Philanthropy Meets Parliament Summit

Thank you very much Alan and can I acknowledge the traditional owners on the land on which we meet and any elders past and present. Can I thank you Alan for your introduction and the opportunity to be here today and can I congratulate Philanthropy Australia on this initiative. There are many of these initiatives that take place and I think this is very important one. I was very pleased to be able to accept the invitation to come along and lend it my support but also to share some thoughts and to encourage you in the work you are doing.

Can I also acknowledge Peter Treseder who is the Chair of the Community Business Partnership, as well as Susan Pascoe the Commissioner of the Australian Charities and Not-for-profits Commission [ACNC] and I believe Alan Tudge the Parliamentary Secretary to the Prime Minister may be here also, I acknowledge the tremendous work that Alan does both as a colleague and in his role as Parliamentary Secretary.

When I came into the Parliament in 2007 in my first speech – my maiden speech I said I believed in a country that was strong and prosperous and generous. I am looking at a pretty generous room today; this is a generous mob the Philanthropy Australia mob. Generosity I think is very much part of our national fabric, it is the basis upon which our social society I think is sustained not just built. It is a generosity that extends beyond our most basic obligations, it is about a willingness to reach out and support those around us.

We need to recognise as I said in the introduction the social challenges we will face in the near future won’t be met by government alone. It is true $154 billion is what the social service portfolio expenditure is every year, $154 billion. It will rise to around $227 billion over the course of the next decade. Eight out of ten income taxpayers go to work every single day to ensure that those services and that funding can be in place. So as a big part of what we do and our challenge is to spend that money better; to spend it better and more effectively. The good news also is that Australians are a generous people – we are not mugs but we are a generous society, a generous people.

We are keen to do things that are effective, to do things that work. Not just as a show but we care what works. One of the things I have been encouraged about in this portfolio since coming to it late last year is the real pragmatism of the sector, the commitment of the sector to seeing changes take place and not just engage in some sort of scoreboard on funding but that the sector really cares about getting the results and if results aren’t coming from the funding well the funding is misplaced. And how much money is being put in can be a complete waste. I have been very encouraged by the very results focus of the sector and the consultations and the partnerships we have been able to form.

As Australian citizens it is and must continue to be our natural instinct to lend the proverbial helping hand by whatever means necessary.

As the members here exemplify, simply paying our taxes and expecting the government to do the rest is not enough. Paying our taxes is the law, it’s not charity, it is our obligation. Generosity is not doing what you’re obliged to do or compelled to do, it is about what we do beyond those obligations. I fear sometimes that in our civil society there is a perception or a view that I pay my taxes and I don’t have to worry about much more than that. That is not going to build a stronger community; it is not going to build a stronger society. Paying taxes is part of the obligation sadly of being a citizen. We think they should be simpler, we think they should be fairer and we think they should be lower as a government. But that is not even the beginning of our social responsibilities as citizens. Our social responsibilities as citizens go well beyond that. Simply paying our taxes does not give us a leave pass not to engage constructively and socially in our communities in the work that you do and that is what you are all about.

We need to prevent our nation from becoming complacent in its attitude to community responsibility. Our generosity should be harnessed to ensure positive outcomes for all. Previous studies have estimated philanthropic giving amounts to about $11 billion a year in Australia. There is scope to grow this generosity and to make each dollar raised go even further. The work you do is leading the way. Solutions to social challenges need to involve businesses, philanthropic organisations, individuals, and the community. One of the reasons for that is all of the non-government players in each of those areas bring different disciplines, bring different focuses. It is not just the fact they are bringing some cash, they are bringing themselves and their application to the task; which in many ways is as important as the dollars they bring.

As I have noted in other forums social responsibility has an important role to play in contributing to the solutions and supporting vulnerable individuals and families. Businesses are engaging in corporate social responsibility in increasingly diverse ways, including impact investment, corporate grants, skilled volunteering and community partnerships. The Government is supporting these efforts; Good Shepherd Microfinance and the National Australia Bank’s partnership is delivering a national no interest loan scheme, or NILS and has been a tremendous success. I am proud of what the Abbott Government has been able to do to continue contributing to this important initiative. NILS loans are now available in more than 600 towns and suburbs across Australia, providing products that improve the lives of about 25,000 people each year. We’ve also recently invested more than $63 million over the next five years not only to NILS but to other microfinance products, such as StepUP and Saver Plus. I look forward to this encouraging more corporate support. And we’re investing almost $5 million over three years into the Community Development Financial Institutions programme to support disadvantaged Australians start or expand a microenterprise. I will often say that the best form of welfare is a job, it is also a business – a business that that person can start and create and free them from a life where their choices will be constrained by the welfare system. They are empowered economically through their own initiative and enterprise.

As a government we owe it to these community efforts to ensure we manage the incredibly important national asset that is our social services system in a sustainable way. It underpins the strength of our society, of our community and indeed our economy. This means it has to focus itself as well as it possibly can. We do have one of the most targeted welfare systems – arguably the most targeted welfare systems in the world. I think that is the product of a century of work. But we can do better. Australia’s welfare bill as I said sits at $154 billion and I have already outlined how it will grow into the future. This is one of the reasons why to ensure we can better spend those funds and particularly better spend them in the decade it follows that we are engaging in the Investment Approach to welfare in Australia. In the recent Budget we invested $20.7 million to build the policy framework, the actuarial framework, the grunt of a system that we are seeing deliver in New Zealand a more targeted approach to welfare interventions in that country. I believe it can be achieved in this country. We are not just talking about it we are building it as we speak. As you know, Patrick McClure recommended this in his excellent review of our system earlier this year. It is all about directing funding where it will do the most good, particularly in reducing long-term welfare dependency.

It is working in New Zealand, where more people are getting into work, and are staying in work. Their analysis shows that young parents and single parents have the highest lifetime costs compared with other groups on welfare. That’s because they find themselves stranded on welfare for the long term. New Zealand has concentrated funding and efforts on getting these young people trained and into work; adopting innovative approaches – that doesn’t mean everything works but they are having a go. They, like this government, understand that the best form of welfare is a job. Deputy Prime Minister and Minister for Finance, Bill English in New Zealand has credited the Investment Approach with incredible changes – there are now 43,000 fewer children in New Zealand living in households that rely on benefits compared with three years ago. And the number of sole parents on benefits is the lowest in more than 25 years. The most disturbing statistic and there are plenty in this space but the one that I reflect on constantly is that 19 per cent of Australian families are jobless families and over 500,000 children under the age of 15 are growing up in a jobless family. That was highlighted in a recent Australian Institute of Health and Welfare report. That is a statistic that should focus not just the government’s minds but all of our minds. The New Zealanders are showing how we can change that situation – their results are extremely encouraging figures that demonstrate the value of innovative thinking and private investment to address social need.

But welfare has to be a good deal for investors. Under an Investment Approach, we start by assessing the risk factors that drive long-term welfare dependency, and which groups will most likely benefit from early intervention. This gives us a better picture of how we can make lifetime changes for people in the welfare system–changes that not only help individuals and communities, but they also help our economy. Based on this analysis, the Government can invest in evidence-based programmes tailored to make the most difference to those groups whose pathway can be changed. Each year, expert actuaries will consider which policies are working for which groups of payment recipients, and which groups would benefit from a different approach. This is about changing the scoreboard on welfare. A government’s success will not be measured by how much it spends but by how effectively it spends as it should if we are to be true to the taxpayers who generously support the scheme that they also believe in. With robust and ongoing evaluation, policies can be refined to have the most impact and funding can be directed to where it will do the most good. Right now, we’re selecting the actuarial service provider, who will do an initial baseline evaluation of the government’s social security liabilities. Then they’ll do another three valuations over the following three years.

As a way of funding some programmes under the Australian Investment Approach, we’re looking at the potential of Social Impact Bonds (SIBs), which many in this room will not only be interested in but heavily involved in at the same time; another recommendation from the McClure review. Social Impact Bonds harness the knowledge and initiative of those who work directly with vulnerable people–those who know best what works and what doesn’t. An intermediary then raises money from private investors to fund a solution to a social issue. If the outcomes are successfully achieved, the government will pay the investor a share of the savings. This approach means that an idea must be well thought out and explored before it’s likely to get private investment. I would add that investors will have the confidence in the implementation mechanisms for that programme. Sentiment is fantastic but the ability to deliver is what will actually make a difference. The risks are shared between government and the private sector, while making sure interventions are based on sound research, and money is paid based on results. Because those involved have a vested interest in the success of the venture, the Social Impact Bonds approach leads to innovation and performance. Social Impact Bonds can deliver better services and results, better partnerships between the government and non-government sectors, and better value for taxpayers. They’re being used widely overseas, and just last week Common Ground in South Australia announced a ground breaking initiative, launching the first homelessness specific SIB venture in Australia and only the fourth of its type in the world. We are innovators in this space. With the support of bodies such as Social Ventures Australia, who are supporting today’s events, and the South Australian State Government these organisations will continue to achieve tremendous things. I recently visited Common Ground’s facilities in Adelaide and I cannot commend them enough for their work combating the challenge of homelessness in South Australia and indeed around the country. Their own research shows that 95 per cent of tenants who went to live at Common Ground do not return to homelessness. That’s a good result.

I must give credit also to my friend and colleague Premier Mike Baird and the NSW Government who were the first to launch two SIB pilots which are currently being run, for family support and child safety. When Mike and I meet we often talk about these types of initiatives.

The Benevolent Society is partnering with Westpac and the Commonwealth Bank to strengthen families and reduce the need for foster care. Social Ventures Australia raised $7 million from investors to support UnitingCare Children, Young People and Families to expand the existing New Parent and Infant Network programme commonly known as Newpin. This resulted in funding for four extra Newpin Centres. The first results are encouraging; with reports suggesting that 66 children have been returned to their families from foster care. A further 35 children have been kept out of out of home care altogether. As a result of the program’s above average restoration rate, investors have received an interest rate of 8.9 per cent – that’s a good deal for the first year of the bond. The program will be expanded with the government’s savings estimated to be in the order of $80 million. I think we can all agree that this sort of return is a very attractive investment option. But the true value of such success cannot be measured in dollars alone.

I acknowledge that an Investment Approach is a huge cultural shift in the way we look at social policy. It is not intended to replace government funding it is intended to supplement and improve the effectiveness of government funding. We have big challenges facing us in this area and we do need significant change to how the system works. Success will depend on collaboration between the various sectors to achieve a common goal. Those who work in the Social Impact Bond space tell me frequently the capital is there but the product is not there yet. We need to work hard on how to structure these products for them to invest in – that moves corporate philanthropy beyond charity and it turns it in to a good deal and an investment. I don’t want to see just millions of dollars coming through corporate philanthropy, I would like to see hundreds of millions of dollars coming because it is a good deal and a good investment. The Approach recognises that our society is interdependent and when one sector succeeds we all benefit.

This leads me to the Community Business Partnership and the valuable contribution this body can make to innovative policy. As I am sure you are all aware last year the Abbott Government re-established this important Partnership. Most of the members are here with us today and I acknowledge them. I want to thank them for their commitment and enthusiasm; I have enjoyed my initial engagements with the group. The Partnership provides invaluable advice to the government on ways to foster philanthropy, increase volunteering and social impact investment, as well as suggesting new innovative finance models. They give us a good poke I can assure you, they really push us and I think it is great because they are talking about the innovation that is taking place out there. It is very hard not to get caught up in their passion about how it can work. I want to thank them for their boldness and their advice, it is certainly fearless and frank as it should be but it is underpinned by the most sincere and genuine of motives and we really appreciate their investment in that Partnership.

I’m pleased to announce today that we will be adding another to their number. The Prime Minister and I will be appointing to the Partnership Mr Tony Stuart, who is here with us today. There he is, Tony is up the back, good on you Tony. Tony and I have known each other for some time going back to my days in the tourism industry. As Group CEO of the NRMA, Tony brings extensive experience in corporate philanthropy, business, charity work, community enterprise and regulatory structures. This includes membership on the national board of the Starlight Children’s Foundation, the Executive of the Committee for Sydney and the Board of Directors of the Business Council of Co-operatives and Mutuals. He’s an advocate for reform and has a passion for good governance. I have seen that in all the work Tony has done whether it was at Sydney Airport, the NRMA or other places where he has been involved. I really appreciate Tony bringing his extensive experience in the mutual space which needs to have a stronger voice and stronger involvement in what we will be doing going forward. So I very much appreciate Tony taking on that role. Welcome, Tony and we look forward to working with you.

The Partnership has been talking with a wide variety of experts and stakeholders over the past few months–including Philanthropy Australia–with the goal of developing robust policy recommendations. With advice from the Partnership, we have committed to making two important changes to reduce red tape. The first is to make planned giving simpler and more accessible, by allowing money to be moved from one Private Ancillary Fund to another when it is winding up. The second is simplifying donation rules for listed shares and listed managed funds. Donors will no longer need a valuation from the tax office, saving them the paperwork and a $241 fee. Several Partnership research initiatives are also under way. We are providing up to $1.7 million to the Queensland University of Technology in partnership with the Swinburne University of Technology and the Centre for Corporate Public Affairs to deliver the Giving Australia 2015 project. Collecting information from individuals, charitable organisations, philanthropists and businesses, the project will look at issues such as the reasons people volunteer or give, and what approach best works to encourage giving. This will help us better understand philanthropic behaviour and improve our understanding of the capacity and needs of community organisations. The Partnership is also looking at what barriers and opportunities there might be for volunteering within multicultural and Indigenous communities, so that we can grow giving and volunteering in these sectors and communities.

There are many other ways to help grow philanthropic giving in Australia. That’s why we’re investing $650,000 over three years to support Philanthropy Australia to deliver Philanthropy Partnerships Week with the Foundation for Regional and Rural Renewal. Held over the second week in December, the week will grow our culture of philanthropy, inspire new partnerships, and change perceptions of philanthropy. To help community groups and their philanthropic supporters celebrate, the Australian Government will provide $160,000 in grants of up to $10,000 each. I’ll be announcing the successful grant recipients in the coming weeks. And I’m pleased my department is also providing $110,000 to Volunteering Australia to help individuals and community groups attend the 2016 National Volunteering Conference through the Inclusive Scholarships Program.

Finally I just wanted to make a couple of comments in relation to the ACNC. We are passionate as a government about encouraging philanthropy across Australia and this means supporting the mechanisms which make this possible. Including with the Community Business Partnership, I have been consulting over the issue of the ACNC and there is strong sector support for the ACNC to continue and I would say that view is shared particularly in the Parliament. So we will continue to look at that issue closely in the weeks ahead and what I will focus on in the short term though is that we get the focus of the ACNC where I believe it wants it and the government wants it – that is, rather than regulation, the ACNC should be about championing charities, working with them to become more effective, and to improve their governance arrangements. We don’t want another bureaucracy any more than the ACNC does and we don’t want more red tape for our volunteering sector and our not for profit sector. We need to strike the right balance between the need for public accountability and cutting red tape, maintaining public confidence through transparency and consistency of reporting, and having a proportionate compliance framework across state and territory charity legislation. We remain very committed to reducing red tape and regulation. Therefore we will work with the Treasurer, the Commission, states and territories, and the sector to identify areas where we can reduce the administrative burden for charities and not-for-profit organisations so they can focus on outcomes that go to support the most vulnerable in society.

There is no doubt we have many challenges to overcome in addressing some of the social issues that Australia faces. But we have to tackle them head on. We are embarking on some exciting projects that are not just about finding short-term solutions, but looking to the future. By all working together, governments, business, and the not-for-profit sector and our communities – all Australians, we can build a strong social services system that empowers people to defeat welfare dependence and build a life of independence; a better life for themselves and their children. Philanthropy is a huge part of that, and I hope today results in some great discussions and ideas in how we can advance that agenda.

So I thank you for your attention today I look forward to continuing to work with you in the times ahead and I wish you well for your deliberations today.