John Key MP
Leader of the National Party

16 May 2007

Speech to the

Royal New Zealand Plunket Society
Annual Conference

The Dunedin Centre

It really is a privilege to be speaking at your 100th anniversary conference.

To me, Plunket is the premier example of how a volunteer-led community group can effect change and make a real difference in New Zealand.

What started here in Dunedin 100 years ago was a small, local society. It grew rapidly, however, into an organisation which provided advice and care to most of the parents and most of the babies born in New Zealand.

And it still does. Plunket certainly helped my family. As bewildered first-time parents, Bronagh and I appreciated all the help we received from our local Plunket nurse.

Today I want to announce some new National Party policies.

These are policies on the way the government funds community and voluntary groups, and on the way the tax system treats volunteers. Together with the other policies I announced earlier this year, they will have a significant effect on the community and voluntary sector.

Really, it was a no-brainer that I should announce these policies here at the conference marking your centenary. After all, yours has been a 100-year history of all the issues that arise between community groups and the government – from maintaining funding to maintaining independence.

Before I announce policies, however, I want to talk briefly about Section 59. It would be remiss of me not to, since Sue Bradford’s Bill is due to have its Third Reading in Parliament this afternoon.

I know Plunket has been very vocal in its support of this bill.

Months ago, when he invited me to speak here, your CEO, Paul Baigent, gave me the topic of “Opposites Attract”. At the time I really didn’t know what he was getting at. Now I realise, of course, that he had tremendous foresight and could see that Helen Clark and I would eventually get together on the bill and work out a solution which left all sides feeling satisfied.

With that kind of ability to see into the future, Paul, you’ll be in demand at the next election, if not at the Wingatui Racecourse.

Seriously, though, I think something quite important in our society has emerged from what has been a rather fog-filled debate on Section 59.

We have had an opportunity to define for ourselves the way we see New Zealand society going, what we think is important, and the way we see our children. I think the debate ultimately led to the right conclusions.

First, we all want to see a reduction in violence against children. As a country, we just cannot stand back when thousands of young New Zealanders suffer abuse.

Secondly, I do not think there is a Member of Parliament—and I think there would be very few New Zealanders—who would want to see the law used to shield someone who beats their child.

But, thirdly, nor do we want to see a society where we criminalise good parents who are doing their best for their children.

They are doing the hardest job in the world. They have to put up with the extremes that occur and they have to do it on a day-by-day basis. They need confidence and they need support.

They have to know that we as a Parliament will back them up, and not look for an opportunity to demonise them. They need to feel they are treated with the respect, fairness, and honesty that they deserve.

I think the wording that will be voted into law this afternoon has a good chance of meeting these objectives. And importantly, the bill will now pass almost unanimously. That strengthens it immensely because it sends a clear message that our society needs to change.

However, I want to dispel the rumour that consensus is currently breaking out all over Parliament. It isn’t. The next time Helen Clark and I are likely to be sharing a podium is in the Leaders’ Debate at the next election. That’s because, on a whole range of matters, National totally disagrees with Labour. We have a very different mindset, and very different policies, and that is not going to change.

We fundamentally disagree, for example, over PlunketLine.

I want to reaffirm to you today that National is committed to supporting a 24-hour PlunketLine service.

Labour, on the other hand, is quite happy to ditch 100 years of experience with New Zealand children and parents.

I know as a parent that one of the most stressful times you face is when your child is distressed and crying, and you don’t know what the matter is, and you don’t know what to do. That stress is multiplied by a factor of 10 when it happens in the middle of the night.

So, for the sake of the infants and the parents of New Zealand, we want to support a telephone service that is run by Plunket and staffed by experienced Plunket nurses.

Like you, we also want to ensure that this is a high-quality service, consistently delivering better health outcomes for children.

Recently, I have been pointing out, across a whole range of areas, the difference between the rhetoric of this Labour Government and its record. What they say is not what they do.

When Helen Clark spoke at your annual conference in 1999 she launched a petition to save PlunketLine. She said: "We see real value in PlunketLine, and we want it to receive Government funding". Well, Helen Clark axed that funding without batting an eyelid. So don’t expect the opposites of National and Labour to keep on attracting.

I’ve also discovered that National and Labour have quite a different mindset on the whole issue of community and voluntary groups.

In my Burnside speech at the beginning of the year I said I wanted to turbo-charge the efforts of community groups making a difference. I also challenged businesses to play their part in supporting community efforts. I said I didn’t think “more government” was the solution to every social problem.

A month later I announced National’s policy to abolish the cap on charitable donations, so individuals and businesses could give as much as they liked to charity and still claim a rebate from IRD at the end of the year. That is going to result in more people giving money to organisations such as Plunket.

I thought that was just common sense, but the speeches I gave ended up exposing a great ideological divide. The Government went into full-on attack mode.

Steve Maharey said the things I was talking about in the Burnside speech amounted to nothing more than “Tory charity”. Michael Cullen said in a speech that only “the active and redemptive power of the state” could make a real difference in society, rather than “random acts of charity, however well meant”. Helen Clark said our charitable donations policy was simply "tax cuts for the rich", and insinuated I had announced this policy in order to gain financially myself.

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.

I think there are a few people who need to get out of their ivory towers, put down their textbooks on political theory, and come and look at what organisations – like Plunket – are doing in their communities.

I now want to get on to the really meaty part of this speech.

I want you to think about where community and voluntary organisations get their resources from.

First, there are donations of money – from individuals, from business groups and from philanthropic organisations. Secondly, there are volunteers who, in effect, are donating their time. And finally there is funding from the government.

As I mentioned, I have already released National’s policy on the first of these inputs – donations of money.

So today, I want to announce some new National policies on the other two – on volunteers, and on government funding of community and voluntary organisations.

Volunteers

First, volunteers.

At Plunket, you know as well as anyone the value of voluntary work. Your organisation has always had a backbone of dedicated volunteers.

An American academic gave a presentation to this conference a few years ago which showed that the value of Plunket’s 8,000 to 10,000 volunteers at that time was $47 million. To put it in perspective, that amount was 2½ times greater than government funding for Plunket.

The contribution of volunteers, not just in Plunket but across all community groups, is immense. Unfortunately the tax system imposes compliance costs which can really discourage people from giving their time as volunteers.

At the moment, if a community group reimburses a volunteer for expenses, like $20 for petrol, then this payment by law should be declared by the volunteer as income. And if it’s income, you have to pay tax on it.

Some organisations have an historical arrangement whereby IRD turns a blind eye to expense payments under a certain level. Others, however, do not.

Similarly, if a community group gives its unpaid president $200 as recognition of his or her contribution, then again our tax law treats this as income to the recipient. Moreover, with honoraria payments like this, the community group must deduct withholding tax at 33 cents in the dollar.

To my mind, this is just crazy. In the true spirit of volunteering, people are not looking to get financial rewards for the contribution of time, skills and experience they freely and generously provide. They are not in it for the money, and the tax system should recognise this.

National’s policy is this:

- All payments that reimburse volunteers for actual and reasonable expenses will be tax-free, regardless of the amount of the payment.

- Honoraria payments will be tax-free, up to an amount of $500 per year per person, as a way of expressing appreciation to people who generously give their time and expertise.

Initially we see these provisions applying to organisations registered with the Charities Commission, although we will review this requirement before introducing legislation.

I think this policy will ease the burden and reinforce the goodwill of those who already generously give their time, as well encouraging the giving of more time by more people.

Government funding

I want to talk now about government funding of community groups.

Funding, of course, is not everything. We are always genuinely interested in the views of organisations that have first-hand experience of working in the community. Any government’s policy development processes are better for the involvement of people who know what actually goes on and what the needs, and opportunities, and pitfalls are.

But no doubt you’ve heard ad nauseum about how government is in “partnership” with the community and voluntary sector. They’ll tell you it’s a partnership because the government said so in its Statement of Government Intentions for an Improved Community-Government Relationship.

Well, let me be up-front here – not every relationship between government and community groups is or should be a partnership.

It is both condescending and misleading to characterise it as such. Describing all and any such relationships as partnerships creates expectations that, quite frankly, government is often unwilling and usually unable to fulfil.

In some cases, the government is really just a purchaser of services, and the need to sustain a longer-term relationship is not an explicit part of its actions.

In other cases, the government may simply want to contribute to something a community organisation is already doing. This is the case, for example, with most of the COGS grants. This contribution is usually one-off rather than ongoing, and the government has no expectation that it will receive anything directly in return.

But in a few cases – and I consider Plunket to be certainly one of these – the relationship is far more complex. There is more than just a mutual or overlapping interest in or concern for a particular group. The organisation is more than just a potential contractor, and government funding is – or should be – only one part of the relationship. That’s where I think you can talk about partnerships.

Even here we should recognise that relationships between government and community groups are dynamic. They don't automatically start as partnerships. They evolve and they should evolve. The history of Plunket is a good example of this.

What I am saying, in essence, is that government needs to be honest and upfront with community groups about what it will or won't do, and what it does or doesn't expect in return – both up-front and as the relationship develops.

I want to tell you a true story I heard the other day. A community organisation was asked by a government department it frequently contracts with to provide services to an additional 60 families, for the sum of $12,000.

The organisation said – look we’d like to but we can’t do 60 families, it’s not possible for that price. So the government department said to them, just sign the contract, you’ll get your $12,000 and we won’t check up that you haven’t seen 60 people.

That sort of story will, no doubt, be familiar in the community and voluntary sector. And it shows there are a number of things going wrong.

First, it shows that government was not being at all realistic about what it could get for the money available. Secondly, it is a case study of misplaced accountability. And thirdly, it demonstrates a take-it-or-leave-it attitude which is all too prevalent, despite the government’s talk about partnerships.

I think we need to make some changes to the government’s funding relationships with the community and voluntary sector.

National’s policy has three parts to it – a commitment to:

- Full-cost funding of services.

- Reducing the burden of bureaucracy, and

- Investigating a venture capital fund for community groups.

I’ll go through these one by one.

Full cost funding

The first thing is that when a National Government wants to run a particular programme, and there is a competitive tendering process, we will encourage community groups to put in bids which reflect the full cost of delivery, including all relevant overhead costs. They may choose not to, and they may have their reasons for that decision.

But government departments must recognise that it is completely legitimate for community and voluntary organisations to recover the appropriate level of overhead costs associated with providing a particular service.

Otherwise what happens – and it happens often – is that community groups can deliver only by committing some of their own resources to the project.

In some cases, this might be a conscious decision to work in a true partnership with the government. It’s like we are going halves in a project, or whatever the proportion might be. But in other cases it means that people who make donations to community groups, and people who volunteer their time, are in effect subsidising the government’s activities.

For a start, that is totally unfair. It is not how government treats private, for-profit service providers, and so it should not be how government treats community groups.

It also risks what is known as “mission drift”, where an organisation’s energy and resources are spent doing the government’s bidding rather than on what that organisation was originally set up to do.

And, from the government’s point of view, a community organisation that is unwittingly subsidising a public service is unlikely to represent good value for money, particularly in the long-term.

So, we think nothing should stand in the way of community groups bidding for government contracts on a full cost basis.

Reducing bureaucracy

The second thing we are going to do is cut down on the bureaucracy and compliance costs that community groups face when they are dealing with the government. This will make your lives simpler, and it will also ensure that resources are spent on delivering services rather than filling in forms.

Here are three things we will be pushing in government:

- We will be telling departments to ensure that their funding policies and procedures are as clear and simple as they can be, and that tender processes are as painless as they can be.

- We will make sure that for those community groups with a proven history of performance, there should be nothing preventing departments from moving to longer-term, multi-year funding arrangements.

- We will encourage departments to look at greater front-loading of payments.

These measures will enable organisations to plan ahead, and will mean they don’t spend disproportionate amounts of resource chasing new or renewed funding.

Above all, what we want to avoid is so over-regulating the community and voluntary sector that it turns into a public sector clone, weighed down by the same constraints and limitations, and unwilling to take risks or challenge convention. Then we would lose what makes the sector so distinctive in the first place and the reason government often wants to work with it.

I said we want to cut down on bureaucracy. But at the same time, we have a responsibility to taxpayers to properly account for their money. We take this responsibility very seriously.

In actual fact, I haven’t met a community group that doesn’t want to be accountable, not just to the government, but to their members, users and donors as well.

It’s a case of horses for courses. There is no point having a 50-page contract with onerous reporting requirements for $5,000 worth of funding. That’s just being heavy-handed.

Government departments need to ensure that the specification, monitoring and inspection burden on community groups is at a level proportionate to the amount of funding they are receiving, and the risk they represent.

They need to ensure that contracts are not just "rolled over" without reviewing what has or hasn't been achieved, whether the funding is actually adequate, or whether the service or project is still needed.

One area that has been pretty murky has been Labour’s use of “capacity building grants”, where considerable amounts of money can be given to an organisation without a clear purpose, and without the impact of these grants being kept under review.

I can tell you that we will cut right back on capacity funding, both because departments have demonstrated that they are poor at assessing capacity building needs, and because under full-cost funding, community organisations should be building capacity funding into the price of the service, rather than as a separate activity.

Venture capital fund

Sometimes there is a risk that if government funds only those community organisations it has always funded then we will miss out on fresh thinking and new ideas.

So I’d like to share some initial thinking I’ve been doing about how government and the community sector could work together to foster the kind of innovation and new thinking that we, as country need, and that you, as a sector, are well known for.

In the sphere of economic development, government is involved in various venture capital or seeding funds.

These funds invest in, or loan money to, young, innovative companies with a high potential for growth. Generally, the funds involve a mix of government and private sector funding. They’re managed outside of government by professional investment managers who understand the markets they invest in.

I think a similar approach could work in the sphere of community development as well. The idea would be to give a push along to those organisations that have the capacity to do more, that want to do things in a different way, or that are new to the community sector altogether.

Venture capital funds like this have been set up recently in Australia, where a fund was established by some of the big philanthropic foundations, and in the United Kingdom, where the government established a fund.

In both these cases, it is not the government that runs the scheme – it is not administered, for example, by officials from the Ministry of Social Development. These funds are run by people with experience in the community and voluntary sector, together with people who know about venture capital in the business sphere. Most of their funding is in the form of capital grants and loans.

In New Zealand, I can see a place for a scheme that is funded by a combination of the government, philanthropic organisations and even community groups themselves. I am interested in your views on this.

I want to sum up by saying that National is serious about supporting the community and voluntary sector.

We want to encourage people to give more to community groups and to give their time as volunteers. We want to have relationships based on mutual respect and understanding. We want to pay community groups fairly, and we want to reduce the burden of bureaucracy and compliance costs that they face. The policies I have announced here today will help do this.

Let me conclude by saying to you, the supporters, volunteers and employees of Plunket – thank you.

They say when a Test cricketer gets to a century he shouldn’t relax, but instead he should take guard again, mark his crease, and plan for the next hundred runs.

So thank-you for 100 years of unstinting effort on behalf of New Zealand babies and parents. But don’t relax, because we need you for another 100 years.

Thank you.

ENDS

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