The Development of the Australian Club Industry - Coursework Example

How have changing competitive, environment and legislative conditions influenced the development of the Australian Club Industry? Introduction Clubs have been considered as an important component of social fabric of Australia since the very early days of colonization and it is evident from the fact that a number of small clubs were existed in Australia prior to 1905. However, it has found that these clubs were sporting and business type clubs and with the increasing demand of leisure activities, the number of clubs rose in Australia (The Council of Community Clubs of Australia and New Zealand, 1998). Today, a number of clubs are operating in Australia including sports, cultural, social, national, community and others. In fact Club Industry of Australia has become a major factor of economic structure in Australia. Since significant changes have been observed in the current environment of Australian Club Industry therefore, the primary focus of this report is to analyze the impact of changing competitive, environment and legislative conditions on the development of Australian Club Industry. Discussion There are around 4,000 licensed clubs in Australia and they are operating as not-for-profit organizations intended to offer infrastructure, employment and training, direct cash and other social contributions to local communities (Clubs Australia, 2011). The boom in Australian Club Industry started when the slot machines were legalized and the industry transformed from an emergent industry to a mature industry. The developments in the industry have always been influenced by competitive situation, changing environment and regulations. However, today the Club Industry in Australia is recognized as having intensified industry rivalry, significant barriers to entry, mature markets and customer segments and high product substitution. According to 2010 industry statistics, the Club Industry revenue of Australia is 9,170.3$ million in 2010 and the revenue growth rate is 1.2 percent as compared to year 2009. Moreover, around 62,595 individuals are currently employed in Australia Club Industry (IBISWorld, 2011). The sizes of clubs vary in Australia ranging from small clubs with very few members to large clubs with more than 5,000 members (Singleton & Miller, 2009). Singleton & Miller (2009) have found that the registered club industry in Australia is already going through the demographic and economic changes and face significant challenges to meet the opportunities and limitations brought by changing competitive, legislative and social environment. In the following sections of this essay, the impact of competitive, legislative and environment changes on the development of Australian Club Industry has been discussed. Competition The competition in Australian Club Industry is intensifying as evident from the increasing number of licensed clubs. The nature of competition between clubs has changed as a result of various factors. Today, clubs are competing for members through the range and quality of services and the intensity of loyalty. Although clubs in Australia come in the not-for-profit sector however, they are not dependent on external funds or donations and they make their revenues through commercial activities. Therefore, the enhanced competition between clubs has encouraged them to improve the quality of their services to remain commercially competitive. As compared to the previous years when clubs were recognized as sports, ethnic, entertainment clubs etc. today more than 90 percent of Australian clubs offer sports facilities to individuals (Clubs Australia). The report of Clubs Australia also highlight that recreational facilities provided in clubs such as Bowling Green and golf courses are given at very low rates as compared to commercial prices of these courses. It gives an idea that membership charges or the fees for recreational activities also influence the level of competition between clubs. Therefore, the increased level of competition in Australian Club Industry has increased the roles of club in community services and infrastructure, encouraged the development of sports and recreational activities, improved the affordability of common people and improved the physical fitness of members. Environment With the significant developments in the Club Industry Australia, significant changes have been observed in the ways the clubs are operating. In other words, the business environment of clubs has changed significantly. For example, in the previous years, the local government used to play a role in providing infrastructure for sports and the councils were responsible for ground maintenance and capital improvements. On the other hand, today council is responsible to charge commercial rent on Crown Land from the clubs and clubs are then responsible to utilize their revenues to bring improvement and maintenance (Clubs Australia). This change has proven very significant in the development of clubs in Australia as clubs have become more independent in their operations and they understand their responsibility towards not-for-profit sector in Australia. In addition, this practice has also encouraged all clubs to participate equally in society for community services and encouragement of sports. Legislation The registered clubs in Australia are supposed to follow regulations of clubs. The Registered Clubs Act 1976 of New South Wales defines registered clubs as not-for-profit organizations which provide lifestyle services to public (Singleton & Miller, 2009). Therefore, the regulatory and legislative changes directly influence the Australian Club Industry. The recent action of pre-mandatory system presents a very good example of impact of regulations and legislations on Australian clubs. When Prime Minister Julia Gillard showed her willingness to impose a mandatory pre-commitment system across all poker machines in Australia and limit the amount of ATM cash withdrawal to $250 a day, significant changes were noted in the Australian Club Industry. The findings of trials in South Australian and Queensland in 2009 showed that the pre-commitment system reduced the daily turnover from the regular players and the demand of cashless gaming increased. Moreover, significant changes were noticed in the daily spend limits, breaks in play and account summary print-outs (Grant Thorton, 2010). Changes in the legislation take place from time to time to bring improvements in legislation. In the following sections, the recent changes in legislation specific to clubs industry have been discussed. Legislative Changes related to Smoking The smoking area within the licensed clubs of Australia has been one of the major issues in the legislations relating to smoking. The Government of Australia and Australian Council on Smoking and health together reviewed the “Part IXB of the Health Act 1911 and the Health Regulations 1999. In consideration to the public health concerns, the Government passed a few amendments in the smoking regulations in hospitality sector. Based on Government’s announcement, all Australian jurisdictions declared the dates of “smoke free hospitality sector” for example New South Wales and Victoria announced to have smoke free pubs and clubs from July 2007 (Australian Council on Smoking and Health, 2010). The smoking bans of 2006-2007 negatively influenced the club industry at that time and the number of clubs declined and the consolidations within the industry increased however, the clubs which were focusing on a proactive approach, found this ban as an opportunity to provide a new level of experience to their customers (Grant Thorton, 2010). The decline in revenues is because of the reason that smokers were finding it hard to smoke in clubs and pubs and their visits to clubs declined. Changes to Trading Hours of Clubs The legislative changes related to the trading hours of clubs also influence the clubbing revenue. For example, in the Western Australia, the trading hours are mentioned by Liquor Control Act according to which the clubs in Western Australia are not permitted to serve alcohol after their trading hours. All licensed clubs in Australia have to follow the defined trading hours and they cannot open their premises after the trading hours however, the clubs can apply for the extended trading permits. Changes related to Responsible Practices The youth in Australia appear to be the major potential customers for clubs however; legislation restricts the illegal practices of clubs and promotes them to become socially responsible. For example, the clubs in Western Australia are not allowed to sell alcohol to anyone under the age of 18 years according to the Act of Liquor Control 1988. The manager or licensee of club is subject to pay $1,000 infringement or $10,000 fine. If an employee is found at guilt then he is subject to pay $400 infringement or $4000 fine (Western Australian Police). This law has made it mandatory for clubs in Western Australia to get the proof of age of the young customers. Although this law has created various concerns for clubs because they have to compromise of their revenues however, its positive contributions towards the social responsibility of Australian Club Industry cannot be ignored as well. Changes in Tax Regulations Australian clubs come under not-for-profit (NFP) organizations therefore; they are subject to NFP sector taxation. However, whenever changes in the tax regulations in NFP sector are made, clubs are largely influenced because they are not relying upon external grants and donations like other NFP organizations and they are majorly dependent on their own commercial activities. A research report of Taylor Wooding (2005) highlights the changes related to gaming tax that adversely affected the clubs. The report found a loss of around $1 million in Gaming Machine revenue of clubs located in New South Wales (NSW) as a result of changes to Gaming Machine Tax in NSW. The recent changes in tax regulations are also expected to influence the operations and development of clubs in Australia. A recently proposed tax reform of the government defines a two step process through which the eligibility of clubs for tax exempt status can be assessed. The purpose of this tax reform is to ensure that resources in NFP sector are directed only for philanthropic purposes such as development of sports and community services. Since the government recognizes that revenues from clubs in Australia account for around 20 percent of the total NFP sector’s non-government income therefore, this reform has been considered very significant however, revenue agencies take a very constricted explanation of tax legislation while reviewing the eligibility of clubs (Clubs Australia). Moreover, the proposed two-step process has not only made it impossible for sports clubs to have entire income tax exemption but it also puts a burden on sports clubs to determine which part of their income is directly attributable to the development of sports. Therefore, if this reform is imposed then sports clubs would have to pay taxes on the profits which were previously considered as exempt (Clubs Australia). However, rather than providing a two-step reform, if the government would have provided a clear criteria to determine the eligibility of income tax concessions then it would have contributed more positively in the encouragement of sports and development of clubs. Conclusion In the light of above discussion, it can be concluded that Australian Club Industry is facing significant developments and challenges as a result of increased competition, social, economic, structural and regulatory changes. The major changes that have influenced the development of Club Industry Australia include the changes in taxation rate and reforms, enhanced complexity of statutory requirements for licensed clubs, progressive changes related to smoking and responsible service of alcohol and pressures to ensure the responsibility of clubs to implement harm minimization measures. Although many of these changes have positively contributed towards the development of club industry in Australia however, many changes have also enhanced complexities for clubs. It is evident from the above discussion that enhanced pressures on clubs have been mainly raised to increase the social responsibility of clubs in society therefore, it is expected that such changes will surely provide long-term benefits to clubs in Australia. Moreover, further changes in the environment and legislation are also expected because of the increasing number of licensed clubs and increasing contributions of clubs in Australian society. References Australian Council on Smoking and Health. (2010). Bars/Clubs - Background. Abgerufen am 6. August 2011 von http://www.acosh.org/news-and-campaigns/achieved-campaigns/barsclubsbackground/ Clubs Australia. (kein Datum). Clubs Australia. Abgerufen am 10. August 2011 von http://www.clubsaustralia.com.au/docs/default-document-library/treasury-nfp-tax-reforms-submission---final.pdf Clubs Australia. (2011). Clubs Australia. Abgerufen am 6. August 2011 von http://www.clubsaustralia.com.au/ Grant Thorton. (2010). Another period of uncertainty for Registered Clubs. Abgerufen am 6. August 2011 von http://www.grantthornton.com.au/Publications/Newsletters/nfp_1010e.asp IBISWorld. (30. May 2011). Clubs in Australia. Abgerufen am 6. August 2011 von http://www.ibisworld.com.au/industry/default.aspx?indid=452 Singleton, M., & Miller, P. (2009). A preliminary investigation into Australias registered club industry and issues of corporate governance and government review. Abgerufen am 6. August 2011 von http://epubs.scu.edu.au/cgi/viewcontent.cgi?article=1181&context=gcm_pubs Taylor Woodings. (July 2005). Industry Update: No Free Games for Clubs. Abgerufen am 4. August 2011 von http://www.taylorwoodings.com.au/Assets/files/Industry-Bulletin---Clubs.pdf The Council of Community Clubs of Australia and New Zealand. (1998). Inquiry into Australia’s Gambling Industries. Abgerufen am 6. August 2011 von http://www.pc.gov.au/__data/assets/pdf_file/0009/49842/sub063.pdf Western Australian Police. (kein Datum). Alcohol and the law. Abgerufen am 8. august 2011 von http://www.police.wa.gov.au/Yoursafety/Alcoholanddrugs/Alcoholandthelaw/tabid/1461/Default.aspx Read More