Address at the 15th Hospitality Association Annual Conference and Trade Expo
Good afternoon, Thank you for inviting me to speak at your conference as the Minister responsible for the Gambling Act and for gambling policy in New Zealand.
First I'd like to acknowledge:
- The Chief Executive of the Hospitality Association Bruce Robertson
- Fellow speakers
- Invited guests from throughout New Zealand
I'm aware that HANZ has a long history of representing businesses in the hospitality industry, and that as a result it deals with a wide variety of issues. One of its roles is to represent the interests of hospitality businesses as non-casino gaming machine venue operators. Pubs are, after all, an important part of the gaming machine environment.
This afternoon, I'd like to talk about the Government's priorities for gambling, the Gambling Act and the Gambling Amendment Bill.
Since I've taken up the Internal Affairs portfolio, I've met many different representatives within the sector and the wider community. I've heard their views, I appreciate their different positions, and I now have a better understanding of gambling issues.
I'm aware of public debate on several issues including grant distributions, so-called end user trusts, pre-commitment of gaming machine profits, the problem gambling levy, and of course, the issue that I expect concerns most of you, the venue payments system.
As far as venue payments are concerned, I know that many societies and venue operators would like a commission-based venue payments system or for the cap on venue payments to be increased.
As you know, the Gambling Act 2003 prohibits commission-based venue payments, so any changes along that line would require amendment to the Act. After careful reflection (and many of you are probably already aware of this), the Government has decided that there won't be any major changes to the Act for now.
I recognise that the decision not to progress a commission-based venue payments system may be frustrating, given the efforts of your representatives in preparing a proposal for a system along these lines.
However, I've asked the Department of Internal Affairs to continue monitoring the situation, and a commission payments proposal could be considered again in the future.
If that proves to be the case, I would anticipate that in order to survive parliamentary scrutiny, any changes to the current venue payments system would have to:
- Promote simplicity
- Ensure that costs are kept to a minimum so that funding for the community is maximised and, of course
- Ensure that no publican is out of pocket as a result of hosting gaming machines.
For now, I know that the Department has recently consulted the sector on how claims for venue payments should be assessed under the current Gazette Notice.
This consultation is intended as a starting point to make the current notice operate in a fairer manner for all.
Once there is more reliable and comparable information around the actual, reasonable and necessary costs that are currently being incurred, then I would expect the Department to go on to assess whether the limits under the Gazette Notice are appropriate.
Given the bigger picture of the current economic climate and financial uncertainty, the primary goal driving the Government is to grow the New Zealand economy in order to provide greater prosperity, security and opportunities for all New Zealanders.
This goal is reflected in the Government's legislative priorities and a very full programme of legislation is moving slowly through the House. Indeed, we have been waiting for quite some time to get the Gambling Amendment Bill no. 2 through all its stages.
As far as the community funding from gaming machines is concerned, it appears that other possible sources of community funding have reduced. Both community trusts and large corporations seemed to have reduced their donations and sponsorships.
This is unlikely to change in the short term, event though recent statistics say that we've started to climb back out of the recession. This means that the better allocation of grants, including gaming machine grants, will be an important way to support our communities.
Therefore, the Government's current priorities in the gaming machine area are to:
1. maximise the community funding generated by non-casino gaming machines, and
2. to resolve questionable grant funding practices in the sector.
I appreciate that HANZ represents the interests of venue operators, and that most of you would simply like to be paid a little more. However, these gaming machines exist primarily to raise money for community purposes, and the payments to venue operators are mainly a cost that must be met in order to help achieve those broader goals.
Gaming machine proceeds have the potential to provide significant community benefit. But the large sums of money raised also entail considerable risk in terms of the potential for foul play.
In 2007/08:
- Gambling turnover exceeded $16 billion
- Expenditure (that is, player losses) was just over $2 billion
- The amount spent on gaming machines in pubs and clubs alone was $938 million, and
- Gambling provided over $400 million to community purposes of various sorts, and around $280 million in sector-specific taxation.
More recently, the amount spent on non-casino gaming machines has dropped to around $890 million, but even so, that's a huge amount of money.
The Gambling Act is a large, complex, and prescriptive piece of legislation. The Act brought major reforms to the gambling sector, including a moratorium on casinos, a reduction in the number of gaming machines and new gaming machine venues, and a significant shift in focus towards the minimisation of harm associated with gambling.
Under the Act, corporate non-commercial societies are licensed to own and operate non-casino gaming machines to raise funds for what the Act terms "authorised purposes".
"Authorised purposes" mean charitable and community purposes. They include amateur sport, and the promotion and running of race meetings, including the payment of stakes.
It appears that no other gaming machine jurisdiction in the world takes this approach, which has the potential to generate significant community benefit.
Maximising community funding generated by non-casino gaming machines is an important objective at any time. But in the current economic climate, when machine revenue is declining - just as demand for community funding is rising - this is even more important.
I am interested in looking at ways to bring about further efficiency in the sector and further develop its potential to generate significant community benefit.
Resolving questionable grant practices is also a key priority. From what I have seen and heard so far, it appears there are deep concerns about how the present arrangements are working.
A recurrent theme is a loss of confidence in the current framework for the distribution of gaming machine profits to community purposes.
There has been some pressure to eliminate the potential conflicts of interest that can arise in the course of making decisions.
Some also think there is a need to ensure that the funds are distributed in what might be seen as a more "equitable" way.
They suggest that this could be done by requiring operators to distribute their profits to a wider variety of community purposes, or by requiring operators to return profits to the community in which they were raised.
Another issue is the apparent conflict between the community benefit objectives for non-casino gaming machines, and the existence of commercial incentives and objectives in the sector.
There appear to have been cases of gaming machine societies or their personnel receiving benefits from community groups after the societies have made grants to the community groups concerned.
These include horse races named after the society; the society's name on billboards or score boards at sports events; the society's name on sports equipment; access to corporate boxes; invitations to attend events; and so on. In effect, societies acting like corporate sponsors.
The issue that arises here is whether societies end up giving money mainly to those community groups that can give them fringe benefits.
I understand that there have also been examples of the inappropriate use of gaming machine funding for individual sports professionals and professional sports teams.
It's important that venues steer clear of these types of arrangements.
The Department's focus is on making the current system work properly and it has sharpened its focus on licensing and compliance at the society level.
The Department will take action to suspend, cancel, or refuse to renew licences where breaches of the Act are found.
This has already resulted in sanctions being served and others are in the pipeline. I support the Department's approach.
While there will be no major changes to the Act at the present time, the Gambling Amendment Bill makes several small policy amendments and many technical amendments to the Act.
The Bill addresses a number of issues that have emerged since the Act was passed, with the aim of allowing it to operate as originally intended. It was introduced by the previous government and was never intended to be a vehicle for major change.
In conclusion, I am confident that if we all work together, we can make solid progress on maximising community funding and resolving questionable grant funding practices in the sector.
Thank you once again for the opportunity to talk to you. I wish you all the best for your conference over the next 2 days or so.
I'm happy to take any questions, though when it comes to operational matters, I'll defer to my officials.
Thank you.