Ms PATTEN (Northern Metropolitan) (15:00:22) — I move:
That the bill be now read a second time.
Sanitarium, the manufacturer of Australia’s iconic breakfast cereal Weet-Bix, is a charity. As a nation we buy and consume more than 1.4 billion Weet-Bix per year, yet as a consequence of its charitable status, Sanitarium pays no company tax in Australia, quite unlike its multinational competitors Kellogg’s, Kraft and Nestlé.
Were Sanitarium still based in Melbourne where it was founded, it would also be entitled to exemptions from various Victorian taxes, including land tax, stamp duty and payroll tax.
How is this possible? That the manufacture and sale of breakfast cereal for profit is a charitable activity?
Because Weet-Bix is manufactured by a company wholly owned by the Seventh Day Adventist Church.
A charitable tax break of this type does not mean that the resulting income stays in Victoria or is even spent on charitable activities. As the Seventh Day Adventist Church has acknowledged, it has invested millions of dollars generated by its ‘group one’ entities, including Sanitarium, into US-based companies.
This is not what most people understand a charity to be. Compare this to taxes, which can only be spent by the state for the benefit of the community.
Paying its ‘fair share of tax’ does not abrogate the ability of a business like Sanitarium from generating profits for the church, just as Kellogg’s, Kraft and Nestlé pay tax and return profits to shareholders. Taxes benefit the community, just as charitable activities do; neither is mutually exclusive.
I use Sanitarium as an example, but there are many more.
Fairfax revealed recently, when it published its investigative report into the wealth of the Catholic Church in Australia, that the church holds assets in Victoria valued at more than $9 billion, making it the largest non-government landholder in the state.
Those holdings reportedly include banks, a superannuation fund, an insurance company, a news service and telecommunications provider. Properties reportedly include offices, residences, car parks, conference centres, tennis courts, mobile phone towers and a restaurant.
That Fairfax article highlighted again the lack of transparency and accountability around religious institutions, just as the royal commission and the Betrayal of Trust inquiries did before it.
The government acknowledged this in part yesterday, in announcing their Legal Identity of Defendants (Organisational Child Abuse) Bill 2018.
My response to this lack of transparency is this bill.
A bill that does not in any way inhibit the genuinely charitable activities of religious organisations. A bill that does not affect land tax exemptions for places of public worship. But a bill that may see profitable religious-run commercial enterprises pay their fair share of taxes for the benefit of all Victorians as a whole.
Most people understand a charity to be ‘an organisation set up to provide help and raise money for those in need’, being the Oxford dictionary definition. Victorian laws should reflect this, just like the laws of the United Kingdom and Canada.
My bill operates by redefining ‘charitable purpose’ as it applies to Victorian statute to exclude ‘advancement of religion’ as a charitable head. This amendment will ensure that tax exemptions for charities in Victoria only apply to those organisations engaging in objectively charitable works, including:
– advancing health, including preventing and relieving sickness, disease or human suffering;
– advancing education;
– advancing social or public welfare;
– relieving the poverty, distress or disadvantage of individuals or families;
– caring for and supporting the aged;
– caring for and supporting individuals with disabilities;
– caring for, supporting and protecting children and young individuals; and
– assisting the rebuild after a disaster.
Turning to the structure of the bill:
Clause 1 of the bill sets out the purposes of the bill.
Clause 3 inserts definitions of charity, charitable purpose and disqualifying purpose into the Charities Act 1978.
Clause 4 inserts new sections 1B to 1F into the Charities Act 1978, which set out the criteria for determining whether an entity is a charity, whether its purposes are charitable and whether it operates for the public benefit.
Clauses 4 and 5 also provide certain protections from unintended consequences.
The remaining clauses of the Charities Amendment (Charitable Purpose) Bill 2017 provide for the adoption of these definitions in the Duties Act 2000, the Land Tax Act 2005 and the Payroll Tax Act 2007.
As I have already stated, religious-run charities and places of worship remain protected.
I acknowledge the limitations on this house of Parliament provided by section 62 of the Constitution Act 1975 — namely, that a bill ‘for imposing any duty, rate, tax, rent, return or impost must originate in the Assembly’.
When construed narrowly, removing an exception to an existing taxing law does not itself impose a tax. Other members may wish to be heard on this issue on a later occasion.
This bill clarifies and aligns the concept of charity with 21st century expectations.
I commend the bill to the house.
Fiona Patten MP
Leader of Reason
Member for Northern Metropolitan Region
Second reading speech 7/4/18
The full Bill can be found here.