Statistics Home The Latest News Contents The High Court Case Feedback

The following is the Submission made by the DOGS to the Enquiry into the Definition of Charity. As you are no doubt aware, the exemption from taxes is one of the major forms of "State Aid" given to private schools. It does not matter that such schools may be well endowed institutions for the benefit of the wealthy few. They are labelled "charitable" and do not have to pay a myriad of taxes. Not so government schools- So, what is the true cost of State Aid to the taxpayer? This submission can also be found on the Enquiries website at together with other submissions.

























President: Ray Nilsen

P.O. Box 4869

Melbourne 3001



Provision of health, education, social security,(a living income) job networks be regarded as a right for Australian citizens and not a "charity".

If it is government policy to fund so called "charitable" enterprises which provide a public benefit, then such funding should be paid directly from the public Treasury to relevant community organisations. Accountabiliy for such funding should be the responsibility of the organisations and relevant Minister in State or Federal Parliament.

If 1 is implemented and if Australia is a country in which

all citizens have a right to health, education, a living income and employment opportunities,

taxation schemes and abuses based on definitions of "charity" are avoided

18th century divisions based on class and religion are left behind in Europe

then legal fictions and topsy turvy definitions of "charities" together with funding of community services through the back door of taxation exemptions become irrelevant.

Current indirect subsidisation of all religious, educational, welfare and other "charitable" institutions through taxation exemptions be quantified

Institutions and organisations presently receiving direct and indirect public subsidisation be made accountable to a central administrative body for any public subsidisation received.



In this Submission the Australian Council for the Defence of Public Schools refer to the historical background of legal fictions which have grown up around the definition of "charities’. Legal definitions have become inseparable from substantial taxation exemption advantages and even abuses for powerful and wealthy organisations. Small, struggling community organisations tag along hoping to pick up some of the taxation exemption crumbs.


It is noted that the Pemsel case definition of charities has opened a Pandora’s box through which wealthy, commercial religions and their enterprises receive substantial Taxation advantages with little or no accountability . In the process, the commonsense meaning of ‘charity" for "the relief of poverty" has often been turned on its head.

Some attempt is made to outline abuses inherent in the back door subsidisation of charities. It is noted that parents of State school children were recently astonished to discover that children at wealthy religious private schools received enormous taxation benefits by virtue of their "charitable" status, while children in the public system went begging.

This submission also questions the Brave New World of New Right ideology which attempts to privatise and tender out basic services for Australian citizens to sectarian, divisive religious groups - at taxpayer’s expense. It is noted that Justice Murphy in the Scientology case grasped the real issues involved in "religious liberty", the definition of "religion", and its relation to taxation exemptions

We challenge the Committee of Enquiry to look carefully at the Pandora’s Box opened by the Pemsel case and take measures to close it again.

Finally, we submit that if Australian citizens believe that community organisations providing essential public services are worth funding, then they should be adequately funded with direct funding from the public Treasury. Hidden, unquantified "exemption" forms of funding encourage legal fictions, abuse, enrichment for the powerful and wealthy, and - the "devil take the hindmost."





The Committee of Enquiry ‘s terms of reference require the


"Committee to examine and report on existing definitions of charitable, religious and community service not-for-profit organisations, and provide options for enhancing the clarity and consistency of existing definitions."


The Committee has indicated some willingness to extend these terms of reference. In particular, they call into question the "public benefit" requirement which to date has excluded some organisations from taxation exemption.




The "charitable status" of an organisation has enormous implications for taxation exemptions and indirect subsidisation of organisations with commercial as well as charitable operations. This is a matter of public, not private concern. This represents subsidisation of private enterprises by Australian citizen/taxpayers. It is assumed from the Issues paper and published submissions to date that taxation exemptions or indirect subsidisation from the public purse is really what this Enquiry is about. Billions indirect taxpayer subsidisations are involved.


We believe therefore that it would be both improper and reprehensible if the Committee failed to


inform Australian citizens of the types of indirect subsidy presently enjoyed by institutions and organisations which are labelled "charitable"

inform Australian citizens of the amounts of indirect subsidy presently enjoyed by individual institutions and organisations which are currently labelled "charitable"

The Issues Paper contemplates an extension of the definition of "charities" to include further "ethnic" and "community organisations" which service sectarian groups. There is minimum concern for the dangers inherent in the present system. The Committee has also encouraged individual groups wishing to be incorporated in the taxation exemptions schemes to make submissions. Submissions from Commonwealth, State and local taxation authorities have been discouraged. Nor have they , to date, been made.


Select Committee Reports are often pre-determined by terms of reference and selection of material. It seems that this is to be no exception. If it is made without hard data on current public subsidisation of existing "charities" which only the State authorities could provide , it will fall into disrepute and place public confidence in "charities" in further jeopardy.


This submission seeks to


Question the current extension of "charitable" status to private sectarian religious organisations and private church schools. It is suggested that this contravenes Section 116 of the Australian Constitution and the Separation of Church and State.

Question the current extension of "charitable" status and the extension of taxation exemption schemes to organisations and institutions providing what should be basic and obligations of the State, namely:




Job Network




"Those who do not learn from their history are doomed to repeat it"

It is customary to commence with reference to the Preamble to the Statute of Charitable Uses 1601 in the definition of Charity, and then bemoan the fact that this is out of date. What is not done is relate this Statute to the Church/State issues of that time. It was an attempt to restrict the definition of charity to the relief of poverty rather than subsidization of wealthy Church properties. The 21 charitable uses enumerated were directed to the correction of abuses which had grown up in the administration of charitable trusts.


Elizabeth 1 understood "charitable uses" to generally mean the alleviation of poverty. The Australian citizen in the street understands "charitable" to mean the alleviation of poverty. But since 1601, wealthy pressure groups have used the legal and tax system to turn this meaning on its head.


Australia is in danger of repeating the abuses which the Elizabethan Statute sought to avoid. There is a current need to control abuses inherent in untrammelled, unquestioning taxation exemptions for wealthy, propertied, charitable trusts with "not-for-profit" commercial enterprises. This development was assisted by the well known Pemsel case which "interpreted" the list of purposes in the Preamble to the Elizabethan Statute of Charitable Uses to encompass four classes of purposes:


The relief of poverty, age or impotence

The advancement of education

The advancement of religion

And other purposes beneficial to the community

The second, and third heads of charity introduced the possibility of special educational privileges for children of the wealthy, together with advancement of sectarian religious organisations. For ii iii and iv are legally "separated" from i. So, in legal fiction, and then in fact, the common sense meaning of "charitable" – the relief of those in need – was extended and turned upside down.


It is the extension of the fourth class, "other purposes beneficial to the community" which appears to be of immediate interest to the Committee. But it is (ii), and (iii) which have spawned sectarian and divisive enterprises inimical to the well being of a democratic, heterogeneous and egalitarian Australian community. They have also encouraged taxation minimisation schemes. Their overall cost in both direct and indirect grants to the Australian citizen has never been quantified or even estimated.



The Committee has an obligation to rectify this situation


Nor does Australia have a "Charities Commission" comparable to that in England. Once an organisation is labelled "charitable" it is virtually self regulating.



If it is to be taken seriously, the Committee has an obligation to bring Australian into line with other countries.

It is not politically correct to question abuses of taxation exemptions for wealthy religious and educational trusts in Australia at the present time. But "correct rhetoric" becomes a mere comfort zone for political and economic elites when the quiet majority of Australian citizens understand their own realities.


Supporters of State Education started to wake up to not a few of these realities with the introduction of the GST . They suddenly discovered that even the wealthiest private church schools were "charities" exempted from a myriad of taxation requirements, while public school children went begging. Some enquired further and discovered that the four billion dollars in direct State Aid to the private sector was only part of the total public subsidisation of private church schools .


And why?


Because for at least a hundred years, the courts decided that the advancement of religion and religious education could be legally defined as "charitable".





In his recent work Charity Law in Australia and New Zealand, Gino dal Pont notes three areas for reform


the legal definition of charity

the need for greater accountability of charities that rely on fundraising and commercial operations


an increasing discontent with the tax privileges accorded to charitable bodies prompting calls for a reassessment of these privileges.

We submit that the first and the third, the legal definition and the discontent with taxation privileges are inextricably linked. If the legal definition of charity is to promote public confidence in charities then definitions which give a blanket exemption to religions and religious enterprises can only lead to ever increasing privileges for rich and institutions enriching themselves rather than the poor.


Doubters in the Australian community – and there are many more taxpaying citizens outside than inside church pews- are beginning to question "the high cost of heaven".





For the purposes of charity law, "religion", like education, is defined broadly. The law does not engage in distinction between religion and sects,- thus giving sectarian enterprises exemptions from taxation. The leading case is the 1983 Scientology case in which the High Court of Australia held that Scientology fulfilled the relevant indicia of a religion regardless of its commercial activities. The decisions of Mason ACJ and Brennan J. are generally quoted, but it is the judgement of Murphy J. which, like so many of his judgements, goes to the nub of the real problem.


It was Lionel Keith Murphy, was the judge beloved of ordinary Australians - the judge who has proved more attractive to historians than any Australian judge before or since. With his usual prescience, he was the only one who understood , in this particular case, the real issues of


freedom of religion ( even for minorities)

separation of church and state and

dangers inherent in taxation exemptions.

His judgement in this case together with his dissenting judgement in the DOGS (1981) case is worth reading in full. We reproduce sections of his judgement in the Scientology case :



Murphy J. This appeal turns on whether the Church of the New Faith, which was conceded to be an institution, is a "religious institution" and thus exempt from pay roll taxation under the Payroll Tax Act 1971 (Vict) s. 10(b)


In Australia there are a great number of tax exemptions and other privileges for religious institutions. Under numerous federal and State Acts, Regulations and Ordinances they are exempted from taxes imposed on the public generally. Examples are stamp duty, pay-roll tax, sales tax, local government rates, and the taxes on motor vehicle registration, hire purchase, insurance premiums, purchase and sale of marketable securities and financial transactions. Ministers of religion are exempted from military conscription. There are also special censorship and blasphemy laws against those who deride or attack religious beliefs, particularly those of the Christian religions. There are many other State and federal laws which directly or indirectly subsidize or support religion.


Because religious status confers such financial and other advantages, the emergence of new religions is bound to be regarded with scepticism.



Scepticism and Religion


Organised religion has always had sceptics, unbelievers, and outright opponents…

Scepticism has been strong in Australia since European settlement. This has been attributed primarily to two causes. The progress of science displaced many European religious beliefs. Second the conditions of settlement and the harsh environment encouraged a philosophy of life

based on pragmatic individualism and mutual aid rather than adherence to the abstract dogma, indoctrination and rituals of the organised European religions.


Last century Marcus Clarke described religion as "an active and general delusion": Civilization Without Delusion (1880), p. 12. Henry Lawson, Joseph Furphy, Manning Clark, Patrick White, A.B. Facey and many other Australians have written sceptically about organised religion.



Religious Freedom.


Religious freedom is a fundamental theme of our society. That freedom has been asserted by men and women throughout history by resisting the attempts of government, through its legislative, executive or judicial branches, to define or impose belies or practices of religion. Whenever the legislature prescribes what religion is, or permi8ts or requires the executive or the judiciary to determine what religion is, this poses a threat to religious freedom. Religious discrimination by officials or by courts is unacceptable in a free society. The truth or falsity of religions is not the business of officials or the courts. If each purported religion had to show that its doctrines were true, then all might fail. Administrators and judges must resist the temptation to hold that groups or institutions are not religious because claimed religious beliefs or practices seem absurd, fraudulent, evil or novel; or because the group or institution is new, the number of adherents small, the leaders hypocrites, or because they seek to obtain the financial and other privileges which come with religious status. In the eyes of the law, religions are equal. There is nor eligious club with a monopoly of State privileges for its members. The policy of the law is "one in, all in….


The onus is on each applicant for tax exemption to prove, on the civil standard, that it is entitled to the exemption, that it is, more likely than not, a religious institution. ..Any body which claims to be religious, and offers a way to find meaning and purpose in life, is religious. The Aboriginal religion of Australia and of other countries must be included. The list is not exhaustive; the categories of religion are not closed…





Young C.J. States (2): "Nothing in the way the ideas of scientology are exploited commercially suggests that it is a religion. Indeed the considerations referred to under this heading might be thought to point clearly to the opposite conclusion." The commercial operations were : (I) sale of services to members (ii) charges for instructions leading to ordination (iii) financial arrangements with overseas headquarters and (iv) registration as trade names words such as "Scientology" and other steps taken to protect trade marks, trade names, patents and copyright, all owned by the founder, Mr. Hubbard.


Most organised religions have been riddled with commercialism, this being an integral part of the drive by their leaders for social authority and power (in conformity with the "iron law of oligarchy"". The amassing of wealth by organised religions often means that the leaders live richly ( sometimes in palaces) even though many of the believers live in poverty. Many religions have been notorious for corrupt trafficking in relics, other sacred objects, and religious offices, as well as for condoning "sin" even in advance, for money.



The great organised religions are big businesses. They engage in large scale real estate investment, money-dealing, and other commercial ventures. In country after country, religious tax exemption has led to enormous wealth for religious bodies, presenting severe social problems. These often precipitate suppression of the religion or its leadership and expropriation of its wealth ( see Larson, Church, Wealth and Business Income (1965) ; Larson and Lowell, The Religious Empire (1976). In the United States of America, where tax exemptions ( but not subsidies) are available, Dr. Blake, former President of the National Council of Churches, states that in view of their favoured tax position America’s churches" with reasonably prudent management….ought to be able to control the whole economy of the nation within the predictable future" (Christianity Today, vol. 3, no. 22 (1959), p. 7). Commercialism is so characteristic of organised religion that it is absurd to regard it as disqualifying.



Special Leave


Christianity claims to have begun with a founder and twelve adherents. It had no written constitution, and no permanent meeting place. It borrowed heavily from the teachings of the Jewish religion, but had no complete and absolute moral code. Its founder exhorted people to love one another and taught by example. Outsiders regarded his teachings, especially ab out the nature of divinity, as ambiguous, obscure and contradictory, as well as blasphemous and illegal. On the criteria used in this case by the Supreme Court of Victoria, early Christianity would not have been considered religious.


On this appeal, the Court was informed that following the Supreme Court’s decision, the Victorian Commissioner of Probate Duties has refused to treat the Seventh Day Adventists as a religious institution. The Seventh Day Adventists are generally accepted as religious. They have been inAustralis since 1885, and were "enthusiastic and dedicated proponents of liberty of conscience, and of the strict separation of Church and State" and campaigned vigorously for the introduction of a freedom of religion clause into the Constitution of the Commonwealth ( see Richard Ely Unto God and Caesar (1976) p. 27). The approach of the Supreme Court of Victoria, if allowed to prevail, would result in intolerable religious discrimination. "


Justice Murphy upheld the lessons learnt from the terrible religious wars of Europe and the principles of the Enlightenment, and promoted religious freedom. But what was his conclusion in the Scientology case?


His concluding paragraphs contain a judgement and a conclusion.


The judgement was that Scientology was a religion and entitled to an exemption as were other religions.


But, his conclusion, his message for our generation, was this :



" The Commissioner should not be criticized for attempting to minimise the number of tax exempt bodies. The crushing burden of taxation is heavier because of exemptions in favour of religious institutions, many of which have enormous and increasing wealth. "



We suggest that if the Committee has the intestinal fortitude to grab the real issues involved in the definition of "charity" they should have the temerity to exclude "religions" and their institutions from the equation. They should do this for the following reasons:

The subsidisation of religions and their institutions, (most particularly their educational institutions), contravenes Section 116 of the Australian Constitution which states that the Commonwealth should not establish ANY religion ( not A religion)

The present outsourcing and downloading of government education and welfare responsibilities on to private church enterprises means that one particular institution has become the largest employer in Australia. Religious tests are imposed upon applicants for employment with not only this religious body, but other religious institutions. Religious institutions are exempted from Equal Opportunity Legislation. Since religious tests can be applied, with impunity, upon employees of institutions. These "charitable" institutions are funded directly – and indirectly with public money, religious and civil liberty is at grave risk.

Large, wealthy, sectarian, triumphalist, religious institutions become a State within a State. We believe that this has already occurred, and our democratic, heterogeneous society is at risk.





Taxation relief is granted to church schools as "charitable" institutions. Public Education institutions do not attract the same level of relief, especially in the area of payroll tax. As noted above awareness of this hidden advantage emerged in recent disquiet over the GST on school materials. State school parents realised with some astonishment that their children were severely disadvantaged by the definition of "charity" as applied to private church institutions.


Tax free public donations to Australia’s 2600 state assisted private, mostly church school building and library funds have been estimated at #320 million by the National Council of Independent Schools Associations. They are concerned that this review might place this in jeopardy.


There has not to date been any overall estimate of the wide variety of taxation concessions outlined above by Justice Murphy in the Scientology case and enjoyed by the private religious sector. Given the value of assets alone, local rates, land tax, and stamp duty exemptions could prove an interesting calculation. The other interesting calculation would be payroll tax exemption. The Scientologists considered it well worth the challenge to the High Court.


The private Church School interest, basking in the most recent largesse of the Howard/Kemp funding has always resisted quantification of indirect subsidies. Media and political silence on the issue has been deafening. Yet taxpaying citizens have a right to know.


Taxpaying citizens also have a right to question the wisdom of both direct and indirect funding of the private sector in education. Its social and political effects are contributing substantially to the fragmentation and pillaring of our democratic, heterogeneous and harmonious society.





If public funding of church schools was intended to encourage religious diversity and sectarianism, it has succeeded. There has been a mushrooming of religious schools from 1964 to 1999. Newcomers since 1964 include

4 Ananda Marga

101 Christian

21 Moslem

7 Greek Orthodox;

2 Christadelphian

1 Hare Krishna

9 Brethren

22 Pentecostal

4 Scientology

4 Other orthodox

26 inter-denominational

134 non-denominational schools

The Lutheran system has increased from 28 to 80 schools; the Uniting from 27 to 42; the Seventh Day Adventist from 44 to 60.


We note that some forms of diversity enhance a civil, enlightened society. Others, we know from bitter experience, tend to undermine and destroy it. A necessary hard question for the Committee in its consideration of the definition and consequent subsidisation of "charities" is :


When does "diversity" mean "division" into social and cultural isolates rather than enriching diversity? If the Committee decides to extend the meaning of ‘charity" to include the subsidisation of "ethnic" groups, then our children and our children’s children are in danger of being divided along racial as well as religious lines. This is a heady brew. At what point then does multiculturalism descend into tribalism?


A useful handle on this question in relation to education is a quote from the 1844 New South Wales Select Committee on Education:


"The first great objection to the denominational system, is its expense; the number of schools in a given locality ought to depend on the number of children requiring instruction which that locality contains. To admit any other principle is to depart from those maxims of wholesome economy upon which public money should always be administered. It appears to your Committee impossible not to see, that the very essence of a denominational system is to leave the majority uneducated, in order thoroughly to imbue the minority with peculiar tenets. It is a system always tending to excess or defect, the natural result of which is, that whenever one school is founded, two or three others will arise, not because they are wanted, but because it is feared the proselytes will be made; and thus a superfluous activity is produced in one place, and a total stagnation in another…being exclusively in the hands of the Clergy, it places the State in the awkward dilemma, of either supplying money whose expenditure it is not permitted to regulate, or of interfering between the Clergy and their superiors, to the manifest derangement of the whole ecclesiastical polity."

Like our forefathers in the nineteenth century and the majority of the Founding Fathers of Australian Federation we have consistently opposed the granting of direct State Aid to private church schools. Our predictions of the 1960s have, sadly, come to pass. The trickling stream of State Aid has become a roaring flood. Our public systems are starved of funds while triumphalist Church systems demand ever greater subsidies; and our society is bedevilled by sectarian divisions.


Indirect subsidisation of wealthy private institutions because of their "charitable status" makes a complete mockery of the common sense concept of "charity".


There is no place in a democratic system for indirect subsidisation for which there is neither quantification nor accountability.


If the Committee is to take into account the concerns of the majority of taxpaying Australian citizens and the future of a democratic harmonious society, they will delete "education" from the definition of "charity.’





The Brave New World of privatisation, outsourcing of government responsibilities, and abdication of accountability is under question. The Committee of Enquiry into the definition of "Charities’ would do well to consider this before it joins the New Right rhetorical bandwagon, encouraging further indirect subsidisation of religious and community groups tendering for government responsibilities in health, education, welfare and job networks.


Recent protests at the World Economic Forum in Melbourne indicate that a broad cross section of our population do not accept the rhetoric and economic structures imposed from above. Many Australians are concerned that civically, we live in sad, bad times. They are not alone on the world stage.


Canadian public education unionists and their Canadian counterparts inform activists in Australia that the general Agreement on trade in Services implemented by the World Trade Organisation, applies to education. Investment houses like Merrill Lynch predict that public education will be privatised over the next decade in the way that public health has been, and there is an untold amount of profit to be made when this happens. The education industry has been called "the final frontier of a number of sectors once dominated by public control," and it is predicted that "for every 1% market penetration" achieved in public education, for-profit companies can add over $5 billion to their "top line". They are encouraged by the Howard government’s preference for the privatisation model in education. And, as well as direct grants they will be eligible for all the indirect subsidies.

Companies entering the private education market may well fit within the current "education" classification of "charities". If this occurs, while public schools are starved of funds or tendered out to international investors in search of profits, the term "charity" will cease to have any

meaning at all.


Will the Committee be party to such a travesty of justice?





The plain fact is that in this country our forefathers fought for the right to health, education, social security and employment services. The idea that they should depend upon "charities" for these rights was an outworn idea from the class and priest ridden societies of the Old World.Those who made Australia into a "social laboratory" leading the world in social and political reform at the time of Federation, would turn in their graves to find our politicians leading us back past the Enlightenment into the mistakes of the eighteenth century.


Many thinking Australians are determined that their children shall not be forced back into the old world models under the guise of New Right rhetoric.


We hope that the Committee of Enquiry has the moral and intellectual courage to grasp the nettle and confine the definition of "charity" to a proper, realistic, definition for the alleviation of poverty, age and powerlessness – and make it irrelevant to taxation exemptions, abuse, and inequity.


A Pandora’s box was opened by the Pemsel case.


Does the Committee have the courage to close it again?






...Contact Us:

If you have a message for supporters of public education:

Please Contact:
Ray Nilsen on
(03) 9326 9277 or Fax: (03) 9326 9180
Postal address:
P.O. BOX 4869
Melbourne Victoria Australia 3001
Or complete our feedback form.
Last modified:Monday, 25 April 2005