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Closure of NZ Charities Commission is 'against the flow' of regulation worldwide

David Locke, former executive director of charity services, Charity Commission
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Closure of NZ Charities Commission is 'against the flow' of regulation worldwide1

Governance | Niki May Young | 21 Mar 2012

Former director of charity services at the UK Charity Commission David Locke says the imminent closure of the New Zealand Charities Commission is "against the flow" of charity regulation throughout the world.

Locke is currently living in Australia and working as part of the Australian Charities and Not-for-profits Commission (ACNC) implementation taskforce, responsible for seeing in the new regulator in the country. 

"I have been following the decision in New Zealand," he said. "This decision is against the flow of a number of other common jurisdictions that have recognised the need for independent regulation of this important sector.

"Scotland, Northern Ireland and Singapore have all established independent regulators in recent years. In Hong Kong the Law Commission has recommended the establishment of a Charity Commission."

The closure of the independent New Zealand Charities Commission was announced as part of the government's cost-cutting measures on 11 August last year. Its functions are to be transferred to the Department of Internal Affairs (DIA), whilst a statutory board of three people to oversee independent registration and related functions will be established. The DIA will retain monitoring, investigating and prosecuting functions.

But Locke says the issue of independence is vital in charity regulation:

"In the UK the British government did consider the future of the Charity Commission in 2010 as part of its review of arms length bodies. The government accepted that the Charity Commission of England and Wales carried out necessary functions and there was a need for the exercise of these functions to be independent of politcal interests. The issue of impartiality is in my view an important one.

"In Australia, the government is implementing a wide raft of reforms of the charitable and not-for-profit sectos and is delivering on a number of key recommendations from the Productivity Commission report of 2010.

"The establishment of the ACNC is one of the cornerstones of this important reform agenda. Here the government has recognised the need for the regulator to be an independent body that has its own Commissioner and appropriation and reports to Parliament."

The New Zealand government believes that the transfer of charity regulation functions to the Department of Internal Affairs will save AUS$2.032m in the four years from 1 July 2012 at a transition cost of $300,000.

The transfer is currently going through New Zealand Parliament via the Crown Entities Reform Bill which was introduced to the House on 20 September and is expected to reach report stage at the end of March. Completion of transfer is expected in the middle of the year.

Michael Hardy
27 Mar 2012

The 'against the flow' assertion needs some critical evaluation. Relationships between the government, the not-for-profit sector and the community at large move in cycles, at different paces in different countries.

The developments in New Zealand might more accurately reflect a trend of civil society in each jurisdiction expecting higher value from their not-for-profit regulators.

In England and Wales, the trend towards higher value may be seen in the reductions to the budget of the Charity Commission of England and Wales, under which it will presumably focus on delivering the best value to the community within its reduced resources. In Australia, the formation of the Australian Charities and Not-for-profits Commission (ACNC) with 'back office' support from larger government agencies also reflects a government looking to provide greater value to the community by avoiding duplication of 'overhead' costs.

Efficiency initiatives Scotland, Northern Ireland, Singapore and elsewhere also reflect this trend, probably accelerated by the fiscal pressures on all Governments since the global economic crisis.

The circumstances in New Zealand need to be considered in this light.

The changes in New Zealand do not necessarily diminish the availability of "independent regulation" of the charitable sector in New Zealand, and are more likely indicative of a public expectation of greater value from regulators.

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