Speech to 0800 HUNGRY
Fundraising Event
Christchurch Convention Centre

It's a pleasure to be here at the launch of 0800 HUNGRY's fundraising campaign.

This evening I am going to expand on the policies I announced earlier today. These policies send a clear and strong message that National supports charitable giving and is serious about backing community groups.

But before I do, I would like to reflect on some of the issues which have kicked off 2007.

A month ago I gave a speech at the Burnside Rugby Club.

I spoke about how the Government needs to get behind and support the groups who are making a difference in our communities. I said I didn't think "more government" was the solution to every social problem. I said I wanted to turbo-charge the efforts of community groups which were making a difference. I also challenged businesses to play their part, for example, in helping provide food for kids in deprived areas before the school bell rings in the morning.

I was amazed by the reaction to this challenge.

Tasti Foods offered to give 100,000 specially designed snack bars to the KidsCan organisation. This will allow KidsCan to reach almost three times as many kids as they do now. A week later, James Crisp Ltd matched this offer with a gift of 100,000 boxes of Cinderella raisins.

On top of this, we have been contacted by a host of businesses and individuals who would like to play a part in providing food in schools.

Rather than reinventing the wheel, we have been working hard to match up these offers of support to existing programmes.

Not everyone thinks this has been a good response to my challenge. Some hold the view that the government is always best placed to improve society, by taxing people and spending the money on its own programmes. This view sees private giving and privately organised programmes as simply patronising.

Steve Maharey summed up this view with his sneering use of the term "Tory charity".

Michael Cullen gave a speech recently which talked about "the active and redemptive power of the state" making a real difference in society, rather than "random acts of charity, however well meant". If anything is patronising, that statement surely is.

John Minto expounded on this view in the New Zealand Herald last week. He said that my model of more business involvement, and more government funding for community groups working with families is "a charity model based on the philanthropy of Victorian England, whereby the undertaxed rich patronise the deserving poor … We are back to Dickensian England with Key."

Not surprisingly, I have a very different view.

I think it is a sign of a mature and caring society that people do things for one another, that they do them selflessly, without being compelled, and without the government having to organise it all.

Steve Maharey, Michael Cullen and John Minto need to get out of their ivory towers, put down their textbooks on political theory, and come down and look at what organisations – like 0800 HUNGRY – are doing in their communities.

Every day, trucks from 0800 HUNGRY pick up surplus food from around the Christchurch region. For one reason or another, this food would otherwise be dumped, ploughed in, left to rot on trees, or fed to livestock. 0800 HUNGRY gives it a second life.

In a big warehouse in Wainoni, volunteers pack this food up into parcels. Yet more volunteers take these food parcels out to hungry families across Christchurch. As well as this, 0800 HUNGRY acts as a sort of wholesaler, by supplying 122 community groups in the Christchurch area, who in turn give these food parcels to their clients.

Kerry Bensemann, the founder of 0800 HUNGRY, tells me that over the five years it has been running, it has helped 20,000 families. Currently more than 300 parcels are prepared every week. This is the biggest food bank in New Zealand, and probably bigger than anything in Australia as well.

Like many other charitable organisations, it exists on the smell of an oily rag. Most weeks there is a lot more rag than oil. 0800 HUNGRY relies on Christchurch people and Christchurch businesses giving food, giving their time and giving their money.

Kiwis are generous people. We do things for others, in informal as well as in more organised settings. Every hour of every day you can find New Zealanders doing good works, and you can find New Zealanders whose gifts of money enable that good work to continue.

These generous donors include some of New Zealand's wealthiest individuals, but also people of very modest means. They give to a range of charitable, cultural and philanthropic groups.

The vast majority don't seek any recognition for their efforts and often don't want to be identified.

I was struck by something Sir Roy McKenzie said when he was nominated for Wellingtonian of the Year in 2004. It was put to him that as the heir to a fortune he could have just spent the money on himself and his family, instead of giving away more than $100 million to charities. "I don't think about that", Sir Roy said. "I was so fortunate to have the opportunity to make a difference."

People like Sir Roy, as well as people of far more modest means, who might drop a $10 note into the collection box for Women's Refuge, are making New Zealand a better place for all of us. The generosity of all these people sends this message to charities: you are doing something good and worthwhile and I'm prepared to support you in what you do.

In turn, I want to send a message to people who generously open their pockets to charities: you too are doing something good and worthwhile, and a National government is prepared to support you in what you do.

At present, people who give cash donations to what the IRD calls "donee organisations" are entitled to a 33.3% rebate at the end of the tax year.

If someone gives $1000 to charity, for example, they can get back $333 at the end of the year. This is paid to them by the IRD as a tax rebate.

However, the maximum amount people can claim a rebate on is capped at $1,890. If people give any more than this, they can claim a rebate on only the first $1,890, so the most money they can get back from the government at the end of the year is $630.

New Zealand's tax rules on corporate donations are also restrictive. Only widely-held or publicly-listed companies, as well as Maori authorities, are able to claim a deduction for charitable donations. If they give to donee organisations, these companies can deduct only up to 5% of their net income each year for their charitable donations.

I think the tax system should be more generous than that, for both individuals and for businesses. That's why earlier today I announced National's policy on the tax treatment of charitable donations.

First, we will remove the cap on tax rebates for charitable donations. There will be no $1,890 maximum, and indeed no maximum at all. Donations of any amount, up to an individual's total net income, will be eligible for the rebate.

If you want to give $30,000 away, for example, you will be able to get a rebate of $10,000 at the end of the year.

The current tax treatment of charitable giving is miserly compared to that in other countries. Australia, for example, has no cap on charitable donations.

Just this year, Jan Cameron, the founder of Kathmandu, said she was moving to Australia because of this difference in tax policy. She wanted to give money away to charity – serious amounts of money – and it was much easier to do this on the other side of the Tasman. New Zealand's loss is Australia's gain.

Secondly, we will allow companies and Maori authorities to claim a deduction for any level of charitable donations.

There will be no 5% maximum as there is at present. Companies will be able to give as much as they want, as long as this doesn't exceed their total net income for the year. I don't believe that the tax system should restrict a company that chooses to do something for its community.

Thirdly, we will allow all businesses to claim the deduction, not just publicly listed or widely held companies.

This policy will enable businesses that have alternative forms of ownership, such as sole traders and partnerships, to claim a deduction for charitable donations. A high proportion of New Zealand's businesses are small and medium closely held companies or are operating under other business structures. The current tax system unfairly excludes them from making deductible donations.

Finally, we will remove gift duty from donations to donee organisations, so that people can give as much as they like.

Otherwise, any gift over $27,000 could attract gift duty, which would discourage people from making large donations.

These policies will not be cheap. National estimates they will result in foregoing revenue of between $60 million and $90 million each year.

The great benefit of these policies, however, is that the money we spend will be more than matched by private donations to private charities. When the government gives $1, we know that charities will have benefited to the tune of $3. In effect, this is a kind of matching policy. When people or businesses donate money, the government chips in as well.

If National's policy sees donations increase as much as we estimate, then donations will increase by up to $300 million – nearly doubling the amount that goes to the sector now.

Furthermore, we know that charities in New Zealand are extremely effective and deliver high-quality services despite being thinly resourced.

A report prepared in 2004 by PricewaterhouseCoopers found that for every $1 provided to a voluntary agency, between $3 and $5 worth of services are delivered in the community. So what this all means is that for every $1 spent by the government on this policy, charities will benefit by $3, and in turn the community will benefit by between $9 and $15.

To use the language of my previous career, that's a very impressive return on the government's investment! It's also smart policy.

Furthermore, I want to make something quite clear to you today. I don't want the government telling you how you should be giving away your money, or who you should be giving it to.

As long as it is not tax avoidance or fraud, and the organisations involved are bona fide donee organisations, you should give to whoever you like, and the government will give you a rebate for it.

I believe it is the very strength of private giving that it is not directed by the government; that it depends instead on individual people and individual businesses deciding where to put their own money.

When people give to groups in their own community, they do so with the sort of diversity, imagination, and innovation that the government just can't replicate.

Does anyone think that an interdepartmental government working group or a Cabinet subcommittee would ever have dreamed up 0800 HUNGRY? I can tell you with 100% certainty that they wouldn't have.

Individual donors and individual programmes almost always have a much finer-grained understanding of their community's needs and resources than do public servants and Cabinet Ministers in Wellington.

They have more information; they see the problems up close; they know the resources that are available. They are not stifled by the bureaucracy that accompanies all government programmes.

That is not to say private groups and the government should stay away from each other.

I made the point in my Burnside speech that business, community groups and the government should be working together more than they do at present. But we should recognise that private donors can have different motivations, different attitudes and different expectations than the government, and that this can be a good thing.

One key difference is that private donors have their own money at stake. There is no better accountability than having to persuade people to dip into their own pockets. People won't support a dud cause. After all, they have a choice in the matter.

A National Government will trust them to do exercise this choice. We know that to address the problems facing our country we will have to trust people, not doubt their motives or take all responsibility on ourselves.

And I believe that the more people give, the more they will want to make sure their money is being spent wisely and efficiently.

By contrast, taxpayers are rather more resigned to having their money spent on their behalf. In fact, I wonder how some of the functions of government would survive the kinds of tests that most private charities have to pass.

Would we have some of the government programmes we have if they were forced to raise money by collecting in the rain, knocking on doors, having sausage sizzles, and so on? Again, I am 100% sure we would not.

I want to make two final points.

The first is that though I have used the term "charities" in this speech, the beneficiaries of National's policy will be a somewhat wider group of organisations. These are not just social services but also cultural groups, the arts, the SPCA, and other groups which have philanthropic or benevolent purposes.

Furthermore, the tax rebate will apply, as it does at the moment, to many overseas aid organisations such World Vision, Caritas and Save the Children.

The last point I want to make may seem pretty obvious to you, but I'll make it all the same: Tax is not everything.

I have focused on tax this evening because I want the tax system to encourage, rather than hinder, private giving. I also do not want to force people to have to structure their financial affairs in a contorted way.

But this policy announcement is not just about tax. It's also about making a statement – to say that National supports people giving generously, and supports the community groups which benefit from it.

We want to promote a culture of generosity and giving in New Zealand, and this is one step towards doing this. And tax changes on their own will go only so far towards creating this more giving environment.

I think the government has an important role in assisting and promoting greater generosity in New Zealand. It can cultivate awareness of the sector and awareness of what opportunities there are to give.

National is keen to investigate how we can do this, and we look forward to working with the sector over the months ahead.