Australian Tax Law May Muzzle Environmental Groups

By Bob Burton

CANBERRA, Australia, July 31, 2003 (ENS) - The Australian government has proposed legislation that provides for environmental groups designated as charities to be stripped of tax concessions if they are considered to be too involved in advocating changes to government policies.

Under the draft Charities Bill introduced last week by Treasurer Peter Costello, a “disqualifying purpose” preventing a charity from gaining tax concessions would include any of “advocating a political party or cause,” “supporting a candidate for political office” or “attempting to change the law or government policy.”


Treasurer Peter Costello is the senior economic minister in the Australian government. (Photo courtesy OECD)
A charity would be excluded if advocacy were deemed to be either the sole purpose or “more than ancillary or incidental to the other purposes of the entity concerned.”

Australian Greens Senator, Bob Brown, believes that all the major environmental groups are at risk. “I think that any group and there are over 200 environment groups in the gun on this who are politically active or are trying to change the government policy on anything from animal exports to the logging of forests are going to face being put out of action,” he said.

Under the current tax system, most environmental nonprofit groups are exempt from income tax and have tax deductibility enabling donations from individuals to be claimed as a personal tax deduction. But most are not currently designated as charities due to the current narrow definition used.

Environmental groups have welcomed the proposed broadening the definition of charity to include “the advancement of the natural environment.”

However, it remains unclear whether the proposed Charities Bill will apply to environmental groups that are currently designated as a tax deductible entity on the register administered by Environment Australia, the government's environmental agency.

Senator Brown believes there is no prospect that environment groups will be allowed to escape the new provisions if the government succeeds in getting them through the parliament. “The tax system has to be even handed and fair to all players," he said, "so to think that there is going to be some way here in which some conservation groups will be caught and others won’t, isn’t realistic."


Senator Bob Brown of the Green Party says the tax bill would threaten loss of tax deductible status of The Wilderness Society, Friends of the Earth and Greenpeace. (Photo courtesy B. Burton)
The government’s proposed definition of a charity has gone beyond what was recommended by its own inquiry in 2001 into the tax treatment of charities. The inquiry was instigated following the introduction of a national goods and services tax system.

One of the members of the committee that inquired into charities, Robert Fitzgerald, argues that the government proposal has gone too far. “The danger is very simple it now means the charities to have to continually look over their shoulder to see whether or not they breach the magic threshold of going too far in terms of trying to deal with legislational policy, which frankly in Australia is part and parcel of the not for profit and charitable sector,” he told ABC TV on Wednesday night.

Elements of the government's proposal echo parts of the submission to the inquiry by the corporate funded think tank, the Institute of Public Affairs (IPA).

In its January 2001 submission to the inquiry, the Director of Economic Policy at the IPA, Jim Hoggett, submitted that a benefit of defining a charity as only those providing social welfare services was that it would exclude environmental groups.

If a broader definition was adopted, he suggested that charities be required to provide greater detail on what they spent their funds on which “would exclude a number of what are, in reality, political action groups falling under environmental and ethical and other headings.”

A spokeswoman for Greenpeace Australia, Sonia Zavesky, said that the environmental organization is seeking legal advice on Costello’s proposed legislation but a preliminary reading of the proposals revealed there is cause for concern.

“When you look at some of those definitions then you would have to think that … they could be used to target groups like Greenpeace," she said. "It could lead to a situation of where [the government says] ‘whoever disagrees with us we shut them down.'"

One of the largest environmental groups, the Australian Conservation Foundation (ACF), also is concerned about the proposed legislation. ACF believes that the Federal Parliament should amend the proposed bill to ensure that charities, including environment groups, are not prevented from advocating for change in law or government policy.


Senator Natasha Stott Despoja, leader of the Australian Democrats and Peter Garrett, president of the Australian Conservation Foundation, protest a new government supported nuclear reactor in suburban Sydney. (Photo courtesy React Now)
In a bid to defuse the growing controversy, Treasurer Costello claimed that his proposed legislation was being misrepresented. "Charities have never been penalized for speaking out on public policy," he said. "To suggest that the government has proposed this is false."

The Australian Conservation Foundation is in under another heading, said Costello. "They are specifically named as an environmental group. They are not covered by this, they are not regarded as a charity. This doesn't apply to them. This is a charity, a charity is somebody who helps the poor or the sick, or an education or something like that,” he said.

However, last year the ACF won a case against the Victorian Commissioner for Taxes in which it was accepted that for tax purposes the organization was a charity.

Brown argues that it would be nonsensical to include the environment within the revised definition of a charity but then allow environmental organizations to opt out of the system.

Worse still, the senator argues, the government wants to reign in advocacy groups but allow lobbying by corporations to proceed unchecked. “The big end of town will be totally unscathed, yet the millions of dollars that go into political lobbying and advertising including at election time which are tax deductible to the corporate sector are not touched by these reforms,” he said.

The draft bill is open for public comment until the end of September.