Federal Budget 2020: China Matters think tank loses tax exempt status

A China think tank that was stripped of funding over suspicions it was lobbying against Australia’s interests was dinged in Tuesday’s Budget.

A controversial think tank that was stripped of lucrative government funding earlier this year over suspicions it was lobbying for China against Australia’s interests emerged as a loser in Tuesday night’s Federal Budget.

China Matters, established in 2015 by some of the country’s most senior public servants and business figures to promote “more nuanced discussion of the Australia-China relationship”, has fallen out of favour with Canberra in recent months despite strongly denying having a pro-Beijing agenda.

The Sunday Telegraph revealed earlier this year that the since its founding, the group had received more than $1.86 million in taxpayer funds from a number of government departments including Prime Minister and Cabinet, Attorney-General, Defence and Foreign Affairs.

The group reportedly ruffled feathers in 2018 for calling for Australia to sign up to China’s controversial Belt and Road Initiative, the Communist Party’s $1.5 trillion infrastructure program widely viewed as a national security threat.

At the time, China Matters chair Kevin McCann described article as containing “demonstrable falsehoods and defamatory insinuations” about the group and its “supporter circle”.

“China Matters does not, has not, and will not lobby against Australia or the Australian national interest,” he said in the statement.

“Advocacy of ongoing engagement with the PRC does not make one a stooge of the Communist Party of China or an agent of influence. One can call out the government in Beijing and at the same time strongly support – in the national interest – engagement with the PRC. What is detrimental to Australia’s national interest is the labelling of such people as pro-Beijing.”

MPs Richard Marles, Tanya Plibersek and Ted O'Brien on a ‘study tour’ paid for by the China Matters think tank.

The newspaper reported that China Matters was stripped of its government grants – which accounted for nearly half of all its funding – amid foreign influence concerns, while also losing special tax exempt status that would have helped it raise funds elsewhere.

China Matters was listed in the 2019-20 budget papers as an addition to the list of organisations granted deductible gift recipient (DGR) status, meaning taxpayers may claim income tax deduction for donations.

The think tank’s name did not appear in the enabling legislation, however, and in July its chief executive Michael Clifton told a webinar that he was still in the dark about the decision, which he described as “more problematic” than the loss of government funding.

“We did notice quite some time ago that despite being approved for DGR status in the budget papers we mysteriously were dropped from the enabling legislation,’’ Mr Clifton told the conference, The Sunday Telegraph reported.

“Now, despite multiple approaches to the relevant Minister, in this case (Assistant Treasurer) Michael Sukkar, we know only what we’ve read in The Daily Telegraph. If indeed the government has made a decision to reverse its previous position, no one has had the courage or courtesy to relay that decision to China Matters.”

He added, “That’s a tad blunt but I’m struggling to put it in a more gentle form of words. We seem to have lost DGR but no one has actually told us that as yet. I’ve called the office on several occasions. No one has seen fit to return my calls. We are getting the silent treatment for reasons which remain somewhat of a mystery to me.”

On Tuesday, the Federal Government unceremoniously confirmed the think tank had lost DGR status. “The specific listing of China Matters Limited from July 1, 2019 to June 30, 2024 will not proceed,” the Budget papers said.

China Matters has been contacted for comment.

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