARE CURRAN: Thank you, Mr Chair. I would like to reiterate that the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill has as its base principle the principle of transparency and informed choice. The point I am making is that in order for that legislation to be trusted by the public of New Zealand, the principle of transparency and informed choice in legislation needs to be reflected across the behaviour of the party that is actually bringing the legislation into the House. What we have seen in the last 4 and a bit months is certainly not transparency. The principles of transparency, informed choice, and consumer rights have not been reflected in that behaviour. So I think it is important, with reference to this legislation, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, that we have the ability to do a comparison with some of the issues that have arisen consistently in this House.
I was going to also refer to the issue of the child poverty documentary, where you saw the Prime Minister’s own electorate chair, who sits on the board of New Zealand On Air, which funded the child poverty documentary, objecting to it being shown before the election. That case, actually—with relation to transparency and informed choice for the public of New Zealand—is certainly relevant here and important because it has actually been shown through a recent decision of the Broadcasting Standards Authority that there was no bias shown in that documentary. When you think about transparency in a piece of legislation—
Louise Upston: Are you going to talk about charities now?
CLARE CURRAN: Charities? Well, the thing is, if you want to talk about charities, you could talk about donations. We could get into donations to charity and the amounts of donations that have been made—two lots of $25,000—to certain members of this House who have had convenient amnesia—
Hon Members: Point of order.
The CHAIRPERSON (H V Ross Robertson): Order! I know the member was responding—order! Both of you, sit down, please. I know the member was responding to an interjection, and so I let her respond to that interjection, but now she needs to come back to the bill.
CLARE CURRAN: Thank you, Mr Chair. I would like to reiterate that this piece of legislation is a good piece of legislation. Labour has supported it. It certainly does no harm. There has been a wide debate within the select committee. There were some very good submissions received, and there were some good submissions received from a number of charities who had some very good points to make. As you know, they included Arthritis New Zealand, which the member tonight referenced, and a number of other charities who had some very valid points to make, in good faith, about the importance of the issues they were bringing before us. And I suppose, you know, when you look at the points that are being made tonight about transparency, if a piece of legislation like this is actually going to the heart of what—
JONATHAN YOUNG (National—New Plymouth)
: I am very pleased to stand in support of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I would think that I, like many members of our communities, believe that making donations to charities is something of the Kiwi way of life. In fact, the MasterCard survey, which every 2 years surveys nations around the world in terms of the generosity of different societies, ranks New Zealand fairly highly as a generous society.
We have seen over the last 4 to 5 years the collapse of finance companies and the way that has deterred people from investing in those companies because they have been burnt. This Government over the last 3 years has been working strongly and in a very focused way on bringing transparency and accountability to the financial services industry in order to promote, once again, New Zealanders being active in that area.
Likewise in this particular area, when it comes to donating to charities, transparency is very important. People have heard at different times the amount of funds that have been used for the support of the third-party fund-raiser—not so much the charity, but the third-party fund-raiser—and the proportion of the donation that has gone to them has, in fact, been the cause for this bill to arise in the House. Many New Zealanders, when they know those figures, feel quite concerned, to the point where people stop donating to charities because they feel that the money they are donating is not getting to the cause they have given for. So for the sake of bona fide registered charities in our country, this bill will serve you. And for the sake of people who believe they are making donations to community efforts, organisations, or NGOs—churches, youth groups, or whatever it might be—knowing that there is accountability and transparency is going to give them the assurance that when they do donate, their money is going to a good cause.
I, like many people in our country, receive phone calls from different organisations, and from people who—
Hon Simon Bridges: I bet Andrew Little’s not calling you much lately.
JONATHAN YOUNG: No, he is not calling me much lately.
Andrew Little: Too busy in New Plymouth.
JONATHAN YOUNG: Thank you. I am a very busy MP. My opponent across the way is making reference to the busyness I am engaged in in New Plymouth, and, of course, he learnt about that last November.
Anyway, in regard to all of this we do receive solicitation on the telephone from different organisations needing funds. Every single one, I understand, of the organisations that have called me are using third-party fund-raisers. Many, many years ago I gave my phone number to an organisation. I received a phone call, and, of course, I made a donation. I think that from that database I have probably been called by about 30 other different organisations. We have in this country what some people call an alms race—a-l-m-s. There is a lot of competition in our society for the donated dollar—the alms race. The donated dollar is highly competed for in this country. So when it comes to pieces of legislation for the people out there in charitable organisations or organisations that are doing good for our community, they may think this is just one more hurdle to stop people donating. But I say to you that it is the contrary: what this bill will do in creating accountability and transparency is sort the sheep from the goats. Those bona fide organisations—[Bell rung]—Mr Chair—that are worthy of support—
The CHAIRPERSON (H V Ross Robertson): I have not called the member. I call the honourable member Jonathan Young.
JONATHAN YOUNG: Thank you, Mr Chair. Those organisations that are worthy of support will submit themselves to the robustness of this regime. We understand, going through the select committee process, that there is a lot of complexity around this, and we know that submitters came and said it was actually going to turn people away
from donating, as it would make it too difficult. Other people said: “No, actually, this is good.” We realise that amongst this whole sector, the charitable organisations sector of our country, this is an important point. In fact, Consumer New Zealand in 2009 was pushing for this. There has been some thinking by different groups of people over the last few years. We realise there is some complexity to that. At the Commerce Committee in discussion with the proposer, the sponsor, of the bill, the Hon Amy Adams, who is here this evening, we came to an agreement that by regulation all the fine details can be worked out, so that in consultation with the sector we can find a way to make this work so that it is win-win.
Our intention is not to stymie or stifle the donated funds from the public into these organisations. Our intention is actually to improve the quality of the return of those donated funds. So we, I believe, are going to see—as it progresses and becomes law, and as in due course regulations come out—a robustness around our charitable organisations. We are going to find some satisfaction amongst the donors in our country in that they know that when they donate, it is going to reputable groups of people who are prepared to have accountability and transparency, and who have nothing that they are not prepared to have come under the scrutiny of the Government or the Charities Commission, as it might be. We will see that there will be a very robust and significant community of people who are working not only with the donated funds but amongst their own volunteer group seeing these sorts of organisations prosper and continue to succeed. It is my great pleasure to continue to support what I believe to be a very good piece of legislation. Thank you.
DENISE ROCHE (Green)
: It is my great pleasure to take this call on behalf of the Green Party. New Zealanders are very generous people. According to a report commissioned by Philanthropy New Zealand, it is estimated that ordinary New Zealanders donated $1.5462 billion last year. Individual people actually gave just over that amount personally. In total what was given was $2.6 billion, and that includes the grants from trusts, foundations, and businesses that have also been making donations. It all adds up to about 1.35 percent of our national GDP given to charities. According to the Charities Commission, there are 23,000 registered charities in New Zealand. That is just the registered ones; that is not including the ones like the National Council of Women, which has been denied registration because of the narrow definition of “charitable purpose”. So it is without a doubt that New Zealanders are generous.
The Fair Trading (Soliciting on Behalf of Charities) Amendment Bill emerged 2 years ago because there was concern that there was a lack of clarity about how much of that personal giving was being siphoned off to professional fund-raisers while donors remained unaware. The stated purpose of the bill is to increase transparency and public accountability of third-party businesses that collect funds on behalf of registered charities. I actually have not been able to find out how much of the $1.5 billion that was donated personally last year was donated through professional fund-raisers. However, I hazard a guess that quite a few of those 23,000 charities use them.
I am sure everyone is aware that the Greens do support transparency and accountability, and we would certainly like a lot more of it. I have a bill in the ballot at the moment that is around creating transparency for donations in local elections, which might be a help.
We do believe that those who give money to charities need to be assured that the money they give is used for the purposes that it was given for. We are pleased to see the progression of this bill, and like other speakers I pay tribute to the Commerce Committee members and chairs who have guided the progression of this bill. As we have seen it progress through the House, and especially at the select committee,
significant adjustments have been made to this bill so that this legislation is less prescriptive than it was on its first reading.
We are aware that some charities and community organisations do spend a proportion of the funds that they raise to raise funds, and we acknowledge that when those donations are regular payments, the cost of fund-raising reduces over time. As an example, I pay a regular fortnightly donation to Greenpeace New Zealand, and I am pretty sure that over the last 5 years that donation has accrued and more than covered the cost of the worker who hit me up for that donation in the first place.
On the whole we support the provisions of this bill that give discretion to the Minister of Consumer Affairs and the Governor-General through an Order in Council to check how much of a fee a specific professional fund-raiser is receiving when they are acting for specific charities. We believe this is a better solution to the complexities that were identified during the select committee process. Those complexities included trying to figure out what percentage of a donation would trigger either a partial or a full disclosure of what percentage of the donation was being kept by the professional fund-raisers. So we welcome the bill’s move to shift responsibility for examining the detail of those arrangements to the Minister.
The legislation is timely. In the charitable and not-for-profit sector, especially for those that provide social services, the Government has already signalled that it wants to reduce costs and claw back on contracts. At the same time, there are savage cuts to our public services. In this environment, it is likely that in the near future New Zealanders will be called on to maintain that high level of giving. Some charities may rely on professional fund-raisers to help them raise the money they need to provide the services that the Government falls short on. It is these circumstances that also fuel the addiction that many organisations have to money gained from pokie trusts, and that is another bill that is up later.
Hon DAVID PARKER (Labour)
: I was on the Commerce Committee, which considered this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill—towards the end of its consideration, not during the earlier parts. I think it is fair to say that the greatest act of charity in this is actually the parties agreeing that this bill proceed, because although it does not do any harm, it actually does not do anything. It does not.
Louise Upston: Where’s your sense of charity, David?
Hon DAVID PARKER: Where is my sense of charity? Well, my sense of charity was just about overcome when I agreed that this bill should proceed at the select committee.
Phil Twyford: He’s exhausted it.
Hon DAVID PARKER: I have exhausted it. This bill does no harm but I would ask the member in the chair or Amy Adams to take a call and tell us whether there have been any draft regulations made. Has there been any preparation made of any regulations that would give effect to this piece of legislation?
This piece of legislation now says one thing, and that is that it creates a regulation-making power to do something in the future. It does not do anything more than that. It does not say anything other than what it does in clause 4, which inserts a new clause 28A into the Fair Trading Act to make it explicit that third parties can be required to disclose the amount of the donation that is going to them.
The Fair Trading Act already makes it clear—and this is in the select committee report—that regulation-making powers exist under the Fair Trading Act. So that would have allowed regulations to be required to be made about the percentage of the funds that was donated to charities that was going to somewhere other than the charity. What the Fair Trading Act does not allow is a requirement that the disclosure be made by the
third party who is collecting the donation. So it is a pretty narrow point that is being covered by the regulations here.
The legislation, as it came to the select committee, tried to do this by way of provisions in the operative part of the legislation, rather than in subsidiary regulations. There was a requirement, according to the version that came to the select committee, that if the proportion being retained was less than 50 percent, then the collector had to disclose that there was a portion of the donation being hived off, but was not required to disclose what the proportion was. But if it was more than 50 percent, then they had to show how much of it was being hived off.
It became apparent—as the Greens have already indicated—that that did not work in respect of some of the donations where the first donation might be one of a regular weekly donation, every week, essentially for ever. They did not know how that would work in practice, and therefore they opposed it. So the select committee agreed that although these complexities had to be worked out in the future, the committee was not in a position to work out those complexities. The promoter of the bill—with respect, Amy Adams—had not worked out how those were going to be worked in practice, and so no one has done the drafting to work out how that will be attacked in practice.
Although this legislation does no harm, it barely passes muster as to what should be passed in the House. Were we being less than charitable at the select committee, I think that Opposition members at least would have said that this was fatuous and did not actually rate passing into law as a statute. But given that we were charitable at the time, and given that we wanted to help Amy Adams on her aspirations into Cabinet—and we were successful in that regard—we decided that we would be charitable, as well.
So I would ask the member in the chair, Michael Woodhouse, to advise whether any drafting has been made of the regulations so as to overcome the complexities that could not be cured in the bill, and that led to the bill abandoning the attempt to do it by way of primary legislation, and leaving it to the secondary legislation—the regulation-making power—to sort these issues out. If there has been any work done, I would like to know. I certainly have not seen any drafts. That would be influential for me as to whether I should grant my vote for this next reading of the bill. At least there would be an intention to actually put this into practice.
It seems to me to be a worthless waste of money causing the cost of new statutes to be printed throughout the land, only for it to lie dormant on the statute book. So would the member in the chair please advise whether there is any intention on the part of the Ministry of Consumer Affairs to promulgate regulations.
DENIS O’ROURKE (NZ First)
: New Zealand First is also happy to support the amended Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I might say though, to begin with, that the name is a little bit unfortunate. Using the term “soliciting for donations” is probably not quite appropriate. I really think it should be something like “fund-raising”, or along those lines. However, I think that the important part, of course, is that this bill is now being changed very radically. I think that is a good thing.
The original bill clearly had some problems. It was very complex, and it was very difficult to work out how the various percentages would apply. I am a member of a charitable trust board in Christchurch that exists exclusively to raise money for donation to other charities. When I looked at the bill as it originally was, I thought that we had some expenses that we had to deduct, but no profits. When I looked at the complexity of the original bill, I thought: “Well, where on earth are we going to fit in that?”. I think that was one of the problems with it. When some of the charitable organisations that exist in the community looked at it, if it had been enacted, then they would have had a lot of trouble working out where they fitted in and what their liabilities were. Of course, that means it is bad law, because law that is not readily understandable and not readily
applicable to people so that they can comply with it is not good law and should not really proceed.
So it was that complexity that I think was the main problem with it. I also think that it had huge holes in it, so that people with mischievous intent would have been able to avoid the legislation, if that is what their intention was. But it was also too inflexible, because, of course, any amendment would have had to come through the whole system of the House. That would have taken time and it would have been difficult.
So I really do applaud the Commerce Committee for recommending these changes. I think that the amended bill, which provides for the four areas of regulation, is definitely the way to go. Other speakers have also mentioned why they think that is appropriate, as well. But I note that the regulations are to be made for prescribing the disclosure requirements of information, prescribing the manner of disclosure, prescribing how the financial benefit must be calculated and expressed, and specifying any financial benefit that the fund-raiser is required to disclose. All of that is fine, but I do wonder whether it goes far enough. When you think about what the intention is, or what the intention perhaps should be, it really is not just about transparency. That is very important, and I agree with that and so does New Zealand First. We do want to see more regulation around this difficult area.
But perhaps what it could have done too is to specify some limitation about what could be deducted from charitable donations for expenses and for profits—and perhaps only by way of guidelines so, again, it would not be too inflexible. If the guidelines were then exceeded, perhaps the regulation should require that that be stated to the person giving the donation. In this way we would be able to influence, without too much prescription, how much should be removed from charitable donations to cover the cost of expenses and profits of those who fund-raise. That is something that if I had been on the select committee, I would have liked to argue for. It is too late now, of course, to do that. But perhaps when the Fair Trading Act is revised, as it is intended to be shortly, some consideration could then be given to that kind of concept. I think that is actually more important than the disclosure requirements that we see in the amended bill.
However, those regulations are needed. When we think about some of the sophisticated ways that fund-raising happens these days, such as online donations, automatic donations, and all of that sort of thing, and, most particularly, the sophisticated way—sometimes misleading, I think—that soliciting for donations is carried out, then there is no doubt at all that regulation of this kind is needed, so that people do get a fair go. As everybody in the Chamber knows, New Zealand First stands first and foremost—
Hon AMY ADAMS (Minister for the Environment)
: I did want to come down to the Chamber tonight and take a call in the Committee stage of what began life as a bill in my name, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, and has now been so ably picked up by my colleague Michael Woodhouse, who is shepherding the bill through this Parliament.
I want to just reflect a little bit on the genesis of the bill and where it came from, the thinking in bringing it to the House, and where we find it now with the report back from the Commerce Committee. The original concern for me in this space came about in listening to a report on the radio talking around recent fund-raising or a recent audit into the work of a particular charity—I will not name it, out of fairness—where more than 80c in every dollar that had been collected on its behalf never made it anywhere near the charity. Now, let me make this really clear. We are not talking about the costs of charity and running organisations. We are not talking about the normal good work and administration overheads that go in within charities. We are talking about 80c in every
dollar that hard-working New Zealanders gave never getting anywhere near the charity that the donors thought they were giving to. That is a rort. It is a rort. When I give money to charities, and when other members of this House give money to charity, as I know we all do, we fully expect that the bulk of that money, if not all of the money, will go to the charity we anticipate will receive it. When I started looking into the area, though, I found, actually, that in some cases the problem was worse. In a number of situations, with what are often called “chuggers” on the street, the charity muggers, 100 percent of the funds—100 percent—often did not make it to the charity. It is not unusual for some professional fund-raising firms to keep the full first year of regular donations—
Andrew Little: Well, that’s not 100 percent.
Hon AMY ADAMS: —the full first year of donations—before they gave anything to the charity, if the donor continued giving past that time. A lot of donors will say: “Well, I will give to this charity for a year, and then I will support that one and I will support the other.” They have no way of knowing that possibly nothing they have contributed from their salaries has gone to the charity. I have got no issue at all—and I want to make this really clear—with charities using professional fund-raising firms. I have no issue with firms running a profit for business by collecting on behalf of smaller charities that do not see the value in doing it for themselves. That makes perfectly good sense, and during the select committee process I sat and heard most of the submissions. Absolutely we can accept that that is a valid approach for charities to take—to not do this in-house. There is nothing in this bill that is intended to stop reputable, honest, transparent firms contracting to charities to do this work out of house, and I absolutely want to make it clear that this is not anti - professional fund-raisers. What this is is anti the element in society that saw this as a way to set up a bank of telephones somewhere, get on the phone, say: “We are raising money for this. Won’t you give?”, and, frankly, ripping off New Zealanders. This bill is about protecting consumers, but it is also—as my colleagues have so ably said in this debate tonight—about putting transparency back into the sector. A number of people came up to me during the process when this bill was being debated and said: “Do you know what? I have lost faith in giving to charities, because I don’t know where my money gets to.” There are issues, obviously, around the auditing and regulation of charities. I think that area has made incredible progress over the last few years, and that is certainly well in hand, but it left a gap between when you gave your money and the time it ever got anywhere near that registered charity. That is what this bill is intended to address.
I want to address the last two speakers. Mr Parker suggested that the bill did not do anything, and then Mr O’Rourke suggested that, frankly, it did too much. So the answer to it is this. Initially we tried to provide this in primary legislation to make a very clear approach. During the process, what became clear was two things: this did need to be a reactive, flexible tool—and I accept that—and primary legislation is never a good place to put in place fixed rules that are going to need to be able to be flexible and reactive. What we also found out, though, was that, actually, there was no way to do this without changing the law. There was no way to give the Ministry of Consumer Affairs the power to protect consumers in this area of law without making a change to primary law. So to Mr Parker, I would simply say that if you think this bill does nothing, you do not understand consumer law.
The CHAIRPERSON (H V Ross Robertson): Order!
Hon AMY ADAMS: My apologies, Mr Chair. Without this bill, there is no ability to protect consumers from the impact of unscrupulous rip-off merchants. I have been very proud to be associated with this bill. I thank the House for its support to date, and the givers of New Zealand support it too.
PHIL TWYFORD (Labour—Te Atatū)
: It certainly is an unorthodox approach to lawmaking to pass a primary piece of legislation that basically hands to the Minister of Consumer Affairs the unfettered right to write regulations to deal with a problem. I do not think—
Rt Hon Winston Peters: In a private member’s bill.
PHIL TWYFORD: That is right—in a private member’s bill. I do not think the Hon David Parker was being too uncharitable when he described in less than flattering tones the final product of this extensive piece of work by the member Amy Adams and by the Commerce Committee. It is a strange thing to bring, effectively, a hollow bill to the House that hands to the Minister the ability to write regulations to solve the purported problem. It is pretty clear, reading the report that goes with this member’s bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, that the committee was overcome by the complexity. If that is the case—if it was overcome by the complexity of this issue—it might have been a bit more sensible to go back to the drawing board, rather than proceed with this hollow bill.
I want to focus on two issues in particular, following on from the member’s contribution. The cost of donation is the critical factor in this. The cost of donation is the key factor that this bill is setting out to regulate. But the reality is that for almost all fund-raising work in New Zealand today, when you make that first phone call, that first direct-mail letter, or that first conversation on the street, that is the beginning of what the charity hopes will be a lifelong relationship with the donor, and in all cases that first contact with the donor, the first donation, is always very expensive. What I would like to know is why this bill does not cover direct mail, because, actually, what most charities do is capture their donors, their prospects, for the first time through direct-mail fund-raising. It is the first cheque that gets written or the first credit card transaction that is the beginning of the lifelong donor relationship. The cost of that direct-mail transaction, for most charities, is about 100 percent. Most charities would consider that to be money well spent—if they could capture a donor with that first donation, at a cost of 100 percent. So why is that not included in this bill? I think it is a fundamental misunderstanding of the way that fund-raising works and the way that the fund-raising business model for almost all charities in this country works, and that misunderstanding is captured in this bill and the so-called complexity that led to a non-bill being brought to this House.
The other thing that is inexplicable to me is why the bill focuses on face-to-face fund-raising and telemarketing. Why not charitable events? Charitable events are one of the main ways that charities strike up a relationship with new donors. The cost ratio for charitable events is generally very, very high—far higher than the cost ratio for street-based, face-to-face fund-raising or telemarketing. So why does the bill not include charitable events within its ambit? I invite the member in the chair, Michael Woodhouse, to explain why this bill does not cover fund-raising events or direct-mail fund-raising, because in the fund-raising business model that almost every charity in this country uses those two things are just as important as, actually, or more important than, street-based, face-to-face fund-raising or telemarketing.
I know Labour members are supporting this bill, and it is out of a sense of charity, I say to members. No one disagrees with the principles of accountability, disclosure, and transparency. But I am sad to say that this bill is an example of woolly thinking and, really, it needs further work.
MICHAEL WOODHOUSE (National)
: I thank honourable members for their contributions so far. I think there have been a couple of issues raised that are worthy of addressing. I think the first one I really have to address is probably the least charitable call I have heard in this Chamber for a long time, and that was from the Hon David
Parker. I do think that it really is against the spirit of this debate and this bill, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill, to be quite so uncharitable about a bill that has very noble purpose.
I would accept something of a rebuke for the fact that the bill did have to be substantially amended were it not for the fact that the speech came from the Hon David Parker. More experienced members will well remember, as I am sure Dr Nick Smith will, that member bringing to the Committee of the whole House in 2008 the Climate Change (Emissions Trading and Renewable Preferences) Bill with 785 amendments by way of Supplementary Order Paper, which went through absolutely no democratic process, completely rewriting that bill after 1,000 other amendments went in 2 days before the closure of submissions—completely re-engineering the bill. He may well have a very good justification for that, but I will not accept the rebuke from that member on this bill.
He also talked very uncharitably about this being a worthless waste of money. Ms Curran and Mr Twyford also said that it does no harm, so they will support it. Well, I think that lacks something, actually. If Labour members think this is a worthless waste of time, they should actually put their votes where there mouths are and vote against the bill. I would be quite happy to have that challenge laid down. I do not mind that, but the bill went through select committee under the very able Hon Lianne Dalziel, and it recommended that it be passed, so let us stop talking about it as a worthless waste of time.
I think it is very helpful to look at the case for change, and it was somewhat well articulated by the Hon Amy Adams. I think it is also worth referencing the Charities Commission and the work that it did in 2008 to survey charitable givers.
Hon Trevor Mallard: I raise a point of order, Mr Chairperson. I would just like to draw your attention to the fact that there appear to be strangers in the Chamber. We are currently on a member’s bill, and there is not the provision on a member’s bill for officials to be in the Chamber. There appear to be people sitting on the bench reserved for Ministers’ officials.
The CHAIRPERSON (H V Ross Robertson): I will seek some advice on the issue.
Hon Tau Henare: Can we carry on while you look for an answer?
The CHAIRPERSON (H V Ross Robertson): I think we will carry on in the meantime, while we are checking this out.
Hon Trevor Mallard: No, no, give us a ruling. You can’t do that.
The CHAIRPERSON (H V Ross Robertson): Order! The issue is being checked. I am advised that the member in charge of the bill is entitled to have officials.
Hon Trevor Mallard: I raise a point of order, Mr Chairperson. A member in charge of a bill who is not a Minister cannot have officials. Officials are Government officials; they are not members’ officials.
The CHAIRPERSON (H V Ross Robertson): Thank you. I have been advised that members may have advisers. So I have been guided, and the situation is that members are allowed to have advisers.
Hon Trevor Mallard: I raise a point of order, Mr Chairperson. Can I seek an assurance that these are the member’s advisers, and that they are not departmental officials.
MICHAEL WOODHOUSE: Speaking to the point of order, I can assure the honourable member that they are advisers to me who happen to work for a Government department. But they have provided advice, as they did to the select committee.
Hon Dr Nick Smith: I can speak to you as a matter of record that during the Labour period of Government I had a member’s bill in respect of the engineering profession, and in exactly the place where the officials are sitting today, with the Labour
Government’s consent at the time, I had sitting in exactly that place officials from the department as well as from the Institution of Professional Engineers, consistent with the Standing Orders. What is taking place today is no different from what occurred during the period when Labour was the Government.
Rt Hon Winston Peters: The trouble with the last submission you just heard was, and is, that if there was no objection raised at the time, that does not give it status as a precedent in this Chamber. We need to know precisely who they work for now, and we have not heard that.
Hon Chester Borrows: It appears to me, Mr Chair, that you have ruled on this matter, and people seem to be taking issue with that ruling from their seat without getting to their feet.
The CHAIRPERSON (H V Ross Robertson): I have sought advice on it, because I am not sure myself of the position with the officials who are sitting in the Chamber.
MICHAEL WOODHOUSE: Speaking to the point of order, I am pleased to advise the Committee that the people providing advice to me are employees of the Ministry of Consumer Affairs. They have provided advice to the Commerce Committee in the 49th Parliament, and will continue to advise the Minister of Consumer Affairs when the bill is passed into law as to the framing of the regulations.
Rt Hon Winston Peters: I seek a point of clarification. The member in the chair has not told us what we want to know. He has given some explanation—
Hon Simon Bridges: It’s not question time.
Rt Hon Winston Peters: Well, in your case it should be.
The CHAIRPERSON (H V Ross Robertson): Order! Can I say to members on my right that when a point of order is being taken, it is heard in silence, and there is no interjection whatsoever, and to the member that points of order are to be terse and to the point.
Rt Hon Winston Peters: The terse point I wish to make is: who are they employed by now? Not what advice have they given in the past, but, as of right now, who are they in the employ of: the Minister or the department?
Hon Simon Bridges: The right honourable member did not raise a point of order, and you should not rule on it.
The CHAIRPERSON (H V Ross Robertson): At the moment we are seeking some advice. I have in front of me a situation regarding the admittance of strangers to the Chamber, and it quite clearly states that “To the right: … a person invited by a member in charge of a Member’s bill, a local bill, or a private bill, to advise that member on the bill;”. In this case, that is what we have.
Hon Trevor Mallard: Which Standing Order is it?
The CHAIRPERSON (H V Ross Robertson): It is covered under Ancillary Rules to the House.
Hon Trevor Mallard: No, but someone’s got to make the rules—
Hon Phil Heatley: I raise a point of order, Mr Chairperson. The member Trevor Mallard shouted twice from his seat, asking you questions without asking to be called, and not standing, yet you seemed to engage with him on that. Could we have some dignity in the Chamber, please?
The CHAIRPERSON (H V Ross Robertson): Thank you. This comes from “Rules for Admission to the Chamber, Lobbies and Galleries of the House of Representatives during Sittings of the House, made by the Speaker pursuant to the Standing Orders of the House”. That is where it comes from, and I am assured that the people here sitting behind us have the right to be here.
MICHAEL WOODHOUSE: That is a very timely reminder to thank the advisers who have given advice not only to me but also, firstly, to the Hon Amy Adams, in the
initial stages of the bill, and, secondly, to the Commerce Committee—and now me—for the outstanding advice that they have provided and continue to provide.
Andrew Little: So where are the draft regulations?
MICHAEL WOODHOUSE: I am coming to that—patience. I just, firstly, want to address the initial point, which was the case for change. The Charities Commission conducted two surveys of public trust and confidence in charities, and in those it noted “an increasing public concern over the fundraising techniques of charities and a reduction in confidence in the charities sector.” In particular, 34 percent of respondents in 2008 reported high levels of trust that charities ensure a reasonable proportion of donations get to the end cause, and at least 38 percent of respondents agreed with the statement “Charities use more dubious fundraising techniques these days.” I think the Hon Amy Adams gave us a couple of very compelling reasons why this legislation is very important.
Labour members are free to decide what they do with that, but what I have heard in two previous calls is that it cannot be in primary legislation, and it should not be in regulation, so what they are really saying is that this cannot be fixed. Yet this is a matter of very important public interest to those who give to charities.
I also want to touch on the issue that Mr Parker raised. I may have misheard him, but I thought I heard him say that the Fair Trading Act already provides for regulation powers in this respect, but in fact that was not the advice of the Ministry of Consumer Affairs, which told the Commerce Committee that the Fair Trading Act would have to be amended to specifically allow for disclosure about third-party collectors, as section 27(1) currently does not allow that. So there is definitely a need, there is definitely a public interest, and there is definitely an improvement to the environment in which people provide charitable giving.
To the question asked about whether or not there are draft regulations that have been made, the answer is no, but they will be advanced over the next 12 months. The bill–
Andrew Little: Oh! All this lack of public confidence and no regulation.
MICHAEL WOODHOUSE: If they will listen they will get the right advice. They asked the question, but do not seem to be prepared to listen for the answer. The bill provides for the Minister to consult—in fact, it requires the Minister to consult—with affected parties before the regulations are drafted.
Andrew Little: Regulations can be made without consultation.
MICHAEL WOODHOUSE: No, that is not what it says. I will provide the necessary position for the member. It says somewhere that there is an obligation on the Minister to consult, albeit that that Minister’s failure to consult does not necessarily invalidate the regulation. That is a way of framing regulations that is quite customary. It happened under the Labour Government; I cannot give you an immediate example, but that is quite a normal way of framing regulations. In any event, I am sure the honourable member Charles Chauvel will have something to say to that when it gets to the Regulations Review Committee.
Although we have not drafted regulation yet, I have sought advice anticipating the question as to what the regulation might look like. In fact, there are precedents around the world for the Ministry of Consumer Affairs in advising the Minister as to what that might be. The UK model has what is known as a solicitation statement, which requires fund-raisers to state the institution that they are fund-raising for, whether there is more than one charity, the names of those charities, how the fund-raiser’s remuneration in connection with the appeal is to be calculated, and the amount if it is known. In Australia there are a variety of processes under regulation that are a bit different. In Victoria, collectors must disclose how much they are paid to collect. That is probably the intention that the member introducing the bill had when she talked about the 20
percent and 50 percent thresholds. In New South Wales, collectors are simply prohibited from retaining more than 50 percent of the funds raised. In Tasmania they use the term that the benefit cannot be “manifestly excessive”. So there are quite differing ways to do that. My own view—and it will actually be up to the Minister of Consumer Affairs, in any event—is that the UK model is probably the pathway that we should explore. I think it provides the comprehensive statement that we need, but it is not overly prescriptive, and indeed it talks about not being overly prescriptive.
The last thing I just want to touch on in respect of the things that have been raised is the timeliness of this, and I have spoken with the Minister of Consumer Affairs. It is important that we do not let this drift. I think there is a high level of public interest, and he has indicated to me that he is quite willing to get advice on this in a timely manner and that the regulation should be drafted, consulted on, and passed into regulation in the next 12 months. I thank the Minister for his commitment to doing that, because, as I say, this is very much a matter of public interest.
Peseta SAM LOTU-IIGA (National—Maungakiekie)
: Thank you, Mr Woodhouse, for clarifying the area of regulations. I just want to bring back up a point in the debate around why this Fair Trading (Soliciting on Behalf of Charities) Amendment Bill was brought to bear in the first place. What it has done, despite the protestations of members opposite, is raise the level of awareness and the level of conversation around this very important issue. We have heard tonight from members around this Chamber that there are over 25,000 charities in this country, to which members of the public donate in excess of $1 billion. Those members—at least the members whom I speak to on the streets of Maungakiekie—who want to have trust and confidence in the charities that they donate to say that they want some level of accountability and some level of transparency in what they are donating and where that money is going.
In the Commerce Committee we heard some submissions from various charities—and I see the Hon Lianne Dalziel is here—and, to be fair, we grappled with the way that this bill would address the issues that were raised both in the public oral submissions and in the written submissions. We grappled primarily with the way that we wanted to see some primary legislation that would directly address the issues that have been canvassed here tonight. We tried and we tried, and we did not quite get there. That was disappointing, but I think it is mischievous for members opposite to claim now that this bill is hollow, because it is not hollow; it actually has regulation-making powers. I have already canvassed in this House my reluctance to use regulation-making powers. As lawmakers we should at least have a go at defining and describing the types of laws that people in New Zealand should adhere to and obey. But we could not get there. The regulation-making powers are in place, and I have already stated my reluctance for that to go ahead. Mr Woodhouse has pointed out various models of approach to making those regulation powers work. I certainly have confidence that the Minister of Consumer Affairs, the Hon Simon Bridges—and he is here tonight—will carefully consider this, that he will consult widely, and that he will take upon his conscience the representations of those who are directly affected by this bill.
I think one of the more compelling submissions that we heard was from Greenpeace and various others who stated that it was not a one-off donation that they were receiving but actually a trail of donations, and that in order to attain those long-term donors they needed to invest in marketing, in public relations, and in those people who would—
Hon Lianne Dalziel: Maybe a dotcom website.
Peseta SAM LOTU-IIGA: —a dotcom website—take on these donations and would encourage and attract long-term donors. That point was very well made, and I think, in good conscience, we resisted some of the desire to go ahead and regulate in this way.
I think, also, the points raised by Mr Twyford are quite valid. He referred to direct mail. Mr Twyford did not actually state the online contributions that people make. The internet is taking over in terms of attracting donations to various charitable organisations. He also mentioned charitable events, which, again, are a different way of soliciting funds from potential donors and future donors. I take the point, but I think that Mr Twyford, who was not part of our select committee process, should actually look at the bill as amended. The bill actually incorporates some of those things. The regulation powers stated within the bill are wide enough to take on some of those different forms of donating moneys.
We cannot forget the mischief that this bill addresses. The honourable Minister Amy Adams referred to third-party organisations that use up 80 percent—although I have heard of other organisations that have chewed up 90 percent—of actual donations. I do not believe that the New Zealand public has trust and confidence—and I did not hear one member of the committee refer to them as having trust and confidence—in that type of operation.
This bill is to be commended. I encourage all parties in this Chamber to vote for this bill. Despite their protestations about it being hollow, I think it does address the issues. I have confidence that the Minister will put together regulation-making powers. There is a review of the Fair Trading Act, which will also go a long way towards addressing some of the issues in this area. I certainly speak in favour of this bill.
Hon LIANNE DALZIEL (Labour—Christchurch East)
: Thank you for the opportunity to address the Committee stage of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. As the former chair of the Commerce Committee who was chairing the meetings that dealt with this particular piece of legislation, I thought it was appropriate to respond to a comment made by the member who has just resumed his seat,
Peseta Sam Lotu-Iiga. I think, to be fair—and actually I think my colleague Phil Twyford is correct in terms of the content—legislation that does not have substance within it is hollow. I cannot think of any other description for it. The reason it is hollow is that it was not possible in the framework of a member’s bill to deal with the substantive issues that needed to be dealt with in order to cover the issues that need to be addressed. We think that it is important. We on this side of the House do think it is important to address this issue. Do we think this is ideal? No, we do not. Are we supporting the bill? Yes, we are, but largely because it will sit in place only for a very short period of time, and it will be subsumed, as it were, by the consumer law review legislation that will travel its way through the House over the next wee while. I think that bill has already gone to a select committee. [Interruption] It has. During the context of that legislation, I think we will be able to see this matter addressed. In actual fact, we may never see the regulations passed under this bill.
It really came down to a point where there were two pieces of legislation that came to our select committee that were ahead of the consumer law review. It was decided that one of them would be held back and would basically sit within the review itself, and the other one—this one—in the name of the Hon Amy Adams, as she is now, she was very keen to progress. I think one of the main justifications for us agreeing to that request was the belief that there were some important public interest issues that should be put out there to increase people’s awareness. That would enable people to ask the question: “How much of my charity dollar is going to the charity?”. I think that one of the points that has been made several times over in the debate thus far is that there is often a considerable cost in getting that donor, who is then going to commit to donating for the rest of their life. There are people who continue to pay an ongoing tithing or something to a church, to a local charity, or to Greenpeace or something like that—
Phil Twyford: Oxfam.
Hon LIANNE DALZIEL:—Oxfam—where there is a considerable amount of upfront cost. The agencies that do this work actually do charge a lot, but once you have got somebody basically hooked on a—
Hon Trevor Mallard: Regular payment.
Hon LIANNE DALZIEL: “Regular payment” are the words I was looking for.
Hon Trevor Mallard: Would you like me to help you?
Hon LIANNE DALZIEL: Yes, I would love your assistance. It would actually be a rare and unusual event for you to be giving me a hand, Trevor! Sorry. The point that I am making is that once you have got people on to regular payments, it actually operates on that inertia basis—that it actually is more trouble to go and end the automatic payment than it is to just carry on with the payment. I think it is a very important issue to bring to people’s attention, but I do not think people should get completely bogged down in the idea that just because there is a commercial operation that enables people to come into that giving programme that there is somehow something wrong with that, because I do not think that is the case. I think a lot of large charities internationally rely on those commercial operations to make that initial contact for them—and they get paid well for that—but then the benefits flow on to the organisation for a long time to come.
I do not think we will ever see regulations passed under this legislation, but it has been a very useful exercise in order to bring public attention to an issue that is of concern, and that is how much of their money that they are giving for charity is actually going to the charity. And when you are actually making that donation in a very direct way, I think people are entitled to know the answer.
MICHAEL WOODHOUSE (National)
: I just want to make three quick points, as we approach the end of the Committee stage, and I will start—
Phil Twyford: Why does the member think that?
MICHAEL WOODHOUSE: —by addressing the contribution by the Hon Lianne Dalziel. Well, I am quite sure that if members have other meaningful contributions to make, they will stand up. The first relates to the issue of hollowness. I would say that small is not hollow. The fact that the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill is, even now, small—it was when it was introduced and it is now—does not make it hollow.
Hon Lianne Dalziel: Substance.
MICHAEL WOODHOUSE: There is substance in it. The issue is certainly very important. I would also say that, yes, there was some complexity around the framing of the primary legislation that it was felt would be best addressed in the regulation, but that will not make the complexity go away. I know that the Commerce Committee did hear from fund-raising organisations that were not in support of this. I think there is an element of self-interest by those organisations in respect of the disclosure requirements that this regulation, when it is passed, will have. So I do not agree with Ms Dalziel that this regulation will not be put in place. I am quite sure that both I and the Hon Amy Adams will keep on the Hon Simon Bridges until those regulations are drafted, and that we will get there.
I think the member Sam Lotu-Iiga did address the issue that Mr Twyford raised about public disclosure of other types of fund-raising events, not just cold calling, and I draw members’ attention to new section 28A(1)(a)(iii) in clause 4, which does provide for a fund-raising event. They will fall within the description—
Phil Twyford: And direct mail?
MICHAEL WOODHOUSE: And on direct mail I am advised that any requests that come from a third party will be covered. The member’s description in his call was a little unclear as to whether he was clearly articulating between direct mail that is done
by charities themselves and that which is done by a third-party fund-raiser. If it is from a third-party fund-raiser, it will be covered by the disclosure requirements.
The last thing I want to say is in respect of the member Raymond Huo’s call in the second reading, where he raised the question about sanctions, and penalties for non-compliance. He mentioned the—
Hon Lianne Dalziel: It was Rajen.
MICHAEL WOODHOUSE: Was it Rajen? I do apologise to Mr Huo. The member is quite right; it was Dr Rajen Prasad. He raised the question of where the sanctions are and where the penalties are. I can advise the Committee that, in fact, the primary legislation provides in section 40 for there to be penalties for contravention of the provisions of Parts 1, 2, 3, and 4, and those penalties will apply to the regulation. They are onerous. For an individual there can be up to a $60,000 fine, and in the case of bodies corporate, which are most likely to be the agents that are covered by the regulation, a fine not exceeding $200,000. So it is a significant potential penalty for those who do not comply with the Fair Trading Act, and most appropriately so. So the sanctions are there. I thank members for their contribution.
The CHAIRPERSON (H V Ross Robertson): The question is—
Scott Simpson: I move that the question be now—[Interruption]
The CHAIRPERSON (H V Ross Robertson): No.
- Clauses 1 to 4 agreed to.
- Bill reported without amendment.