It's Time for Churches to Account for Their Cash Says Sex Abuse Royal Commissioner

By Royce Millar and Ben Schneiders
Sydney Morning Herald
October 9, 2018

https://www.smh.com.au/national/sex-abuse-royal-commissioner-says-it-s-time-for-churches-to-account-for-their-cash-20181009-p508oj.html?fbclid=IwAR2bV98D1scjdPiQQg4HiiKaHzVje4OioswVEEH9quy5q-gNEaO3l_hkLps

All Australian churches should be made to open their books to account more thoroughly for their billions of dollars in assets and revenue, a member of the child abuse royal commission has said.

Robert Fitzgerald AM, one of the six commissioners who oversaw the five-year royal commission, will call on Wednesday for the scrapping of special exemptions that have until now allowed half of church charities, including much of the Catholic and Anglican church networks, to avoid financial reporting to the charities watchdog, the Australian Charities and Not-for-Profits Commission.

Commissioners Robert Fitzgerald, Justice Peter McClellan and Commissioner Helen Milroy at the Royal Commission into Institutional Responses to Child Sexual Abuse

In an address celebrating the 10th anniversary of the not-for-profit law program of community legal group Justice Connect, Mr Fitzgerald will publicly declare for the first time that the arguments for the exemptions for "basic religious charities" do not hold up.

Mr Fitzgerald will explain how the exemptions had sent a "poor signal" to the wider community that some charities deserved special treatment simply because of their religious status.

“In light of what’s been revealed about abuse and poor governance by the royal commission and other inquiries, why should anybody be exempt from good governance requirements?

“My view is that the rationale for the exemption no longer exists given the proven need for improvements in governance, transparency and accountability across the charitable and not profit sectors.”

His call also comes after The Age earlier this year revealed the Catholic church misled the royal commission by grossly under-valuing its property portfolio while claiming that increased payments to abuse survivors would likely require cuts to its social programs.

The Age found the church has more than $30 billion in largely undisclosed property and other assets Australia-wide.

The final report of the Royal Commission into Institutional Responses to Child Sexual Abuse, delivered last December, made 400 recommendations to secular and religious institutions. It called for improved accountability, governance and transparency but did not specifically address the issue of the exemptions for basic religious charities.

Uncertainty over their finances has allowed churches to underplay their wealth and obscure the movement of money between religious and non-religious activities, including education and aged care.

Church agencies and schools receive billions of dollars a year in public funds, almost $8 billion for Catholic schools alone in 2015.

Mr Fitzgerald, a practising Catholic, was also the inaugural chair of the charities commission advisory committee, when the Gillard government established the commission in 2012.

A five-year review of the Charities Act was written into the 2012 law.

The review recommends a rethink of the reporting exemptions, subject to conditions. It was tabled in federal parliament amidst the August leadership turmoil.

At the time the responsible minister was Michael Sukkar. Assistant Minister for Treasury and Finance, Senator Zed Seselja, is now responsible for the charities commission.

He is on ministerial leave and was not immediately available for comment. It is unclear when the government will respond to the review's recommendations.

In 2013 The Sunday Age revealed how lobbying led by the Catholic church had won exemptions from annual financial reporting requirements and governance standards under the new charities laws.

About half of the 16,000 charities with religious purposes are exempt.

The churches successfully argued that such reporting was an unreasonable burden on overworked local parishes, an argument that was challenged by experts.

"Of course they know how much money they've got," Professor Ann O'Connell from the Melbourne Law School, said early this year.

The Age has obtained annual financial reporting forms that Melbourne's parish priests are required to complete for the church's head office. They ask for at least as much financial detail as the statements the regulator requires from non-exempt charities.

Mr Fitzgerald said with trust in institutions at an all-time low, improved transparency and governance were more important than ever.

“We’ve now had almost seven years of the operation of those exemptions. I think it is clear that the rationale for those exemptions no longer applies.”

The ACNC review, chaired by Patrick McClure AO, cautiously supports a rethink of the exemptions, subject to other changes including lifting the threshold for annual financial reporting for charities to groups with annual income of more than $1 million. Currently the threshold is an income of $250,000.

Mr Fitzgerald does not support lifting the threshold.

Justice Connect - which works closely with many small charities - has long been a critic of the basic religious charities exemption.

“Even the smallest volunteer-run charities that we regularly help have coped well with the charities commission reporting and governance obligations,” said the group's head of Not-for-Profit Law, Sue Woodward.

It’s time for basic religious charities to have the same responsibilities, given they enjoy the taxation concessions as registered charities.”