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Tax Laws Amendment (Public Benefit Test) Bill 2010

Ms Stewart —On behalf of the Church of Scientology I would like to take this opportunity to thank the committee for this invitation to appear today before this inquiry into the Tax Laws Amendment (Public Benefit Test) Bill 2010. In opening we would like to recognise the long and proud tradition that exists in Australia for the promotion of religious freedom and tolerance. Our founding fathers in uniting the six colonies to create the Commonwealth of Australia recognised and understood the need to enshrine this basic human right for future generations. This freedom is formally safeguarded by section 116 of the Australian Constitution. This foundation stone of our modern system of government prohibits the Commonwealth from making any law establishing any religion, imposing any religious observance or prohibiting the free exercise of any religion. Further, individual Australians are free to express a diversity of views as long as they do not incite religious hatred within our neighbourhoods and communities.

Today is important as this committee has been established to examine the Tax Laws Amendment (Public Benefit Test) Bill 2010. As senators are aware, this is a private member’s bill. It has not been introduced by the Labor government or the coalition opposition. It is a bill that proposes that all charities and religions be subjected to a public benefit test, which would put at risk the future of many organisations that are dedicated to delivering crucial community services for the betterment of our nation. I think it is also important to reflect that only 19 private members’ bills have succeeded in passing into law since Federation. Today is all about a proposed taxation bill. I wish to assure the committee that we are cognisant of the narrow terms of reference that have been established. We look forward to assisting all members of the committee as per the terms of reference.

Religions have been traditionally on the forefront of charitable work beyond the pure advancement of religion. In many of these instances the impetus towards charity has come from within the religious philosophy itself and a genuine belief that helping one’s fellow man or woman is spiritually inspired, not materially. Our religion and its followers are motivated by the same spiritual inspirations. As outlined in the church’s submission to this inquiry, Scientologists have been in Australia since 1952 with the Hubbard Association of Scientologists International opening in April 1955 in Melbourne. Our institution was incorporated locally as a non-profit religious fellowship for the purpose of research into the spirit and human soul and the use and dissemination of these findings. A central part of the religious philosophy of Scientology is that an individual exists as a part of a family, a work environment and a community. The community and social wellbeing of others is important to one’s own family and personal success and happiness in life. Our church encourages its members to become involved in many community projects and many do, both through financial support and active participation.

In making our submission to the Senate Economics Legislation Committee concerning the Tax Laws Amendment (Public Benefit Test) Bill 2010, the trustees of the Church underscore the myriad of grassroots initiatives undertaken by the church in Australia and around the world. Some of these community activities include drug prevention. The Church of Scientology in Australia and around the world undertakes a range of drug education and prevention programs that have delivered significant and lasting benefits to communities around the world. In Australia we have printed and distributed over 2.5 million antidrug education flyers and booklets to youths and adults and over 300,000 Australian youths have taken the drug-free pledge to dedicate themselves and others to remain or become drug free. Under our Scientology Volunteer Ministers program, Scientologists volunteer their help both in times of major disasters and in times of more personal disasters that befall all individuals. Our volunteer ministers have helped at the New South Wales and Victorian bushfires and Australians have travelled to many disasters, to our neighbours in the South Pacific, including Indonesia, Samoa and the Philippines.

The area of defending human rights is highlighted in our submission to this inquiry. Sydney Scientologists were key in exposing the fatal risks and other dangers of deep sleep treatment, with over 1,100 patients exposed to this treatment in Australia. This resulted in the establishment of the New South Wales royal commission into Chelmsford Hospital. This work was officially recognised by the report of the New South Wales royal commission into deep sleep treatment. On the international front, more than 800 volunteer ministers gave of themselves for months to help. They were initially fully supported by the Church of Scientology. This is in relation to 9/11. Here is what the police chief of the City of New York said afterwards:

“As one who saw firsthand what was needed at the World Trade Center site in the days and weeks immediately after September 11th, I want to thank you, the Church of Scientology, and the Volunteer Ministers of the Church of Scientology, many of whom came long distances to help us.

“The Volunteer Ministers worked with great energy and great compassion at Ground Zero, helping to ease the physical burdens, and mental strains of the rescue workers. From the earliest days of this tragedy, until the time when volunteers were no longer needed at the site, the people of your Church were there in force.

“The organization, the caring, and the dedication of your Volunteer Ministers were exceptional, very much appreciated, and will long be remembered by those who received their help. I cannot thank the Volunteers enough.”

The church sent more than 500 volunteers recently to Haiti, some of them Australians, including medical doctors, emergency medical technicians and nurses. They worked with the University of Miami’s tent hospital at the capital and also at the airport and helped to save thousands of lives. The Georgia state legislature commended this effort. There were many other letters of commendation received by the church and the volunteer ministers for the work they did, and copies of these can be made available to the committee. Specifically on the topic of Narconon, I would like to also mention that in August-September 2009 the International Association of Scientologists gave a grant to Narconon in Nepal of over $1 million to purchase and renovate facilities for the group.

In terms of funding for the social betterment and charitable activities that the church sponsors or supports, it is true that the funds that the church does ask for come from its parishioners to donate to support these organisations and activities, which is what all charitable organisations do. Where else is the money going to come from if not its members? The church also has used its resources to develop materials and its own facilities to develop audiovisual properties that are used within the church.

Given this inquiry has been established to inquire into the proposed Tax Laws Amendment (Public Benefit Test) Bill 2010, I would now like to address the specific matters relating to the tax treatment of the Church of Scientology in Australia. A tax concession has been available to religious and charitable institutions among other bodies in Australia in all federal government income tax statutes since 1915 without the requirement to demonstrate tangible benefits available to the public at large or an appreciably important section of the public. As senators are aware, the granting of charitable status in Australia is already a highly regulated process. There are lengthy tests and requirements that must be met to prove that a charitable status is deserved, governed by the Australian tax office.

As the committee is also aware, charitable status is not a mantle readily handed out to any organisation merely claiming to be charitable. In appearing today before the Senate economics legislation committee, it is important recognise that the church has undergone significant investigation and assessment to achieve the appropriate taxation exemptions that it has. Scientology is accepted as a religion around the world. In a few countries the church has been forced to litigate the issue of its religiosity, either affirmatively or in response to unfounded charges. Inevitably the church’s religiosity has been upheld by the courts in these cases, and its religious bona fides have been unequivocally recognised.

In relation to Australia, the 1983 High Court decision found that the church met the criteria and, as a result, was then provided with tax concessions that apply to other religions. Following this decision by the High Court, and other judicial bodies around the world, Scientology is considered by leading scholars and authorities to have established the standards regarding religious recognition that all religions must meet. For the benefit of the committee, I wish to draw your attention to the United States Internal Revenue Service investigation into the Church of Scientology. The investigation into the Church of Scientology was and remains the single largest in the history of the Internal Revenue Service. It not only involved the US church, but all churches of Scientology around the world. This IRS examination included reviewing every single claim made against Scientology, reviewing every single flow of money within the church and reviewing allegations which have been raised in the last few months by Australian media outlets.

Further, the New Zealand Inland Revenue department granted Scientology charitable status in 2002 after their inspection of the church, which lasted 10 years. In 2006, when the New Zealand Charities Commission was formed, it too gave the church charitable status. In recent days the church has also become aware of disturbing allegations regarding taxation matters in Australia. These allegations were raised by a media organisation and involved commentary from a member of the economics legislation committee. For the benefit of the committee, and given it relates directly to taxation, I wish to make the following comments. The allegations refer to the Church of Scientology in Australia and the United Kingdom, and a specific allegation that the entire UK operation is ‘run out of South Australia’. The facts are as follows. The church association that is incorporated in South Australia, Church of Scientology Religious Education College Inc, was incorporated in 1976 and registered as the corporation for churches in England in 1977—a full 22 years earlier than the alleged incident in the media. The Church of Scientology Religious Education College has paid all corporate taxes on any surplus in accordance with the UK tax legislation. It receives no corporate tax benefit in the UK from being incorporated in South Australia. I wish to provide a copy of the statement that was issued by the church clarifying the allegations and outlining correct details surrounding the matter. Mr Chairman, I seek leave to provide this to the committee.

ACTING CHAIR —Leave is granted, if the committee agrees.

Senator XENOPHON —Yes.

Senator CAMERON —I am happy with that, but could you also table the statement that you are reading from? It would be helpful for us.

Ms Stewart —Yes. I would now like to turn to allegations that have come to the attention of the church relating to the corporate, legal and taxation structures of our institution. These allegations originate in the United States and involve a former staff member from the corporate office. It should be noted that these allegations have no basis and have been comprehensively investigated by the IRS. The last involvement of this employee in the legal affairs of the church was in December 1983—approximately 27 years ago. The review undertaken by the IRS took place between 1991 and 1993. The church was given a clean bill of health by the US authorities and the allegations were unfounded.

I would now like to turn to the proposed bill. The church commissioned a leading legal opinion on the proposed legislation that is currently before the Senate committee. It formed the basis of our submission and Ms McBride appears in her capacity today as a legal specialist on taxation law. She will be able to assist the committee with regard to the details arising from the proposed bill. Suffice to say, the church believes that the proposed bill is inherently flawed and puts at risk the financial future of charities and religions in Australia.

Given the need for brevity, I will not go into the details already covered in the church’s submission tendered to the committee and the comprehensive arguments outlined by Ms McBride, as she will be making her opening statement. It is significant that, already, the former coalition government and more recently the Henry review commissioned by the Labor government have investigated the application of a public benefits test and on both occasions the recommendations have been ignored or rejected by the executive.

In appearing before the committee today, we welcome the opportunity to answer questions relating to proposed taxation measures. We wish to assist the committee in its important work in examining the bill and the detrimental impact that the proposed bill will have in moving forward. I would like to place on the record the great assistance of numerous senators and members of the Commonwealth parliament, including the Privileges Committee, the Scrutiny of Bills Committee and the clerk’s office in the lead-up to today’s hearing. I would also like to acknowledge the assistance and support of the committee secretariat, led by Mr John Hawkins, who provided professional and impartial advice as part of the inquiry process.

Finally, given the Senate’s well-established as a house of review, it is also important to recognise the role the Senate has had and continues to have in maintaining freedom of religion and the promotion of tolerance. We have no doubt that the Senate, in its wisdom, will continue to protect and promote these traditions. Thank you.

ACTING CHAIR —Ms McBride, do you wish to make a statement?

Ms McBride —I am in the committee’s hands. I have an opening statement that I can tender, but I can—

ACTING CHAIR —Please proceed.

Ms McBride —Again, I would like to thank the committee for giving me leave to appear today in my professional capacity. In commencing my opening statement, I would like to make it clear that I am not a Scientologist. I do not practise Scientology. I have never been to a church that is run by the Scientologists. I am, however, a tax barrister. I have practised law since 1981. During my career I have served as a board member of the Takeovers Panel, the Export, Finance and Insurance Corporation, a corporations market and advisory committee and the Commonwealth government superannuation and the Public Sector Superannuation schemes. I have been retained by the church to provide my legal opinion on the bill, particularly as it relates to taxation as I had a role on the board of tax advising on tax reform generally. I am also retained in my capacity to advise on constitutional and administrative law issues.

My opinion, I believe, has been circulated to the members of the committee, and it is on the website. In brief, as I am sure the committee is aware, I have some major concerns with the bill as presently drafted. The bill as currently drafted imposes a taxation and therefore is subject to the limits of section 53 and section 55 of the Commonwealth of Australia Constitution. This is a bill imposing taxation where none was imposed before, given that we have already heard that religions have never been subject to tax in this country. The parliament provides that only the House of Representatives may introduce a tax bill, and then it may only be introduced by a minister of the Crown or a parliamentary secretary. I refer the Senate to standing ordinance 293. I have concern that this bill is in the wrong house. This point has been raised as a point of order. I understand that the bill has been or will be referred to the constitutional committee. I am not sure whether a point of order has been taken as to the propriety of proceeding with this inquiry, given the very significant constitutional issue raised before the committee.

ACTING CHAIR —Ms McBride, this bill has been referred to this committee by the Senate. These hearings are legitimate and have the authority of the Senate.

Ms McBride —Thank you, Chair. The bill nonetheless is a tax bill. I refer the committee to the opinion of the former chief counsel of the Attorney-General’s Department which was dated 30 August 1993 and was obtained in respect of the Taxation (Deficit Reduction) Bill 1993. It talks about dealing with taxation, and these provisions include provisions that remove or add to exemptions. That inquiry took note of some learned QCs. The better view was that the Taxation (Deficit Reduction) Bill 1993 was a tax bill. Again, I realise that the Senate has referred it here. I do believe there is a significant constitutional issue.

The second concern with the current drafting of the bill is that it makes mandatory regulations. It requires the minister to regulate and the regulations are mandatory, which means that they will have a force of law in their own right and, if there were any inconsistency between the regulations and the common law, the regulations would override the common law. That is a huge change and a departure from the way the Constitution and the parliament’s power to delegate have been interpreted since 1901.

If such a massive change is to occur in the way that regulations require a test, I would have thought—forgive me; I know that I am not the Senate—that it was something that parliament needed to consider and debate at length. There is a question that if this bill were passed in its current form it would be successfully challenged as being beyond the power of parliament. There is a considerable body of law—and I refer you to Professor Pearce’s works on delegated legislation—that says that the regulator cannot mandatorily regulate. The now Chief Justice French of the High Court, when he was on the Federal Court, made a very compelling statement which I have quoted in my submissions and will not read. There is an issue of whether or not this bill as currently drafted is even within the power of delegated legislation.

If it were determined to be in the power of delegated legislation, by imposing mandatory tests where the regulator, not the parliament, would determine whether something was in the public benefit or not, you place upon the Commissioner of Taxation and the minister the potential burden of, with the best will in the world, breaching section 116 of the Constitution, that being the guarantee of religious freedom. To determine what is and what is not for the public benefit, particularly when the bill as currently drafted requires that determination to be weighted against undetermined, undefined detriment or harm, is a test that would be fraught with difficulty in administering. I draw to the committee’s attention that no jurisdiction in the world has been able to impose a test where a bureaucrat has to work out whether something is more detrimental than beneficial.

On that point, I would just like to note that it would be a subjective area of the law—and public views change. There would be a body of feminists that would see it is more detrimental than beneficial for Muslim women to wear burqas. There is a body of medical opinion that says it is more detrimental than beneficial for male children to have circumcision. There would be a body of opinion at the moment that says that the Catholic Church, given the current problems it is facing, has caused more detriment than harm with sexual abuse to its members. Mores and morals change. Are the proposed bureaucrats going to say we should outlaw all of those because their detriment is perceived to be greater than their benefit?

I also want to draw to the committee’s attention to the fact that these tests—which, even if they can be objectively defined, will be subjectively determined—will be in regulations. Regulations are placed before the House but do not have the normal passage through both chambers and do not have the benefit of a parliamentary debate. Regulations are either accepted in whole or rejected in whole; they are not considered on a regulation-by-regulation basis, as I am sure everybody on the committee is aware.

The bill raises the issue of retrospectivity. Scientology is already held to be a religion and already has charitable status. This bill would not only walk across the existing exemptions of Scientology and other religious groups, but its intent is clearly retrospective. Given that retrospective legislation is also abhorrent to the rule of law and good government, if that is to happen I would think that both houses of the parliament would need to be actively engaged in a review of this bill.

Finally, given that the EM, in the second paragraph, targets a group of people, and states ‘allegations that have not been before the appropriate state body’, the bill probably offends the human rights document Guidance for the review of legislation pertaining to religion or belief. This document was prepared by the Advisory Panel of Experts on Freedom of Religion and Belief for the Organisation of Democratic Institutions and Human Rights and the Organisation for Security and Co-operation in Europe and adopted by the UN. Singling out a group in a government bill, as the purpose for the bill, is discrimination. But for parliamentary privilege, it would amount to libel. It does no credit to the parliament, it does no credit to democracy and it should be referred to the Senate Standing Committee of Privileges, as it is a precedent that this country should not tolerate and, in the past, has not tolerated. The High Court has previously looked very dimly upon legislation that targets a specific person or group, notwithstanding that a member of this government might not like that group. I would like to table my opening address, together with my CV.

ACTING CHAIR —This hearing is recorded and your address will be printed in full in Hansard.

Ms McBride —In my opening statement I have gone into quite a lot of detail which I have not bothered the committee with. I have quoted cases and judgments and sections. I am happy to read it all out.

Senator CAMERON —Please don’t!

Ms McBride —I did not think you would want me to do that, Senator Cameron!

ACTING CHAIR —Is the committee happy to accept the tabling of this statement? There being no objection, it is so ordered. The other thing I have to say to you, Ms McBride, is that this is a bill for an act. This is a private member’s bill. What happens to a bill when it goes into the Senate is unpredictable. A bill is a proposal for an act. There are amendments, and you should not assume that whatever form the bill is in initially will be the form it is in at the conclusion of the parliamentary process.

Ms McBride —Thank you.

Senator CAMERON —Ms Stewart, are any of the witnesses here today employees or office bearers of, or hold any other position in, the Church of Scientology New Zealand Inc.?

Ms Stewart —Yes. Mr Mike Ferriss does.

Senator CAMERON —Mr Ferriss, I have some questions for you then. In relation to the assertion that has been made that this bill would put at risk the future of organisations, why is it that in New Zealand, where similar tests are applied to your operation, that has not put at risk the Church of Scientology in New Zealand?

Mr Ferriss —The Charities Commission of New Zealand, established in 2006, granted us charitable status. We are basically formed with the purpose of the advancement of religion and the public benefit that extends from a group established for the advancement of religion—that is, it was just a matter of course. If you look at the Charities Commission of New Zealand’s material, the advancement of religion is considered to be of public benefit. The public attend religious services, Scientology services, and they benefit from that process. It is a spiritual thing. It is something that is deemed, and has been deemed for hundreds of years, to be beneficial

Senator CAMERON —Sorry, Mr Ferriss; that is not what I am asking you. The assertion has been made by Ms Stewart that, if this bill went through the Australian parliament, it would be a danger for the survival—I assume—of the Church of Scientology. What I am asking you is to do with the similarity of the issues in this bill and those facing your operation in New Zealand. You are an officer of the Church of Scientology of New Zealand; explain to me why there has not been the demise or the death of the Church of Scientology in New Zealand? What is the difference?

Mr Ferriss —We are not being tested on a basis of public benefit against harm. That is not part of the test for the Charities Commission of New Zealand.

Senator XENOPHON —That does not seem to be the evidence that we have had.

Senator CAMERON —No. That is not what I understand.

Mr Ferriss —Okay. Maybe I do not know the answer to the question.

Senator CAMERON —Can you see that this is a fundamental question? If you come here and your first assertion is that this bill will destroy Scientology, yet you as an officer of the Church of Scientology in New Zealand operate under similar legal obligations and it has not destroyed you in New Zealand, what are we to make of the submission that you put forward this afternoon? What will we make of that?

Ms Stewart —I would like to add something in that regard. I think the point that I also was making in my submission and my opening statement was that I was not just referring to the Church of Scientology; I also was referring to all charities in Australia that would be affected. There are quite some significant submissions that were submitted to the committee that attested to that fact, that the onerous—

Senator CAMERON —But you are not asserting that you are here talking for other charities, are you?

Ms Stewart —Yes.

Senator CAMERON —Are you talking for other charities?

Ms Stewart —I am talking on behalf of us and from that point in a generality.

Senator CAMERON —Let us stick to the Church of Scientology, please. Do not make comments about other charities if you are not representing them.

Ms Stewart —Sure.

Senator CAMERON —I am asking the office bearer, Mr Mike Ferriss, why, if there are these restrictions and obligations in New Zealand, you come here and say that this is the death of Scientology in Australia. It is a nonsense, isn’t it?

Ms Stewart —I have not said that it is the death of Scientology in Australia.

Senator CAMERON —I will tell you exactly what you said. You said it would put at risk the future of organisations.

Ms Stewart —Yes.

Senator CAMERON —Does that include Scientology?

Ms Stewart —It depends how the—

Senator CAMERON —So you were talking for others, not Scientology, when you said that?

Ms Stewart —I feel I was speaking in general, not just on our behalf.

Senator CAMERON —Mr Ferris, could you explain to us how you can continue to operate in New Zealand under the same sort of overview that would be required under this bill? Can you explain to us how it works in New Zealand?

Mr Ferriss —We have not suffered under the New Zealand Charities Commission; that is true. This bill refers to the UK charities commission, and the UK charities commission denied Scientology recognition in 1999. The New Zealand Charities Commission ignored that and gave us charitable status in that country.

Senator CAMERON —What we have to decide is whether this bill should proceed in its current form and whether this committee will support that proposal. We are entitled to the look at the New Zealand Charities Commission, as we have done, and the UK charities commission, as we will do later today. Given that you operative effectively—and that is my word—and meet your obligations under the New Zealand Charities Commission, if a charities commission were established in Australia and we were wanting to recommend a charities commission type of approach with similar tests to New Zealand’s, would that be a problem for the Church of Scientology?

Mr Ferriss —I do not think it would be. I think it would be fair. I think the New Zealand Charities Commission have treated us fairly. I have seen some of their other decisions on other religious groups, which they have treated fairly. The Carmelite nuns, for example, are a charity in New Zealand, where they are not in the UK. I think it is a fair process and we are certainly experiencing that in New Zealand, yes.

Senator CAMERON —Are you an officer bearer of the church in the UK?

Mr Ferriss —No.

Senator CAMERON —I noticed in the New Zealand Charities Commission report your statement of income and expenditure, which is a public document. I am wondering if the problem was that when the charities commission came into place you had an income of $2.6 million in New Zealand in 2007, and the following year the income dropped to $374,000. Is there any link between that drop in income and having to report to the Charities Commission? What was the issue there?

Mr Ferriss —No, it was not anything to do with reporting to the Charities Commission. I think that drop in income was, from memory, the exchange rate drop—

Senator CAMERON —What?

Mr Ferriss —Yes, absolutely.

Senator CAMERON —I knew a lot of countries were in trouble but I did not think New Zealand was in that much trouble!

Mr Ferriss —I can take it on notice and provide you with the exact information, if that is what is required.

Senator CAMERON —That is fine. Thanks. I hope it is not New Zealand’s exchange rate! There has been much said about your religious freedom. I have read the bill. There is nothing in it that says anything about religious freedom, and it is not about the Church of Scientology. It is a general based approach. It is not about religious freedom. So why would you be concerned about this bill if it does not go to the issue of religious freedom?

Ms McBride —I would like to answer that, if I may. If you refer to the judgment of the High Court on the Church of the New Faith, which, again, is in my opinion, you will see that all the judges, paraphrased, basically said that when bureaucrats and the government get involved with deciding what is and what is not religion and enacting laws, impinging on that does go to religious freedom.

Senator CAMERON —How come both in the UK and New Zealand we moved from the Charter of Elizabeth, I think it is called—

Ms McBride —The Statute of Elizabeth.

Senator CAMERON —The Statute of Elizabeth. How come we moved from that approach to a charities commission without all of the issues you have raised in your legal opinion?

Ms McBride —There are several reasons why we are different. It is a charities commission; it does not actually address religion, I think you will find. The UK has a public benefit test. It does not have a ‘greater good than harm’ requirement. There is no requirement that you weight the benefit against the harm. It is not in mandatory regulations. And there is an entire new act for charities which takes all of this is outside the realm of parliament. The charities commission is not answerable to a minister; it is an independent body. It has set up a tribunal and a commission, and it determines cases. It got rid of the public law presumption of public benefit, but it applies to charities.

I would also say that we have had two inquiries here, one in 2002, which was a very lengthy inquiry—and the Treasury paper refers to it in detail—and the NGO inquiry just recently. They determined, after a lot of public consultation, not to proceed with the public benefit test and not to override the common law, particularly in light of the fact that this government has committed to reducing bureaucracy, not expanding it.

Senator CAMERON —Can you point me to those deliberative decisions.

Ms McBride —Yes. I think if you look at the Treasury paper, on page—

Senator CAMERON —I am talking about government decisions; the Treasury does not make these decisions.

Ms McBride —No, but the Treasury paper refers to the government inquiry:

In response to the recommendations of the 2001—

Senator CAMERON —I am not aware of any debates on this issue in parliament where either the previous government or this government made a deliberative decision to go down the path that you are saying. That is why I am asking for—

Ms McBride —I am just trying find where it is referred to.

Senator CAMERON —So you are relying on the Treasury?

Ms McBride —I am relying on their paper, which refers to the inquiry that was held under the former government, I believe, in 2000 in relation to whether we had a charities act and a charities definition. After an extensive inquiry, I believe that it was determined—and I thought it was by the then government—not to proceed with this bill. I am just looking for the precise reference to it which I believe was inserted into the Treasury submission to this committee.

Senator CAMERON —Would you like to take it on notice?

Ms McBride —Yes, thank you; I would. Anyway, I believe this issue has been looked at at least twice before and again under the not-for-profit inquiry, and it was the subject of some consideration by the Henry review—and I believe, Senator, that it was not government policy to proceed with that recommendation. But I am happy, if I may take that on notice, to provide you with the details of those.

Senator CAMERON —I am pretty keen to focus on New Zealand, which has got a lot of similarities in terms of their rule of law, where they have come from and where they have got to. They do not seem to have had any problem moving from a common-law approach to an approach where they have a commission which can make decisions about charities. The evidence we had this morning was that the commission can make a decision but it is appealable to their High Court. What are your comments on that? Why wouldn’t that be a problem?

Ms McBride —Because at the moment, as the bill is currently drafted, that is not the way it is. The public benefit test as currently drafted—

Senator CAMERON —It is not my bill. I am not proposing the bill. What I am doing is having a look at it to see what may be an outcome arising from the bill. I am asking you to tell me, with your experience of being able to work under the New Zealand Charities Commission with an appeal to the High Court of New Zealand if your religious status was challenged, why that cannot work here.

Ms McBride —At the moment it could not work here, because the bill is beyond the common law. The way the bill is drafted—

Senator CAMERON —But I am not asking about this bill.

Ms McBride —The inquiry is an inquiry into the bill. True, if it is amended so you could have something that is reviewable by the courts and challengeable by the High Court, there is no problem. I suppose what I would draw your attention to is the anti-avoidance provisions contained in part 4A of the Income Tax Assessment Act. The anti-avoidance provisions are somewhat similar. It is an objective set of criteria subjectively determined and administered which has caused a lot of angst and tax cases and cost a huge amount of money. I do not know that charities, particularly smaller charities, and religions would welcome a lot of litigation, and I am sure that this bill will lead to a lot of litigation.

Senator CAMERON —I am not sure whether you want to answer this, because it is a policy issue as distinct from a legal issue, but is it appropriate, if the Australian public—this is not just for Scientologists but for any charity—put public funds into a charity, for there to be an identifiable benefit arising from the aims and activities of that entity?

Ms Stewart —I think so, yes.

Senator CAMERON —Okay. ‘The benefit must be balanced against any detriment or harm’—what is the problem there?

Ms Stewart —I think it is how you determine that by subjective means.

Senator CAMERON —Don’t you determine it similarly to how they do it in New Zealand, where the Charities Commission makes a determination and it is appealable to the High Court of New Zealand? Why can’t you do that?

Ms McBride —Isn’t that like the example I gave you? Views of what is detrimental or harmful change.

Senator CAMERON —So do the judges in the High Court.

Ms McBride —That is true. The cost of a court case in the High Court is huge.

Senator CAMERON —But law changes over the years. This seems to me to be one of the laws that is stuck in time. Laws change as society changes, and if we need to change those laws then surely we should look at them.

Ms McBride —I do not think anybody has suggested that the law should not be looked at. As I said, I think it has been looked at on at least two—to my knowledge—and possibly three previous occasions. Far greater minds than mine decided it is like a can of worms and a recipe for disaster. You may say that is no reason for not trying to do something about it, but there is no more emotive or emotional issue than religion.

Senator CAMERON —What were the legal disasters in New Zealand arising from their move to a charities commission?

Ms McBride —I do not know.

Senator CAMERON —Then why are you using language like that?

Ms McBride —Because I practise in taxation. I see all the time problems that arise from an attempt—

Senator CAMERON —Tell me about New Zealand, then.

Ms McBride —Efforts to codify the common law are fraught with difficulty. You have only to look at our current tax legislation to see that.

ACTING CHAIR —We had your specific evidence from New Zealand. If you are going to make these comments, you surely should make specific references, because it is not very helpful to the committee to generalise.

Ms McBride —I am not here as a New Zealand tax expert—

ACTING CHAIR —Then, with respect, perhaps you should not have made the comments about New Zealand.

Senator CAMERON —If you are not an expert on New Zealand, we might ask these questions of Mr Ferriss, as an officer of a registered body in New Zealand; maybe we should be asking him these questions, because he has the responsibility, as an officer of an organisation registered in New Zealand, to understand how it operates. I am happy to take these questions up with him. Mr Ferriss, tell me what disasters have befallen the Church of Scientology in New Zealand arising from the move to the charities commission—the disasters that Ms McBride spoke about.

Mr Ferriss —As I said earlier, we have had no disasters from the charities commission. I was not aware, I must say, that they had a test of harm. I was not aware of that. I have read some of their material. I do not have it with me. But I know that when they are assessing a religious group, they see that the advancement of religion is for the public benefit. They gave one example of that. A funeral service might be being conducted and members of the public at that funeral service, by being present and listening to those prayers and the service itself, might feel some spiritual gain or benefit from just being present at something religious. They called that a public benefit.

Senator CAMERON —Given that the Productivity Commission estimate—and I will be asking Treasury about this estimate—is that somewhere between $1 billion and maybe $8 billion of public money goes to charities, do you accept that, if you receive a benefit from public money, you should be very open and accountable and you should act in the public interest as a charity?

Mr Ferriss —Absolutely; no question.

Senator CAMERON —And you operate in New Zealand without any problems. I am happy with that, thanks.

Senator XENOPHON —Mr Ferriss, you said that Scientology, before the operation of the New Zealand Charities Commission’s laws, had an income—as I think Senator Cameron pointed out—of about $2.5 million or $2.6 million. Is that right Senator Cameron?

Senator CAMERON —Yes; that was in the last—

Senator XENOPHON —That was in the last year before it, and then there was a drop.

Senator CAMERON —It was $2.623 million in 2007, and $374,000 in 2008, and that was a big drop in the exchange rate.

Senator XENOPHON —That is right. I think, Mr Ferriss, you ascribed that to the exchange rate. Do you want to reconsider your evidence in relation to that?

Mr Ferriss —I said I would take that on notice.

Senator XENOPHON —But that would mean a drop in the value of the New Zealand dollar—

Mr Ferriss —Against the US dollar.

Senator XENOPHON —against the US dollar of in the order of 70 or 80 per cent, or more than that. It would be a complete collapse of the New Zealand dollar.

Mr Ferriss —I do not follow the currency fluctuations particularly, and I am not the church’s accountant and I have not brought him with me today, so I would like to take those questions on notice.

Senator XENOPHON —Did the church change its accounting practices in the year before the New Zealand charities laws came into place and subsequent to that?

Mr Ferriss —No, not at all.

Senator XENOPHON —So the books have been kept the same way?

Mr Ferriss —Absolutely.

Senator XENOPHON —And you do not know of any other cause for such a dramatic drop in revenue or income?

Mr Ferriss —I am not going to speculate off the top of my head on this matter. I would like to take that on notice. I am very happy to provide information to the committee, but I would like to make sure that it is the correct information.

Senator XENOPHON —You understand that it seems quite a dramatic drop?

Mr Ferriss —Absolutely; I understand that. I also know something about our accounts but, like I say, I am not the accountant and I have not brought them with me.

Senator XENOPHON —We will leave that aspect of it. Ms McBride, in your submission you argue that the bill is unconstitutional because it ‘imposes taxation’ and therefore cannot originate in the Senate under section 53 of the Constitution. The committee has been advised that section 53 is not justiciable and it is for parliament to interpret how it deals with proposed laws rather than laws. How do you respond to that?

Ms McBride —I believe that there are two views on whether or not it is justiciable, and that goes back to the Attorney-General’s advice in 1993. But parliament has a set of rules that say that tax bills need to originate in the House by a minister, because they are tax bills. You are making a mockery of that, aren’t you, by saying, ‘We don’t care; we are going to originate it here anyway.’

Senator XENOPHON —Ms McBride, that is really quite unprofessional of you to say that we are making a mockery of laws. This has gone to the Scrutiny of Bills Committee. The Scrutiny of Bills Committee has said that it is quite appropriate for this bill to be heard by this committee. So if I am making a mockery of it, so is the Senate Scrutiny of Bills Committee, so is this committee and so, indeed, is the entire Senate.

Ms McBride —Have you asked the Attorney-General? It is not just section 53 but also section 55. Have you obtained advice from the Attorney-General or the Solicitor-General? Or has it gone to the constitutional bills committee? It may not be justiciable by a court, but it is certainly not what parliamentary practice has been in the past. Tax bills are supposed to be originated in the House by a minister or the parliamentary secretary. This bill has not been originated by either a minister or a parliamentary secretary and it is not in the House.

Senator XENOPHON —Could I suggest to you that if the bill does not impose a new tax but merely deals with the administration of exemptions granted to a tax, how would that contradict section 53? And further, it is not the role of the Senate as a house of review to be obtaining advice from the executive arm of government.

Ms McBride —No, but given that this is an inquiry and you can obtain advice from Treasury, I would have thought you would have sought advice from the Attorney-General or one of the chief counsels of that department. That is the answer to that issue. The fact is: religions have never been subject to tax, under any federal tax bill since 1915. This bill proposes to tax religions. You are not removing an exemption; you are proposing a tax on religions.

Senator XENOPHON —Mr Lind, who gave evidence earlier today—his firm acts for a number of charities and is concerned with administrative burdens in respect of that—posed the question, ‘Does freedom of religion mean freedom from tax?’ and his answer was no. Do you disagree with that?

Ms McBride —Far greater minds than mine—and I would refer you to the High Court’s judgment in Church of the New Faith v Commissioner of Payroll Tax—have discussed this at length, and they would say yes.

Senator XENOPHON —Perhaps I could put it to Ms Stewart. Ms Stewart, are you saying that the whole concept of freedom of religion is tied up with freedom from paying tax? Are you endorsing what Ms McBride is saying—in other words, freedom of religion is tied up with the concept of freedom from paying tax?

Ms McBride —I have copies of the High Court’s judgment and I think you should read that with care. But that is not what the court said. What the court made very clear, and what the bill is attempting to do, is to determine which religion is worthy of a tax concession and which religion is not; which charity is worthy of a tax concession and which charity is not. That does fly in the face of section 116, because that is a subjective test and the court, which was considering a tax bill, went into great lengths, and the reason why special leave was granted in that case was to determine public policy, because there was a paucity of authority in that area. So I think the court said quite firmly, ‘All judges, no matter what you think of the religion, no matter how foolish you may think the religion is, you cannot and should not discriminate.’ They were talking about tax, so their view—and given it was a full court and it was unanimous, and they were very great brains on that court—would be ‘yes’. In the context of a tax concession, to quote Murphy, ‘One in, all in.’ You leave one out, you leave them all out.

Senator XENOPHON —An extreme example was given earlier to the chief executive of the New Zealand Charities Commission that if an organisation had human or animal sacrifice as one of its core beliefs that would be something that would be of concern to them in terms of tax-free status. You do not see that as an issue.

Ms McBride —I think the High Court, again, I commend you to read that judgement—

Senator XENOPHON —Yes, I have read the judgement.

Ms McBride —several times, clearly. I think the High Court said you are not above the law. You would not have a defence to say ‘I’m a Mormon. I have 10 wives in this country because I am allowed to under my religion.’ You have to actually abide by the law. If our law outlaws the sacrifice of humans or animals, which I believe it does, then you would not be entitled to practise that, and I am sure that the commissioner’s current ruling on charities says at paragraph 100 that things that are illegal are not charitable and therefore do not get the tax concession.

Senator XENOPHON —And if the law says that in order to get a tax concession you need to weigh up the whole concept of a public benefit test as applies in the United Kingdom and more recently New Zealand that would be the law that would have to be applied, wouldn’t it?

Ms McBride —Yes, that would be the law that would have to be applied.

Senator XENOPHON —Yes, so therefore the issue of public benefit would of necessity need to look at issues of detriment as well, wouldn’t it?

Ms McBride —In your test, yes. Your test requires it to be weighted against benefit. I do not think the UK test requires that, and you would have to determine and define what was detrimental or harmful, which the bill does not do. Then you would have to work out how you weighted that detriment or harm against any benefit. Is it substantially more than? Then you would have to have somebody who was impartial determine that issue, otherwise you run the risk of discrimination.

Senator XENOPHON —I will go to Mr Ferriss because of his role in New Zealand. You are aware that there is a public benefit test that applies in New Zealand with the Charities Commission.

Mr Ferriss —Yes, I am aware of that.

Senator XENOPHON —And that is something that has not caused the Church of Scientology any difficulty in itself.

Mr Ferriss —That is correct.

Senator XENOPHON —Would it be fair to say that in your view it would be implicit that in considering a public benefit test you look at the good an organisation does but you would also weigh it against any harmful activities or any complaints about its activities in having an impartial body looking at the determination of the benefit test.

Mr Ferriss —It is not a natural assumption when you look at the public benefit that there possibly could be a public harm. For example, the Quakers in the 17th century were against slavery and were very unpopular. They were persecuted, tortured and even murdered in England and the United States because of their views, their different way of preaching and the different methodology of their faith. They were very unpopular. It might have been even considered that their views against slavery were a public harm.

Senator XENOPHON —Sure but, Mr Ferriss, in the context of the issue of the freedom to practise a religion, the freedom to express your beliefs and have those beliefs, that is still quite different from the issue as to whether you have a tax-free status or not.

Mr Ferriss —The right to practise one’s beliefs is a fundamental human right, correct.

Senator XENOPHON —And it is independent of whether you have tax-free status or not.

Mr Ferriss —It is independent of tax-free status, but if you are then going to judge one religion you would have to judge all. You could not just say, ‘We’re going to single out this group because this group looks particularly bad at this point in time,’ because where would you be? I mean, if you were doing it with the Salvation Army, for example, back in the late 1800s, they were against alcohol, they are very active in England, and they were not welcome here in Australia, they were not welcome in New Zealand in the early 19th century because of their views against alcohol. They were beaten up and they were persecuted. So where do you go?

Senator XENOPHON —Perhaps I could ask Ms Stewart, in terms of the Church of Scientology in Australia, would you agree with Mr Ferriss that there is a distinction between the freedom of belief, the freedom to practise your religion, and having a tax-free status? There is a distinction between the two: you can have freedom of religion without having a tax-free status?

Ms Stewart —Yes, you can.

Senator XENOPHON —So there is not an issue there for you in relation to that.

Ms Stewart —No.

Senator XENOPHON —There have been a number of complaints from former members of the Church of Scientology, and you would have heard that today in terms of these complaints. Without going into the veracity of those complaints, would you be concerned at an organisation having a tax-free status if it was a systemic issue in that organisation in terms of people having difficulty leaving the organisation, being coerced into doing things they did not want to do? Again, I am not asking you to comment on the veracity or otherwise, I want to try and be as clinical and as objective as possible on this.

Ms McBride —Can—

Senator XENOPHON —I am not asking you the question, Ms McBride, if you don’t mind.

Ms Stewart —That is fine, I can answer. I think one thing is what the media says and then what real life is and what documented evidence is. I think that really is what it comes down to. Some people say some things, but is it true? Can it be proven? Is there proper evidence? Is there a whole evidence base of it or not? We have provided already information packs earlier to the Senate addressing some of the allegations that were again repeated today. We have different documents that we have already put in to the Senate and we have had two right of replies published as well that address specifically those issues. So I think trial by media is one issue that we have seen in relation to the Church of Scientology very much so, and I think that personally the laws of our country are pretty good. And just in that issue, yes.

Senator XENOPHON —Can I go back to the issue of Mr Ferriss’s evidence about the New Zealand umbrella, which is different from this bill although it has a similar concept in terms of the public benefit. I know Ms McBride has said the structure and overview are quite different, but we have heard evidence from the New Zealand Charities Commission. Are you comforted by what Mr Ferriss has said of his experience, the Church of Scientology in New Zealand’s experience in New Zealand, with respect to being subject to a charities commission, as is the case for all religions and all charities in that country, and being subject to a broad public benefit test? Are you comforted by what Mr Ferris has said about the New Zealand experience?

Ms Stewart —I think yes. Also I looked to an investigation by the internal revenue service into the Church of Scientology, which also included the Church in Australia. They revealed all of our documentation. It also includes the church in the United Kingdom. They provided over a million documents, and they travelled to various countries to investigate the church. So I would be quite confident.

Senator XENOPHON —So you are comforted by the structure that has been set up in New Zealand—

Ms Stewart —I could not comment on that because I actually am not familiar with the tax issue and I have not read the New Zealand charities—

Senator XENOPHON —Sure, but the fact that your colleague has not had any real difficulty was the New Zealand setup is of some reassurance to you.

Ms Stewart —Definitely.

Senator XENOPHON —Some of the former members of the Church of Scientology have talked about the extraordinary fees they paid over. There was evidence earlier today of a person between himself and his wife $1 million to $1.5 million. Again I am not asking you about that particular case, but are there instances where members of the Church of Scientology have either given, donated or handed over for courses amounts in the hundreds of thousands of dollars?

Mr Ferriss —I can answer that.

Senator XENOPHON —I wasn’t asking you; I was asking Ms Stewart.

Ms Stewart —I can answer that as well. I don’t think courses in the Church of Scientology come to those sums. We are an organisation that operates on donations. I think some of what you are asking me does fall outside the terms of reference of the inquiry here today. I am very happy to provide a full documented listings of how are we fundraise and what happens to the funding. I am very happy to provide that to the Senate in writing afterwards.

Senator XENOPHON —That would be useful. You also talk about the work in terms of drug education and drug rehabilitation. Can you provide details of how much is actually spent on that in terms of the receipts so that your books are an accurate reflection of the income that the church receives? Does it also show how much money goes to the head organisation in the United States? Is that reflected in your books?

Ms Stewart —If I could refer to Michael Gordon on that question. He is familiar with that.

Senator XENOPHON —You have been very quiet. Can you tell us the role?

Rev. Gordon —I believe the answer to that is yes. The books get done by accountants.

Senator XENOPHON —And they are publicly available?

Rev. Gordon —I believe they are, actually.

Senator XENOPHON —So you would have no difficulty providing them.

Ms Stewart —No.

Senator XENOPHON —That would be good. I think Senator Cameron has some questions, but I have a couple more. Do you think that your auditing sessions—this is to you Ms Stewart—should be regarded as providing a public benefit? I have seen an expression that they seem to be more like a cross between personal counselling and Maoist self-criticism. How could that be seen to be in the public benefit? You charge for those courses. Is it a form of religious observance or prayer? I note that the UK Charity Commission in their 1999 decision actually made reference to the fact that the auditing sessions were a factor as to why the Church of Scientology in the United Kingdom did not get a tax-free status. That is a common criticism that has been provided in relation to auditing sessions.

Ms McBride —Chair, I have a point of order. Isn’t that outside the terms of reference of the tax bill? How is that relevant to a tax bill, Senator Xenophon?

Senator XENOPHON —Chair, I am happy to address that.

CHAIR —If you would, because it is a valid point. We have made a point of saying that this inquiry should address the terms of reference. I think that applies to senators as much as the witnesses.

Senator XENOPHON —Chair, for the benefit of the rest of the committee, my view is that it is relevant for a number of reasons. Firstly, in order to determine the issue of the public benefit this legislation is based on the approach of the United Kingdom. The United Kingdom in a decision in relation to the public benefit test made reference to how open and how public a benefit was and it made specific reference to the auditing sessions. That is why I have drawn on a decision made on an approach that is similar to the approach envisaged in this legislation.

CHAIR —Thank you. Perhaps you should have said that in your preamble to the question.

Senator XENOPHON —Perhaps I should have, Chair. I apologise.

CHAIR —I think in that case it is a relevant question.

Ms Stewart —Could you please ask it again. I got lost in all the backwards and forwards.

Senator XENOPHON —Of course, Ms Stewart. Should the auditing sessions carried out by the Church of Scientology be regarded as a public benefit? There is a view that they are a cross between personal counselling and Maoist self-criticism. That is one view that has been given. Even if they provide a benefit to the individual paying for them, because payment is involved as I understand it, how is this a public benefit? I note that this was one of the factors that was looked at by the Charity Commission in the United Kingdom in its decision on 17 November 1999.

Ms Stewart —One thing on the 1999 UK Charity Commission issue that you were talking about, they since have come out with a law that has passed. We believe that under the new UK law that decision will be reversed. That is one point. Secondly—

Senator XENOPHON —That is a matter of opinion.

Ms Stewart —There is now legislation.

Mr Ferriss —2006.

Ms Stewart —In 2006 legislation was passed.

Senator XENOPHON —That was a codification, I think, of the earlier law.

Ms Stewart —Yes, and that codification is quite different. I am not an expert on this matter. Actually, we could provide some information to you afterwards on that. We have legal opinions on that 1999 UK decision.

On the question of our religious counselling and auditing, I put to you that those comments by former members are not shared or held by the large majority of Scientologists, who love their religion and love receiving services. For them, it is very much a public benefit—(1) because it makes them a better person; a better individual. In terms of increased spirituality and gains, Scientology works on the principle that, by increasing your spiritual awareness, you will then come to understand and know God as you move further along.

From the point of view of their opinion as compared to the opinions of courts, this matter has been taken up in courts all around the world—throughout Europe and the United States, and particularly with the IRS. They found that our religious courses and counselling were of public benefit. The same has been found in New Zealand. Also, many religious scholars have studied Scientology in great depth and they do not have an axe to grind really. So they, in my view, have come up with some quite definitive decisions along religious scholar principles of our religious services and the public benefit that they give.

Senator XENOPHON —But you do charge for the auditing sections, do you not?

Ms Stewart —Yes, but it forms the basis of our donation. The Church of Scientology has no outside business. We do not operate any secular type of activity that in turn gives us money from which to operate our church.

Senator XENOPHON —But auditing sessions, I think you said, are for the spiritual wellbeing of the followers.

Ms Stewart —That is correct.

Senator XENOPHON —But that comes at a cost?

Ms Stewart —Not always, Senator. I think a very key point is that the aim of a Scientologist is to be a counsellor and to learn to deliver this religious counselling to others and to also receive it and give it. If you wish to receive it in a professional capacity, we do request a donation—because that is how Scientologists wanted to contribute to their church. If you are not an active Scientologist—you are not receiving a service—your church does not require a donation from you. So it is equitable in terms of donations—those who use the church’ services the most. The church has many, many services for which no donation is requested.

Senator XENOPHON —Can I just go to this issue of ‘fair game’ with you, Ms Stewart, which I note—

Ms Stewart —Senator, I think that is definitely outside the terms of reference.

Senator XENOPHON —Perhaps as a preamble for the chair, if I can indicate that, in terms of public benefit and detriment, the Scientology website refers to ‘fair game’ as being cancelled in 1968. It was a policy of basically targeting those who are against Scientology. There was a doctrine of ‘fair game’ in 1965, wasn’t there, Ms Stewart?

Ms Stewart —I do not actually know any specifics regarding dates, to be honest. What I can say is that the definition of ‘fair game’ is, I feel, definitely outside the terms of reference. I would be very happy to take that on notice and present something in writing to the Senate to specifically address those claims with documentation and evidence.

Senator XENOPHON —So ‘fair game’ does not apply—

Ms Stewart —Absolutely not. I have worked for the church for 22 years. I have never heard of it and never seen it. The only place I have heard of it is in the media, and it is used really to marginalise us.

Senator XENOPHON —I am concerned about time constraints, so perhaps you could do that. For an organisation to obtain a tax-free status, as has been suggested in this bill, there needs to be a public benefit. If an organisation was systemically involved in activities that harmed individuals or there was coercion or abuses—and, again, I want to put this in general terms; I want to make that clear—would that be something that would concern you in terms of general principles as to whether that organisation should have a tax-free status?

Ms Stewart —I might have Mike Ferriss answer the question.

Senator XENOPHON —I might get you to respond as well, Ms Stewart.

Ms Stewart —Sure.

Mr Ferriss —First of all, you have raised a couple of points. You used the word ‘systemic’. The allegations, claims and so forth are not systemic in the Church of Scientology. You have to be very careful about what is being alleged and claimed. The church has provided a lot of information to the Senate in writing, which is available—and we know it is here. It does answer many of the allegations, as Ms Stewart said earlier. The other point is that this is not—

Senator XENOPHON —So, generally, if an organisation is involved in what could be seen as human rights abuses, cover-ups, telling people not to go to the authorities if there is evidence of criminal activity, do you think those things would be relevant in determining a public benefit test?

Ms McBride —Yes, they clearly are, and they should apply to the Catholic Church as well as to the Anglican Church. I think in relation to the latter, the Governor-General had to stand down, didn’t he, over allegations in the Anglican Church. Currently, there is an enormous amount of hoo-ha about the Catholic Church. Are you going to ask the same questions of them, Senator Xenophon?

Senator CAMERON —If he does not, I will.

Senator XENOPHON —It was a general question. Do you endorse Ms McBride’s views—

Mr Ferriss —Essentially, is it the actions of individuals that these claims are about? That would have to be determined. I am saying it is not systemic. Again, there would have to be evidence and so forth that would substantiate those claims.

Senator XENOPHON —I will not take that any further. Finally, on something I find quite curious: if you believe in freedom of religion, why is it that the texts of Scientology are strictly copyrighted so that the views of Scientology are strictly protected by copyright laws? If you want to get a Bible or a Koran or other religious texts you can get them for free or virtually for free. Can you see my point?

Ms Stewart —Definitely. I have just one point. I do not think copyright has anything to do with the materials being provided for free. We provide ample quantities of our materials for free to anybody who wishes. We put books in libraries and you can download them off the internet. I do not think that they are connected. The issue of copyright is essentially one of religious philosophy. As an example, the Bible is excellent, because the Bible has undergone massive changes. It depends who wants to write it, which section they want to put in. We do not know the true text of what Jesus said. In Scientology it is very important for us that there are no alterations, because Scientology works as written—I am now talking about our religious philosophy.

Other parts of the church have writings but, in terms of the practice of the Scientology religion, it is very important to us that they are not altered or changed so that 100 years, 200 years, 1,000 years down the track we do not have a completely different book, as has happened with the Bible.

Senator XENOPHON —Sure. I thank you for that answer. But in that case, if that is the intent, why can’t it be free for people to see it and to have access to all the teachings of the Church of Scientology without having to pay for them?

Ms Stewart —I think that is a larger question. I can definitely provide you with a written statement on that covering those issues.

Senator CAMERON —Mr Ferriss, maybe you are in a position to answer this. There has been criticism from the Church of Scientology about the approach taken by the UK charity commission. Last year the UK charity commission conducted an inquiry into the public benefit and the advancement of moral or ethical belief systems. A number of groups made submissions to that inquiry. Are you aware whether Scientology made a submission?

Mr Ferriss —I am not aware.

Senator CAMERON —Could you take that on notice because, given that you are critical of the UK commission, I would be interested to know whether the church made a submission to that inquiry.

Mr Ferriss —Sure. We said that we will take that on notice. Another point to be made is that we are not so critical of the UK charity commission per se but rather of the earlier decision in 1999, which was not made by the commission itself. The commission was established in 2002, I believe.

Senator CAMERON —I do not want to go into the history of that because I have only a few minutes.

Mr Ferriss —We can certainly provide you with that.

Senator CAMERON —I am interested in a consultation process that was undertaken, called the public benefit and the advancement of moral or ethical belief systems. Maybe you can come back to me on that.

Mr Ferriss —Sure.

Senator CAMERON —Submissions we have had from the taxation department say that religious organisations basically self-assess. So you, as a religious organisation, have self-assessed and gained an exemption from income tax in Australia? Is that correct?

Rev. Gordon —That would be correct.

Senator CAMERON —I hope it is correct, because that is what you need to do!

Ms Stewart —I think your question at the beginning was a bit confusing.

Senator CAMERON —You do not understand the question?

Ms Stewart —I did not understand your question. That is why there was a bit of a lag in answering it.

Senator CAMERON —Do you want me to repeat it?

Ms Stewart —Yes.

Senator CAMERON —The Taxation Office said:

Under the tax laws, religious organisations are entitled to self-assess as religious institutions, thereby gaining an exemption from income tax …

I assume that you have done that.

Rev. Gordon —That is right.

Senator CAMERON —Are you aware of the Extension of Charitable Purposes Act 2004?

Ms Stewart —No.

Senator CAMERON —The Taxation Office said that, under the Extension of Charitable Purposes Act, religious organisations can go on to demonstrate a public benefit, and that public benefit then provides them with further tax exemptions as charitable institutions. Have you done that? You get a tax exemption as a religious organisation, which is an automatic self-assessment?

Rev. Gordon —That is right. And, yes, we did do a submission to the Taxation Office.

Senator CAMERON —And, following that, you seek a further exemption for GST and FBT? Do you pay GST or FBT?

Rev. Gordon —Yes, we do collect GST.

Senator CAMERON —So you have not sought a charitable exemption? Your exemption is on the basis of being a religion? Is that correct?

Rev. Gordon —Yes.

Senator CAMERON —Why haven’t you sought the charitable concession in Australia?

Rev. Gordon —Actually we did get the charitable exemption as well. It is based on being a religion and a charity.

Ms McBride —I think we should take that question on notice. I believe there is an exemption granted, under the Goods and Services Tax Act and also under the Income Tax Act, on the basis of being a charitable exemption. I believe that has been filed with the submission.

Senator CAMERON —What the Taxation Office says is that the religious institution category for tax exemption is almost inoperative—that that is not the main area where organisations gain their tax exemption. The main area is through charitable purposes. So that brings us, in a circular way, back to the position of being a charitable organisation and being accountable. It is not just the Church of Scientology; all churches, all religions, have to comply with these issues. And there is a public benefit issue there as well.

Mr Ferriss —That is right. The issue of public benefit was raised by Senator Xenophon as well. When a person who follows a religion also lives and works in the world, that in itself is considered to be a public benefit. Scientology is not a closed order. Scientologists live and work in the world and, as an extension of their faith, as an extension of their beliefs, they do good work in the community—like many other people from other faiths.

Senator CAMERON —We had a submission from Corney and Lind Lawyers this morning. They indicated that they would support a charities commission. The bulk of the evidence seems to be that charity commissions are the best practice developing approach. You have indicated that you would not be opposed to that. Am I right in saying that the Church of Scientology would engage in a consultative process about the implementation of a charities commission within Australia?

Mr Ferriss —I think we would.

ACTING CHAIR —What did you say, Mr Ferriss? It was very hard to hear.

Ms Stewart —He was half talking to me. We would consult with anybody on that issue. We are happy to talk.

Senator CAMERON —And that would include the application of a public benefit test and a charities commission? You would sit down and talk about that issue as well?

Mr Ferriss —For sure.

Ms Stewart —Yes.

Senator XENOPHON —Ms Stewart, if you do all the good things that you say you do, you would have nothing to fear from a public benefit test. You are nodding. Is that a yes?

Ms McBride —There is already a public benefit—

Senator XENOPHON —I was not asking Ms McBride, Chair; I was asking Ms Stewart.

Ms Stewart —I do not know whether I can answer that question, because I am not fully familiar with all the other parts of what it is that you are asking. I could take that one on notice, because I would have to study more.

Senator XENOPHON —It was following on from Senator Cameron’s statement.

Ms Stewart —Yes. I would have to study more to be able to answer that question.

ACTING CHAIR —We have now actually exceeded the end of this time, so I thank the witnesses for appearing.

 [3.42 pm]