Henry Review Threatens Delivery of Charity Services

The Community Council for Australia (CCA) has warned the government that wholesale removal of benefits to the Not for Profit sector would have severe consequences for Australians’ ability to choose how they allocate their welfare dollars.

The CCA comments come just days before the planned release of the long awaited Henry Report.

The Henry Tax Review, due to be made public on Sunday (May 2), is expected to advocate curtailing fringe benefits taxation (FBT) exemptions for Not for Profit organisations.

CCA chairman, Rev Tim Costello says if adopted by the Federal Government, the move could “cut the throat of a sector that the public trusts”.

He says the government understands that the Not for Profit sector operates substantial welfare and community services and does them more efficiently than any new federal or state bureaucracy.

Rev Costello says Australians are among the most generous people in the world, but they need to be free to choose who they support in regular appeals and with their donations.

Rev Costello welcomed discussion about practical reforms to the existing system of benefits to eligible charitable groups to ensure they are well targeted and that any abuses are rooted out.

Costello says benefits must be accessed and accounted for transparently and reasonably.

The founding members of CCA have welcomed the imminent release of the Henry Review. It follows the release of the Productivity Commission report in February and the subsequent signing of the National Compact between the Federal Government and the Not for Profit sector.

The Productivity Commission’s report in February recognised that the charitable sector represents $43 billion worth of service provision to the commonwealth and states, and accounts for about 8 per cent of employees.

A report commissioned by CCA from Access Economics identified some significant deficiencies with current taxation arrangements and concessions for the Not for Profit sector.

The CCA says reforms which could reduce anomalies and inefficiencies include extending DGR status to all charities to remove confusion and allowing tax deductibility for all donations at the top marginal tax rate.

It says suggestions in the report that the Government move to directly fund charities may bring theoretical efficiencies but would run counter to arguments that the Australian community prefers to choose how it allocates its support for charitable causes.