SYDNEY - Religious groups in Australia are allowed to discriminate against people who are gay or transgender, prompting criticism from gay rights activists who find it galling that religious social service programs receive millions of dollars in government funding.

Such exemptions to anti-discrimination laws exist elsewhere, but other countries including Britain and the United States have narrowed their scope in recent years, limiting them to issues such as the appointment of church leaders.

In Australia, gays can be denied social services and employment from religious groups, including teaching jobs in their schools. Anglicare, a branch of the Anglican church, won't allow gay parents to use its adoption services.

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Anglicare Sydney received more than 55 million Australian dollars ($50 million) in government funding in 2010, and the Catholic Education Commission of New South Wales received AU$1.8 billion in 2009.

"States are providing large amounts of funding to services along with essentially a license to discriminate with the provision of those services, and it just seems very out of date and inappropriate," said Alan Brotherton, a policy director for ACON, an organization promoting health issues for the gay community.

Some religious groups say they would scale back their social service programs if they were subject to the same rules as others operating in the public sphere.

"One of the freedoms we need to have is the freedom not to be forced to act against your conscience," Robert Forsyth, the Anglican Bishop in Sydney, said.

The exemptions vary from state to state in Australia and are not uniformly applied by religious bodies, creating confusion and fear among gay and transgender people, activists said.

Anthony Venn-Brown, a former Pentecostal preacher who left the church after coming out as gay, said gay teachers often hide their homosexuality, but fear of being found out eventually forces many to leave.

"Teaching is a calling, it's a vocation, it's not just a job for many of these people, so for them to move out of that situation, it's a huge decision to make," said Venn-Brown, now a consultant to church groups on gay issues.

Anti-discrimination laws and religious exemptions in the United States differ by state, but faith-based groups cannot discriminate when receiving public funding, said Rose Saxe of the American Civil Liberties Union. She added that the emergence of more progressive churches in the US may be helping to lessen discrimination there.

A 2000 European Union directive limits employment exemptions to ministerial roles or where it is justified by groups to maintain their religious ethos. The precise language of the exemptions leaves little room for them to be interpreted broadly or abused, said Colm O'Cinneide, a British legal expert.

In 2006, Britain made it illegal for religious groups to discriminate in the provision of services if they receive public funding - a step that activists in Australia say they would welcome here.

"The religious exemptions in Australia are probably some of the broadest that now exist," said Wayne Morgan, a discrimination law expert at the Australian National University. "They were consistent with other countries' laws 20 years ago, but in the meantime we've kept our laws the same whilst other countries have amended theirs."

The exemptions originated through church lobbying efforts and may remain because of the power of the churches in Australia, he said.

In New South Wales, Australia's most populous state, the law provides an exemption for church leadership roles and anyone who may propagate religion within the organization, including school teachers. It further extends the exemption to any other act or practice by a religious body necessary to conform to church doctrine.

In Victoria state, the rules are even broader, allowing any person to claim an exemption "if the discrimination is necessary ... to comply with the person's genuine religious beliefs or principles."

Former Victoria Attorney General Jan Wade said in a 1995 speech that the bill "aims to strike a balance between two very important and sometimes conflicting rights - the right to freedom of religion and the right to be free from discrimination."

Not all faith-based groups use the exemptions. Rev. Harry Herbert, head of UnitingCare NSW, a health and social service branch of Australia's Uniting Church, said his group wants employees to share its faith, but that sexual orientation doesn't come into play when hiring staff.

"We simply don't discriminate," he said, adding that the church itself has gay ministers and leaders.

Peter Kell, the head of Anglicare, says the group would not turn someone away in need of health care because they are gay, but it wouldn't place children with a gay couple.

Neil Foster, a Newcastle University expert on law and religion, said the Australian situation presents a dichotomy between human rights and religious rights. He considers both equally important rights.

But Morgan, the discrimination law expert, doesn't think the religious freedom argument is valid when it comes to services that extend into the public sector.

"The churches, when they provide these services, they are not propagating their religion," he said. "They are engaging in secular activities."