Page 94 - Week 01 - Tuesday, 12 February 1991

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Fitness Centres

MR CONNOLLY (10.07): I rise in the adjournment debate to raise a matter that was agitated in the media last week concerning fitness centres in Canberra. There was an unfortunate incident with the Cardio Fitness Club at Kambah, the operators of that institution apparently having left the Territory with the institution being closed down and a lot of Canberra citizens losing a lot of money because they had purchased long-term memberships.

I spoke with a number of people in the fitness industry and was surprised at the extent to which the industry would welcome a degree of government intervention. The normal course of the debate on regulation and deregulation in Australia is that industry generally says to government, "Keep out; we can look after our own affairs", and the political debate often focuses on a view from one side of the house that the public interest demands more regulation, usually advanced by the Labor Party, and the view from the conservative parties that the public interest is best served by less regulation.

It is very unusual to find an industry that is actively seeking regulation. The type of regulation that the industry is keen on is the type of regulation that I proposed last week, and that is a ban on long-term memberships - memberships of more than 12 months. It is felt by people who have been in the industry for some time that a club or organisation that is offering a lot of long-term membership deals is basically relying on large slabs of membership money to raise its capital base, and that such organisations are therefore almost inherently more risky than the organisation that relies solely on selling a three-, six- or 12-month membership.

This is basic free market economics. The club that sells a 10-year membership really is not terribly interested in providing a good level of service to that client because, if that client, having passed over their money for 10 years, is dissatisfied and goes away, it does not matter very much to the club. But the club that sells a three-month, six-month or 12-month membership has a very obvious incentive to provide a very good level of service to the client because at the end of that short membership period the client who is not satisfied by the service will go somewhere else. This is, almost by definition, a very competitive industry, and the consumer has a fair degree of choice as to which club to belong to.

The industry is very keen to initiate discussion with the Government on this point, on standards in relation to the accreditation of instructors, and also on the question of some sort of accreditation of the entrepreneur setting up the organisation, to ensure that that person has some adequacy of capital base when setting up, so to avoid an organisation that relies solely on membership fees and is at some risk of collapse.

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