Jail threat for leader of Catholic schools lobby

Opponent of Simon Birmingham’s flawed school funding policy secretly threatened with jail by a commonwealth regulator.

Catholic Education Melbourne executive director Stephen Elder. Picture: Kym Smith

The chief critic of Education Minister Simon Birmingham’s schools funding policy has been secretly threatened with jail by a commonwealth regulator warning it will cut his organisation’s charity status and tax concessions for campaigning against flawed government policy.

The nation’s charity regulator has written to Catholic Education Melbourne executive director Stephen Elder advising of a sweeping investigation, explicitly warning him that he will be fined and jailed for up to a year if he does not comply fully and accurately with the probe.

The extraordinary demand follows a national campaign led by Mr Elder against Senator Birmingham’s funding model for schools. Mr Elder’s campaign ­severely embarrassed Senator Birmingham and Malcolm Turnbull, and stretched to breaking point the Coalition’s relationship with the Catholic Church, with the government potentially forced to find billions of dollars for church schools.

The Weekend Australian can reveal that the Australian Charities and Not-For Profits Commission has launched an investigation into Catholic Education Melbourne over robocalls and leaflets used during the March 17 Batman federal by-election. But the probe will extend well beyond the by-election ­period, with the ACNC demanding potentially thousands of pages of documents from July 1 last year to June 12 this year.

The ACNC has demanded an audit of the innermost workings of CEM, sending Mr Elder a list of three penalties if he fails to comply. They are 12 months’ jail for providing false and misleading information, 12 months’ jail for false or misleading documents and a $3600 fine for failing to comply with his notice.

“The ACNC is concerned that the actions of CEM may be placing the charity at risk of having a disqualifying purpose,’’ ACNC ­director of compliance Prue Monument wrote on June 12.

“Should the ACNC find evidence of noncompliance with the requirements under the ACNC Act or ACNC Regulation, the ACNC may decide to use its enforcement powers or to revoke the charity’s registration.

“If the outcome of the ACNC investigation results in revocation of the charity’s registration it will also result in the loss of tax concessions.’’

The investigation comes just days before the Prime Minister is due to meet the heads of the Catholic Church in Australia to end the school funding war.

Mr Elder yesterday hit back, declaring that the Catholic sector would push ahead with its demands for a fairer deal for its schools, estimated to be as much as $2.5 billion to $3bn over the next 10 years.

“The Catholics didn’t pick this fight with the Turnbull government, but it’s my job to protect the interests of Australian families of modest financial means who want to send their kids to Catholic and low-fee independent schools,” he said.

“To shrink from the fight would be to betray those families, and that’s something I could never in good conscience do.”

Mr Elder was sent a notice of investigation by the ACNC on June 12, but the authority had been communicating for several months in the wake of the March 17 Batman by-election, in which CEM paid $4378.84, minus GST, for robocalls discussing education policy.

The by-election was a battle between Labor and the Greens. There was no Coalition candidate and Labor won amid significant Greens infighting. Mr Elder’s involvement in the by-election escalated the feud ­between him and Senator Birmingham after Labor leader Bill Shorten pledged an extra $250 million to Catholic schools in the first two years of a Labor government. Senator Birmingham offered an apology to Mr Elder, a former state Liberal MP, after suggesting he could be bought for a few pieces of silver.

Ms Monument said promoting or opposing a political party or candidate for political office could lead to disqualification.

The groups were in a dispute over what needed to be provided to the ACNC, with CEM claiming its activities in the by-election were “in the pursuit of CEM’s charitable purposes to advance education and religion’’.

Ms Monument said: “We consider the distinction between political purposes and charitable purposes is one of degree, we consider the expenditure of otherwise charitable funds on an activity is relevant to the question of whether this points to a disqualifying purpose.’’

The investigation raises questions for all charitable organisations and could restrict the flow of information during campaigns.

The CEM robocall was carefully worded on legal advice. It stated: “Malcolm Turnbull has slashed funds from low-fee local Catholic and independent schools and our state school system. The Greens seek to strip funds from Catholic schools, threatening your right to choose the best school for your children, putting pressure on the state system. In contrast, Labor believes that local Catholic schools are an essential element of our education system.

“Labor will restore hundreds of millions in school funding cut by the Liberals to both Catholic and state schools. Education is vital for our future — and the ­future of our schools depends on who you support on Saturday.’’

The Independent Schools Council of Australia, Independent Schools Victoria and elite campuses such as Melbourne Grammar School all have charity status, which provides a range of benefits. The ACNC was formed in 2012 under Labor to more closely examine the charities sector, with a side function of keeping checks on potential terror funding and money laundering. Its chairman is former federal Labor minister Gary Johns.

An ACNC spokeswoman said: “Due to secrecy provisions in the ACNC Act, we are unable to comment on what action we may or may not take in relation to a specific charity. However, the ACNC does take all concerns from the public seriously, and where there is evidence of misconduct or mismanagement, we will investigate.’’ On its website, the ACNC states an organisation will not be a charity if it has “disqualifying political purposes’’.

“A charity’s policy position on a matter of concern may be similar to, or align with, that of a particular political party,’’ it said.

“In such a situation it is OK for the charity to continue to campaign on that issue, provided that this does not amount to the charity having a purpose of promoting or opposing a particular political party or candidate. In the lead up to an election there are increased risks that, in the minds of the public, charity advocacy or campaigning can be associated with a particular political party.’’