Are you game to support your community clubs? - The Good Oil by Rod Brown*

Are you game to support your community clubs? - The Good Oil by Rod Brown*

We are in the middle of a fascinating political play. Thinking Australians agree that the influence of poker machines is way too large. But the club associations representing the thousands of clubs across Australia are leading them like lemmings over the cliff. And the politicians kowtowing to such political pressure should hang their heads in shame.

What hasn't been sufficiently stressed in the debate is that private companies and individuals should not be able to profit from poker machines. If you want to donate $50 every Friday night to the pokies, then it should only be in properly constituted clubs. And these clubs should be mandated to spend those revenues on local jobs, exercise and health facilities, Meals on Wheels, subsidised entertainment and food for pensioners and the like. Not some random donations like at present.

The reason why the benefits of "community gaming" have not been debated is because the Productivity Commission refused to accept the argument that there should be no poker machines in pubs. The PC chose this path either because of its unrelenting faith in competitive neutrality dogma, because it was too hard, or - dare I say it - because of political pressure.

Let's be clear. There is NO rationale for poker machines to finance a publican's Mercedes or school fees, or indeed the bottom lines of supermarket chains – the biggest of which reportedly operates over 13,000 machines.

If this rationale was understood and accepted, community clubs could better perform the community functions for which they were established. Community club across the nation could recapture their former role as social support hubs. But it must involve a New Deal – namely that clubs would commit to the bulk of the surplus (after allowances for depreciation and capital improvements) going to community facilities.

However taking pokies away from the private sector will be political suicide if the Gillard Government cannot counter the scare tactics of the clubs industry and sell it to the wider electorate. The States will also have to be assured that they will save money by pokies revenue going towards disadvantaged individuals and families and to community infrastructure.

A phased removal of licences from the private sector would be required – possibly over a 10 year timeframe to enable investors to recoup their money. There are precedents e.g. the phasing out of tariff quotas and associated licences.

To sum up, my concern is that the Gillard Government is only thinking on one level – namely to rein in the amount going into pokies and to minimise the harm. The other level is to ensure that the amount coming out of pokies is channelled in the right direction. This issue must be considered and local councils must get off their collective backsides to make it happen. Less than ten councils made a submission to the Productivity Commission e.g. Greater Dandenong, Coffs Harbour, Fairfield, Hume, Macedon Ranges, Maribyrnong, Moreland and Wattle Ranges. They are to be commended.

Are you game to support your community clubs vis-à-vis the hotel industry, and to mix it with the feds and state governments?

SCG upgrade establishes precedent

The Gillard Government recently announced a $50 million contribution towards the $186 million upgrade of the Sydney Cricket Ground. The other parties are the NSW Government ($86 million) and the Sydney Cricket and Sports Ground Trust ($50 million)

Is federal expenditure of this level justified? Or is pork barreling? It's tricky, because the SCG is an iconic piece of social and economic infrastructure, and delivers a lot of benefit to many people.

But the MCG is an icon too. But the $450 million redevelopment of its Northern Stand (2002-2006) attracted no federal funding. The feds had actually offered $90 million (or 20%) towards the total cost, but the then Industrial Relations Minister Abbott sought certain workplace conditions and the Bracks Government declined the offer. The end result is that the Victorian Government provided $77 million and the Melbourne Cricket Club members paid for the bulk of the remainder through higher membership fees. We thus have a precedent in terms of the capacity of members to pay for such expenditure.

And Adelaide Oval is also an icon. In this case, the Gillard Government has committed $30 million to help rebuild Adelaide Oval. The SA Government committed $535 million, an amazing amount given that it habitually cries poor on most infrastructure projects. Interestingly, the Prime Minister has been criticised for attempting to buy votes in her home state, while Senator Simon Birmingham (Liberal, SA) dismissed the federal funding as paying for 375 members' car parking places and free up the state government to install a third replay screen!

And Bellerive Oval is an icon as well. In this case, the federal government has committed $15 million towards a $22 million upgrade to swing the deal for North Melbourne to play AFL in Hobart.

And the tussles over the WACA, Subiaco, Gabba and Manuka Ovals have each experienced uncertainty over who should pay.

In summary, we have Commonwealth funding 68% of Bellerive Oval, 27% of the SCG, 5% of Adelaide Oval and 0% of the MCG. The issue is complicated by many regional sporting grounds being absolute orphans.

The response by the Commonwealth to this inequality of treatment will be that each case is assessed on its merits. This is rubbish, and I will bet London to a brick that proper cost benefit studies have not been presented to justify recent funding.

It is clear that we must have some ground rules. For example:

  • Commonwealth funding should be capped at around 20% of the total redevelopment costs of major sports grounds. The rationale is that such venues can attract private sector funding and member contributions. The MCG example proves this!
  • Commonwealth funding might rise to 25% for more 'regional' sporting facilities where private sector funding is difficult.
  • State governments should fund an equivalent amount.
  • All funding requests should be supported by cost benefit analyses.

A Memorandum of Understanding containing such principles would stop pork barreling in its tracks, and protect politicians from themselves. It would also provide federal and state agencies and local councils with some surety when planning such facilities.

ACT Government shows the way on collaboration

Australia is hosting the next G20 summit in 2014 - but a location has not been decided.

Well ACT Chief Minister Katy Gallagher has basically stitched things up with a very intelligent play.

The background is that Canberra has not got a big enough venue nor the accommodation for such an event. So she has proposed a joint bid with NSW Premier Barry O'Farrell for Sydney to host the major summit meeting, with Canberra picking up lead-up meetings and associated events.

O'Farrell is happy because it basically stymies a Melbourne bid. He would be wary of Victoria's aggressive tactics, and the significant alliances between the federal and Victorian bureaucracies. But PM Gillard would now be loathe to reject such an innovative bid by two governments.

This bid raises the question of how local councils might collaborate on bids to the federal and indeed state governments. Federal programs are increasingly seeking signs of collaboration from the other parties. It might be in terms of sharing particular types of infrastructure, or developing joint bids for a defence installation, or a hub and spoke arrangement for regional sports facilities. We work with local councils to develop collaborative bids.

*Rod Brown is a Canberra-based consultant specialising in industry/regional development, investment attraction, clusters and accessing Federal grants. He also runs the Cockatoo Network. He can be contacted at or phone (02) 6231 7261.

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