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Of horizontal finance, sand gropers and the paranoid android: Equalising the NRL

Roar Guru
27th November, 2021
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Roar Guru
27th November, 2021
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This is the latest in what is unexpectedly becoming a series of slightly mad ideas about rugby league governance and reducing inequality among NRL clubs.

In a former life, I spent several years working in the field of federal financial relations. In essence, begging the federal government for money.

An important part of Australia’s federation is the distribution of GST revenue between our eight states and territories, known by wonks as horizontal fiscal equalisation.

It’s most recently been in the news through Western Australia’s successful effort to reduce the amount of money generated by hard-working sand gropers that’s sent east.

Anybody who tells you they understand how the system works is probably lying. I like to think Marvin, Douglas Adams’ famously paranoid android, is hooked-up to a computer bank in the Commonwealth Grants Commission figuring it all out with a mere fraction of his mental faculties.

Here’s a very rough overview. The more populous and prosperous jurisdictions have a portion of the GST revenue they generate transferred to less populous and prosperous jurisdictions to roughly equalise the quality of services provided across the board.

It works this way because of the multiplying effect of bigger economies and because there are unavoidable structural factors, population dispersion and remoteness most notably.

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Queensland is a case in point. The distance between Brisbane and Boigu, the northernmost inhabited island in the Torres Strait, is about 500 kilometres farther than the distance between Brisbane and Hobart.

The value of a dollar in Brisbane is not the same at Boigu.

Critics of the system argue it rewards inefficiency and inertia. This argument is not entirely without merit. But an often-ignored aspect of the system is that there are incentives for governments to remove inefficiencies. When a problem appears intractable, the federal government will provide targeted support to resolve it.

Rugby league has no remote outposts, though some clubs do appear to reside on the edge of reality. It does have plenty of inefficiency, inertia and structural problems.

While every club has the same salary cap – $9.9 million in 2021 – it’s clear a dollar is not of the same value to all of them.

Latrell Mitchell of the Rabbitohs reacts after scoring a try during the round 24 NRL match between the Sydney Roosters and the South Sydney Rabbitohs at Suncorp Stadium on August 27, 2021, in Brisbane, Australia. (Photo by Chris Hyde/Getty Images)

(Photo by Chris Hyde/Getty Images)

Canterbury and Wests have just signed players from top-six clubs on big money. They’ve seemingly done well, but a lot more needs to be done in both cases.

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Melbourne and Easts have both lost multiple representative players.

Melbourne’s signed Canterbury’s unwanted fullback, Brisbane’s underperforming winger and a rugby sevens player.

Easts have signed Paul Momirovski and a couple of bench players.

There’s a good chance clubs like Canterbury or Wests will pay big money for Nick Meaney and Renouf Atoni a couple of years from now in a bid to usurp Melbourne and Easts.

I’m not about to propose robbing Melbourne to pay the Wests Tigers. Neither deserves that. Nor will I suggest that we should divert more money from the grassroots to pay NRL players.

But I’m worried the disparities that have emerged between NRL clubs despite the salary cap are in danger of becoming permanent fixtures.

A limited internal draft might help. The much-hyped concept of ‘culture’ is important, but it’s an organic thing. You can’t force a random group of people into getting along. Good coaching is a must. But you don’t know who’s going to make a good coach until they are one.

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Struggling clubs are going to have to work it out themselves, which is not to say they can’t be nudged in the right direction.

Which brings us back to incentives and targeted support.

Many NRL clubs are obviously not run well, not penalised for inefficiency or inertia and, beyond results on the field, not incentivised to run better.

Some of them are two clubs attempting to run as one. Some are riven with factional warfare that makes major political parties look harmonious. Some were well run but have lapsed into complacency.

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There could be better standards. There could be incentives and nudges. It can be targeted support without being one size fits all.

This is the problem definition. Part 2 will look at what could be done. It’s about the composition of boards and the quality of decision-making, reporting, evaluation and recruitment practices.

It’s not as boring as it sounds, I promise.

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