PUTTING THE CHARITABLE SECTOR CENTRE STAGE
AUTHOR: Peter Dunne
In a recent newspaper column Associate Professor Susan St John expressed concern that the reform of the tax treatment of charitable donations I instigated under the last government, and which is continuing under this government, is a costly, risky and uncontrolled experiment, which could lead to the balance of social service provision shifting away from central government.
Well, she is absolutely right. That is precisely what I am intending.
The charitable and philanthropic sector already makes a huge contribution to New Zealand society in the provision of health, education, welfare and general community services, and the reality is the government could never hope to bridge the gap, if the sector was to suddenly shut up shop. In addition, there are now many business organisations working in partnership with charitable and voluntary agencies, so the model Ms St John fears is already close to being entrenched here.
The question which then arises is the extent to which the donation preferences of those who support these initiatives should be recognised. The removal of the limits on tax subsidised donations was but the first step in a comprehensive programme of reform underway in this area. It will be followed later this year by the introduction of a payroll giving scheme whereby employees can have donations credited directly from their pay, and subject to a tax rebate at the time, rather than at the end of the tax year as at present.
There has already been a lift in the amount of expenses volunteers can claim as a tax deduction, and work is continuing on other related issues, such as the tax treatment of those who gift goods or services in kind for charitable purposes. At the same time, a review is underway of the criteria by which organisations are recognised as charities and thereby tax exempt. I expect to be making further announcements on all these issues as the year unfolds.
There is nothing to fear from having a strong and vibrant charitable and philanthropic sector making an important contribution to the delivery of health, education and social services, or active partnerships between and community organisations to deliver agreed community goals. The support the sector currently enjoys shows it is a concept many New Zealanders already strongly approve of and actively participate in through their direct financial support. In many cases, it is because they believe these services provide better and more compassionate outcomes than the state alternative. From a government’s point of view, it makes good sense to encourage the support and growth of these activities, as they ultimately lessen the demand on the public purse. After all, it is far better to make good use of committed and determined community resources, where these are readily available, than to replicate them.
Ms St John worries that this policy will lead to uneven outcomes, and that the vulnerable will not have their needs similarly attended to. On the contrary, supporting strong and viable community organisations in their work not only strengthens their ability to deal with disadvantage and poverty where they encounter it, but also frees up government resources to more directly focus on these issues.
It is the classic “win, win” situation.