Court Finding In Favour Of Australian Charity Has "Huge Implications" For New Zealand

Wellington - 02 Dec 2010

The Charities Commission will be uncomfortable with the ruling of senior Australian judges against the Tax Commissioner in a case that will have implications for New Zealand charities.

The Australian High Court has found in favour of charity Aid/Watch in a case that could have significant implications for the New Zealand civil society sector. In the decision announced this week the Court deliberated on the meaning of the terms "charitable institution" and "political purposes". The Charities Commission has been seen by some as unfairly preventing organisations engaged in lawful charitable work from going onto the Charities Register and as such providing a significant barrier to fundraising.

Aid/Watch started it's battle with the Commissioner of Taxation four years ago, when that organisation was prevented from getting charitable tax exempt status because it "engaged in political activity". However yesterday the group was vilified when the Australian High Court ruled that Air/Watch's role in generating public debate about the efficiency of foreign aid is in fact beneficial to the community. It ruled that the group, therefore, is a charity and can operate tax-free.

Jarrod Coburn, a Trustee of the Draco Foundation (NZ) Charitable Trust, says that this is a dream decision for the New Zealand civil society sector.

"The Charities Commission has been very heavy handed of late, accusing all and sundry of having nefarious political purposes behind the work that they try to undertake. In many ways this must have been what honest women felt like in Salem during the witch trials, a fact probably not lost upon the 140-year old National Council of Women, who had their status revoked because the Commission said they were a political organisation."

"Draco Foundation, too, has been refused charitable status, as have many residents' and ratepayers' associations around the country. The Commission justifies this by an archaic piece of English legislation called the 'Act of Elizabeth' that was enacted in 1601. I know I speak for the entire sector when I say that society has moved on a lot in the past 410 years, and it's time the Government took a hard look at how their policy is being delivered by these civil servants."

Draco Foundation will be pleading their case before the New Zealand High Court in February next year. Mr Coburn says that - whilst he cannot speak specifically about their case - he is confident that the ruling by the Australian High Court will hold some sway in this country.

"If someone doesn't win a similar court case in this country then our civil society organisations - who are essentially the last bastion of democracy - will be slowly starved of funding. The Charities Commission on the one hand spends millions of dollars of taxpayer money on promoting 'charities' listed on their register, and on the other hand warns the public of the dire consequences of donating money to those organisations that are not listed."

"The National, Act and Green parties all vehemently opposed the introduction of the Charities Act when it came before Parliament under urgency in 2005. Every single submission received by the Government of the day was opposed to the setting up of the Charities Commission. By the way the Commission has behaved this past year - independent of Government policy according to Minister Turia (who has said she has 'no control' over their decisions) - it is apparent that we have a situation spiralling out of control."

Mr Coburn says that regardless of the outcome of their court case next year the Draco Foundation will continue in its mission to 'promote democracy and enhance natural justice in New Zealand'.

Draco Foundation currently funds Council Watch, which maintains a watching brief over the local government sector and undertakes regular research projects designed to highlight issues and demystify the processes of local government. It also funds the National Database of Residents' Associations. Further information is available at www.civilsociety.org.nz.

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