Who the faiths employ in their pulpits is their own affair. If they want to tear themselves apart over the ordination of women or homosexuals, they are answerable only to themselves. But ever since anti-discrimination laws first appeared 30 or 40 years ago, the faiths have fought for exemptions to allow them to employ only the sexually virtuous in their welfare agencies, hospitals and schools. Services are denied. Promotions are blocked. Individuals are picked off. Applications are rebuffed. Jobs are lost. It is not a boutique issue. The faiths are big employers. Indeed, the Catholic Church is one of the biggest private employers in Australia and claims the right to vet the sexual morals even of the gardeners in hospital grounds. It says: "Catholic agencies must be free in employing staff and accepting volunteers to prefer practising and faithful Catholics even in support roles, and not just in roles directly concerned with pastoral work or the teaching of religion." The issue spooks – and bores – politicians. Grappling with religious leaders complaining about threats to religious freedom is about the most distasteful contest a government can imagine. At something like a dozen inquiries over the past five or six years, the exemptions have been challenged by human rights advocates, peak law bodies, gay and lesbian advocates and a handful of determined politicians. These tussles are barely reported and almost never successful. The British government was forced to retreat last year when the Pope attacked British plans to allow exemptions only for the hiring of "vicars, bishops, imams and rabbis". Benedict XVI denounced this as interfering with the "freedom of religious communities to act in accordance with their beliefs" and the reform died in the House of Lords, voted down in a revolt led by the Anglican bishops.

Even so, the exemptions are far tighter in Britain than they are here. Religious bodies can't discriminate when delivering services for any public authority. When the churches are doing the work of the state, they have to obey secular rules of fairness. That's not so in Australia. Though public money is their lifeblood, church schools and hospitals in this country remain free to pick and choose staff according to the rules of religion. The former Victorian government fought to tighten the exemptions so religious rules would apply only when sexual virtue is an "inherent requirement" of a position in a religious agency. Though then Attorney-General Rob Hulls reported Anglican and Catholic bishops were content with the final form of the changes, they are to be reversed by the Baillieu government even before coming into effect. "A Liberal-Nationals Coalition government will restore the rights of freedom of religion and freedom of association in relation to faith-based schools and other organisations by removing the inherent requirements test which Labor has imposed," the new Attorney-General of Victoria, Robert Clark, told the Herald. The exemptions issue is back on the boil because the Gillard government has promised to extend federal anti-discrimination laws to cover sexual orientation and gender identity. It's a late move. Most states and territories did so many years – even decades – ago. Tony Abbott and the Coalition back the plan in principle. A Galaxy poll indicates public support is running at roughly 85 per cent. But religious bodies are demanding exemptions to allow them to ignore the reforms. At the heart of this story is a political mystery: where are the votes in giving the religious privileges so distasteful they are rarely used? The laws of every state and territory – with the notable exception of Tasmania – allow for adulterers, homosexuals and like sinners to be stripped from religious payrolls. Yet there are never any pogroms. Careers are ruined quietly. Both church and state appear to recognise there are profound political hazards here.

Yet national politics is shaped by the subterranean battles to protect the exemptions. The death of Frank Brennan's proposal for a national charter of rights can best be explained by the role of the churches. Among the many enemies of the charter, they were the best-organised and made no secret of being driven by the fear that a charter might undermine the exemptions. "There is no doubt about that," Brigadier Jim Wallace of the Australian Christian Lobby told the Herald. "This is an extremely important issue." Cardinal George Pell set out to destroy the charter for just that reason. "There is no doubt that if Australia gets a charter of rights, upfront or by stealth, it will be used against religious schools, hospitals and charities by other people who don't like religious freedom and think it shouldn't be a human right," he thundered. "The target will be the protection in anti-discrimination laws that allow religious schools to exercise a preference in employment for people who share their faith." The Anglicans lined up with Rome. "We don't spend our nights tossing and turning wanting more laws," Forsyth tells the Herald. "It's when we see the state moving and we think if we don't watch out we will seriously lose a freedom to operate in a way we think we need to operate, and that's what we're concerned about – concerned about the human rights and anti-discrimination lobby intruding too deeply into our organisations. That's why we react."

But even in the ranks of the religious, there is deep disquiet about these privileges to discriminate. The Anglican bishop of Gippsland, John McIntyre, says they are "at odds with the essence of what the founder of the Christian faith lived, taught and died for. How bizarre that the followers of Jesus Christ would oppose, and ask for exemptions from, a legal instrument that has at its heart a declaration of the dignity and value of every human life and the basic rights of every person". The Reverend Harry Herbert of the Uniting Church blames this on the old obsessions of Christianity. "The church is stuffed up about sex," he told the Herald. "It all arises from that. The church has this thing that you can only have sex to have babies. It all goes back to that." A LAWYER and a social worker, O. V. and O. W., offered to foster a child through a service run by Sydney's Wesley Mission in 2002. The men were told: "As part of Wesley Mission, our policies must align with the ethos and values of that church, which does not support same-sex relationships." They lodged a complaint with the NSW Anti-Discrimination Board which the mission spent seven years and at least half a million dollars fighting. Court cases that test the power of the churches to discriminate against sinners have been rare in the past so many churches watched intently as the case against Wesley Mission made its slow way through the courts. The NSW Anti-Discrimination Act forbids discrimination on many grounds including sex, marital status and homosexuality but exempts "any act or practice" that conforms to the doctrines of a religion. O. V. and O. W. argued that fostering children was not a religious or pastoral function of the mission and denying a child to them was not dictated by the teachings of the wider Uniting Church.

A win for O. V. and O. W. in April 2008 provoked the NSW Attorney General, John Hatzistergos, to intervene on the side of the Mission. This was necessary, a spokesman for the Attorney-General told the Herald, because the case "raised particularly difficult and complex issues of statutory interpretation". The key issue Hatzistergos backed was this: that the NSW law exempts all the efforts – not just the pastoral work – of religious bodies. Cardinal Pell was one of several churchmen who expressed relief when the case began to go the Mission's way. But it took another two hearings before the government-backed victory over O. V. and O. W. was clinched in the Administrative Decisions Tribunal just before last Christmas. The upshot is that religious bodies in NSW now have an open slather to discriminate in all their operations against anyone who breaks the sex rules of the faiths. So unhappy was the tribunal to reach this decision that the panel of three called the criteria for religious exemptions so "singularly undemanding" that they called for the "attention of parliament".

But the politicians disagreed. Hatzistergos announced: "It is not envisaged that there will be changes to the current exemptions in relation to religious institutions." And the Leader of the Opposition, Barry O'Farrell, backed him. More victims are pushing back in the courts. That win for the churches in NSW came only weeks after a big loss in Victoria when a sect called the Christian Brethren was fined for refusing to allow WayOut, a suicide prevention group for gay kids, to rent cabins at the sect's Phillip Island Adventure Resort one weekend in 2007. Though happy to host the Collingwood Football Club at this commercial operation, the sect justified knocking back the kids and their counsellors because their camping ground was "a place where God is honoured, where there is an atmosphere of peace, and where there is an opportunity of experiencing the truth of God's love". Judge Felicity Hampel in the Civil and Administrative Tribunal made mincemeat of the sect's claims. She declared the resort a secular business usually untroubled by the sex lives of its customers. She didn't doubt the Brethren faithful deeply disapproved of homosexuality, but she found rebuffing gay kids was compelled neither by doctrinal necessity nor the need to protect the religious sensitivities of sect members. The sect is appealing. But win or lose, the WayOut case displays exactly why the churches fear charters of rights. In NSW there is no such instrument, so "religious freedom" trumps "freedom from discrimination" every time. But the Human Rights Charter in Victoria compels the courts to interpret every law as far as possible to favour human rights – not the rights of religious institutions, but of ordinary and fallible human beings.

MASTURBATORS? Stephen O'Doherty takes the question seriously. While he has no doubt teachers in the low-fee schools he represents would denounce the vice, he wonders if masturbation at home would be a sacking offence from school. He lists adultery, living in sin, homosexual intercourse and being transsexual as sure career-stoppers. But masturbation? "I don't think I've ever heard a teaching on that issue." O'Doherty has clout. Once a journalist and later a Liberal parliamentarian in NSW, he has been the face of Christian Schools Australia for nearly a decade. Protecting the exemptions is a big part of his job and he counts on the fingers of both hands the public inquiries where, over the years, he has had to grapple with the issue. "At any one time we have generally got two or three of these on the go." He talks of the 130 or so schools he represents as communities of faith where all – down to the gardeners in the grounds – must show they not only believe but live by their beliefs. "Anybody who is employed in one of our schools but whose lifestyle didn't reflect any one of a number of teachings – let's say they became profligate gamblers – we would say absolutely we reserve the right to disengage them on the basis that they are not living by the values of the church, because they are there as exemplars to the kids." Concerned with Canberra's latest plans, O'Doherty made a submission last October to the Australian Human Rights Commission consultation on the proposed extension of Federal anti-discrimination laws. "Current exemptions should be maintained," he wrote, "in order to ensure that faith communities can continue to exercise their rights to freedom of religion, consistent with both Australian and international law."



Dozens of submissions from religious bodies put the same argument to the commission. They are a familiar mix of high praise for human rights in general, broad demands for religious liberty and a remarkable coyness about who might suffer in the workplace if the faiths have their way.



None are as coy as the Catholics. Efforts by the Herald over nearly a month to clarify who might suffer under Rome's rules of employment proved fruitless. A list by Melbourne's Archbishop, Denis Hart, to an earlier inquiry had "seven attributes" demanding exemptions: "Religious belief or activity, sex, sexual orientation, gender identity, lawful sexual activity, marital status or parental status or status as a carer."



Neither the Sydney nor Melbourne archdiocese would clarify Hart's list, but it looks like the lot. Francis Moore, the business manager of the Melbourne archdiocese, says hiring and firing turns on public conflict with Church teachings: "The failure in behaviour has to be relevant, at odds with these teachings, the role of the Church body and the role the employee performs in the Church body. It is against these criteria and not a simplistic categorisation of individual personal circumstances that Church bodies determine their employment practices."



By contrast, Rabbi Dr Shimon Cowen of the Institute for Judaism and Civilisation offered the Australian Human Rights Commission a full-throttle denunciation of homosexuality. "Judaism's position on the practice of homosexuality is unchanged over more than three millennia," he wrote. "Homosexual practice remains a moral wrong alongside adultery, incest and bestiality. The same God prohibited them all at Mount Sinai."



Dr Cowen concedes Jews are divided on this issue. "I speak on behalf of Orthodox Judaism and Orthodox Judaism accounts for the overwhelming majority of congregations in Australia." And no Orthodox school or hospital, he says, will employ homosexuals, the openly promiscuous, the flagrant adulterer and Jews in de facto relationships - though "for non-Jewish teachers it would not constitute a major problem".



Transsexuals need not apply. They don't worry Anglicans, it seems, but repugnance to transgender is a powerful, ecumenical bond across most denominations and faiths. Jews, Evangelical Christians and Muslims are at one insisting we must all stick with the sex we were born with. Ikebal Patel, the president of the Australian Federation of Islamic Councils, lists transsexuals as the least likely to find work with Islamic organisations.



Muslims want exemptions but don't lobby for them. "It is not a priority," Patel says. Islamic schools in Australia employ about 5000 people. They will include homosexuals, de factos, sexually active singles and adulterers who keep their moral views to themselves.



"Marriage between a man and a woman is a very strong requirement of Islam," Patel says. "So if there is someone in the school who is trying to espouse otherwise, then we would like to have the right to terminate their services."



For Brigadier Jim Wallace and the Australian Christian Lobby, gender confusion is only one of a number of nightmares. No politicians' doors are shut to him and his lobby. Political leaders queue to speak at his evangelical shindigs. Wallace believes church agencies have a right to sack any sinner for any sin without being answerable to any secular tribunal. On the sex front, he sees no place on Christian payrolls for the unchaste and unrepentant - heterosexual or homosexual.



"My view - and the view of most Christians - is that we are all sinners. I would very much doubt that somebody is going to be fired on the basis that they were found to be an adulterer if they repent of that and correct themselves. If it's an unrepentant adulterer, why would he expect not to be fired?"



None of the Christians the Herald consulted could find a Biblical text that directs them to shed sinners from their payrolls. Bishop Forsyth and Stephen O'Doherty came up with some rather opaque teachings about gentiles, tax collectors and the dangers of yoking believers with unbelievers. Wallace simply laughs at the idea. "Clearly the texts of the Bible do not cover employment. But there are loads of texts that say homosexuality is a sin."



He is a candid man. The demands by the faithful to be allowed to hire only the virtuous began when homosexuality was decriminalised here and in Britain from the 1960s onwards. The exemptions were a sop to churches that demanded, all the way to the end, that governments go on punishing homosexuals. Adulterers and de factos hardly matter. The exemptions were designed to allow religious bodies to continue to punish homosexuals in their own way by refusing them work.



Wallace disagrees categorically. "The homosexual community is now determined to punish the church. I cannot understand for one moment how a community that has demanded tolerance, demanded the acceptance of diversity, is now attacking the right of the church to be diverse and different in a multicultural environment. Right?"



O.V. AND O.W. are now parents. Within days of losing their case against Wesley Mission, they became the first gay couple in NSW to be allowed to adopt children: a boy of nine and a girl of five they had been fostering for some years through Barnardos. Judge George Palmer remarked that his court was not concerned with ideological debates surrounding gay adoption. He declared the men: "Unquestionably capable of parenting these two children."