The ACT Government is moving to make clubs contribute more to charity and sport. About time, too. The clubs, which for so long with hand on heart have said they exist for the community good, should have nothing to be concerned about. They are going to be required by law to contribute 5 per cent of their poker machine profits for charity and sport. One would have thought that all clubs were doing that much at least. After all, they are getting tax-free status for their poker machine revenues and for a lot of their trading activities and they have a monopoly on poker machines in the ACT. One would have thought this legislation would have been unnecessary.
Alas, no. The legislation is necessary because over the years poker machines have had a pernicious influence on many clubs in the ACT. The clubs have grown fat on cash that flows from the machines. Many clubs lost a lot of their community spirit. Many lost their raison d’etre, opening their doors to all and sundry, charging only nominal memberships fees and for all intents and purposes being little more than businesses with an unfair tax advantage over hotels. Some have a “”membership” base so huge that they could not possibly have any community of interest (other than perhaps they are human).
Nearly $1 billion a year is poured through poker machines in the ACT every year. So you would think that sport and charity would be doing well. Not a bit of it. For quite some time people suspected this. Last year it was proved. The Commissioner for ACT Revenue issued a report following a requirement a year earlier that clubs give details of their sporting and charitable gifts.
That report made it quite plain that the clubs were giving a false impression to the community. The impression they sought to give was one of abundant charity. The fact was parsimony. Out of the $950 million that went through poker machines only $2.2 million ( 0.23 per cent) went to sport and charity, plus some more in kind. Winners were paid about 85 per cent of what went through the machines and tax and overheads took some more, leaving $86.8 million in profit. Only 11 per cent of that ($9.2 million) left club doors to the world outside and was submitted in the returns to the commissioner under the new provisions of the Gaming Machine Act as “”contributions donated to a charitable organisation; for a charitable purpose; or for an organisation declared . . . as [being for] the benefit of the community”.
The new provisions have shone light into hollow logs. What the clubs thought was “”charitable” or “”for the benefit of the community” was very different from what the commissioner thought. The commissioner divided out political and union donations and donations which ultimately went to activities or infrastructure for members only. Of the $9.2 million, the clubs wound back to themselves more than $5 million and gave a further $1.3 million to their political mates.
Most of the ACT’s 72 clubs have been misleading the public by suggesting they do huge amounts of charitable and sporting work when in fact they do pitiful amounts, with very few honourable exceptions.
The legislation proposed by the Government is too little too late. In fact, it is no remedy for the essential problem that poker machines have made a mockery of much of the club scene in Canberra. The Government has granted a tax concession to clubs in the hope they would use the money for charitable and sporting purposes. They didn’t. So the Government is now attempting to force them. That will require a whole of enforcement expenses. Moreover, it means that the clubs will direct what is in effect tax revenue in a largely unaccountable way. And we saw how unaccountable the clubs have been with last year’s report.
The numbers may be a bit shaky in the Assembly, but the Government should say the game is up for the clubs. It should tax their poker machines and revenue in the same way as hotels and allow the hotels to have poker machines on the same terms. It should then give directly and generously to sport and charity in an open and accountable way.
The new legislation will not go far enough to ensure that the tax concessions given to clubs yield a commensurate return to the community. The community would be better off if the government raised the tax and did the spending itself rather than letting the clubs do it. They have not been up to it in the past.