Taxation, Charities and Religion

We are pleased to remind our readers that the current issue of Quadrant is the 400th since the magazine began in 1956 under the editorship of
James McAuley.  Much has changed since then, both within Quadrant, in the Australian scene generally and in the world. While the totalitarian threat of communism, which McAuley wrote about in his editorial in the first issue has almost disappeared, the temptations of the authoritarian Left, and their sympathies for terrorism and dictatorship remain.  But there is a large intellectual space still to be contested, and it is in that space that Quadrant flourishes.  The magazine remains a significant intellectual force which is prepared to challenge accepted orthodoxies in politics, history and literature, while maintaining the standards of civilized discourse. We do not organize round-robins of personal abuse against our opponents. We remain happily out of step with predominant fashions in the universities and the progressivist consensus of the political class.


Taxation, Charities and Religion

The Costello brothers seem to be suffering from a bad case of sibling rivalry – one of them, at least. The Rev Tim Costello, the Baptist minister, seems to have an obsession with criticising his younger (by two years) and more famous brother Peter, the Federal Treasurer. This always makes good copy, especially when the Rev Tim is attacking the government in general, so he gets a good run in the media. The relationship is reminiscent of that between Barry McKenzie and his censorious godbothering brother, Kev the Rev, depicted marvellously in the famous comic strip by Barry Humphries and Nicholas Garland. Normally Peter suffers this in silence.

But recently we were treated (in the Financial Review in August) to the spectacle of an attack by the Rev Tim on Peter’s proposed codification of the law on the tax status of charities, and a pained reply by Peter two days after. Tim the Rev had picked up on the notion that the codification is intended to put a political gag on charities, and Peter said that the draft legislation had no such intent. But from the degree of noise emanating from what is sometimes called the voluntary sector of the economy quite a few people are worried. But not about charities. The Rev Tim began with a well-known quotation from the Brazilian Bishop Dom Helder Camara who said. “When I feed the poor they call me a saint. When I ask why the poor are poor they call me a communist.” But while this seems to make a good point, it is nonsense. For it is not for asking the question that Camara and others such are criticised, but for the answers they come up with without having made any serious effort to conduct research. Whether their answers are communist, fascist, or anything else they are usually wrong, and based on a lack of any attempt to genuinely understand the causes of poverty – or even its nature and extent.

So we often see clergy or charity organisations campaigning for or against government policies on the basis of emotion rather than knowledge and analysis, and advocating policies which may well make both the community as a whole and the poor in particular worse off rather than better off. There is an element of political ideology in all this which involves the firm belief that existing policies will work better if only more money is spent on them, and resistance to any alternative approaches even on the experimental level. However, charities are unlikely to find any more difficulties with the new legislation than with the existing law. So long that is that they are actually carrying out charitable (or religious) work as well as campaigning against the government, expounding moralism, ideology or even communism – not that the form of communism once popular in Latin America, Liberation Theology, has proved to be of any value to anyone. It is up to donors to take a hard look at what such charities are doing with their money.

Those organisations who will have a problem are those who with no genuine religious or charitable activity have claimed, or are trying to claim, tax status as charities when they have as their principal purpose political lobbying or the exercise of political influence. Moreover, there are many organisations which have no claim to being charities but which have for various reasons been granted government funds to conduct activities which are for the most part political or self-serving. A good example is the Australian Conservation Foundation, established many years ago for the best of reasons but which in later years has become captive of the green politicians of various kinds and now espouses tendentious views on many issues which, while perfectly acceptable in public discourse, deserve no special government funding. There are many lesser organisations active in various political, welfare, and social causes which enjoy government funding and use it for political purposes.

One of the concerns of the Howard government (as of many people throughout the world) is the increasing power of Non Governmental Organisations (NGOs) which advocate various political causes and policies and try to influence national and international governmental bodies while often having murky financial sources and a clear political agenda. Some of these form alliances of convenience with business interests, like the protectionists in the United States and Europe, to damage industries and exporters in other countries or their own. This is where most of the protest about Treasurer Costello’s evil plans is coming from. The NGOs do not want any democratic accountability for themselves, or any examination by government of their activities and funding. What they want is power without responsibility.

Not surprisingly they are furious with the fact that the government has asked an independent think tank, the Institute of Public Affairs in Melbourne, to prepare a report on their activities. The NGO for a couple of years now has had an ongoing research project devoted to the cataloguing and investigation of the NGOs – an occasional publication, NGO Watch, as well as several papers, have usefully added to our knowledge of their activities.

Rather than expending more and more public funds to finance the propaganda activities of churches, charities, advocacy organisations and NGOs devoted to the destruction of capitalism, with all the difficulties of distinguishing between charitable and non-charitable activities, it might be better to rethink the whole issue of government financial assistance to NGOs.

This must involve a fundamental rethinking of the way in which we treat religion. Ever since the famous High Court judgement which determined that even the shonkiest operations claiming to be religious could claim the tax privileges traditionally given to the mainstream churches (the Scientology case, 1983) there has been no real definition of religion for tax purposes. Although the Tax Office in 1998 knocked back the Raelian movement as a religion for charity purposes following the High Court because, rather than claiming belief in a fictitious Supreme Being they believe in their “Elohim”, fictitious beings supposedly in another galaxy, and therefore not notionally supernatural. As the Sun Herald report of 7 May 2000 put it, “No angels, no tax break”.

Increasingly the mainstream churches see themselves as political organisations campaigning on behalf of themselves and their beliefs, however ill-founded, about the state of the world and the causes of social problems. There is no way in which a free society could attempt to muzzle even the looniest of clerics, despite the fact that the public’s taxes are financing their activities. One might think that someone who professes a deep concern for morals and ethics would have some hesitation in diverting monies intended for charitable and spiritual purposes to propaganda, but few seem to worry about their misuse of funds. So perhaps they could be relieved of an occasion for error.

This could be achieved by simply abolishing the tax privileges enjoyed by all churches, charitable organisations, and voluntary organisations generally. It has always been objectionable in principle that a person who supports no religion at all should be taxed, both directly and indirectly, to support the religious; this is especially so when some of the main religions organisations have shown themselves unable to deal with the moral issues affecting their clergy and child abuse. Perhaps the way here has been shown by the head of the Jesuit order in Australia when he declared that people are more important than assets. There is no strong evidence that sexual abuse (at least by religious) has been a big problem for the Jesuits, although physical abuse was not at all uncommon in their schools in past years. But the whole issue has clearly stained the moral claims of religion in general to public subsidy.

The case for tax exemptions for religion is, in a secular society, weak. While many of us might happily donate to the churches for the maintenance of the clergy and the church organisation, and to the worthwhile organisations they have created for social welfare purposes, we might well object to some of the activities of the churches. Those who object to all or some of the activities of churches and other charitable organisations ought not to be obliged to support them through the tax system. Tax concessions to churches and for charitable donations are tax expenditures for which everyone pays. True, it can be judged that like justice, defence, and many other social functions everyone should pay what the democratically elected government decides in the way of taxes for them. But religion and charity are different matters. They are neither necessary nor necessarily a useful social activity. Of course it can be argued that the decline of religion has been a big part of the problem of declining social solidarity and the increase of crime, immorality and drug use. But the decline of religion as a social force is an irreversible reality, so it is time that we ceased financing it.

There is of course no reason why people would stop donating money to religion and charitable organisations, and other organisations having equivalent status, just because the most important of the tax privileges, tax deductibility of donations, was removed. Indeed, the spiritual and moral worth of such donations would be enhanced when they came wholly out of the donor’s pocket, rather than being matched through deductibility by government money. True charity, like the widow’s mite, should cost the donor something. It may be of course that there would be a reduction in the finance available to religious and other charities if tax-deductibility were removed. But such a temporary reduction, temporary because if there were a genuine dcsire to see charities financed the donors would see that they could not depend on government to make up deficiencies and increase their sacrifices (notoriously low in Australia by international standards), would be a salutary reminder to the charities and churches that they should stick to their last. Faith and good works, that is, not welfare administration.

Meanwhile, think tanks are once again subject to an ill-informed and biased media campaign, because apparently there is a sinister network of Rightwing think tanks which accept money from commercial enterprises to advance the ideas put forward by the late Friedrich Hayek, and so to serve the interests of business and the rich. It seems from reportage on this issue that there are no Leftwing think tanks, advancing any pernicious ideas at all.

That there are no Leftwing think tanks is belied by a moment’s thought. For a start, every university social science or cultural studies department is full of leftish academics, many of whom band together for the purposes of additional funding in so-called research or policy centres. Unfortunately for Labor, most of the academic Left at present hate traditional Labor voters unless they think and do what they are told. Or worse, they are so mired in postmodernism or Chomskyism that any policy proposals they put forward are so far from the real world as to be useless. There are some which produce useful work, for example the Social Welfare Research unit at the University of NSW. But it is unvaryingly supportive of the conservative patronising of the poor as unable to help themselves which characterises the bourgeois Left. Thus it can certainly be classed as a Leftwing think tank. Its best known researcher is Professor Peter Saunders the Good, who has to be carefully distinguished from his darkside counterpart in the Centre of Independent Studies, Professor Peter Saunders the Bad, lest the enlightened fall into error. To make it even more confusing both of them are Poms.

Now the point of this is that all the academic think tanks are generously financed by the government, while the so-called Rightwing think tanks depend chiefly on donations. If there were less conformity and political correctness in the universities there would be not nearly such a need for an external counterbalance. There are a few independent Leftwing think tanks also, like Clive Hamilton’s Australia Institute (allowed to use Australian National University premises), which now seems devoted to denouncing people who want good lives, and the Whitlam Institute at the University of Western Sydney. This used to be headed by Dr Peter Botsman who however was ejected for daring to criticise repentant former Quadrant contributor, Mark Latham, MHR – so much for its independence. The Left’s discomfort with so-called Rightwing think tanks reflects a guilty conscience rather than the existence of any real conspiracies. It seems the only acceptable conspiracy is that between the Left and the churches.

The social welfare functions of the churches have already been given a special status and they now act to some extent as government agencies, with finance provided by government in quite a different way to that provided via tax deductibility. This inevitably threatens the independence of the churches, since the government must police the delivery of the services it pays for, and they must lose a good deal of their independence. For atheists and the truly spiritual alike, it should be repugnant to see the increasing interpenetration of religious and charitable activities with government. Far from rendering unto Caesar that which is Caesar’s, the churches are now taking from Caesar that which is Caesar’s, and enrolling themselves in his legions as a result. Not surprisingly they now think they can have a say in the next palace coup.


In the very  near future, Quadrant will be going online, and a growing proportion of printed material will be available also through the Internet, especially the fully footnoted versions of some articles. It will be assumed, failing evidence to the contrary, that contributors will have no objection to this procedure – which can only enhance the readership of the magazine outside Australia (especially by way of links from sites like Arts & Letters Daily) and amongst students and low-income groups within Australia.

Padraic McGuinness . Quadrant  editorial . October . 2003

  the rathouse
P.P. McGuinness