The ACT Greens want to set up an independent fund to manage how licensed clubs’ community contributions are divided up to sports clubs. Photo: ACT Government/Facebook.
The ACT Greens want to remove any doubt or “creative accounting” around licensed clubs’ community contributions by establishing an independent fund for sports groups.
Gambling Harm spokesperson Rebecca Vassarotti will introduce her proposal for an independent Community Contributions Fund, and to mandate clubs pay their entire 8 per cent community contribution in cash rather than in-kind, during the October sitting of the Legislative Assembly.
Her motion will also call for the ACT Government to investigate setting up a compounding investment framework to future-proof local sport funding.
“Local sports shouldn’t have to beg profit-driven clubs for hand-outs, nor should they have to compete in the budget every year,” Ms Vassarotti said.
“By setting up a dedicated fund, with an initial investment base, we could lock in the baseline $6.83 million our sports rely on today, working towards truly independent and self-sustaining sports funding.
“And better yet, this would set the groundwork for clubs to eliminate their reliance on pokies without taking a cent from community sport.”
ACT Greens’ calculations base the $6.83 million on a combination of the current $5.25 million in cash and $1.58 million in non-cash contributions from clubs.
The fund would need an initial $154.07 million contribution, which would earn an assumed 4.43 per cent annual return, to cover the funding that local sports clubs need.
The ACT Greens’ projections for its proposed independent community fund for local sports include the assumption that licensed clubs will contribute $6.83 million in the short term as part of their mandatory contribution obligations. Photo: ACT Greens.
Ms Vassarotti argued the ACT Government needed to remove licensed clubs’ ability to claim that further cuts to poker machines would harm local sports funding options, given the difficulties clubs face in diversifying their profit sources.
“Right now, the big clubs decide where community contributions go with zero strings attached. The cash gets scattered in tiny amounts, diluting its impact and keeping community sport dependent on private businesses,” she said.
“This system, where the government takes a back seat and lets clubs ride roughshod over our community, is fundamentally broken.
“To ensure every dollar actually serves the public, we need to create this independent fund.”
Ms Vassarotti said the second element of the proposal, to mandate the 8 per cent in-kind community contribution from clubs to be cash-only, would close a major loophole in how the system currently worked.
“Last year, Canberra clubs logged nearly $7 million in reported community contributions. But accounting loopholes mean a massive chunk of that is just ‘in-kind’ only, reducing how much real cash gets invested in our community,” she said.
“If we took the actual cash contributions required from clubs, no creative accounting allowed, and put them into an independent central fund, we could better support sports funding as well as better support our community.”
In-kind donations can include things like allowing community groups to use club meeting rooms for free.
According to the ClubsACT frequently asked questions page, Canberra clubs have donated more than $150 million to local sports teams and infrastructure since 2000.
“In the ACT, two-thirds of Canberra’s clubs provide their members with sporting facilities, and collectively there is over $500 million of assets under management. This highlights the importance of clubs in providing the community with sporting and recreational facilities,” it stated.
“Although members pay for the use of these types of sporting facilities, the charges are often below the full cost of provision. The difference, however, is made up from income earned from other parts of clubs’ operation.
“Across clubs at large, the total charges for providing these sporting facilities do not cover the costs of provision.”
ClubsACT has already announced it doesn’t support the proposal in its current form.
CEO Craig Shannon said there was a “legitimate question” about the long-term security of funding as gaming revenue declined, but labelling community contributions as “creative accounting” was “unfair”.
“Clubs already operate under eligibility, reporting and audit requirements. If a particular contribution is overvalued, establish that and correct it. We support defensible valuation standards and proper scrutiny,” he said.
“A free meeting room can be the difference between a volunteer group operating and folding. Access to equipment or a sporting facility can save an organisation money it simply does not have. A service does not become worthless because no cash changes hands.
“Moving recipients from a club relationship into a central grant process also changes who they depend on. It does not, by itself, remove that dependence or make funding more secure.”
Mr Shannon also questioned the financial assumptions, stating they didn’t stack up to secure, ongoing funding.
“The headline calculation uses a 4.43 per cent investment return but separately allows 0.35 per cent for administration and fees. On those assumptions, the initial $154.07 million fund alone would fall approximately $539,000 short of the annual funding target after costs,” he said.
“Subsequent club payments improve the position, but the first-year return after fees still falls approximately $261,000 short of the target, even after the first injection.
“The public deserves a complete model showing who supplies the capital, how grants are paid and who covers shortfalls.”
ClubsACT called for the proposal to be postponed until consultation, an independent financial assessment and a community impact analysis were completed.
