Religious Discrimination and Financial Hardship: A Minefield for Sponsors Like Qantas

Janek Ratnatunga CEO, CMA Australia
Prof Janek Ratnatunga
CEO, CMA Australia

I did not think I will be writing an article about the implications for finance professionals about the Australian Federal Government’s draft ‘Religious Discrimination Bill’ which was released for comment on August 29, 2019. But write I must, as the implications for management accountants are significant enough to warrant comment.

I have two full disclosures to make in writing this opinion piece. First, I am one of the 30% of Australians that identified with ‘No Religion’ when the Census data was last collected in Australia. Second, I have not read the draft bill, and have formed my views based solely on media interpretations of the draft Bill.

The Bill protects against discrimination on the grounds of religious belief or activity in the multiple key areas of public life. This includes: employment, education, access to premises, goods, services and facilities, sport and clubs.

The bill covers both direct and indirect discrimination. According to media reports, the draft bill outlaws discrimination on the basis of religious belief or lack thereof”.[i] Therefore, those with ‘no religion’ are also covered. For example, it would be direct discrimination for a company to refuse to hire atheists because of their faith “or lack thereof”. It might be indirect discrimination for a company to require employees to come to a meeting on a Friday afternoon, which could disadvantage Jewish people who leave early on Fridays to observe the Sabbath.

However, the draft bill says “religious bodies” are not discriminating against a person by engaging, in good faith, in conduct that would be regarded as in accordance with its doctrines or beliefs. As such, religious schools would have discretion to employ staff of their own faith, and refuse employment to someone of another faith or one who has no faith at all.

Health practitioners would also be able to conscientiously object to providing a health service –such as abortion – on the basis of their religious belief. The bill is silent about finance professionals of the Muslim faith who conscientiously object to charging interest, as Islamic Sharia Law prohibits riba, or usury, defined as interest paid on all loans of money.

Of particular interest to finance professionals is that the draft bill would impose additional requirements on businesses with a revenue of at least $50 million a year when it comes to standards of dress, appearance or behaviour that limit religious expression. If a business imposes a restriction, it must prove this is necessary to “avoid unjustifiable financial hardship on the business”.[ii]

This particular clause is being referred to as the “Folau Clause”.

Mr. Israel Folau is a world-class player in the sport of Rugby Union, and was under contract by Rugby Australia. His contract was terminated after he said on his private social media in April 2019, that hell awaited “drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters” if they failed to repent.

Rugby Australia claimed that Folau had breached its code of conduct; whilst Folau launched legal action seeking an apology, $10 million in damages­ and for his rugby contracts to be reinstated. The case will go for trial in February, to the Federal Circuit Court in Melbourne.

The application of the ‘Folau Clause’ would mean that organisations would have to prove that their social media rules on religious expression – and subsequent actions taken – were in order to protect its brand. However, the impact on brand reputation is not an easy to quantify as it has both tangible and intangible elements.  A favourable brand reputation means consumers trust your company, and feel good about purchasing your goods or services; and vice-versa for a negative brand reputation.

As such, the draft bill defines ‘the impact on brand’ in financial terms; i.e. as causing “unjustifiable financial hardship on the business”. Such a calculation must be done by management accountants.

In terms of finance, Rugby Australia obtains its main revenue from ticket sales at matches, broadcast rights, government grants, and sponsorships. During the calendar years 2017 and 2018 Rugby Australia’s total income was $267 million. Of that, sponsorship totalled $59 million (22%) and government grants totalled $29 million (10%).[iii]

As it is impossible to find a nexus between Mr. Folau’s social media posts and fall in ticket sales[iv], the other two revenue sources’ i.e. sponsorship and government grants would need to be examined for potentially unjustifiable financial impact. The revenue source that has garnered the most attention in the media is the actions of Rugby Australia’s major sponsor, Qantas.

Qantas, Australia’s premier airline, is a large corporate with a very outspoken Chief Executive, Mr. Alan Joyce; who has been vocal in his support of LGBTI rights. He was a high-profile corporate figure in the fight for marriage equality and Qantas is a sponsor of the Sydney Gay and Lesbian Mardi Gras.[v]

Mr. Joyce, said on June 16, 2019 in Brisbane that Folau’s comment was “clearly inappropriate” and it was up to the Rugby Australia to fix it”. However, on June 19 he said that “the insinuation the airline was involved in Folau’s dumping was “outrageous”, and that the firm had only asked RA what it was doing about the saga”.[vi]

Qantas clearly has to distance itself from the Folau case, as it may be considered an accessory to any breach, and itself a target for legal action if Rugby Australia are found guilty of wrongful dismissal by the Federal Circuit Court.

This brings up an interesting conundrum for sponsors like Qantas in the light of the draft ‘Religious Discrimination Bill’. Taking a hypothetical situation that the Folau case came up after the draft bill is passed in its current form, then Rugby Australia will have to prove that Qantas was going to pull-out its sponsorship to prove ‘financial hardship’. On the other hand, Qantas would have to reject any such claim, or face the consequences of Mr. Folau winning his case and citing it as an be accessory to any breach.

Clearly, corporates will need to be very careful as to whom they sponsor, and who is sponsoring them. This is also true of large organisations like universities who have been the subject of much debate regarding external sponsors and their influence on ‘free speech’ at their institutions.

Take the case of sponsorship money obtained from the China based Confucius Institute network. This network has been created to spearhead the teaching of Chinese language and culture worldwide, as well as acting as a vehicle through which to strengthen economic and business ties. Confucius Institutes are in place across the USA, Europe, Asia and Oceania; with 14 in operation across Australia, including The University of Melbourne.

In a hypothetical example, what if a University of Melbourne academic placed on his or her private social media a post “very supportive of the Dalai Lama returning to Tibet and rejuvenating Buddhism there”; and as a consequence, there was a possibility of sponsorship from the Confucius Institute being pulled out? Would the university be justified in terminating that academic’s contract under the ‘Folau Clause’?

Another example of sponsorship at universities is the setting up of the Ramsay Centre for Western Civilisation, with its objective of advancing studies and discussion of western civilisation; and establishing scholarship funds and educational courses in partnership with universities. What if an academic in a university to which the Centre has provided a scholarship funding, says that “the only thing that western civilisation has done is to spread Christianity with the gun”. Would the university be justified in terminating that academic’s contract under the ‘Folau Clause’?

Whilst both these sponsoring organisations have objectives that appear unrelated to religion, neither did Qantas and Rugby Australia. It is the social media posts of those who are contracted by them that got these organisations mired in controversy.

This brings up a final question. Should corporates give their views on social issues unrelated to their core business? Corporates are justified in pulling out sponsorship deals with individuals and other organisations for bad behaviour, sexual discrimination and the like, both publicly and privately. But commenting and threatening to pull out sponsorship on private post by employees or other contractors on religious issues that have little or no nexus with their core business is another matter.

Qantas Chief Executive, Mr. Alan Joyce’s high-profile corporate backing in 2017 in the fight for marriage equality and Qantas’ sponsorship of the Sydney Gay and Lesbian Mardi Gras are examples corporate views that have no bearing on core business. And, given that Qantas is a public company and has shareholders and other stakeholders having very diverse views on social issues that have a religious undertone, one cannot automatically assume that the CEO’s views are same as the corporation’s views. A proper stakeholder audit needs to be done to ascertain this.

The social commentary made from his position of CEO made Mr. Alan Joyce a target for some on the right of politics, including then Home Affairs Minister Peter Dutton, who notably said in 2017 that, “CEOs should stick to their knitting”.[vii]

This will be good advice should the draft ‘Religious Discrimination Bill’ be passed in Parliament.

 

Professor Janek Ratnatunga, CMA, CGBA

CEO, ICMA Australia

 

The opinions in this article reflect those of the author and not necessarily that of the organisation or its executive

 

[i] Julie Szego (2019), “A Righteous Anger: Discrimination bill saves the religious lobby from themselves, Sunday Age, Opinion, Sept 1, p.32.

 

[ii] Judith Ireland (2019), “What are the new religious discrimination laws about?” The Age, News, August 30, p.9

 

[iii] “Rugby Union 2018 Annual Report”. Rugby Australia. 7 April 2019. p. 50.

 

[iv] One could even argue that Rugby Australia brought about its own financial demise, as not having its world-class player in the team would have diminished ticket sales.

 

[v] Benedict Brook (2019), “Sponsors in line of fire over Folau sacking’, news.com.au. July 2.

 

[vi] Chris Merritt (2019), “Sponsors may be liable for compo if Folau wins case”, The Australian, Business Review, July 2, p.3.

 

[vii] Benedict Brook (2019),