HEALTH SERVICES CHARITABLE GIFTS BILL

Second Reading

Adjourned debate on second reading.

(Continued from 8 March 2010.)

The Hon. D.G.E. HOOD (16:46): I rise to indicate Family First's view regarding this bill. It is important for me to put on the record our concern for the proper handling of charitable gifts to services (whether they be health services or otherwise) and their proper perception in the community, and that those gifts (specified in wills or otherwise) are being dealt with in a fair and transparent manner.

Commissioners under the bill will be tasked with receiving assets which are gifted to public health and research services, administering those assets (which I understand are currently in the order of $80 million) and ensuring that the assets are appropriately distributed. It is an important and undervalued task because, if done wrongly, those gifts will no doubt dry up to some extent and, of course, the vital medical research and health services in our state will enjoy less funding than currently. Gifts given to medical research are a vital resource of funds and the generosity of our community in this regard should be applauded.

It is clear that the current act requires updating to meet community expectations. The government has quite rightly pointed out that the current act has not been substantially amended since 1935. Much of the language used in the current act is clearly in need of updating. I note that the definition of an institution in the current act has been advanced, as one example. The current definition is expressed to include, 'any public hospital, destitute asylum, lunatic asylum, hospital for the mentally defective, orphanage, reformatory or other institution of like character'. That definition includes some words that are considered quite inappropriate and insensitive in today's day and age and, for that reason, Family First welcomes the amendment of those terms.

The government notes that one of the prime purposes of this bill is that it removes some uncertainty surrounding the legal capacity of commissioners acting as individuals and acting as a body corporate. This is resolved by establishing the Health Services Charitable Gifts Board upon which the commissioners will sit. In this regard I note the recommendations of the Auditor-General, who has advised that gifts received on behalf of these institutions do not currently vest with the commissioners. From my understanding, this was the advice that precipitated the current amendment and delayed the 2008-09 annual report of the Commissioners of Charitable Funds.

The bill also does several other things, including the removal of the current restrictions on investment by the commissioners and the establishment of an investment advisory committee. However, there is certainly a concern that donors want their gifts to go directly and immediately into medical research—which is usually the request, of course—and not gambled over-zealously on the share market, for instance. I certainly hope that the new investment powers are not taken too far.

Of concern from Family First's perspective, and I suspect other members' as well, the bill widens the current powers of the commissioners to direct gifts to entities other than those entities specified by the donors. One immediate question that comes to my mind concerns gifts that may be directed to the Royal Adelaide Hospital, for example.

On notice, I ask whether it is envisaged that gifts directed to the RAH will continue to be directed to the new hospital (the new rail yards hospital). The two hospitals certainly will share the same name, but I wonder whether donors who may have had a particular experience at the hospital on its current site actually intended gifts to be distributed to the hospital that has now taken on the RAH name at the rail yards site. I am not saying they will not: I am just saying I wonder whether some of them may, and that is just one example of course.

Until a relatively short time ago, the new hospital had a different name—the Marjorie Jackson-Nelson Hospital, as I recall—and the argument for a connection between the old and new would have been more tenuous. The connection still may be somewhat tenuous in some regards at least. The new legislation at any rate requires the board to consider the intent of a donor, and perhaps nothing more than that can be done. Many funds in any event, it seems, may be redirected to the South Australian Health and Medical Research Institute.

Family First would have preferred a regime whereby relatives were consulted in the event that the board wishes to give the whole or part of a gift to another public entity. In fact, we had considered drafting an amendment but, given that we are told that this bill is seeking rapid access, we have decided not to do that in the interests of not holding up the legislation. We are operating with our usual spirit of cooperation in the chamber.

Having said that, it is an important issue. As members may recall, in early 2009 there was debate—or lack thereof—about the Mount Gambier hydrotherapy pool, and the donations that had been made towards that cause. Similar arguments apply in regional communities when fundraisers occur and bequests are sought to refurbish or build, say, an obstetrics unit in a country hospital, for example, or to buy new equipment.

If the fundraising falls short, where do the donations go? There can be considerable angst if donations intended for a local community end up absorbed in a general fund or redirected to somewhere else in the health service. Why leave a loophole for bureaucracy to decide what would be the intent of donors? We feel the wording of the clause, as presently drafted, leaves that loophole for the government or a bureaucracy to do as they wish with what can be sizeable gifts, sometimes given with great deliberation by testators in wills or by philanthropic individuals. If that gift is frustrated, in our view, it would be a positive requirement within reason to consult with the family or the body giving that particular amount of money.

I do not say that to be mischievous; I think it is a genuine issue. All of us when we give donations to individual bodies expect that money to go where we intended it to go. In the case of the Mount Gambier hydrotherapy pool, there was some angst because the pool never proceeded, as members are no doubt aware. There was some angst among people who had given quite considerable amounts of money or had been involved in fairly extensive fundraising efforts. A lot of their own time, energy, sweat and whatever else went into raising that money, yet it did not go to the pool in the end.

I am not criticising anyone for that; these things happen. The question is: where does that money go? I think that is the thing that is missing to some extent in this bill. I place that question on notice for the government. I am really looking for an adequate response to that question in the summing up.

Having said that, this is a bill that will receive the overwhelming support of this house, including Family First's for the second reading at the very least. It is a sensible move, it would seem, and we look forward to seeing its impact.

The Hon. K.L. VINCENT (16:54): I will speak briefly to this bill. Firstly, I wish to thank the Department of Health's Mr Andrew Thompson and Mr Rob Smetak for the briefing that they provided. I appreciate that there is a need to update what appears to be somewhat outdated legislation that deals with charitable gifts in this state.

One only needs to look at the language of the Public Charities Funds Act 1935, which refers to 'destitute asylums, lunatic asylums, hospitals for the mentally defective and orphanages', to realise that the language is outdated. I am glad that this bill refers to the more palatable and more politically correct terminology in the Health Care Act 2008 to describe health services, particularly as a disability advocate who therefore appreciates the role that terminology plays in how we operate as a society.

But this bill is about more than semantics. It also provides the commissioners of the Health Services Charitable Gifts Board with wider discretion in the management of funds, which will in turn provide more scope for growing these charitable donations. Of course, this discretion is offset by the requirement that the commissioners prudently manage funds and deliver annual reports on the operation of the board.

I note from what the Minister for Health in another place has said that the commissioners are currently holding $53,000 in trust funds on behalf of the Intellectual Disability Services Council, which was dissolved in 2006, as well as $435,000 for the metropolitan domiciliary care, which was dissolved in 2007. Schedule 3 of this bill provides for these funds to be transferred to the Minister for Families and Communities, who may apply the funds as she sees fit, taking into account the intent of the donor.

Once the Minister for Families and Communities has taken into account the intent of these donors I suggest that she consider, among others, people who have been deemed fit for discharge but remain in institutions such as Hampstead, waiting for the minister to fund their in-home support needs. When I visited Hampstead in December last year I was told that there were dozens of people waiting for discharge, many of whom were waiting for funding from Disability SA. Since that time I have been approached by two of these people and, in the past few weeks, I have received responses from the Minister for Disabilities.

The first was in response to a plea for an additional 15 hours per week of in-home support for a woman who has been waiting in Hampstead since July last year; the other was in response to a plea for additional in-home support for a woman who also found herself in Hampstead waiting for funding from the minister to provide an additional 21 hours of in-home support. Both of the minister's responses indicated that these women would continue to wait as the funding was simply not available. All that it would have taken was for the government to put a bit more into disability funding to allow these women to get out of Hampstead—an additional $70,000-odd in total.

Of course, there are many other people who are stuck in our health institutions waiting on the government to provide funding for in-home support, and it may well cost $1 million to address this unmet need—but is that really a lot of money when we are talking about the right of people to independence and dignity in their own homes? In any event, I ask that the Minister for Families and Communities to consider people such as these who are on the unmet needs list when considering how to spend the funds transferred by virtue of schedule 3 of this bill. In conclusion, I wish to put on the record that the government must not rest on its laurels here. It cannot rely on charitable donations and must dig deep to fund public health institutions and prioritise the people who need it most.

The Hon. J.A. DARLEY (16:57): I rise to speak briefly about the Health Services Charitable Gifts Bill 2010. Members may be aware that I served as a commissioner of charitable funds for some 20 years between 1987 and 2007, so I have taken a keen interest in this particular bill. At the outset I would like to express my appreciation to minister Hill for introducing this bill, bearing in mind that the current act has remained virtually unchanged since 1935 despite repeated requests for amendments to antiquated provisions by the Commissioners of Charitable Funds since 1994. There is simply no question that the bill is in desperate need of legislative reform. Having said that, there are some provisions in the bill that I do not support and that I will be seeking to amend which I will address during the committee stage.

As we all know, the Commissioners of Charitable Funds was established to manage donations to public charitable institutions in South Australia. Historically, when I was first appointed as a commissioner in 1987, the only investments that the CCF had were shares that had been given to the hospitals as a result of bequests, cash and Town Acre No. 86 (otherwise known as the city centre site in Rundle Mall) which was part of the Thomas Martin bequest. Incidentally, Thomas Martin was so fed up with land tax in South Australia at the time that he left Adelaide and returned to the UK in the late 1880s.

Over the next 20 years, however the CCF diversified their investments into a balanced portfolio of real estate, cash and shares after taking legal advice on the interpretation of the Public Charities Funds Act. There were, and still are, some limitations in what the commissioners could invest in, and one of the main reasons for the push for legislative reform by the commissioners is that they wanted to have the same powers as provided in the Trustee Act in relation to investments by similar non-government organisations and statutory authorities.

On the issue of investment, I might also briefly comment on something minister Hill mentioned during his second reading speech relating to the commissioners speculating on the sharemarket. There is a major difference between speculating on the sharemarket and investing in the sharemarket, and I can say that the commissioners have generally only ever invested in the top 50 Australian companies and, more particularly, in the top 10 Australian companies. Even this is done only after taking advice from at least two companies specialising in investment advice for not-for-profit organisations and adopting best practice principles in relation to that advice.

All in all, the commissioners have demonstrated their ability not only to manage donations made to South Australian public charitable institutions and to manage them well, but to diversify the way they do this, particularly in a changing economic environment. They have managed to do this despite criticism that has been levelled at them in the past.

For instance, as mentioned by the Hon. Carmel Zollo in her second reading contribution, in 1998 the Statutory Authorities Review Committee, then chaired by the Hon. Legh Davis, inquired into the Commissioners of Charitable Funds. The commissioners' understanding at the time was that the SARC inquiry was initiated because the annual report of the commissioners was late in being presented to the minister; from memory it was presented in December when in fact it should have been presented in September, as required by the act.

The reason for the delay was that the Auditor-General was late in finalising his report on the statement of accounts. As a result of that, the commissioners gave a direction to the Auditor-General that in future they wanted their accounts to be completed no later than 31 August in any year, otherwise they would take steps to have the audit prepared by a private firm of auditors. As far as I am aware, up until 2007 the Auditor-General complied with the 31 August deadline.

Both the current President of the Legislative Council and I are aware that there may have been other reasons for the SARC inquiry, but I am not prepared to go into those on this occasion. The end result of all this was that the committee recommended that the Commissioners of Charitable Funds be abolished. Despite this recommendation, the minister of the day, the Hon. Dean Brown, decided that the CCF should be retained, and that decision was reaffirmed by the current minister when he took up the position of Minister for Health. This just goes to show that sometimes committees can make the wrong decision. Incidentally, the Public Trustee made a submission offering its investment services. In my opinion, that would have been tantamount to putting Dracula in charge of the blood bank.

Overall, if you compare the investment results of CCF with those of the Flinders Medical Foundation (which, in evidence to the SARC inquiry, indicated that it invested cash at 24-hour call) and the QEH Foundation (which, amongst other things, invested in lotteries), and even with the advent of the global financial crisis, the investment returns achieved by the CCF are far superior. As I said before, what this demonstrates is that, contrary to the recommendation of the SARC inquiry in 1998, the CCF has served, and continues to serve, an invaluable role, as recognised by the government.

In addition to bringing the Public Charities Funds Act 1935 into the 21^st century from a drafting point of view, the bill also addresses a number of concerns about the powers of the commissioners and the way they have been exercised in the past. Generally speaking the commissioners themselves have welcomed the changes. As I mentioned earlier, there are a couple of aspects of the bill relating to the establishment of an investment advisory committee and the application of charitable assets which I am concerned about and which I intend to deal with by way of amendments.

One of these amendments is particularly complicated, and for that reason I will not be ready to deal with it until the next week of sitting. I understand that the government would have liked to progress this bill this week; however, I think it is more important to get the bill right first, bearing in mind that the Commissioners of Charitable Funds have been asking for amendments since 1994. I doubt whether one more week will make much difference.

The Hon. R.P. WORTLEY (17:04): I stand today to make a few brief remarks about the Health Services Charitable Gifts Bill. Philanthropy and compassionate giving is an interesting field that is integral to our research and development sectors and one in which it is important to keep our legislation contemporary. This is especially the case in view of the application of charitable gifts to a changing hospital and research environment.

According to the Philanthropy Australia website, individual taxpayers claimed $2,346 million worth of gifts in 2007-08, an increase of 24 per cent since the previous year. The Giving Australia report of 2005, which is the most recent such document available, put individual and household giving in Australia at $7.7 billion, which came from 13.4 million people, or 80 per cent of adult Australians in the year to January 2005.

The report adds that this figure includes donations that were not tax deductible, in addition to moneys raised at charity events, lotteries, raffles and the like. Meanwhile, the report indicates that the total value of goods, services and money donated by businesses and individuals to the not-for-profit sector was an estimated $11 billion per year, excluding donations related to the tsunami in late 2007.

What this tells me is that Australians are great contributors to charity. Indeed, when the UK Charities Aid Foundation compared individual giving in countries, the wealth of which covers more than half of the complete global economy, we came out fourth on the list. The United States, with its great wealth, came first, as one would expect, with 1.6 per cent of GDP; next was the UK, with 0.73 per cent of GDP; third was Canada, with 0.72 per cent of GDP; and then Australia, with 0.69 per cent of GDP.

While there is always a call for greater levels of giving, I think we can be proud of our charitable responses to local and global needs, so it makes even more sense that we ensure that the legislation governing charitable gifts to hospitals and medical research is up to date and reflects the current powers and obligations of those charged with the management of donations and bequests.

The current Public Charities Funds Act 1935 is itself based on the old Public Charities Act of 1875, which established the Commissioners of Charitable Funds. The commissioners were to be independent of government in their responsibility for the allocation of the funds. This remains the case, but the current act is now outdated in language, in the scope of the powers and responsibilities of commissioners, and in some areas that could result in uncertainty as to the establishment of the commissioners and/or some of the decisions they may have taken in the past. I understand also that the commissioners are happy with the proposed provisions, which will:

maintain the independence of the commissioners with regard to their decision-making powers;

preserve the current powers and augment these;

establish the Health Services Charitable Gifts Board (commissioners of which are nominated by the minister to the Governor) and advisory committees, including an Investment Advisory Committee;

maintain the act's application to hospitals, as per the Health Care Act 2008;

enable the commissioners under certain circumstances to apply a gift to a hospital or related institution not identical to that nominated by the donor; and

validate past actions of the commissioners that were made by them in good faith.

All these measures will enhance the transparency of the commissioners' deliberations and decisions. The new act will apply to all public hospitals in South Australia, save for a few exceptions. The main exception relates to the health advisory councils responsible for country hospitals. This exception is in accordance with the government's commitment to rural and regional electors that the health advisory councils in these areas would retain responsibility for local assets, including local donations.

Should a council wish the board to take over responsibility for such property, however, the bill will enable this to occur with the minister's agreement and that property will remain exclusively for the benefit of that local hospital. The decision will be that of the local health advisory council and can be reversed should the minister revoke his or her decision. Donations made to a hospital by a local auxiliary or foundation will be exempt from investment in the board, where the minister, on application from the hospital, grants the exemption. In addition, gifts of property which can be classified as chattels—for example, a television, furniture or equipment given for the use of patients and staff—will be exempt from investment in the board.

The commissioners hold trust, the total value of which exceeds $75 million. Funds held for the benefit for those requiring domiciliary care or disability care services will now be transferred to the responsibility of the Minister for Families and Communities. The minister will take all reasonable steps to ensure that the funds are allocated in accordance with the wishes of the donor—which is just as it should be. Further, gifts will now vest with the board rather than the commissioners. This means that the commissioners will administer the charitable assets of the board rather than themselves acting as trustees of the asset, though that role will be permissible should the commissioners be so named or if such request is made.

They will, of course, retain their independence in both the investment and dissemination of the funds, and while the intention of the donor as to the application of a bequest will remain one of their paramount considerations, the commissioners will be empowered to apply funds to the South Australian Health and Medical Research Institute should this appear to be more beneficial in terms of health and research outcomes.

It will no longer be the case that the income from an investment will be the sole source of funds available for application. Under the provisions before us today, the commissioners will be empowered to apply the complete value of a gift to a particular purpose. This added flexibility is a particular feature of the bill, as is the advisory body to the commissioners that it envisages. This body will provide advice as to research proposals, another way in which the transparency and accountability of the process can be ensured.

These and related provisions will enhance the operation of the board and the commissioners, enabling them to allocate charitable gifts in an environment of change and innovation in hospital and research spheres. We will all be the beneficiaries, thanks to the generosity and public spirit of the donors, whose gifts are so crucial to our South Australian research bodies and programs. With these few remarks, I commend the bill.

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises) (17:12): There being no other speakers, Mr President, I would take this opportunity to make a few concluding remarks. First of all, I want to thank all members for their second reading contributions. The Minister for Health undertook to find out some further information in response to questions asked in the other place, and I now want to provide those answers to questions.

In relation to whether an investment advisory committee exists, the Department of Health is not aware of a body equivalent to the Commissioners of Charitable Funds established under the statute that has an investment advisory committee, other than the Public Trustee. The Public Trustee has, of its own volition, established an investment advisory committee to advise on the investment of funds held by the trustee and to ensure that a sound and efficient system of client investment is maintained. The investment advisory committee has a role somewhat similar to the Public Trustee. To provide certainty that such a body is established for the Health Services Charitable Gifts Board it is a requirement of the bill.

A question was asked about the amount of funds held for the Hanson Institute and IMVS. The commissioners have advised that they hold approximately $1.9 million that has been directly given to the Hanson Institute or the IMVS. They hold approximately a further $5.7 million that has been given to the Royal Adelaide Hospital for its research fund, for the purposes of the Hanson Institute.

A further question was asked in relation to whether the commissioners had ever sold property they held. The commissioners have advised that they have not, under the life of the current act, made any request to the minister for permission to sell any land. The bill makes it clear that charitable assets will be used as much as possible for the intended purposes. The changes that this bill introduces should only increase public confidence and trust in the commissioners, who will now be known as the Health Services Charitable Gifts Board.

In the management and application of gifts, donations or bequests given to hospitals, it never ceases to amaze me how we seem to come up with longer and longer titles for these bodies, but anyway, there we go. Given that, I commend the bill to the council.

Bill read a second time.