The New South Wales government has been urged to immediately end a “shameless rort” that allows clubs to legally funnel poker machine revenue within their own operations while claiming the expenditure as a “community benefit” that reduces their tax bill.
Clubs with more than $1m in profit from gambling are eligible for a tax break provided a proportion of that money is spent on “community development and support”. Some of those funds are distributed by the controversial ClubGrants scheme.
After years of criticism, including from the NSW Council for Social Service (Ncoss), the state government recently sought to tighten the scheme’s governance pending a formal review by the regulator, treasury and cabinet expected next year. But some welfare groups, anti-gambling campaigners and the Greens want it abolished now.
Ncoss abandoned its 25-year association with the scheme late last year after its own review identified alleged conflicts of interest, a lack of transparency and accountability and instances of money being reportedly funnelled back into clubs.
“We found so many initiatives that were funded through a club grants process that were not about improving living standards for low income and disadvantaged people – from orchid appreciation societies to kennel clubs, fixing up the bowling green, or the club’s own women’s auxiliary lunch,” said the Ncoss CEO, Joanna Quilty.
“We did see many examples of clubs being able to use the scheme to feather their own nests – so in that sense, it was akin to pork-barrelling.”
There is no suggestion clubs have broken the law and ClubsNSW said the scheme provided more than $120m in support last year and $1bn since its launch in 1998.
“ClubsNSW acknowledges that there is always room for improvement in any large grant program that manages tens of thousands of applications for funding,” a ClubsNSW spokesperson said.
Last month, the state government updated its guidelines for the scheme to stress that funding decisions should be “driven by local priorities”. It announced the formal review in July, but terms of reference are still being finalised.
“The review will help determine whether the scheme continues to represent value for money to the people of NSW,” said a spokesperson for the NSW minister for gaming and racing, David Harris.
“The scheme was last formally reviewed in 2013 and all government agencies are required to regularly examine initiatives to ensure they are achieving intended outcomes providing a social benefit for the people of NSW.”
Wesley Mission’s chief executive, Rev Stu Cameron, who is part of the government’s independent advisory panel on gambling reform that will have input on the review, said the scheme should “be scrapped immediately”.
“The ClubGrants scheme in NSW is not only broken, it never worked to begin with,” Cameron said. “It was a cynical attempt by the clubs gambling industry to create the perception they were giving something back to the community, but it was all smoke and mirrors.”
NSW Greens MP and spokesperson for gambling harm reduction, Cate Faehrmann, said the scheme was being used as “a massive slush fund for clubs” with “little to no oversight in how grants are awarded by clubs”.
The Alliance for Gambling Reform’s chief advocate, Tim Costello, said the state government needed to step in to take funding decisions away from clubs.
“I have said for a decade, this is the most shameless rort in Australia,” Costello said.
“The New South Wales government need to actually take this seriously and say: ‘This isn’t clubs’ money, this is New South Wales government money and we’re going to administer the scheme. You pay us. You are not branding it as your generosity.’”
On Monday, Joseph Haweil, the mayor of Hume city council in Victoria, raised the alarm about clubs claiming community benefits from gambling revenue as “waste and removal costs, Foxtel subscription, staff wages and expenses, leasing costs and free entertainment for members”.
“I know for a fact that this is not confined to our municipality. It is something that stretches much further across Victoria and the rest of the country,” said Haweil.
