Clubs in the ACT which are in dire financial straits with income from gaming machines in rapid decline, have warned the government they cannot absorb and will not tolerate any tax increases in thebudget.
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Income from poker machines is down $15 million a year on a decade ago, hit by the smoking ban, higher taxes and limits on machines, as well as the territory’s economic slowdown.
Revenue is tracking even more poorly this year, at $14.2 million for March, compared with $15.1 million in March last year.
Things are “very very bad”, said Clubs ACT chief executive Jeff House who fears substantial tax rises in the territory budget.
“In the final analysis, the picture is simply very bleak,” he said.
“I’ve been in this job four-and-a-half years and until recently I’ve never had meetings with club presidents who are concerned about being the last president of their club.”
The Tradies Group chief executive Rob Docker said an increase in tax would hit hard, putting pressure on bank financing and threatening the group’s $1.5 million a year support of groups including Bosom Buddies, cerebral palsy and sports.
The group took a 20 per cent hit with the smoking ban and had still not recovered to revenues of a decade ago, he said.
“We’re extremely worried about it,'' Mr Docker said. ''From my point of view its quite alarming that another heavy tax increase, particularly at the top end of the industry, is largely going to be worn by ourselves and others. We have not turned a profit in our club group for the last five years, so that tells you how concerning the prospect of a tax increase is.”
Poker machines account for about 60 per cent of club income. But other parts of the business are also down – in the past year, with bar takings down nearly 10 per cent at some clubs, including the Mawson Club, Raiders Gungahlin and the Burns Club.
The smoking ban in 2006 saw an immediate dip in poker machine revenue, amounting to about $20 million or 10 per cent a year, in all the capital's clubs - a hit from which they have never recovered. Mr House said the Government talked at the time of tax relief to compensate, but nothing had been done. Clubs were working to reduce their reliance on poker machines but needed time. Canberra was the only jurisdiction with a $250-a-day cap on ATM club withdrawals. It also has an outdated $20 note limit on machines.
“We haven’t been opposed to every measure that the Government has introduced, even though it involved financial hardship, but I’m having meetings with club presidents and boards where they are genuinely worried about whether or not they can keep the doors open in six months’ time,” Mr House said.
Simply increasing taxes to make up the shortfall brought on by regulatory changes that hurt the clubs ''was a recipe to kill the industry'', he said.
The Government wants to reduce poker machine numbers, with an “aspirational target” of no more than 4000. In 2011-12 there were 4950 machines in clubs, down by 130 over four years. The clubs had also been hit by much higher rateswith the Yowani Council Club rates bill this year up from $14,000 to $42,200.
Clubs were determined to fight for their survival, Mr House said. “I have said quite clearly that if tax goes up the relationship between this industry and the Government will change irrevocably.”
The fight against higher taxes has also brought Canberra’s biggest club back into the fold, with the Tradies group rejoining Clubs ACT after a four-year split. Mr Docker said his group had left Clubs ACT in 2010 because of a “philosophical difference” about the way they were tackling the issue of problem gamblers. Mr Docker felt clubs needed to face the reality of national political moves towards harm minimisation in gambling and move faster to address the issue themselves.
He said in the intervening years views on both sides had moved closer together and it was time to rejoin Clubs ACT and speak with one voice.
“Given the challenge for the club industry, we need to make sure that there is solidarity across the club industry and that there is one single powerful voice,” he said. “The time has come to get back together.”
The Tradies, owned by the Construction, Forestry, Mining and Energy Union, is the biggest club group in Canberra, with 540 of the city’s poker machines in its Dickson and Woden clubs. Second biggest is the Canberra Labor Club group, which has four clubs and is owned by the Labor Party, and has 272 machines.
Mr House of Clubs ACT said the reunion “signifies the very firm desire of the Canberra club industry to act as a single, united group”.
