11 Xenophon wins committee inquiry

Independent Senator Nick Xenophon has moved a step forward in his campaign for a review of Scientology’s tax status in Australia: an inquiry into the feasibility of a public benefit test for charities and religions.

Independent Australian senator Nick Xenophon, who has been campaigning since last November for a parliamentary inquiry into Scientology’s tax-exempt status, will get to put his case to a parliamentary committee.

The Senate’s economics committee has been instructed to carry out an inquiry into his bill proposing a public interest test for charities and religions claiming tax breaks, and to report back by August 31.

Previously, the ruling Labor Party and the main opposition Liberals had twice blocked the senator’s campaign to get an inquiry on Scientology, a campaign he has supported with disturbing accounts from past members of the movement’s activities.

On Wednesday, May 12, his bid to add an amendment to a government bill changing the tax laws was also voted down.[1]

But after introducing his own private member’s bill the following day, he got the committee inquiry, which will take testimony from witnesses and be heard in public.

On Wednesday, Xenophon reminded the Senate that the government had opposed his previous calls for an inquiry into Scientology because it would pre-empt the work of a review of the tax system.

That review, the Henry Tax Review, was now in, said Xenophon: and one of its recommendations (number 41) covered the kind of public interest test that he was proposing.[2]

But the government had chosen not to adopt that recommendation, he said.

“This amendment puts in place a reasonable test for bodies seeking to be recognised as charities and seeking to get tax-free status,” he told the Senate.

“It ensures that their aims and activities are of true benefit to the community as a whole. For charities and other entities to receive tax exemption it seems only fair that they must meet this public benefit test if they are to be propped up and supported by the Australian taxpayer.

“I make no apology for introducing this amendment here in the context of this legislation. I have flagged previously that I will be persistent and relentless in pursuing a just outcome for the victims of Scientology to ensure that this organisation receives appropriate scrutiny.

“Indeed, for any organisation that receives the benefit of a tax-free status there must be a degree of accountability – and that is lacking in our current laws.”

But senators, expressing doubts that his measure was a good fit with the bill being considered, voted down his move by 28 to six. Only the Greens, who have already backed Xenophon’s campaign on this issue, voted with him.

A day later, the senator introduced his own private member’s bill – and here he had more success.[3] The Senate’s selection of bills committee, sitting in private session, instructed the economics legislation committee, which handles tax matters, to conduct the inquiry.

The strength of Xenophon’s current bill is that it is based on a principle that would apply to all charities and religious organisations and not just Scientology: a principle already accepted in England and Wales.

“This proposed amendment is no threat to charities or religions acting in the public good,” said Xenophon of his bill, in a statement released shortly after his bill was referred to committee for the inquiry.

“It is simply designed to ensure that people who derive benefit from the Australian taxpayer actually provide benefit to the Australian people through good works.”

Speaking on a crackly line from Australia, Xenophon explained to Infinite Complacency that the referral to committee was standard procedure in dealing with draft legislation.

But one could not second-guess what the committee’s recommendations might be, he stressed.

In a memorandum accompanying the bill, the senator explained what he meant by a public interest test.

“Under this Bill, a Public Benefit Test would include the following key principles:

n      There must be an identifiable benefit arising from the aims and activities of an entity;

n      The benefit must be balanced against any detriment or harm; and,

n      The benefit must be to the public or a significant section of the public, and not merely to individuals with a material connection to the entity.”

The summary of Thursday’s committee’s meeting leaves blank the section referring to reasons for the decision and principal issues arising.

But its list for possible submissions or evidence includes:

n      former members of the Church of Scientology;

n      the Charity Commission for England Wales (Xenophon’s bill is based on the public benefit test that they apply);

n      Paul Harpur of the Queensland University of Technology, a specialist in employment law;

n      Dr Stephen Mutch, an associate lectuer in government policy at Macquarie University, and formerly a deputy with the opposition Liberal Party;

n      The Church of Scientology itself;

n      And various other churches, campaigning groups and charities.

A spokesperson for Xenophon explained that Mutch and Harpur had appeared on the list of possible witnesses because the senator wanted to call them: both are familiar with the British law in this area.

Submissions and testimony would be open to the public, unless a witness asked to testify in camera and the committee decided to grant the request – but that would be very unusual.

This provisional list does suggest then that the thrust of the inquiry will be directed at Scientology, which after all was the reason Senator Xenophon introduced his bill.

The message boards are already celebrating a major victory, and it is true that this measure will allow the senator to once again air the issues in a parliamentary forum.

But this is no guarantee of course that his bill will be passed.

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[1] He was trying to make a change to the government’s Tax Laws Amendment (2010 Measures No. 1) Bill 2010. The proceedings, with Senator Xenophon’s speech, are in Hansard.

[2] Recommendation 41 of the Henry Tax Review – named after its chairman, Ken Henry – is in the section covering tax concessions for non-profit organisations. It reads: Consistent with the recommendations of previous inquiries, a national charities commission should be established to monitor, regulate and provide advice to all not-for-profit (NFP) organisations (including private ancillary funds). The charities commission should be tasked with streamlining the NFP tax concessions (including the application process for gift deductibility), and modernising and codifying the definition of a charity.

[3] Xenophon’s Tax Laws Amendment (Public Benefit Test) Bill 2010 seeks to reform the 1997 Income Tax Assessment Act.