INDEPENDENT PRICING AND REGULATORY TRIBUNAL

REVIEW OF THE REGISTERED CLUBS INDUSTRY IN NSW

Tribunal Member

Ms Sibylle Krieger

Held at The Cattleman's Motor Inn 31 Marsh Street, Armidale NSW

On Friday, 21 September 2007, at 10.30am .21/9/07 1

Transcript produced by Merrill Legal Solutions

1 MS KRIEGER: By way of opening, for those who haven't 2 met me, my name is Sibylle Krieger. I am one of the members 3 of IPART. I am a part-time member on the Tribunal. For 4 the rest of the time in my day job I am a commercial lawyer 5 in private practice. Thank you all for coming along today. 6 The registered clubs review is being conducted by IPART 7 under section 9 of the IPART Act. It is a project that we 8 have been asked to do by the Premier. The Premier of New 9 South Wales has asked the Tribunal to look at the role and 10 performance of the registered clubs industry in New 11 South Wales. 12 13 All up, there are about 1500 registered clubs in New South 14 Wales whose members have come together to pursue 15 common interests which might be sporting, political, 16 social or cultural. Over the last 10 years various social, 17 demographic and commercial changes have affected the 18 registered club industry and as a result, the ability of 19 individual clubs to provide services that meet the needs of 20 their members and their local communities while at the 21 same time staying financially viable differs, depending on 22 a whole range of factors, including the club's location, size 23 and many other factors. 24 25 For this review, IPART has terms of reference which 26 outline and in some senses limit what we are doing here. 27 As our terms of reference state, the New South Wales 28 Government recognises that a very valuable social and 29 economic contribution is made by registered clubs to the 30 state's social infrastructure and services and the 31 government's position is that it wants to help the clubs 32 industry to flourish. 33 34 At the same time though the government requires the 35 industry to meet its mutuality requirements and to work 36 cooperatively with the government and other community 37 members to provide targeted and substantial community 38 support and to operate in a professional and commercial 39 manner. The Tribunal is gathering information from a range 40 of sources. We released an issues paper in May which you 41 have probably all seen. We then had written submissions 42 coming in in response to that in July and they are all up 43 on the Tribunal's website, if you haven't seen those. 44 45 The Tribunal, its Secretariat and its outside consultant - 46 and I should at this stage introduce Cameron Roan 47 from KPMG who is over on the left here - are .21/9/07 2 Transcript produced by Merrill Legal Solutions

1 also undertaking more detailed case studies in discussions 2 with individual clubs and have had a number of meetings 3 with other stakeholders. There is a lot of information 4 coming into the Tribunal and we thank all of you who have 5 assisted one way or another by making submissions, 6 providing information, participating in the case studies or 7 otherwise. We are very grateful to you for educating us in 8 the business of registered clubs and coming in to discuss 9 with us the role and performance of registered clubs. 10 11 The terms of reference - which are also on the website - for 12 this review are very broad-ranging, covering social 13 contributions of clubs, their financial performance, 14 corporate governance and regulatory issues, but there are 15 limitations and there are some things that this review 16 doesn't do and can't do. What the review is not doing is 17 revisiting government policy on smoking bans, poker 18 machine tax rates and harm minimisation. They are all 19 just part of the landscape within which the industry and 20 its competitors must operate. 21 22 The Tribunal is aware that there are a number of other 23 review processes happening in tandem which are 24 underway or completed, including the review of the CDSE 25 scheme guidelines and the statutory review of Gaming 26 Machines Act provisions. Where issues are more effectively 27 dealt with through those other reviews or inquiries, the 28 Tribunal will try and avoid covering the same ground or 29 trespassing on the responsibilities that others have. 30 31 The purpose of today's discussion is for the Tribunal 32 to seek more information on some specific areas of the 33 terms of reference through a structured public discussion 34 and to allow interested parties the opportunity to comment 35 to the Tribunal on issues arising from the issues paper and 36 the submissions which have been made public. We are not 37 here to make any decisions today. We are here to gather 38 information and to hear the views of participants. 39 40 After we have carefully considered your comments and all 41 of the submissions that we've received, there will be 42 recommendations developed and a draft report is due out 43 in February 2008. There will, of course, be scope for further 44 comment between the draft and the final Tribunal report. 45 46 Before we start, I just want to outline how we are 47 going to go about things today. With respect to the .21/9/07 3 Transcript produced by Merrill Legal Solutions

1 program today, the first issue is the social contribution 2 of clubs, including measurement as well as the current 3 schemes that capture and record clubs' social contribution. 4 We will then have a look at issues concerning financial 5 viability and how to strengthen performance, including the 6 possibility of club amalgamations and issues of corporate 7 governance and then finally we will have a look at the main 8 output which this review is intended to produce, which is a 9 framework for a club industry management plan, including 10 a club vision and a club charter. 11 12 We have circulated a document in advance which sets 13 out some of the questions that we want the discussion to 14 focus on today. We will try to follow that order of 15 topics, stick to the agenda and have discussion in an 16 orderly fashion. For each topic heading, Brett Everett 17 from the IPART Secretariat will give an introduction and 18 then I will invite the various participants who are here 19 today to give some comments on the issues. I ask everyone 20 please to be brief and to the point. We will try to stay 21 under five minutes per organisation. There will be further 22 topics and you'll have a chance to address those later on. 23 24 This is the third of the roundtable discussions that we 25 have had. We had one in Sydney on 27 August and the 26 second in Wagga on 14 September, both of which have 27 been productive, and there will be a further one in Dubbo 28 in a couple of weeks. 29 30 What we are most interested in today is to get some 31 insight into regional clubs and particularly how the issues 32 for the regional clubs differ perhaps from the large and 33 small metropolitan clubs. It is very pleasing that a 34 number of individual clubs have taken the time to come 35 along and participate and tell us about the diversity of 36 the needs and the drivers in the industry as they concern 37 regional clubs. The peak body, ClubsNSW and a number 38 of the other peak bodies are represented. They have 39 already had a major input into the hearings so far, so there 40 is probably not a lot to be gained by going over that 41 ground again. 42 43 Before we get to the end, I will be inviting questions 44 from anyone else who has come along from the broader 45 community and who wants to comment. The discussion is 46 being transcribed. Jim and Judith, up the back here, are 47 transcribing, so before you speak it would be very helpful .21/9/07 4 Transcript produced by Merrill Legal Solutions

1 if you could just state your name, even if you've spoken 2 before, and your organisation so that they can get it down 3 on to the transcript and speak slowly and quite loudly. 4 I will hand over to Brett to introduce the first section of 5 the discussion. 6 7 MR EVERETT: Thank you, Sibylle. My name is Brett Everett 8 and I am with the IPART Secretariat. The Tribunal has been 9 asked to provide recommendations on the contribution of the 10 registered clubs industry in providing social 11 infrastructure and services and a methodology to record and 12 value this provision. The submissions that have been 13 received from the issues paper have provided the Tribunal 14 with a detailed description of the goods and services that 15 are provided by clubs in New South Wales. The challenge 16 for this review lies in better defining and consistently 17 measuring the value of this provision across all clubs 18 without creating an undue burden on clubs. 19 20 The first matter that we would like to discuss today 21 is the measurement of social contribution. Specifically, 22 we would like to look at the issue of how your club can 23 measure the benefit it provides, firstly, to club members, 24 so, for example, activities such as dance lessons, trivia 25 nights, fishing outings or provision of social welfare 26 services, such as assistance to sick members; and secondly, 27 to the general community, so activities such as free or 28 discounted use of facilities to schools and local community 29 groups. 30 31 MS KRIEGER: Instead of starting with ClubsNSW this 32 time, it might be helpful if we start with you, Rod, because 33 I understand you're here both for your individual club 34 and for the broader leagues club movement. 35 36 MR LAING: Rod Laing, representing the Leagues Clubs 37 Association and West Tamworth Leagues Club. That is 38 correct, I am wearing two hats, so it might be a bit of a 39 challenge today. You talked about "measuring". Is that in 40 dollar terms or basically just the benefits? 41 42 MS KRIEGER: That is an open question. It is an open 43 question as to whether everything can or should be 44 measured in dollar terms. 45 46 MR LAING: I represent or manage two clubs, West Diggers 47 and West Tamworth Leagues. Being regional clubs, those two .21/9/07 5 Transcript produced by Merrill Legal Solutions

1 clubs are used frequently by the community, community 2 groups and organisations for various meetings: 3 West Diggers, for the Returned Soldiers Leagues, the 4 Ladies' Auxiliary, those types of thing as well; West 5 Tamworth Leagues, for garden clubs and other community 6 groups as well. Basically, during daylight hours and in 7 the evening those meeting rooms are used by sporting 8 groups for their meetings as well. Measuring it may come 9 back to the number of hours per week these particular 10 groups are using the facility. 11 12 MR GALLEN: James Gallen, Gunnedah Services and 13 Bowls Club. We are in a similar situation as Rod. It is 14 probably hard at times to put a dollar figure on your 15 measurement and adjusting some round figures. As far as 16 we are concerned, over a 12-month period - I think it was 17 June '06 to July '07 - if we had charged for room hire for 18 our different organisations, that figure was around about 19 $50,000 just from our particular club. Our club has about 20 4,800 members and we have 61 poker machines, so just in 21 that little exercise that figure came up. 22 23 Also, I think just as far as measuring things, where people 24 have to go, it is part of their lifestyle. They might not 25 have much else going on socially. The club is a gathering 26 point. They are the ones that help them out with 27 their reasonable value meals, their different 28 organisations, as far as their meeting rooms go, as Rod 29 mentioned, as far as picking them up and dropping them 30 home, as far as our courtesy bus goes. I don't think there 31 would be any other organisation that would do that free of 32 charge. It doesn't cost them anything. Again, it's very 33 hard to put a dollar figure on that sort of thing. 34 35 MS KRIEGER: You could quantify the revenue foregone to 36 you in what you might otherwise charge by way of rent, but 37 there is also a trickle-down effect, we gather from what 38 we've been told, in other places where the small 39 community organisations which use club facilities for free 40 if they had to pay, they in turn would have to have 41 membership fees or some other way of raising that 42 revenue. It is not just the revenue foregone. It trickles 43 down through the community. 44 45 MR GALLEN: That's correct. Over a 12-month period it 46 would be quite a costly exercise if they had to go and hire 47 their rooms at commercial rates or even just getting their .21/9/07 6 Transcript produced by Merrill Legal Solutions

1 tea and coffee that we provide at no charge, that alone for 2 one organisation, if you start adding it up, would run into 3 big dollars. Yes, again, they would have to charge their 4 members to recoup some of their money. 5 6 MR LAING: The difficulty is that we are all different and 7 we're obviously charging different room hire fees for the 8 different groups as well and as you just mentioned, James, 9 commercially, I guess a hotel chain like this would be 10 charging a lot more than what a regional club would be. 11 I can't speak on behalf of metropolitan clubs, I don't know 12 their rates, but, for example, a room hire for us may be 13 $100. 14 15 MS KRIEGER: Which is pretty nominal. 16 17 MR GALLEN: Ours goes from $25. I don't think we 18 charge $100. $50 or $75 would be our top rate and that's 19 not to everyone; that's only someone who can afford it or a 20 government organisation. For your community groups, 21 yes, it is a big figure. As I say, we did an exercise over a 22 12-month period and it was $50,000 if we'd charged for 23 that room hire over that period. 24 25 MS KRIEGER: One thing that we would be interested in 26 hearing about is the attitude of the clubs to the value of 27 recording what that social and community contribution is. 28 Can you tell us what the purpose was of you trying to 29 quantify that as a management exercise? 30 31 MR GALLEN: Yes. We have awards for excellence in our 32 industry and there are different categories for each club. 33 Ours was in the section as to what we do for the community. 34 Our club was lucky enough to win an award in the 35 community section three or four years ago and that was one 36 of the questions, "Could you please nominate what you've 37 given in kind as far as your meeting rooms are concerned, for 38 instance?" That's when we went back through our diary over 39 the 12-month period and picked out the Little Aths or the 40 junior league or the cricket club or the Legacy or the RSL 41 sub-branch, the list goes on and on, and actually wrote them 42 down and put a figure next to them, put our $25 or $50 43 next to them and that's the sort of money you come up with. 44 45 MS KRIEGER: It is not something you ordinarily do as a 46 management tool so as to see -- 47 .21/9/07 7 Transcript produced by Merrill Legal Solutions

1 MR GALLEN: No, but when it came to this sort of thing, it 2 was quite handy for us to say, "We've actually put a figure 3 on that and this is what it came out at." 4 5 MR WHEATON: Can I just extend on that. Phil Wheaton, 6 Armidale Bowling Club. Since 2001, we have deliberately 7 gone out of our way to record all our in-kind services. 8 We continue to do that as part of a report that goes to our 9 board every month as far as function authorities. 10 11 As Jamie and Rod have quite accurately said, we are all 12 very different, but very similar in the fact that we all 13 help our communities big-time, and for me I can tell you 14 exactly what my room hire would have been. I can tell 15 you the services that we would have been able to get 16 dollars and cents out of, if that's what was desired by the 17 board, but obviously it's not. Our board don't have that 18 vision. The vision for us is to help the community because 19 we are the community. Without the community, we 20 wouldn't exist. 21 22 The facilities that we offer our club members are what 23 they can't provide for themselves, so your data projectors, 24 your two or three rooms, your big-screen TVs, the 25 assistance that we provide to all the sporting bodies, the 26 raffles we run for them. Forget about the finance of it. 27 We go out and actually participate at their sporting 28 venues. 29 30 We have sporting clubs and grounds around Armidale and 31 our club is very proud to say that we have been the driver 32 behind those sporting bodies being able to develop fields. 33 We haven't got the space around our club to build soccer 34 fields or cricket fields, but we have around Armidale, and 35 it's been the board that has gone out and used their 36 expertise with the local council to negotiate land that 37 wasn't being utilised and then has put the community's 38 money back into those projects from the revenue that we 39 have gained through our club. 40 41 At our club I can show you records since 2001 that say 42 what our in-kind service is, and it can be done quite 43 simply on an Excel spreadsheet. It is very simple. Every 44 time that you have a function or you help, then one lot is 45 put in the "in kind "column and the other lot is put in 46 who paid. It is very, very simple to be able to present to 47 your board on a regular basis what they are actually .21/9/07 8 Transcript produced by Merrill Legal Solutions

1 contributing to the community. 2 3 MS KRIEGER: Apart from you as the chief executive 4 reporting to the board, is that used for any other 5 purposes? Presumably it's a useful thing to have when a 6 board is negotiating with the local council, or whoever 7 else, for a community project to go ahead? 8 9 MR WHEATON: Absolutely. Dead correct. As far as the 10 power with your local council, that's very true, but keep 11 in mind that the local council are also members of our 12 club, thank goodness, and it is good proof to them to get 13 their sympathy because we are doing something that is 14 worthwhile with the community dollars. 15 16 Just to back up what Jamie said as far as keeping 17 records for industry-based awards, yes, it's great for 18 that, but it is also fantastic for matching up with 19 progress of your club and growth of your membership, 20 and Jamie hit it on the head: if you support your club or if 21 you support your community, the growth of your club is 22 going to come as well. In our club, that's very clearly 23 defined in graphs. 24 25 MS KRIEGER: I suppose, in essence, using it as a means of 26 providing what it is your members actually want, making 27 sure that you grow with your members by providing the 28 right services? 29 30 MR WHEATON: It is a fantastic record for seeing what 31 they want. You could run surveys, for sure, but if you see 32 what they are using your club for and what they expect on 33 a regular basis, then it's a really good tool. 34 35 MR LAING: There is no doubt that supporting the 36 community grows membership. Back to West Leagues 37 again, our facilities extend out onto our grounds as well, 38 so in kind we have obviously football clubs, we have 39 school groups that use those grounds on school sports 40 days, and also local competitions on the weekends. There 41 is no charge to the school groups that are utilising those 42 facilities, and those sports not only cover Rugby League, 43 but also soccer and baseball, that type of thing as well. 44 45 MS KRIEGER: We might just move on to interests we haven't 46 heard from. The Department of Community Services? 47 .21/9/07 9 Transcript produced by Merrill Legal Solutions

1 MS COLYER: Wendy Colyer from the Department of 2 Community Services. I will have you know that I didn't 3 know until late last night that I was doing this, so it has been 4 a bit of a shock, seeing as I am a children's services adviser, 5 but I would basically just like to say that there are 6 two ways of measuring impacts. One can be in, as you've 7 said, all the things that you are providing, and I have 8 worked in different areas over a long period of time and I 9 know that the support that clubs provide has been very good 10 to community services. It definitely helps to maintain 11 the running of the small community-based services, 12 and I am very supportive of the fact that you do provide 13 so much back to the community in that area. 14 15 We were earlier discussing measuring the in-kind things 16 that you are giving out to the community, and I think 17 it is probably an excellent idea to do that, because then 18 in your management plan you can keep on track and 19 weigh up against the social impacts that may be a little 20 bit more negative when you come to those later on. I 21 think in all management planning you must keep in mind 22 that there are good measures and bad measures, and I 23 think in an overall plan, even if it is a fiscal one, those 24 social impacts must be get in proportion at all times. 25 26 MS KRIEGER: Thank you. We have got representatives 27 from two of the Ex-Services Clubs. Doug, would you like 28 to say anything about this? 29 30 MR LENNOX: Doug Lennox, Armidale Ex-Services Club. 31 Basically, what Phil said is correct, that one of the main 32 things in the country clubs is to look after our community. 33 That's the big deal. If we didn't have the clubs, the 34 people wouldn't have the facilities. However, in trying to 35 measure the positive roles, as in fitness and that sort of 36 thing, I don't know whether anybody can do that. It is 37 just, I suppose, how many clubs you might support, 38 sporting clubs. 39 40 As far as giving the clubs the room hire and all that, we 41 can measure that through CDSE, and at our club we have 42 been doing that for a fair while. We will come to CDSE 43 later, but to me CDSE is a great way of getting back into 44 the community. Unfortunately, a lot of people don't know 45 about the CDSE. Through Phil and myself, and I guess the 46 other guys from the other towns, we have been trying to 47 sell it because it helps our community. Like Phil, yes, we .21/9/07 10 Transcript produced by Merrill Legal Solutions

1 can sit down and tell you how much we did to CDSE this 2 year. So that's the only way that I know of really 3 measuring it. 4 5 The Police Boys Club this year wanted to go to some of 6 the schools where kids are going to school with no 7 breakfast, so we donated money and are now looking after 8 that aspect. Hopefully the community will get to know 9 about it - and we know they have, because they have come 10 and congratulated us already - but that is the sort of 11 thing we want to see ongoing. 12 13 MS KRIEGER: Gil Swan from the Tamworth Services Club. 14 15 MR SWAN: Gil Swan, Tamworth Services Club. I regard 16 this area as very important because it is very important that 17 we portray ourselves positively in the community. We 18 have suffered over a period now. I would like to see this 19 integrated into our CDSE report each year. We already 20 know on the report how much we give in cash allocations 21 to category 1 and category 2. We know what we are going 22 for in in-kind donations, so it wouldn't be that difficult to 23 apply a formula to those to extend out to get contribution 24 to the community. 25 26 As a silly example, we gave $2,500 to the hockey club, 27 so that's our input value. Our output value would be the 28 real cost to the community if they had to go and raise it 29 themselves, knocking on doors. You have to look at that 30 and say that if one person managed to raise $50 an hour, 31 that's 50 hours to raise $2,500. Attribute a wage value to 32 it plus expenses, so it might be an extra $1,000. So there 33 you have got $3,500 for them to get the same money 34 compared to us, which is a ratio of about 1.4. 35 36 You have to look at the $9,000 that we gave to 37 Manaelle Lodge. With the same contribution ratio, that's 38 about $13,600. So if we arrived at that ratio, and it's 39 applied to your CDSE returns, to all your cash allocations, 40 there's the value to the community, in my opinion. The 41 ratios might be quite wide there, but you know what I mean. 42 43 I think the other side we are looking at, too, is the 44 intrinsic value for your dance nights, or bingo is a good 45 example of that. Nobody makes money out of bingo. It is 46 a social thing. We get all these dear old souls there who 47 are on their own, usually, because their kids have left .21/9/07 11 Transcript produced by Merrill Legal Solutions

1 town and they are sitting at home with nothing to do. We 2 have a queue at the front door waiting to come in. 3 4 So how do you measure that? You could turn around 5 around and look at it in terms of if we didn't provide it 6 these people may become depressed if they are looking at 7 the wall all the time at home, which is not good business, 8 so you have health costs and so forth. So you have to look 9 at depression. I think the estimated cost of depression in 10 Australia was about $4.3bn last year, and that's over about 11 446,000 people they estimate. 12 13 If you calculate all that back, it would be roughly 14 equal to $1 an hour. It doesn't sound much, but if we've 15 got 80 people a day coming in to bingo, or 50 people a day 16 coming in to bingo, say, for five days a week, you can 17 calculate that out at about $65,000 a year. That's the 18 real value. 19 20 It sounds like a lot of money, but per individual it's 21 $1,500. I think that's a real figure. We can arrive at a 22 mathematical formula there to expand on to our CDSE 23 returns fairly simply. I would estimate that once the 24 initial ratios are established, you're looking at an hour per 25 annum to extend those figures out, and this enables the 26 department and ClubsNSW to give a relatively true figure 27 to the community of what we are doing, remembering, of 28 course, that all clubs are different, but here if we have a 29 standardised calculation that would make it fairly simple, 30 I think. 31 32 MR LAING: Just talking about the clubs that are 33 participating in the CDSE system, of course in the country 34 there are a lot of clubs that don't, Gil -- 35 36 MR SWAN: I know. 37 38 MR LAING: -- small clubs, and they are probably not 39 recording a dollar value. Perhaps, again, the best way I 40 could see it is the number of hours that your rooms are 41 being used by community groups in these organisations. 42 43 MR SWAN: I agree with that, but I didn't touch on that 44 specific area. Here we go back to actual values, what 45 they're charging in town, and hours do come into that, 46 I agree. 47 .21/9/07 12 Transcript produced by Merrill Legal Solutions

1 MS KRIEGER: Just on this question of tangible and 2 non-tangible, quantifiable and non-quantifiable 3 contributions, I would like to hear from the Office of 4 Liquor, Racing and Gaming. 5 6 MR GREENHOUSE: David Greenhouse, New South 7 Wales Office of Liquor, Gaming and Racing. Firstly, I 8 would like to pass on Michael Foggo's apologies for today. 9 Michael, the Commissioner, has been at the last few round 10 tables and he will be at the next one, but unfortunately he 11 was not able to make it along today. I know he will be 12 reviewing the transcript and considering carefully the 13 things that are said. 14 15 So far as this particular area is concerned, the 16 office has always had a reasonably good understanding of 17 the contributions that the clubs have made generally 18 for the community, and I think that was enhanced 19 significantly back in 1998 when the CDSE scheme first 20 came in. 21 22 Prior to that time there wasn't a great deal of 23 articulation as to the nature of the benefits the clubs 24 were providing, and CDSE was an attempt, for the first 25 time, to try to articulate that in a fairly rigorous kind 26 of way. As that scheme has evolved over the best part of 27 the last decade, people in the community have generally - 28 perhaps in a patchy way from what others have said - 29 started to get a better understanding of the contributions 30 that the clubs are making. 31 32 You are right that it doesn't capture the intangibles, 33 as Gil mentioned, and that is a challenge for the next 34 phase in this data-capturing exercise, to get some more 35 finer-grain information from across the club map itself 36 about the sorts of contributions that are being made. 37 38 In terms of how that can be done, there are some precedents 39 in terms of the gaming area. The Productivity Commission 40 themselves, when they are doing the cost benefits 41 of gambling industries generally, looking at the benefits 42 of gambling, look at all these intangible-type things about 43 the nature of gambling venues and the benefits 44 they provide to communities, and they also look at the 45 costs in terms of the intangibles. I think one of the 46 costs that they put a dollar figure on was the emotional 47 cost associated with divorce arising from gambling. .21/9/07 13 Transcript produced by Merrill Legal Solutions

1 2 I think they employ these consumer surplus sorts of 3 calculations - if anyone wants to assist me here, I don't 4 understand much about it at all - and it is not an 5 impossible task, but certainly it's a very, very difficult 6 one. I'm not sure, from where we sit, we are able offer 7 too many more insights into that one. Capturing the nature 8 of these particular activities in the first instance is the 9 main -- 10 11 MS KRIEGER: Identifying first and then quantification 12 later. 13 14 MR GREENHOUSE: Yes. 15 16 MS KRIEGER: I wonder if we might hear a wrap-up from 17 ClubsNSW, if there is anything you would like to add? 18 19 MR BALL: Anthony Ball, ClubsNSW. Not so much of a 20 wrap-up, but I guess our view is that clubs must get better 21 at talking about their story, and I think they need help 22 doing that. Some are terrific; Phil's club and others, in 23 their annual reports, in communications with local councils 24 or other stakeholders, they do that, but it is generally 25 only the clubs that are over a million dollars in gaming 26 revenue, and the genesis for that has been the CDSE. 27 28 We think that clubs do need to record what they do and 29 they need to value it and they need to report on it, be it 30 to their own members or to anyone else, and that needs to 31 be helped by a guideline or some other kind of assistance. 32 We just must make a start. 33 34 We can't have clubs just assuming that people know all of 35 the good things that they do, even a golf course, 36 something as simple as providing rounds of golf and a 37 beer and a meal. That needs to be talked about. There are 38 rounds of golf given to non-members, social play, all those 39 things we think are pretty easily calculated, but we need 40 to remember that some clubs just haven't done it. 41 42 It's taken I think the best part of seven or eight 43 years to get CDSE reported properly. Clubs are still 44 improving the way they do that, and these are our 45 well-resourced clubs, so it's a long-term project, in my 46 view. 47 .21/9/07 14 Transcript produced by Merrill Legal Solutions

1 I think at the highest level it needs to be looked at. 2 The Productivity Commission did look at some of those 3 issues around gambling, but they have also recognised in 4 subsequent reports that valuing the creation of social 5 capital is damn hard, and we do need to make a start at 6 that, and in our own small way we are trying to do that 7 through our choice modelling study which is getting 8 members of the community themselves to value what clubs 9 do: are they prepared to pay for greater assistance to the 10 elderly or are they prepared to pay for more sporting 11 facilities or greater participation in sport to improve health 12 and fitness. 13 14 So it does need to operate at a couple of different 15 levels, and government needs to weigh all of that up, that 16 clubs themselves need to be given help and probably 17 compelled in some way to actually record this so at least 18 their members know what they're doing. 19 20 MR MALLON: Phil Mallon, Cabarita Beach Sports Club. 21 If I could just add, I think it is essential and obviously 22 useful for us to record all these benefits and utilise the 23 already existing reporting mechanisms that are available 24 to us. For those who haven't yet gone to the CDSE level, 25 there are others of us within the community clubs that will 26 help out other clubs to rise to that level. It's vitally 27 important for the clubs themselves, as you say, to be able 28 to look at what they do, to review that with their boards 29 and focus on how they can better do those things. 30 31 With our club in particular, being in a village 32 situation, we are the only organisation that could or 33 would provide the assistance that we do to every sporting 34 body within our community, to the schools, and without 35 the existence of our club within the community, there 36 would be nobody else to provide that support. 37 38 MR LENNOX: When we talk about this, we talk about 39 the bigger clubs or the middle-class clubs. If we go just a 40 little bit north to Guyra, they have a club up there that 41 doesn't fit into the CDSE bracket. If we go a little bit 42 south, we have Uralla and Walcha. None of those clubs fit 43 under it either. I'm deadset sure that somewhere through 44 the year they are supporting sporting bodies, schools, 45 things like that. 46 47 I don't know whether it is workable, but maybe those .21/9/07 15 Transcript produced by Merrill Legal Solutions

1 clubs that don't reach this $1m mark, or whatever it is, 2 could be combined with a larger club within their area; in 3 other words, so that they are being helped with their 4 support, being helped with their reporting. Maybe that's 5 an answer. I don't know. 6 7 MS KRIEGER: You mean combined for the purposes of 8 this sort of community benefit reporting? 9 10 MR LENNOX: Yes. For instance, let's take Guyra, and 11 this is just straight off the bat, I haven't really thought it 12 out. Let's say that we know that they support a golf club, 13 we know that they support a bowls club, we know that 14 they support their schools, I'm sure that they give 15 donations throughout the year, but they never report it to 16 the community. The community, for instance, probably 17 doesn't realise it. So maybe if they were combined with a 18 larger club in a reporting line, for instance the services 19 club, we put in our report and we could say, "And also the 20 Guyra social club", or whatever it's called, "did this within 21 the community". 22 23 MS KRIEGER: Or at least if not amalgamate in any real 24 sense, at least get some guidance from the larger clubs 25 who have it down pat. 26 27 MR LENNOX: That might be a suggestion. I'm not sure. 28 We could sit down and think it out. That's one way we 29 could get to know what the little clubs are doing. 30 31 MS KRIEGER: And how to go about it. 32 33 MR LENNOX: Yes. 34 35 MR WHEATON: That would probably come later in the 36 management skills. 37 38 MS KRIEGER: I think we probably need to move on to 39 financial viability now. 40 41 MR LENNOX: Just two things on the CDSE. One of the 42 things that I would like to see happen is that the local 43 committees and groups publicise it a little bit more in the 44 country. I know it happens in the city, but honestly we 45 had a lot of people here that don't know it exists. 46 47 MS KRIEGER: You mean the committees who input into the .21/9/07 16 Transcript produced by Merrill Legal Solutions

1 CDSE? 2 3 MR LENNOX: Yes. Like, we get all these professional 4 people that want donations - Westpac Helicopter, 5 for instance - and I've got nothing against it, but we've 6 got to save the local Salvation Army here. Unless they go 7 to Sydney and throw their bids in they don't know we can 8 give it to you, or they weren't aware, put it that way. 9 I think it's been fixed now. 10 11 The other thing is the reporting of CDSE. I've got a little 12 problem with it being from September to August. Why 13 can't we go financial to financial year? We have to assess 14 or think out how much our next two months are and then 15 all of a sudden you've got one month to spend your 16 cheque, if you did it all at the end, and then you've got 17 seven days to report it. I just think that the reporting 18 period is wrong. 19 20 MS KRIEGER: The office might be able to give you the 21 answer to that? 22 23 MR GREENHOUSE: Off the bat, I'm not exactly sure why 24 that reporting period is as it is. I think it occurred back in 25 1998. It might have been part of the tax year at that 26 time. 27 28 MR GALLEN: It matches the poker machine tax. 29 30 MR BALL: Yes, and there is very little scope to change 31 that as long as that is the poker machine year. 32 33 MR LAING: Maybe just a quick wrap-up. Gil represents 34 Tamworth as well, the Services Club in Tamworth, and 35 West Diggers and West Leagues are also part of the CDSE 36 scheme there. Our local city there is very good. It is 37 working very well. I think the committee is a good 38 committee right now. 39 40 Some time ago, Gil, I think in the last 12 months, we 41 expanded our coverage area to include the region of the 42 council, so it's not just the city of Tamworth. It takes in the 43 villages around Tamworth as well - Manilla, Barraba, 44 those townships as well - and I think that's working out. I 45 think our scheme is well publicised in Tamworth. We also 46 include in our meetings organisations that have 47 approached the Tamworth regional council as well. .21/9/07 17 Transcript produced by Merrill Legal Solutions

1 2 MR SWAN: I agree with that entirely. It is extremely 3 well run. We have a good committee and, furthermore, we 4 liaise with each other: when we go through the priorities 5 in terms of allocations, I will speak to Wests and see what 6 they are looking for and tell them what we are looking for, 7 so we seem to cover everything pretty adequately. 8 9 Your point there about publicity, we make a point of it. 10 If we give $9,000 to a lodge, we'll arrange for the paper 11 to take a photograph and say, "This has come from the 12 Services Club", and likewise with Rod, so the community 13 are aware this is going on. 14 15 MS KRIEGER: Presumably, broadcasting and publicising 16 what you do by way of community benefit is an important 17 factor in attracting new members to the club. 18 19 MR SWAN: We regard it as very much so. 20 21 MR MALLON: I think one of the most important things 22 for us with our CDSE committee in the Tweed, which works 23 extremely well, is that all of our clubs - and I can give you 24 two examples. This year we have done a rural villages 25 fund where we have supported to about 58,000 eight 26 different projects in rural villages that do not have clubs 27 within their community, and we can only really identify 28 those with the cooperation of NCOSS and the council, and 29 we could only support those by all getting together and 30 creating a rural villages fund, and it provides support to 31 those communities that they couldn't get on an individual 32 basis. 33 34 Whilst the rural villages fund comes from ideas from 35 NCOSS and other outside delegates, some club delegates 36 identified a need for the kids in the community for a skate 37 park and the clubs put together $75,000 and drove that 38 and then council matched that with $75,000. That would 39 never have gotten off the ground without the impetus of 40 the clubs in the CDSE, and they're two terrific things for 41 the community to come out of that. 42 43 MS KRIEGER: Is there anyone in the room who has a 44 different view, who thinks that the CDSE committees do 45 not work well or should be improved in some way? 46 Because if there is a general consensus on this topic, we 47 should just move on to the next one. .21/9/07 18 Transcript produced by Merrill Legal Solutions

1 2 MR LAING: Should we talk about rates as well in this 3 section? 4 5 MS KRIEGER: Certainly, but briefly, because it is not 6 within our terms of reference to change. You mean the 7 threshold rates or the -- 8 9 MR LAING: I don't know if there are indications that 10 those rates have been increased. I would like to see those 11 rates maintained at their levels. I know the second of my 12 smaller clubs would hurt rather badly if that was the case 13 and I know of a lot of clubs out there are spending way 14 over those amounts and that they should be rewarded or 15 that there be some type of system to reward those clubs. 16 17 MS KRIEGER: One other thing we heard at the previous 18 hearings - particularly among some of the larger clubs - 19 was that the actual contribution is above the threshold, 20 that there's no desire from the clubs' side of the industry 21 to increase that threshold, but that there should be a 22 level of flexibility for those who find it difficult to 23 contribute above the current threshold. 24 25 MR WHEATON: Quickly - one last thing from me - CDSE 26 is terrific, committee works well, the liaison between the 27 two clubs in Armidale does anyway, but the deal is the 28 clubs have contributed to CDSE from the day dot. That is 29 how we were set up. This CDSE has made us start to 30 record what we actually do. CDSE has been around in all 31 my existence in club world. The fact that we are forced to 32 write down and send to the department a certain amount 33 does not tell the truth. We might be asked to pay $19,000 34 whereas in actual fact the figure is probably closer to 35 $75,000. Really, it is something that we've done forever. 36 37 MS KRIEGER: But as you say, it represents part only of 38 the overall story of the financial health of the industry. 39 40 MR WHEATON: Absolutely. 41 42 MS KRIEGER: There are the dot points and the questions 43 under that rubric. Do you want to introduce that, Cameron? 44 45 MR ROAN: Cameron Roan, KPMG, IPART's consultant for 46 this project. Submissions have identified that the financial 47 health of individual clubs obviously varies from those that .21/9/07 19 Transcript produced by Merrill Legal Solutions

1 are successful and financially healthy to those that are 2 struggling to survive. 3 4 Submissions have identified a number of reasons why 5 those that are struggling may in fact be struggling. One 6 such reason that has been put forward is that those 7 struggling clubs need to improve their business practices. 8 They have poor management practices in place. The first 9 question that has been posed is what can be done to 10 identify and improve poor business management practices 11 in clubs? 12 13 Submissions have also identified that clubs are 14 particularly financially vulnerable because of their 15 dependency on one income stream and in many cases that 16 is gaming revenue. Submissions have recommended that 17 clubs may be able to overcome this by looking at business 18 diversification opportunities. The second question we 19 have posed is how useful are diversification strategies for 20 improving the financial position of individual clubs? 21 22 Finally, some other submissions have also pointed out 23 that even with improved financial management practices, 24 with diversification strategies and different business 25 models, some clubs may never become financially viable 26 in today's climate and that some degree of industry 27 consolidation is inevitable. The last two questions are: 28 Is industry consolidation inevitable? If so, what do you 29 believe are the best mechanisms to achieve this 30 consolidation? 31 32 MS KRIEGER: We might start on this one with Robert 33 Adams. We haven't heard from you as yet. 34 35 MR ADAMS: Bob Adams, Armidale City Bowling Club. As 36 far as our club is concerned, we are out there in the 37 community on a daily basis looking to try and improve 38 things. Our directors are always looking at different ways 39 of improving the community, to diversify our club 40 movement, to help sporting clubs, to bring other industries 41 into the club and that seems to be working. We have 42 increased our membership on a regular basis. Our 43 membership is not large at this particular time. It does 44 help the community when they know that they can come 45 to the Armidale City Bowling Club and ask for assistance. 46 We are prepared to look at what we need to do in the 47 community and also to diversify our own workings to assist. .21/9/07 20 Transcript produced by Merrill Legal Solutions

1 2 MS KRIEGER: Cabarita. 3 4 MR MALLON: Club management structures are very 5 much the same as council structures, with an elected board, 6 an elected council and a professional management team. 7 The studies that I've seen on councils - which have been 8 quite extensive - show that the best performing councils are 9 those with good working relationships between their 10 boards and their management and there needs to be a high 11 degree of professionalism in both of those areas. 12 13 Our prime concern and the thing of most interest to 14 George - our chairman - and myself here today is that we 15 have the best resourced boards that we can possibly get. 16 In our particular instance, we have 3,400 social members 17 and a dwindling membership of bowling members. Our 18 constitution restricts the election of directors from those 19 bowling members. 20 21 Our club has grown beyond a bowling club and it is a 22 vital part of our community and as I said earlier, it does 23 things that no other organisation in our community can 24 do. We have a large number of different sporting groups as 25 sub-clubs of our organisation and as time goes on and our 26 bowling membership does get smaller, the people with the 27 skills or the willingness to do the job of director is just 28 not there. Yet, it only takes a few members and not the 29 majority to instill some fear that the regional objectives 30 of the club may be lost by going to the wider social 31 membership. 32 33 One of the other gentlemen made the point to us earlier on 34 that you still need people who are vitally interested in the 35 the club as well as professionalism being in evidence on 36 the board and we think that by having the ability to draw 37 on our entire membership for that board is essential for 38 the future of our club and essential for us remaining 39 relevant to our entire community and not just reserved 40 for a small number of people within our community. 41 42 MS KRIEGER: Or even perhaps to go outside the 43 membership of the club entirely and to have the opportunity 44 to appoint a limited number of directors from right outside 45 the club membership, if you have a glaring hole in the 46 skills that you really need on the board of your club. 47 .21/9/07 21 Transcript produced by Merrill Legal Solutions

1 MR MALLON: Certainly, that would be useful. You 2 always want those people though to have their hearts in the 3 club because that's why we do what we do and that's one of 4 those unquantifiable things. How do we get that as well 5 and not lose it in the financial aspects of it? 6 7 MS KRIEGER: Yes. Would someone from the services 8 clubs like to comment on this question of financial viability, 9 business practices and the ease or difficulty of finding 10 people to serve on boards? 11 12 MR LENNOX: One of the things that I've noticed over 13 my period on the board is that, for instance, 14 Armidale Ex-Services Club's constitution - and I think the 15 bowling clubs may be similar - states that of nine 16 directors, five of them must be ex-servicemen. However, 17 when I look around this town that constitutes about point 4 18 of our membership. Most of the people are over 70 and 19 they're all Second World War veterans. A lot of the 20 younger fellows, Vietnam veterans - and I call them young 21 even though we're all over 60 - have no wish to be on the 22 board. They just want to be members and enjoy themselves. 23 24 One of the things we may have to look into is changing 25 our constitution. I know it has to be changed. Somewhere 26 along the line it should say that other people are allowed 27 on there, but at the same time - and I know this from the 28 ex-services point of view - the ex-servicemen don't want 29 the name to be changed and they have a fear that if there 30 aren't ex-servicemen on the board, they will change the 31 name to a social club. That is hypothetical, yes, but 32 that's one of the things that we have I think to look into 33 and identify why we have poor management. 34 35 When I say that from the board's point of view, that is one 36 of the reasons because we've got all these ex-military 37 people. Most of them are not in business, most of them 38 are now retired and from my point of view most of 39 them live on the coast, but because it has been traditional 40 to stay as a member of the club, they do. 41 42 I am finding it hard at times to get the right people with 43 the right qualifications on to the board, but we sort of 44 can't because we're limited with what we can do. Maybe 45 that's something we've got to look at. 46 47 MS KRIEGER: Of course, if it goes on long enough and you .21/9/07 22 Transcript produced by Merrill Legal Solutions

1 end up in a situation that is a very difficult situation 2 then it's a very unattractive prospect to get someone to 3 join the board. 4 5 MR LENNOX: Exactly. 6 7 MS KRIEGER: If there's a crisis on, yes. 8 9 MR LENNOX: If we take one election in five years time, 10 we won't have the people there if we don't change the 11 constitution. All of a sudden we won't be able to form a 12 board, so therefore it's going to cost us an arm and a leg 13 to go into whatever you've got to do with the 14 Corporations Act. That is one of the problems I believe we 15 have. I'm not sure about the cities, but I understand where 16 we're coming from in the country. The people in our 17 club need to be on the board to help. There are members 18 there who are bank people and all that and they've got 19 qualifications, but they're limited in what they can do. 20 We have to look at that. 21 22 I don't believe in the other thing that you said 23 before about bringing outside directors in: I really 24 don't. Maybe that might work in the city, but it 25 definitely won't work in the country. Thank you. 26 27 MR ADAMS: I agree with what Doug had to say there. 28 Bringing other people inside to sit on the board of a club 29 is probably not the way to go. At Armidale City Bowling 30 Club we have a board that consists of people who work in 31 different areas, different industries, different parts of 32 the community and they all work together. When we 33 come to election time, we find it very difficult to get new 34 members to put their hands up to stand as members of the 35 board of directors. We currently have four normal 36 directors. We have an election coming up on the weekend 37 and the nominations for those four positions is six. There 38 are quite a few more people in the club who could actually 39 stand for a position in the club and be of assistance to 40 the board. 41 42 I guess they think that the current board is running 43 the club the way they would like it to be run and as Phil, 44 our chief executive officer, runs the club perfectly, 45 that's where they stop. They seem to think, "That's it. 46 We'll leave the boys there. They're doing the job." 47 .21/9/07 23 Transcript produced by Merrill Legal Solutions

1 MS KRIEGER: To what extent is the difficulty in getting 2 people to serve on the boards of clubs heightened by the 3 fact that people may not know what that involves or may 4 think there's an unknown risk involved? In other words, to 5 what extent can you overcome that by providing people 6 with information as to what it involves and what they need 7 to know about? 8 9 MR DAVIDSON: George Davidson, Cabarita Beach Bowls 10 and Sports Club. I would be like to make a number of points 11 on that. I was saving my comments until the government 12 section, but I would just like to briefly say this, that we 13 have very strong management in our club and a very weak 14 board and I have to honestly say that three quarters of the 15 board wouldn't understand half of the financial problems. 16 17 The whole matter has been this, that the board is governed 18 by the bowling section. We have 200 bowlers and 19 3,400 social members. Social members have no voting 20 rights except to elect the board of directors but they have 21 to be bowlers. Our bowlers are in their 70s, their average 22 age is the middle 70s and in the 11 years that I've been 23 chairman, we have never had a voting election for a board. 24 We are scrambling to find people to go on that board and 25 we don't have the people with the skills. 26 27 Our constitution has to be changed but I can't get it 28 changed because 30 people can come along to a meeting, a 29 constitution meeting and overrule anything that I bring up 30 by a 75 per cent vote. It is absolutely crazy. We have a 31 very successful club and if it wasn't for the skills of 32 management and the way that we have to hold our board 33 meetings to push our directors into trying to understand 34 what we're doing, this club would die. It will absolutely 35 die because we don't have the management strength in the 36 board. We have to change all that. We certainly would 37 want to train people. We do try to do that. We try to do 38 it with our current directors, but I have to tell you it's 39 a lost cause. 40 41 MS KRIEGER: Of course, that is a situation where you 42 have an employed executive. If you were a much smaller 43 club where everyone is a volunteer, then you would really 44 feel the lack of skill level at board level. 45 46 MR DAVIDSON: Absolutely. 47 .21/9/07 24 Transcript produced by Merrill Legal Solutions

1 MR CARROLL: Graeme Carroll, Services Clubs Association. 2 Just to pick up on Doug's point, I can understand the 3 issues that he has and this is something as an association 4 that we've been working on, particularly with the state 5 branch of the RSL, for the last 12 months to try and 6 convince these sub-branches that are connected with 7 probably still about 80 per cent of the clubs in the RSL 8 sector that have this, to try and let go the reins and open up 9 director positions on the board to the wider membership. 10 It is only in the last couple of weeks that we've had a 11 joint letter go out from our chairman and the State 12 President of the RSL, Don Rowe, to all the sub-branches to 13 try and raise the level of awareness about this issue 14 because, as Doug says, in five years time there are a lot 15 of clubs that are going to be in a situation where they 16 will simply not have the members in the sub-branches, in 17 our side of the game, to be able to stand on these boards. 18 19 There is a reluctance to let go the reins because of the fear 20 that our traditions will be thrown out the door. From my 21 observations, the regional clubs probably have more 22 problems in this regard. I am aware of some major clubs 23 with very large sub-branches in big centres that have had a 24 director resign and it has taken anything up to six months 25 to find a replacement director. That is not uncommon and 26 it is not uncommon even in the city for very large clubs to 27 not be able to get 20 members of a sub-branch to have a 28 quorum in an AGM and that's from probably one of the 29 biggest clubs in the state. 30 31 It is a particular issue that we are really pushing for some 32 resolve on, particularly with the sub-branches. I think 33 one way of overcoming that may be to enshrine some 34 core values of clubs in legislation, if we can't get the 35 sub-branches, in our case, to actually open up the 36 membership of the board to the wider membership. 37 38 MS KRIEGER: We have probably gone quite a long way 39 down the road to corporate governance and we'll have to 40 take some time out of that slot later. We should probably 41 address the financial viability issues much more closely. 42 43 MR SWAN: I would like to go to clause (a). The key word 44 there is "identify", of course, because we just can't go 45 out there and jump into everybody's boardroom and look 46 into their figures and so forth. The key to that is the 47 department itself because the department receives each year .21/9/07 25 Transcript produced by Merrill Legal Solutions

1 the financial statements of every club, as far as I'm 2 aware, within one month of their AGM and there's the 3 chance to have a close look at some of these struggling 4 clubs which I think are really of concern. 5 6 They are part of the industry. A lot of them are in 7 rural areas where the population has declined, people have 8 aged and the club itself is just battling to survive from 9 week to week and they can't get skilled people in, of 10 course, and if they did, judging by the size of the town, 11 it may not be worth the effort at the stage they've 12 reached. However, I think it's vital that these clubs be 13 seen and at least be given the chance, if necessary, to 14 close with dignity. They don't want to close and have 15 employee entitlements left, they don't want to close and 16 leave local creditors owing, but again this gets back to 17 the department. 18 19 You see the results of these small clubs and I think the 20 next step is to start assessing them and this may mean 21 that the department, for example, employs on a part-time 22 basis some ex-club managers or financial officers in 23 liaison with ClubsNSW and that an effort be made to go 24 out to these clubs, meet the board, be sympathetic - and 25 there is a lot of pride involved in these matters - and say, 26 "Look, we can't help you" or you take the next step, which 27 is in here too, and you look at amalgamation, but they 28 need guidance on these things and they won't accept 29 guidance. They're set in their ways, they're farmers and 30 God knows what, but this is their last chance. I think this 31 identification bit is very, very important. 32 33 The people around this table here run fairly stable 34 businesses, but we're talking of another thing altogether 35 here. Only the department can handle it and do 36 something about it in a sympathetic manner. 37 38 MS KRIEGER: Do you think it would be met with a level 39 of acceptance to have someone from the outside come in 40 and effectively tell the board of a small club that they're 41 headed toward disaster? 42 43 MR SWAN: I think if handled properly, yes, with a degree 44 of sympathy. You're not talking about somebody like a bank 45 manager coming in. It is a matter of, "We want to help" 46 and I'm sure people will handle that. You'd tend to pick 47 people of a similar age group, for example. That is why I .21/9/07 26 Transcript produced by Merrill Legal Solutions

1 said perhaps retired club managers or financial managers 2 or ClubsNSW and I'm sure that would work if handled 3 properly.That is what concerns me most of all. 4 5 MR LAING: I think club auditors and accountants are 6 probably best used for this purpose. I know some time ago 7 ClubsNSW ran a project whereby unclaimed keno winnings 8 were used for various projects and health check on clubs and 9 from memory, James, that worked very well, especially with 10 the smaller country towns around New South Wales. 11 12 MR GALLEN: Yes. Especially when it comes to financial 13 management, like these guys here, we've probably got good 14 management teams and we travel along pretty well. I am 15 from a little place called Boggabri which only has 700 16 people in it and the little RSL club which I used to be the 17 previous manager of has 700 members out of 800 people: so 18 that's pretty good. When I was CEO there, I'd only had a 19 couple of years in the industry. I went in there very 20 green actually as far as management goes, but what I did 21 was familiarise myself with as much training as I could, 22 but business-wise I found the board - as these guys were 23 talking about - was very, very ordinary and they just 24 weren't there. 25 26 These guys over here are probably a prime example of 27 where they have good management. With the introduction 28 of the CDI, the Club Directors Institute, there is more 29 education there. In our local group of CMA and ClubsNSW 30 in this north-west and New England region, we have been 31 pushing as many seminars and as much education as we 32 can as a core group to get out there to those smaller clubs, 33 but you can't help a lot of them. Gil hit the nail on the 34 head. You want to get out there and help them, but 35 they're very lethargic and don't want to help themselves. 36 37 Gil probably had a bit of a point there where maybe a 38 couple of those ones that are struggling need a tap on the 39 shoulder to say, "Look, you guys, we can see that you're 40 not going too well here. We're only too willing to help." 41 We say to all our young club managers from our smaller 42 clubs that we're only a phone call away. We help a lot of 43 the clubs in that way. If we can keep that going, it can 44 keep the clubs themselves going. 45 46 Also, in our industry - and we'll probably get to this 47 later on - the goalposts keep changing. As managers and .21/9/07 27 Transcript produced by Merrill Legal Solutions

1 boards we're heading that way and then all of a sudden the 2 goalposts are over here. Your tax rate is a prime example. 3 You want us to do 10 or 12 or 15-year business plans and we 4 only know that our tax rate is going to be good until 2011 5 or 2012. We don't know what's going to happen after that. 6 That is a big problem in the industry. The goalposts keep 7 changing. I often describe it to people when they ask, 8 "How are you travelling?" by saying, "We're going all 9 right, but all of a sudden the goalpost is over there and 10 then it's over there", you know. Education and training 11 helps the smaller clubs. We should be trying to get in 12 there and push that we are there to help. 13 14 I know that in our region we have built up our 15 membership and we're only too willing to go and help. 16 Rod, Gil, myself and Phil are from smaller clubs and we're 17 only too willing to help them out, but with a lot of them 18 the boards are very good at selling raffle tickets or putting 19 something up or doing something labour-wise, but I think 20 as far as your management skills are concerned, yes, it is a 21 big problem for the smaller clubs. 22 23 MS KRIEGER: I would be interested in a comment from 24 ClubsNSW on this because overall I think the uptake of 25 the training opportunities has not been as high as you 26 would have liked. 27 28 MR BALL: Yes. We think there are about 12,000 directors 29 and we have over 3,000 in CDI. We're actually quite happy 30 with that at the moment. We think that there's room for 31 improvement certainly, but it's a very good start. That 32 number comes out of about 500 clubs, so there is engagement 33 with a fair chunk of the industry, but it could be better. 34 We know that directors don't like, let's say, the cost and 35 time associated with formal learning and some are simply 36 uncomfortable with being assessed and those things we 37 think can be overcome with a little bit of time and effort 38 and upskilling. Education and training is vital when 39 you're looking at financial viability. 40 41 James's comment about the business environment is valid. 42 We have been pushed around on tax, on smoking, on a 43 whole range of issues that go directly to our bottom line 44 and I guess working back to these questions, that is why 45 dependence on gaming is risky. However, we think gaming 46 is a legitimate and healthy business if done the right way 47 and it should be protected. There is clearly a place for it .21/9/07 28 Transcript produced by Merrill Legal Solutions

1 and clubs need to manage it properly and with some 2 sensitivity. 3 4 CDI we see as one arm of the approach. We have talked 5 about the broadening of the talent pool through the RSL, 6 but that is also vital for sports and bowls clubs. We need 7 to get more members. We haven't been able to ask them for 8 a lot of years in a lot of clubs. We might be surprised 9 about who is prepared to put their hands up and the skills 10 that they have and the help that they can provide to their 11 club. We think if you approach this from a few different 12 ways there is a healthy future, but it does need to be done 13 now. We are talking about very large clubs with 50,000 14 members drawing their boards from 50 people who might 15 not be around in five years. That is a critical issue that 16 needs to be addressed. 17 18 MS KRIEGER: What about diversification? We haven't 19 heard very much about diversification away from gaming 20 as such a significant part of the revenue. Would you like 21 to comment on that? 22 23 MR WHEATON: Very much so. Diversification is a very 24 interesting subject at this particular time for the simple 25 reason that I am in a club that is not quite big enough to go 26 and diversify like West Tamworth Leagues, for instance, 27 but what do we do? Internally, we try and diversify as 28 much as possible. Would you ever have thought that my 29 staff would have spent so much time behind a bar making 30 coffee and sandwiches and selling cakes? That is 31 diversification. Would you ever have thought that five or 32 10 years ago the clubs industry would be supplying quality 33 function equipment for its community as much as it is now? 34 35 We are diversifying, but what is diversification? Is 36 it going out and buying a butcher's shop? Is it owning a 37 building that has a hairdresser's shop in it? In our case, 38 is it buying up land? Is that what our core business 39 really is? No, it's not. Our core business is the 40 hospitality industry which includes gaming which we are 41 very good at, but it's also very strong in the function 42 side and catering for the community. 43 44 It is a difficult question to say truly how a small 45 club, a club that's in the top end of the small club 46 industry, can diversify with limited resources as far as 47 dollars and cents go. In our case, our successes - and .21/9/07 29 Transcript produced by Merrill Legal Solutions

1 Bob, you could expand on this if you wanted to - have come 2 in the last 10 years and it has taken us quite a bit of 3 time to build up sufficient finance so that we could 4 actually think, "Okay, we now have the dollars and cents to 5 go out and buy real estate" or whatever. 6 7 Diversification. Is it called investment as well? Do we 8 have the authority of our members to go and speculate 9 with those dollars? I don't believe we have. Investment is 10 really tied down to a very safe, secure money market. 11 Unfortunately, I can't give you an answer on 12 diversification. I'd love to diversify, but I don't know 13 where I'm going to diversify - and into what - that is 14 going to be safe, secure and not be any risk to my 15 members. We don't have the qualifications on the board, 16 with all due respect, to make those big decisions. 17 18 MR GALLEN: As far as we're concerned, gaming is only 19 50 per cent of our monthly income, so I think that that is 20 not a bad figure when the industry average is anything 21 from 65 to 85 per cent. 22 23 Where do you go to? In small country towns especially 24 the political fallout of me doing my own butchering, for 25 instance, is phenomenal. I deal with three butchers and 26 that is probably worth - I don't know - half a million 27 dollars a year to them. If I go out and say, "Righto, I'm 28 going to put a butcher's shop in to try and cut the costs 29 on my food or my raffle trays", or something like that, the 30 political fallout there would be pretty full-on. 31 32 It doesn't matter in a bigger place, you're there to 33 do business and we all know we have to run our clubs as 34 businesses, but you've got to worry about the political 35 fallout in the smaller clubs in regional areas. 36 37 MS KRIEGER: That is certainly true if it involves taking 38 over somebody else's existing business activity rather than 39 growing the overall size of the cake in the town or adding 40 something new. 41 42 MR GALLEN: Yes, and even with travel. I know that a lot 43 of our clubs have travel shops, they have butchers shops, 44 they have hairdressers shops, but if you take them out in 45 the smaller places it's a big whack that you've taken out 46 of the community. You have to weigh up those political 47 aspects of it. Is it the right thing to do? Should we do .21/9/07 30 Transcript produced by Merrill Legal Solutions

1 that? Should we go and purchase our own butcher's shop? 2 I know of some clubs that have. Nambucca Heads RSL has 3 a shop in the main street. It's called the Club Butchery. 4 The members get a 10 per cent discount. For instance, 5 I know that Coffs Harbour did try buying their whole bodies 6 of beef. They employed their own butchers to cut up the 7 bodies of beef. Yes, they can do their own raffle trays, 8 their own cuts for their catering and all that, but I know 9 that that has since turned around again too. The political 10 fallout with little things like that is something that the 11 smaller clubs in country New South Wales have to be 12 aware of. 13 14 MS KRIEGER: Yes, they have to pay a lot of attention to 15 that. 16 17 MR GALLEN: It can come back and bite you. 18 19 MS KRIEGER: The Wests position? 20 21 MR LAING: Again, it is back to the individual 22 organisation of the club, and we are limited with our own 23 resources. 24 25 In the case of West Diggers, when that club was 26 redeveloped some two and a half years ago, that small 27 club had one restaurant. Today it has three restaurants 28 and it specialises in functions and catering upstairs. I call 29 that diversifying. 30 31 There is obviously also diversifying, for clubs that 32 can afford to, and there are some in the region, by 33 building motels alongside their clubs. So that obviously 34 has worked as well. 35 36 The word comes about because of gaming, I guess; 37 perhaps gaming revenue might be on the nose for some 38 community groups. Like James, roughly about 59 per cent 39 of our revenue comes from gaming, and it would be nice 40 to see that drop down. I guess over time it may. 41 42 MS KRIEGER: Is there any history in the region of 43 diversification into, say, fitness centres or aged care or 44 any of those bigger capital projects? 45 46 MR MALLON: That is what we are looking at doing as 47 one of the next phases of our club development, building a .21/9/07 31 Transcript produced by Merrill Legal Solutions

1 gymnasium. For us, when we are talking about what 2 would you diversify into, I think the relationship that we 3 have always wanted to keep is that we are providing 4 members and guests with a service, and we want to do that 5 through a gymnasium. The reason we want to do it is 6 certainly not because we think it would be a hugely 7 profitable exercise, but it is really something that our 8 community needs that could be financially sustainable with 9 the support of the club, but our community just doesn't have 10 that resource at the moment, so we would like to do that. 11 12 Again, it is something that we feel is within the 13 parameters of what we do as service providers, as 14 hospitality providers, and perhaps a motel still falls 15 within those sorts of things. But going out there into 16 businesses that we have no expertise in I feel just simply 17 puts members' funds in danger. 18 19 MS KRIEGER: Okay. 20 21 MR SWAN: I agree with the guys here. Take our clubs as 22 an example. Things have changed over the last few years, 23 the economy has changed, and all of a sudden we are 24 surrounded by some very, very cashed-up motels. As a 25 result, I'm more inclined to concentrate on our existing 26 facilities. We are in the process of buying land from the 27 Tamworth regional council which adjoins the club so we 28 can expand, but that in itself will take up our resources for 29 a couple of years, I can tell you. 30 31 But in terms of this buzz word "diversification", I look 32 at some of the information from Sydney where they are 33 looking at shopping centres and aged peoples areas, and 34 so forth, and that, to my mind, is out of the question in 35 terms of our organisation. I would like to suggest it is 36 out of the range of most of the clubs in this north to 37 north-western area. We have our own patch we are trying 38 to defend these days. Life is not easy. 39 40 MS KRIEGER: It would be useful to have some discussion 41 about industry consolidation, and particularly some of the 42 problems that come up when clubs try to amalgamate, both 43 in terms of amalgamating too late in some cases or looking 44 at amalgamation too late in the piece for it to be an attractive 45 option and the gaming and machine related hindrances to 46 amalgamation that people have encountered and any 47 other comments people want to make about consolidation, .21/9/07 32 Transcript produced by Merrill Legal Solutions

1 its likelihood and the problems that arise. Who would like 2 to kick off on this? 3 4 MR WHEATON: Consolidation is inevitable: correct. 5 Smaller clubs or clubs that haven't got their business plan 6 organised properly now will not survive. So I see the 7 answer to (c) as, yes, it will happen. The problem that we 8 have with club amalgamation is amalgamating with 9 another organisation is so expensive and so long-winded, 10 and the ones that make the money, with all respect to 11 KPMG and everybody else in that area, are the lawyers 12 that write up the amalgamation contracts. 13 14 As a relatively small club, we have looked at trying to help 15 out two smaller clubs within our region. Due to the 16 financial worth of the exercise we simply had to throw our 17 hands up and say, "Well, we can't help", mainly because 18 it just costs so much to do it. 19 20 As far as the transferring of poker machines, that 21 I can understand and that is part of what the arrangement 22 is with the department, and I accept that, but it is not an 23 easy issue to go through amalgamations. I know two guys 24 in this room have been down that track, and they have 25 successfully been down it, but they have also discussed 26 with me the finance that was involved in actually getting 27 hold of it. Jamie and Rod, I'm sure you can probably 28 expand on that, and both your cases have been successful. 29 30 MR LAING: Just back to consolidation, the other problem 31 we have got in our region - again, the smaller villages 32 around the region - is the populations are shrinking. Over 33 the past few years they have been becoming smaller and 34 smaller. For years we have been oversubscribed with 35 licensed venues, hotels and pubs, in those small towns, 36 and as those communities drift away and relocate to the 37 city or to the coastal areas, that will put those licensed 38 venues at risk and those small towns. 39 40 Turning to amalgamation, our amalgamation took roughly 41 about nine months. It was a costly process. I guess it 42 had to be. During that process, I guess the little club 43 that we were amalgamating with was going broke, and 44 very rapidly as well, so it made it difficult because 45 obviously we were picking up the costs and paying out 46 that debt and that was growing as time went on. 47 .21/9/07 33 Transcript produced by Merrill Legal Solutions

1 MR GALLEN: The amalgamation part of things can be 2 positive, but one of the main things that you look at is 3 you're not going to take on a business that is financially 4 not viable or that has got ghosts in the closets, which a 5 lot of these smaller clubs do have. 6 7 The political part of it, again, raises its head. We 8 merged with the bowling club, which was physically next 9 door to the club, so ideally it was a good amalgamation. 10 Our president - and he sends his apologies today - at the 11 time did the right thing by the community, as far as giving 12 the bowling people a right to have half as many people on 13 the board, and it's turned out financially well for both 14 clubs, but the political fallout of it is that all of a 15 sudden we had a bit of a challenge at our board meeting 16 last year. 17 18 We're in a similar situation to these guys, where we have 19 4,800 members and only 200 male bowling members and 20 80 female bowling members, and they tried to change the 21 constitution where those blokes wanted to try and get in 22 and have all the bowlers on the board. They didn't see it 23 as a power play, but I said, "Fair go", you know. We 24 fought it and we won, and what have you, but those little 25 things come up 10 years after the amalgamation. 26 27 It was all rosy in the first little place, but, again, 28 it's the smaller clubs that have got ghosts in those 29 closets, and if you've worked really hard to build your 30 business up, you are going to think very seriously about 31 taking on something that could bring you down, even 32 though there are values to the community. 33 34 We still have to run our clubs as a business. As I say to a lot 35 of people, as the CEO, I'm responsible for 10 directors, 36 70 staff and 5,000 members. So if we do the wrong thing, 37 you wreck it for a lot of people, and Rod, having a bigger 38 club and more members, would be responsible 39 for more people. So we have to be very careful in what we 40 do and how we operate. 41 42 The bloke across the road at the local pub only has 43 himself to worry about, so he can take risks that won't 44 affect anyone bar himself, but we as a management have 45 to be very wary of what we do. You can wreck it for a lot 46 of people by making a bad decision. 47 .21/9/07 34 Transcript produced by Merrill Legal Solutions

1 MS KRIEGER: That's the business decision, and then 2 there's also the loss of identity if you merge two clubs. 3 I suppose the Returned Services Clubs would perhaps feel 4 that most acutely. Do you want to comment on that at all, 5 the difficulty of amalgamation in your part of the clubs 6 industry? 7 8 MR CARROLL: We have addressed these in other areas. 9 I think one of the problems is the cost in terms of the 10 amalgamations. I'm aware of clubs that have spent up to 11 $300,000 on just the legal and consultancy fees that go 12 with those amalgamations, and that is a huge impost on 13 the club that is already undertaking, as Rod pointed out, 14 some fairly large debts. 15 16 One area that we have suggested could be looked at in 17 this regard is some offsets back to the parent clubs that 18 are taking over these smaller clubs. We have a situation 19 where the regulations have been changed to increase the 20 number of clubs you can amalgamate with from four to 10, 21 but there are a lot of clubs out there, particularly in the 22 country areas, that are struggling to survive themselves 23 and they don't have the wherewithal to be able to take the 24 local bowling club or golf club under their wing as well. 25 26 Another avenue that probably should be explored a 27 little further is management agreements where an 28 amalgamation isn't a viable proposition. There are a 29 couple of instances out there already whereby a larger 30 club has assisted a smaller club by a management 31 structure that's been put in place and the small club has 32 been able to survive. 33 34 MS KRIEGER: That management contract arrangement 35 seems to be quite widespread in Queensland. Is there a 36 reason why it hasn't taken off to the same extent in New 37 South Wales that you're aware of? 38 39 MR CARROLL: I think probably because of the legislative 40 arrangements that exist up there and the fact that we have 41 probably had a mind-set for amalgamations rather than 42 exploring these other opportunities that are out there to 43 undertake the administrative processes of those smaller 44 clubs so that you relieve them of that financial burden 45 enough to enable them to keep their head above water. 46 47 As we all know, there are a couple of examples that we .21/9/07 35 Transcript produced by Merrill Legal Solutions

1 raised in our submission whereby local RSL clubs have 2 taken the golf club under their wing, only to find out two or 3 three years down the track that it is a huge drain on their 4 financial capacity, to the point where they have considered 5 actually closing those clubs. That loses that asset 6 entirely to the local community, and is a huge downturn for 7 that community if they lose a golf club. The local 8 residents in the country then have to perhaps travel 100km 9 to enjoy their sport, and that is something we can't look 10 at in the future. 11 12 MR GALLEN: I think in the bush the bigger clubs can 13 help a few of the smaller clubs. There's a prime example 14 in the room here where Rod helped out the local golf club 15 in Tamworth - it wasn't the Tamworth Golf Club, but 16 Longyard -and just threw some help. 17 18 MS KRIEGER: Just in a sort of mentoring capacity. 19 20 MR GALLEN: Yes, he offered his professional advice, 21 and that club is still cruising along pretty well, aren't they, 22 Rod? 23 24 MR LAING: Yes, they are today. 25 26 MR WHEATON: We are outsourcing some of my staff's 27 expertise to a smaller club, and that has highlighted 28 dramatically the problems that they have. Really, it comes 29 back to, (a), a lack of training and a lack of willingness 30 to want to get out and help themselves. So, really, then 31 you go back to (c), what's going to happen. 32 33 MR LENNOX: It still comes back to what was already 34 mentioned here: we've got good management in most 35 places, but our directors haven't got the knowledge. They 36 don't think it is a business; they still think it is a chook 37 raffle club. 38 39 MR MALLON: So it seems that management is the more 40 important thing than the amalgamation. We wouldn't 41 amalgamate with a club that was not viable, and we 42 probably would dearly love to amalgamate with one that 43 is a valuable asset. 44 45 The thing that concerns me when I look at clubs that 46 have amalgamated and look at their financial reporting is 47 in some circumstances you can't tell what the financial .21/9/07 36 Transcript produced by Merrill Legal Solutions

1 contribution of the amalgamated club is as against that of 2 the parent club or how relevant that club can remain to its 3 community by how much money is being left in there, or 4 whether it is actually propping up - which could be a 5 circumstance, I'm not saying that it is - a 6 management-heavy, larger club and draining on that club. 7 8 We have been approached a number of times by larger 9 clubs saying, "Would you like to amalgamate?", and the 10 reluctance is simply there because they are only looking at 11 us as a valuable asset to gobble us up. 12 13 SHORT ADJOURNMENT 14 15 MS KRIEGER: When we stopped we were partway through 16 the club amalgamation, establishment and relocation. If 17 you look at what we have on the screen, we have really 18 covered off most of it. We have dealt with the problems 19 and the cost of the amalgamation process. We have dealt 20 with the problem of struggling clubs seeing the need to 21 amalgamate too late and then finding it difficult to persuade 22 anyone to take them on, and the restrictions on the transfer 23 of gaming machine entitlements, so if we could focus on 24 (b)and (c), if people have any ideas on how the 25 amalgamation process could be improved and what the 26 barriers are to establishing satellite clubs, to the extent that 27 this is a live issue in rural and regional areas, establishing 28 satellite clubs in new growth areas of towns. 29 30 Does anyone want to kick off on the issue of how to 31 improve the amalgamation process? Probably those who 32 have lived through it might have something further to say 33 about that. James or Rod? 34 35 MR LAING: Good question. If you just go back to the 36 earlier issues of time and cost, if those two areas were to 37 be looked at, the time could be reduced. What did I say - 38 six to nine months for us. If that was reduced back, that 39 would obviously be a lot better. 40 41 MS KRIEGER: What was the main driver of that time? 42 43 MR LAING: I think a lot of our problems were the 44 licensing court, to be honest, if my memory serves me 45 correctly. There was only one chap that was doing the 46 accounting for the New South Wales licensing court, so a 47 lot of that was held up with that particular chap, that his .21/9/07 37 Transcript produced by Merrill Legal Solutions

1 report wasn't ready. We sat around for weeks waiting, and 2 I think it was the week before Christmas that we got the 3 approval. 4 5 So they are really the only two issues. In our amalgamation, 6 obviously some members were for it and some were 7 against it at both clubs, so leading up to the vote for the 8 members we had a number of information sessions where a 9 member could come along and voice their opinion and 10 ask questions and they were informed, so by the time we 11 got around to actually voting on it it went very smoothly. 12 13 MS KRIEGER: Which probably takes some time, but it is 14 worth the investment. 15 16 MR LAING: Yes, it definitely was. The timing issue on 17 that wasn't a real problem, but the licensing court was our 18 main issue at the time. 19 20 MR GALLEN: Similarly with us, but I think the 21 communication is a big thing, that we actually get out 22 there and let the members know what is happening, and 23 that makes that final vote a little bit more easy. 24 Communication is a big thing, because some people are 25 very daunted by it and some people get misinformation 26 and don't really know what the facts of it are and what the 27 grounds behind it are, but the licensing court is a pretty 28 slow process. 29 30 MR LAING: Generally red tape, I guess. 31 32 MS KRIEGER: What about the gaming machine aspects 33 of amalgamation? Did you run into any significant 34 problems there? 35 36 MR GALLEN: No, we didn't, really. We had no problems 37 because the bowling club had their machines and the 38 services club had theirs, and we still actually operate 39 them on two different returns, but there were no hassles 40 there as far as our set-up was concerned. 41 42 MR LAING: We didn't have any issues at the time either. 43 Again, two separate clubs and there were no issues with 44 poker machines. 45 46 MS KRIEGER: We might move on to corporate governance. 47 To some extent we dealt with quite a few of these issues .21/9/07 38 Transcript produced by Merrill Legal Solutions

1 earlier in the discussion on financial viability. I think 2 the consensus on the direct appointment of board members 3 was that is unlikely to work very well in most regional 4 centres. Does anyone want to comment on how well that 5 might work if it had an external impetus, if it was 6 externally imposed as a possibility? In other words, if 7 the clubs themselves didn't have to come up with that by a 8 change of constitution? 9 10 MR BALL: Sibylle, can I make a comment on that? In our 11 submission we see a role for people being appointed to club 12 boards and we make the point strongly that it needs to be 13 at the discretion of the board. If the board collectively 14 thinks that they are lacking something at a particular time 15 or in an ongoing way, then they should be able to fill that 16 if they can't get it from their membership. That makes 17 sense to me. It could be the smallest club or the largest 18 club, but we think that they should be able to get those 19 people on. It already happens to an extent. Boards 20 currently get advice from external people. We think there 21 is some value in formalising that and making that person a 22 proper participant in board discussions. We think that 23 that has benefits. 24 25 So we definitely support that, but it has to be a part of that 26 overall strategy, which includes broadening the talent 27 pool and allowing your bowling club or your RSL to get at 28 that body of members that might have skills. It also 29 includes upskilling, training and education, and it might 30 also include mandating a maximum number of board 31 members in a club. Fifteen is probably too many. 32 I don't know how you can function properly with a board 33 of 15 members. At ClubsNSW we used to have 25 on the 34 board, but we don't anymore. 35 36 So we think that, as part of that overall strategy, we 37 can get to the point where any club can mould their own 38 board in a way that suits them best. 39 40 MR LAING: I know we have discussed this in detail 41 earlier today, but I have to say that I disagree with some of 42 my colleagues around here today. 43 44 I was quite excited when I read this. I am involved with 45 another organisation, the Country Music Association of 46 Australia, where they have a board member total of 12, and 47 three of those are invited along by the board members and .21/9/07 39 Transcript produced by Merrill Legal Solutions

1 the remaining nine are elected by the membership, and that 2 works very successfully. When I read this a few days ago 3 I was quite excited about that; I thought, "Here's a way 4 forward". Listening to the discussions around the table 5 this morning on financial matters, this is one area that 6 would solve some of those almost overnight. 7 8 I've been involved in the club industry for 21 years now, and 9 over the years you see directors come and go. George, 10 you mentioned that your management team is strong, but 11 your board is not. For argument's sake, if your board had 12 seven directors, five of whom were voted on by the 13 membership and two of whom were invited on by the board, 14 you would be in a position where you could invite finance 15 people on there or legal people or various project people. 16 17 I have been fortunate over the years to have solicitors 18 on my board, accountants, the assistant general manager 19 of the Tamworth regional council as well, and they 20 have all had great input. 21 22 The problem is getting those people elected on to a board 23 under the current process is rather difficult. From a 24 membership point of view on voting, they see a person 25 in the club everyday, maybe having a beer or playing 26 a poker machine, and the most popular club person voted 27 on the board may not necessarily be the best person. 28 29 As I said, I was quite excited to read a couple of 30 days ago that there could be some light at the end of the 31 tunnel, especially as a back-up support to managers. 32 33 MR DAVIDSON: If I may just follow up on some of those 34 comments, I don't disagree with what he's saying, but what 35 I would like to see happen first is the Act changed so that 36 you can have a look at the total membership; instead of 37 30 people controlling a membership of 4,000 or 3,400, 38 I would like to see it opened up. I have those kind of 39 people in the social membership, but I can't do anything 40 about getting them on to the board. 41 42 So looking outside is no good to me, because that will 43 never work at the moment, but if I could get that Act 44 opened up or that constitution changed, I have people 45 I could bring onto the board or get voted onto the board 46 that would do a very good job, but I can't do that because 47 we are controlled by a voting people of about 30 people .21/9/07 40 Transcript produced by Merrill Legal Solutions

1 that come from the bowling club that controls the whole 2 club which is absolutely crazy. 3 4 MR LAING: So we are hamstrung by our constitutions. 5 6 MR DAVIDSON: We are absolutely hamstrung by the 7 constitutions. 8 9 MR LENNOX: Yes. 10 11 MR SWAN: Just backing up Rod, I couldn't agree more, it 12 is a great idea, but I just have one query on this: we are 13 looking at professional people who don't necessarily 14 normally come into the club who you would like to have 15 on your board. What is the feeling here in terms of 16 financial incentive? Do we pay them $5,000 in directors 17 fees or something compared with the rest? Does anybody 18 have any feelings on this? 19 20 MR LAING: Gil, are you asking should they be a member 21 or non-member? 22 23 MR SWAN: Say non-member. 24 25 MR GALLEN: Remuneration? 26 27 MR SWAN: Yes, remuneration I'm talking about. You 28 are trying to get professional people onto your board. 29 30 MR LAING: Currently we can't. We can pay an 31 honorarium. My club pays a modest honorarium, and I 32 think your club does as well. I think a lot of clubs around 33 the state do these days, and I think they should. Directors 34 give up their time. Most of the time obviously they're 35 volunteers, maybe helping out in raffles and other 36 activities around the club, so I don't see a problem with 37 the honorariums. Your professional board members you 38 are inviting on would fall under that umbrella. 39 40 MR SWAN: Possibly with a bit of an increase on the rest 41 of the board. 42 43 MR LAING: I think that's dangerous. 44 45 MR SWAN: I know it is dangerous. I'm asking the 46 question. 47 .21/9/07 41 Transcript produced by Merrill Legal Solutions

1 MR GALLEN: Personally, I wouldn't, no. If they wanted 2 to come on and accept the same honorarium as your other 3 directors, not a problem, but I think you would open a can 4 of worms if you invited people on and then paid them 5 more than what the others were getting. 6 7 MR LAING: You invite them on to assist your 8 organisation and it is up to the individual if they are going 9 to take up your offer. 10 11 MR SWAN: This is always the problem: if they were so 12 keen, you probably wouldn't have to ask them. It is a very 13 interesting scenario. The concept is great. I like the 14 idea. 15 16 MR LAING: I think you are missing the big picture, 17 though, Gil. You are right, these people may not be 18 sitting in your club today or they may not be a member of 19 your club, but there may be some individuals out there 20 who have the time and obviously the skills to assist your 21 organisation. 22 23 To just pick a name, one of your board members might 24 know Tom Hanks down the road who runs a very good 25 accountancy firm and he could give some help. It is up to 26 your board or your club to ask for the help, and that is 27 where the problems are with these clubs that are going 28 broke: they are not asking for help. 29 30 MS KRIEGER: To me, it doesn't sound as though the 31 question of payment needs to be dealt with externally. 32 I think that is probably best dealt with within the club. 33 Even if there is a need, perhaps, for the possibility of 34 external director appointments to be imposed, the 35 payment issue I think can probably be resolved internally. 36 37 MR SWAN: It is part, if I may say, of this corporate 38 governance, and you talk about directors generally. It is 39 so difficult to get directors on the board. Here we are 40 looking at externals which I would very much like to see 41 happen. 42 43 It is really a problem for our board in particular. 44 I have actually brought into our board expense allowances 45 over their objections, as well as honorariums, because 46 I think they deserve that, but it is the future that 47 concerns me. I think this is a great scheme and I'm with .21/9/07 42 Transcript produced by Merrill Legal Solutions

1 it all the way, trying to get outside directors in. I just ask the 2 audience here their feelings on the matter of remuneration. 3 I know honorariums are paid. When I'm going 4 to a professional, I can hardly offer him more than the 5 existing ones, but it is something for discussion. It 6 certainly comes into this whole gambit here. Directors are 7 the key. 8 9 MR LAING: That's true. As we move forward, if you want 10 good people you will obviously have to pay those people. 11 12 MR LENNOX: Just a quick question on that: in most 13 constitutions don't we have a situation where the board can 14 form a subcommittee and invite people from outside the 15 board on it? I don't know. I know in our constitution we 16 have got that. Would that not still do the same thing? 17 That is only for a project maybe. 18 19 MR LAING: There are 1,400 clubs across the state and 20 there are probably 1,400 different constitutions. That's 21 where the problem is. You've got RSLs, bowling, golf, 22 leagues. 23 24 MR ADAMS: At Armidale city if we need professional 25 advice we invite maybe a solicitor to come and talk to the 26 board, although not a permanent member of the board, and 27 they work with the club. They don't charge us any fees, 28 either. We have a professional company that does our 29 accounting and that all that sort of thing, that's all there, 30 but the legal advice side of things, yes, it's just an invite to 31 the board meeting and they'll come. 32 33 MR LAING: I only used legal as an example. 34 35 MS KRIEGER: On the question of increasing uptake of 36 training, the general message seems to be that people 37 welcome training opportunities and are happy to take 38 them up. Is there anyone who wants to comment on 39 perceived difficulties or road blocks to director training 40 in particular being taken up? 41 42 MR SWAN: We have seven directors and of course they've 43 got a lot of things to do sometimes when these meetings are 44 on at the CDI. We always have attendance at CDI meetings 45 at ClubsNSW. All our directors are registered, but we may 46 just manage to take two up at any particular meeting. 47 This training is pretty important gear. .21/9/07 43 Transcript produced by Merrill Legal Solutions

1 2 The other problem you face is of course some of our 3 directors are fairly aged people. They don't have much 4 interest in learning any more, thank you very much. To 5 overcome that what I tend to do is get our experts up from 6 Sydney, which I'm doing again shortly - our solicitor - and 7 he will spend four hours with the board telling them what 8 is going on in society and answering their questions. That 9 to me, one on one, works far better than the existing 10 arrangement. That is not ClubsNSW fault. It's just the 11 way it is. I can't get them all to go at once. As far as 12 our directors are concerned, I find that that certainly 13 assists immeasurably in education. 14 15 MR LAING: I would back that up. The biggest hurdle 16 there would be directors that are working full time with 17 other employment. Their opportunity to do director 18 training would only be after dark hours, I guess, unless 19 they were shift workers: that is a hurdle. 20 21 MR BALL: The government is already working towards 22 formal educational requirements. It is now a requirement 23 to obtain information before you run for a board and that 24 will come in shortly. I think the mood is that there should 25 be some kind of compulsion for directors to keep across 26 industry developments and keep across things that way. 27 We don't want to see every director scared off, we 28 certainly don't want to see that, but we also think that 29 there are ways to get that information out there. It might 30 also be a way of identifying those directors that simply 31 don't want to be involved or aren't up to it. There is a 32 section of directors that aren't able to discharge their 33 duties properly because of their background and where 34 they are. 35 36 We need to start looking at that and whilst we haven't 37 said that directors should be required by law to engage in 38 training, I sense that that's a bit of the mood given that 39 it is difficult to get them to come there voluntarily. 40 We think that there's work that can be done in developing 41 training packages that will make life easier. After hours, 42 from home, remote access, those types of things need to be 43 looked at as well, but ClubsNSW director training is one 44 of our highest priorities right now. 45 46 MR LAING: I think ClubsNSW has some great tools out there 47 already through club circulars, the CDI newsletter and also .21/9/07 44 Transcript produced by Merrill Legal Solutions

1 the Club Life magazine as well. They certainly keep 2 directors abreast with industry news, with what's 3 happening around the state, I guess. Again, with those 4 publications you can lead a horse to water, but 5 unfortunately you can't make him drink. 6 7 MR WHEATON: A few years ago we implemented through 8 ClubsNSW the pre-nomination details that are supplied 9 through CDI and obviously via ClubsNSW. We found them 10 to be very successful. Yes, it has certainly thinned out a 11 few of our directors through their self acknowledgment of 12 lack of capability in doing the job: that's fine. Those 13 guys can be given other jobs that aren't on the board, but 14 we can still make them feel as though they're involved 15 with our club. 16 17 Personally, I have found - and I'm sure my vice-president 18 would agree - that the pre-nomination forms and 19 packages that were put out and are still put out by 20 ClubsNSW are a very good tool to identify whether a person 21 actually really wants to be a director and what their 22 capabilities are. I can sit here and sympathise with 23 everybody that suffers with boards, but I have the delight 24 of having a fantastic board and in saying that, these guys 25 all have separate capabilities or they specialise in 26 different areas and the trick is to make sure your chairman 27 puts those people in to their fields of expertise. If it 28 wasn't their field of expertise when they started off, 29 train them in making sure that it is something that they 30 like. I will sit here openly and say I have succeeded in 31 training board members and I have seen those gentlemen - 32 and I hope potentially ladies as well - grow in themselves. 33 That has been a major positive step as far as that 34 pre-nomination kit is concerned. 35 36 There are no ifs and buts. They will automatically become 37 members of the CDI which is also part of it and as Mr Lang 38 just said quite accurately as well, the information then 39 is automatically sent to them and the gear 40 that is coming out of ClubsNSW, those that have been 41 involved with it as strongly as people that are in this 42 room know that it improves and improves and improves. 43 44 Whether they like it or not, training has to be made a 45 responsibility of the director. The friendship tricks of 46 getting votes because you're the best bloke on the floor is 47 history. It has to be history because the businesses that .21/9/07 45 Transcript produced by Merrill Legal Solutions

1 we now run are vital cogs in our communities' development. 2 As far as I'm concerned, there are no ifs and buts. We can 3 discuss all day how crook things are. If so, fix them. If 4 it's crook, do something about it. 5 6 MR LAING: The other factor too, again representing small 7 clubs, is the cost of training, whether the directors are 8 paying for that themselves or whether a small club is 9 burdened with that cost. Again, in the smaller townships, 10 such as Uralla and Manila, the small clubs would battle 11 with the cost as they would battle to attract board 12 members. 13 14 MR LENNOX: At one stage there a couple of years back, 15 Phil, you might remember we combined to get the Sydney 16 mob up and bring in all the little clubs. 17 18 MR WHEATON: Correct. 19 20 MR LENNOX: But really we had no takers from the little 21 clubs. A couple would have come but the rest weren't 22 interested. Yet, I know two or three clubs are members of 23 ClubsNSW. Again, my point is that we've got to educate 24 and develop and not regulate. 25 26 MR LAING: Yes, I think we need options for director 27 training. They could be finance in one section and 28 governance and that sort of thing, but broken down to 29 options and it needs to be affordable for everybody and 30 using today's technology. I know there are very good 31 training courses out there for Hold Up. That is done in 32 front of a laptop or a computer. You only have to press 33 the edit button I think, from memory. They're good tools 34 that are just ideal for adult education that an older 35 director wouldn't be scared or afraid to use. 36 37 MR CARROLL: I think what this discussion has 38 highlighted is that particularly in country areas, the vast 39 number of smaller clubs that probably are the most in 40 need are the least able to afford it and even going down 41 the path of IT,I know that there are clubs out there that 42 simply don't have those sorts of broadband capabilities or 43 computer equipment in there because of the voluntary 44 nature of the operation. 45 46 It behoves all of us, if we want these clubs to continue 47 as a hub in these smaller towns, to come up with a .21/9/07 46 Transcript produced by Merrill Legal Solutions

1 model that is really cost effective to enable those boards 2 to continue on. 3 4 MS COLYER: He has actually stolen my thunder, but I 5 was basically going to say that one thing that I've noticed 6 about this conversation today is that it really does mirror 7 what's happening in the community sector as a whole. 8 I deal with funded programs of all different types and 9 basically, the lack of appropriate governance, good 10 governance, is a problem with all community based services 11 as well and getting good board members is the same whether 12 you're in a small kindergarten right through to this sort 13 of larger club and it is affecting rural areas very badly. 14 15 Yes, I think training is at the bottom of it, they do 16 need training, but what we've found is that if they can get 17 some sort of accredited training it seems to make a 18 difference in having people come on to the boards and 19 again, as you've just said, the fact that the smaller 20 services cannot sustain the costs involved in providing the 21 training is something that is making the smaller services 22 fall over all the time. 23 24 It is quite amazing that it is mirrored in the clubs 25 exactly the same, but I do think that if they can get 26 online accredited training it does make a difference in 27 bringing them to the party, because they know at the end 28 of the day, even if they finish with the particular board 29 that they're involved in, they have a credential to go on 30 with, ven if it is only a Certificate 3 or something like that. 31 They've got something they can go away with. 32 33 MS KRIEGER: ClubsNSW might want to comment on the 34 transportable skills and accreditation aspect. 35 36 MR BALL: Thanks, Wendy. You have made a good 37 point. We have done a lot of research with our directors 38 and formal training and assessment scares the hell out of 39 them and discourages a lot from continuing on with that. 40 Against that, I think we do need an accreditation system 41 perhaps designed specifically for clubs and perhaps 42 transportable elsewhere as well. We are trying to work on 43 that. It is not an easy one because we know that if you put 44 a written test in front of a director - and I'm not saying 45 everybody - out of the 12,000, a good proportion of them 46 will walk away from it. They don't see that as part of 47 what they're doing as a club director. .21/9/07 47 Transcript produced by Merrill Legal Solutions

1 2 We are looking at ways of building that accreditation 3 scheme up, with or without TAFE or some other kind of 4 training provider, because we do think as we get the new 5 directors coming through, we want the young, we want 6 more females, we want that cross-section of the community, 7 they are going to look at accreditation as an incentive 8 to get involved in a club and engage in the training. 9 10 MR GREENHOUSE: At the two previous roundtables 11 Mike Foggo was at pains to emphasise the priority of 12 training and the key place it holds in improving the skills 13 of directors and generally corporate governance. Doug 14 talked about "educate rather than regulate". Certainly, 15 from our perspective, as Michael indicated, the philosophy 16 of the organisation is about education first before you kick 17 a head and we think there's an awful lot of value in terms 18 of making sure people understand and up-skilling them so 19 that they can carry out the jobs that they do to the best of 20 their capacities. 21 22 Regulation at the other end is something. If we can educate 23 people, we won't need to do as much regulation as we 24 currently do. We have been running a lot of corporate 25 governance workshops around the state, but not as many as 26 we'd like to have done. They have been regularly 27 attended. I think we've had 1,200 or so or at least 1,000 go. 28 We plan to carry those on. As far as the organisation is 29 concerned, education is the key focus. 30 31 MR GALLEN: I think there's also an issue in society too 32 about people taking on executive roles because of 33 litigation and I think that comes into it a lot, whether it 34 is just the local football club or the soccer club or the 35 cricket club. We find heaps of them. We've got people 36 who if you ask them to go and sell a raffle ticket or do 37 something, yes, they'll do it, but to actually take on 38 executive roles, I think society is very reluctant to do 39 that because you are responsible for a lot of things. 40 41 I think it's a bit sad the way that society has gone. People 42 are very reluctant to take on executive positions no matter 43 where they are: at our club or at the local sporting club. 44 You have your workers, but people don't actually take 45 on the executive positions not because they don't want 46 to, but I think because of the consequences, although 47 they're very low. Something could happen to them. .21/9/07 48 Transcript produced by Merrill Legal Solutions

1 I think that is also a factor. 2 3 MS KRIEGER: And the apprehension that those 4 consequences may or may not be well informed. 5 6 MR GALLEN: It gets back to the information, yes and the 7 pre-nomination and all that sort of stuff and the 8 information that gets out there to them. 9 10 MR CARROLL: As another aside to that, the other factor 11 that comes into play is the fact that in trying to entice 12 more professional people on to your board, particularly, 13 I would think, in a regional centre, is that those people 14 are so busy in their own right, in what we all know is a 15 time for society, that they simply haven't got the time to 16 also be running their own business and sitting on the 17 board of a club. That is a really difficult issue. I have had 18 that related to me by several managers. They have 19 identified people who they would like to get on the board 20 but they simply haven't got the time and that perhaps 21 comes into the issue that Gil raised about do you set up 22 remuneration processes that give them that extra incentive 23 to get involved? 24 25 MS KRIEGER: I think that just about covers off that 26 topic. We should probably move on to some discussion 27 about the framework for the management plan. 28 29 MR EVERETT: The final area today that the Tribunal has 30 been asked to make recommendations on is the framework 31 for a management plan. There are three specific areas we 32 would like to have a discussion on today. First, what do you 33 think the key elements of the management plan should be? 34 Secondly, how will the plan help the clubs industry? We 35 have also been asked to look at a club charter. We wanted 36 to have some discussion around what you see as being the 37 key responsibilities of the clubs industry and government 38 that needs to be captured through the charter. 39 40 MR WHEATON: For a start, we should have a vision for 41 our organisation and live by that vision. As an individual 42 or organisation I believe you really do have to have a goal, 43 a mission of intent or achievement and whether it is 44 ClubsNSW or the Armidale City Bowling Club, you then 45 set out a plan of business and a management plan to 46 actually achieve those goals, those missions, those 47 achievements in your life that you want to fulfil. .21/9/07 49 Transcript produced by Merrill Legal Solutions

1 2 I believe, getting back to that holy word "board" 3 again, that a lot of them read into business plans and 4 mission statements and so forth things that aren't actually 5 there. As Sibylle quite accurately said a second ago, are 6 the details as far as insurance, litigation and liability 7 that you might be involved in, as far as a being a 8 director, clearly explained to you as to what your actual 9 responsibilities are and what the legal requirements might 10 be if you get it wrong? 11 12 The same applies with management plans. If you don't 13 have a solid structure of where you actually want to go and 14 a mission or a vision for the organisation that you're 15 working for, then all the management plans and all the 16 fancy words that you throw around aren't worth a cracker. 17 18 I certainly believe that there's too much heavy 19 weather made as far as business plans are concerned and 20 that boards, companies, people, individuals should look at 21 themselves and say, "Okay, this is where I want to be. 22 This is what I want to achieve. How am I going to do it?" 23 It is as simple as that. Yes, there are key elements to 24 management plans that the government is going to tell us 25 about and thankfully the IPART committee will be able to 26 sieve through it and come up with a plan for the 27 government to help us in this industry, but if your board 28 is operating properly and is being led correctly, the 29 bottom line is that you should have the vision or that the 30 mission you have for your own organisation shouldn't be 31 very difficult and shouldn't be made a hugely expensive 32 issue. Set out what your goals are and achieve them, but 33 see what you've got to do to achieve them. 34 35 I was talking to Graeme in the break. I hope you don't 36 mind me bringing this up. I believe that the services 37 and leagues associations do a far, far better job than 38 the Royal New South Wales Bowling Association does, 39 which is absolutely zip. That is because they don't have a 40 goal. There is no vision for the future. It is all gloom 41 and doom. There isn't a plan set out as to what they want 42 to achieve and where they want to go. We have a group of 43 people sitting up the top in a committee that are happy 44 where they are and are quite happy with the fact that 45 they've all reached 75 and plus, but they haven't got 46 anything that's going on underneath here. 47 .21/9/07 50 Transcript produced by Merrill Legal Solutions

1 I hope through ClubsNSW and obviously through the 2 examination into our clubs industry that people with that 3 mentality are going to look at what value a management 4 plan or a vision for their organisation is to them and look at 5 how simple it is. It is not something you need to run away 6 from. It is so simple. It is as simple as being able to 7 look after what you want to do in your own life. It is the 8 same as if it is in your own business. If people have 9 variations on that, please, shoot me down, but I believe 10 management plans are dead set easy if you've got a vision. 11 12 MS KRIEGER: Could I just ask you a question about that, 13 Phil? What we are talking about here are recommendations 14 towards an industry-wide management plan. What the 15 government is asking for is something that will assist a 16 stable and flourishing industry over a medium term 17 10-to-15-year period. You are talking in part about a 18 club-by-club management plan or mission statement and 19 then a group of club mission statements. Do you see it as a 20 bottom-up process or a top-down process or a bit of both? 21 22 MR WHEATON: I believe what IPART can do for our 23 industry is quite simply go and say, "These are the common 24 threads that I'm hearing your industry wants to achieve. 25 This is how we believe you should go about it. These are 26 the steps that you need to take to achieve long-term 27 stability. "It's as simple as that. You can see around the 28 room - and obviously you guys have been to a few of 29 these meetings -that there are common threads, there are 30 common problems and that it needs the big witch doctor 31 from above to say, "This is how you're going to do it or else 32 your legs are going to fall off." We are so disjointed in not 33 having a common line to follow that I believe we've got 34 ourselves into the state that George spoke about. George 35 has great passion and enthusiasm for his club, but he's 36 having trouble getting people to follow him. I really 37 believe in our industry and I hope passionately that your 38 group come up with something so that we can at least be 39 forced to look inside ourselves and say, "We're not doing 40 it right. This is how we think you could do it better." That 41 is how I see it. 42 43 MR BALL: I agree wholeheartedly with Phil. You know, 44 if it's not on the plan, it's not on the planet, so let's work 45 out how we should approach this. Like any business plan, 46 you set out your objectives at the top level and it might 47 be to streamline legislation or it might be to value a .21/9/07 51 Transcript produced by Merrill Legal Solutions

1 social contribution. You then set out how it will be 2 achieved. Is there a committee to be formed? Is there 3 something to be done to do that? Hand out some 4 responsibilities and set some milestones. I think it's 5 pretty basic as well. 6 7 The difficult part is going to be in deciding who drives 8 it, who is ultimately responsible for this and who do we 9 involve in the process? Is it to be just clubs sitting 10 around and working out what they want? I don't think 11 so. I think it needs to be broader than that. I think 12 obviously government needs to be involved, probably 13 the community, sporting groups, all of those people that 14 are stakeholders in our clubs need to sit down with us and 15 work out what those high-level objectives should be. 16 17 If we are looking at streamlining legislation – and that's 18 important to reduce the compliance burden - let's work 19 out who needs to be on the review team. We need a 20 small group of people that will sit down and go through the 21 legislation and work out what's old, what's not needed, 22 what needs to go in there, work out when it's going to 23 happen by and just get it done. It's going to need some 24 commitment. Certainly, ClubsNSW, Graeme and Peter 25 Turnbull at the leagues clubs are up to this and we are 26 willing to drive it, but I think it will be a pretty simple 27 document that the whole industry can look at, not only the 28 industry but the government and work out where we're 29 heading. The difficult thing is going to be working out who 30 is responsible for it, who drives it and who signs on to it. 31 32 There aren't too many of these out there. We had a look 33 around trying to find industry management plans and 34 typically they applied to industries where there's an 35 environmental issue or fisheries that you don't want fished 36 out or that you're growing something that has a negative 37 externality, something like that. They tend to be the 38 focus of these. This may be the first time in Australia 39 where an industry which is on balance pretty healthy is 40 actually sitting down and looking at itself in this way and 41 developing such a plan. It is new work but for us it is 42 essential. 43 44 MS KRIEGER: James, what do you think? 45 46 MR GALLEN: Yes, I agree with the guys there. 47 .21/9/07 52 Transcript produced by Merrill Legal Solutions

1 MR LAING: I understand the question to be that as far as 2 the plan goes, it is an evolving plan and a plan that could 3 change. Would it also involve poker machine tax rates if 4 they change, the CDSE commitment percentages if they 5 change, because obviously that changes the playing field 6 again as far as that plan goes. As I see it, if those 7 rates increase, those plans and your vision and what has 8 happened, where the industry is going at the time changes 9 with that. 10 11 MR GALLEN: It gets back to that comment about the 12 goalposts changing. 13 14 MS KRIEGER: Yes. I think what you are talking about is 15 stability or predictability in the tax rate. That is 16 something that would probably go in the charter rather 17 than the overall management plan, but the problem that 18 you always face is that no current government can 19 enforceably commit a future government to any particular 20 tax regime and that's where it generally falls down. 21 22 MR GALLEN: That's right, because if they're in for four 23 years, then they could be out, whereas we're planning 24 something 10 or 15 years down the track. That's why 25 those goalposts are there for four years, but they could 26 move over there. 27 28 MR SWAN: I agree with the guys on this as well. 29 Personally, all I want is the chance to run the club as a 30 business. I know that we're regulated by RSA and RSG 31 and so forth, but I should be able to run that club like any 32 other business around the place. All I want is a level 33 playing field. As has been mentioned here, all I want is 34 the chance to be able to budget long-term which is vital 35 when you have a building project going on. As Anthony 36 has mentioned, I want the regulations looked at. 37 38 A matter I raised with Anthony before - and I know he'll 39 look at it in due course - is section 10(ii) regarding 40 functions held away from a club. For example, I had a 41 chance to run the liquor at the Tamworth Town Hall 42 on behalf of the RSL Club, a sub-branch. They were 43 having an 80th anniversary. I can't do it. They're not 44 members of my club. This to me is restriction of trade. 45 This is not right, in my opinion. 46 47 The NCHA, as Rod is aware, have a very big show in .21/9/07 53 Transcript produced by Merrill Legal Solutions

1 Tamworth, with probably 8,000 or 10,000 people floating 2 around there. I can't run that under my own licence but a 3 hotel can and so can a caterer. This to me is wrong. 4 I want the chance to compete on a level playing field. 5 These are matters which I think should be in this 6 management plan. 7 8 MR LAING: Yes. There are dangers there. We give up a 9 lot of our concessions if we're on a level playing field. 10 I guess you're referring to the situation where a hotelier 11 can take his or her licence then to another part of town 12 and operate. 13 14 MR SWAN: Yes. 15 16 MR WHEATON: Can I duck back to what I said and 17 please, tell me if I'm wrong. The management plan itself 18 is how to get from point A to point B. All the little bits 19 and pieces and nooks and crannies and the regulation and 20 legislation that goes inside that is part of it as well, 21 but a structured management plan as to how we're going 22 to achieve something by these means that involves the 23 community, involves all our members, is what the 24 management plan is to me. It's not the finances that are 25 involved with it. 26 27 MS KRIEGER: What you're saying is that it is the big 28 picture goals. 29 30 MR WHEATON: Yes. 31 32 MR BALL: I think it is both. I think it needs to be. 33 Phil, I think this is as much for the government as it is 34 for us. It needs to provide direction to everybody. 35 I couldn't see a more important thing than promoting 36 skills development in clubs for directors and managers. I 37 think reducing the compliance burden should be in our 38 top two or three priorities. I would see those priorities 39 being right up the top. We'd have a little discussion about 40 how to achieve that of course, but this is not so much for 41 the club. This is more for the people that have the power 42 to change the way that we operate. 43 44 We talked about financial certainty and tax rates. 45 Governments can't commit beyond their term, but there sure 46 as hell can be a process in place whereby governments 47 consult with us. "It is in the plan. Look at it. If you .21/9/07 54 Transcript produced by Merrill Legal Solutions

1 want to change that plan we'll talk about it, but there it is." 2 Consult with us before you think about, heaven forbid, 3 giving us a tax reduction which we'll certainly be asking for 4 in 2012. There does need to be that detail in there because 5 we need to be held to something. Certainly, the high-level 6 principles are important and they're elements of 7 the charter and in our submission we go through 8 that in some detail, but it does need to draw down. 9 10 MR MALLON: To allow us the opportunity to get there 11 ourselves, would it be useful to have key standards which 12 perhaps are common to all our constitutions which ensure 13 fairness for members representation, the greatest 14 opportunity to recruit the best directorship, maintaining 15 the value and relevance in the local communities of that 16 club and there again I see amalgamated clubs requiring to 17 report individually on their financial status. I am sure 18 there are a number of other things that aren't onerous 19 requirements on us, but are simply things that will help us 20 achieve the things that we need to for ourselves. 21 22 MS KRIEGER: Yes, particularly if they're things that are 23 not merely reporting mechanisms, but that serve a 24 secondary and tertiary advantage as well rather than 25 simply reporting to the government instrumentality. 26 27 MR MALLON: Indeed. 28 29 MS KRIEGER: Can we have a comment from the Office 30 of Liquor, Gaming and Racing? 31 32 MR GREENHOUSE: It comes back a lot to corporate 33 governance issues as well, I suppose. The brief here is 34 that the government wants to assist the industry to 35 flourish so as to preserve and enhance the substantial 36 support they provide local communities across the state 37 and for venues to flourish and continue on doing what 38 they're doing and it's going to come back to how individual 39 clubs manage themselves in a sustainable way. It again 40 comes back to the education of directors and beefing up 41 the processes around corporate governance generally. 42 43 In terms of a management plan, I think one of the things that 44 hasn't been mentioned, but I think Michael has mentioned 45 previously, is the gaming agency is particularly 46 interested in promoting risk management issues. There are 47 a lot of risks around this industry, as there are around .21/9/07 55 Transcript produced by Merrill Legal Solutions

1 every industry, and it is about identifying those and how 2 we can manage them through when problems arise so that 3 if something changes in a cathartic sort of way the whole 4 thing doesn't fall over. It is about identifying the risks 5 and working through the process of managing them. 6 Again, it all comes back to the corporate governance 7 processes around doing that. 8 9 I think that Michael mentioned at one of the meetings 10 that item 1 on every agenda meeting for every club board 11 should be, "Will we still be here in five years? What do 12 we need to do to ensure that we're still around doing what 13 we're doing in five years' time?" When you think of it in 14 that sort of way, it really does focus you on how you do 15 things and what your future processes are. 16 17 We see the process for developing the plan across 18 government as being an extraordinarily important 19 opportunity that has to be taken. In the government 20 state-wide there is a state plan just developed, so we have 21 been through this process in some ways at a government 22 level. It certainly clarifies your thinking, it clarifies 23 where your priorities lie and where your strengths and 24 weaknesses are and how you can promote those. 25 26 Clubs certainly are a key part of the state plan as 27 well - I haven't mentioned that previously - but reducing 28 red tape is one of the key priorities of the state plan. 29 There are other things as well that clubs contribute to. 30 31 There are a whole raft of things that a management 32 plan would be focusing on, but at the top of our list would 33 be in terms of corporate governance issues and risk 34 management concerns as well. 35 36 MR BALL: If I could be excused? 37 38 MS KRIEGER: Certainly. Thank you. 39 40 Wendy, would you like to comment on this question of a 41 management plan for the industry? I assume it is 42 something you have encountered? 43 44 MS COLYER: We fall under the state plan of course, being 45 DoCS, but in looking at the regulations - I'm not totally 46 au fait with the regulations in regard to this industry - there 47 has been a regulatory review of most regulations over .21/9/07 56 Transcript produced by Merrill Legal Solutions

1 the last 12 months or so, and there has been a lot of work 2 done, as David said, in cutting red tape. 3 4 I am not sure where that is going within this 5 industry, and that is unfortunate, but I do know that 6 within our department there is a children's services 7 regulatory review going on at the moment and there are a 8 lot of other regulatory reviews, so I think it is probably 9 on the cards that this will happen within the context of 10 the state-wide plan and cutting the red tape. 11 12 So I think that if you're looking at a management plan, yes, 13 you're looking at your vision, you're looking at everything 14 that you want to achieve, but within that you have to look 15 at having a direction towards your outputs and your 16 outcomes and basically looking at what is the community 17 getting from you in the end. Rather than being 18 all statistics and data, I do think that there is a real 19 benefit in putting down your quantitative stuff as well. 20 I know you are saying you are doing it through CDSE, but 21 I do think that that is very important, that reporting and 22 on the plans. 23 24 As far as having an overall management plan that 25 actually says, "Look, this is what we are going to do and 26 this is how we are going to do it at the ground level", 27 I don't actually think that that is the way that most plans 28 at a government level are going at the moment. What they 29 are more or less saying is, "We will get a regulative space 30 for you. Within that regulative space, there will be top 31 priorities and we want to see outcomes for the community 32 and ways of the club being established and within that 33 you will have to then take responsibility for governance in 34 your own service to provide these facilities to your 35 people". 36 37 I mean, every area has a different little set of 38 circumstances. I know you've got the overall governance 39 things that are definitely a problem for every club, but 40 within every single community there are different areas 41 that you will have to deliver to your community. 42 43 So I think overall the government is more or less 44 saying that we want you to be responsible as well. That's 45 basically where I'm coming from because that's where we 46 are coming from within DoCS. 47 .21/9/07 57 Transcript produced by Merrill Legal Solutions

1 MS KRIEGER: Cameron, did you want to comment on 2 management plans? 3 4 MR ROAN: I think it is important. It is obviously going 5 to be key to the outflow of what the industry is wanting, 6 but equally what the government is looking at, where the 7 industry is going to go for the next 10 to 15 years. 8 9 Again, I don't think it has to be too detailed. It 10 needs to obviously be simple in terms of priority and how 11 is that actually going to be measured down the path. It 12 can't be just a management plan. There has to be a regular 13 assessment of achievement towards that management 14 plan. It can't be a document in isolation. There have to be 15 points where it needs to be revisited, whether that's in 16 four years, but I think it will be important to reflect at 17 times. 18 19 MS KRIEGER: I think that probably covers it from the 20 people at the table. We have lost most of our other 21 attendees. Is there anyone who would like to comment 22 from the floor? 23 24 I mentioned at the beginning of this that we are 25 talking to a number of clubs at the metropolitan, regional 26 and other levels in a series of case studies to try to get 27 some detailed information from a number of clubs who 28 are representative of the different layers in the industry, 29 and we are also holding an additional round table in 30 Dubbo on 12 October. 31 32 There will be a transcript on the web site once it is 33 typed up, and that will take a number of days, if anyone 34 wants to go back and have a look at that. 35 36 Other than that, I simply want to say thank you very 37 much all for making the time to come along today and 38 giving us the input that you have, which we value and 39 will certainly take into account. Thank you. 40 41 AT 1.23PM THE TRIBUNAL ADJOURNED ACCORDINGLY 42 43 44 45 46 47 .21/9/07 58 Transcript produced by Merrill Legal Solutions