Danny O’BRIEN (Gippsland South) (13:38): It is a good start to the week to start talking about the Gambling Regulation Amendment Bill 2023. I begin my contribution by noting that this legislation is really part of a package that will be debated in legislation this week. Sometimes we have these situations in Parliament where it is a bit unclear who is responsible for certain legislation. It is a little bit odd that the Gambling Taxation Bill 2023 this week is really about casinos and gambling and yet it is the Treasurer’s bill, and this bill, the Gambling Regulation Amendment Bill 2023, is really about the racing industry but it is in fact the bill of the Minister for Casino, Gaming and Liquor Regulation and me as the shadow minister.
I thank my colleagues the member for Sandringham and the member for Gippsland East. The member for Gippsland East has brought the full weight of his punting experience to deliberations on this side to help us understand the implications of this legislation, but it has been a very collegiate process with the member for Sandringham and the member for Gippsland East in consulting with the industry and with stakeholders and getting a full understanding of both pieces of legislation as they relate to the forward interests of the Victorian racing industry in particular and the Victorian taxpayer when it comes to the wagering and betting licence. And there it is: the first time I have messed up the words ‘wagering’ and ‘betting’, which I am sure I am going to do several times before this debate is out.
It is important to support our Victorian racing industry. It is a fundamental part of our local economy in Victoria but also our culture. It is a very important industry in Victoria. I will come to the details of the bill, but in understanding the impacts of this legislation and how it will assist and support the Victorian racing industry we need to understand how important that industry actually is.
The industry prepared a report – Size and Scope of the Victorian Racing Industry – which was released in April 2022, and it has some key findings that I think are worth putting on the record. The total value-added contribution of the industry is $4.7 billion per annum. I hear the Minister for Racing cheering for that figure. Total full-time equivalent employment is 34,900. That is a very big figure. There are basically 35,000 people employed directly and indirectly in the Victorian racing industry. Half a billion dollars in taxes is generated for the Victorian government – I am sure the Treasurer is happy about that – and that is spread across the three racing codes of thoroughbred, harness and greyhound, with obviously thoroughbreds being the vast majority of that.
Some further figures on direct participants and employees in racing across the three codes in Victoria: in 2018–19 there were 147,952 people directly involved in the industry; that figure is made up of breeders, trainers, owners and volunteers, of which there are about 100,000. The total directly employed in racing was another nearly 22,000 and the total employed in support industries was 26,855, so it is very significant. It is a significant employer and a significant generator of economic activity in the state.
It is important to note who some of those employees are. There are 5399 stablehands and kennel employees. They are not the Danny O’Briens – not the member for Gippsland South, but the trainer Danny O’Brien, a Melbourne Cup winner. They are not the Damien Olivers of the world, the ones that get the publicity, but the stablehands, the kennel employees, the strappers and all of those who perform such an important role in the industry – there are 5500 of them and 7500 racing club staff. Particularly in rural and regional Victoria our racing clubs are the heart and soul of many of our communities, and in many communities they are also significant employers in their own right.
I would like to just in passing mention my own clubs in the Gippsland South electorate. We are talking about racing club staff: Brad Evans, the CEO of the Sale Turf Club, does a magnificent job with David Wilson, the president, and their committee. Sale is the biggest club in Gippsland and has the most meetings per year. Then there is little Stony Creek, headed up by Adam Olszanski, who is also well known as race caller for the industry. Stony Creek has I think four meetings a year currently, mostly from Christmas to autumn, but the Stony Creek Cup is an absolute ripper of a day. I have missed one since I got elected in 2015 as member for Gippsland South. Fortuitously for me the Stony Creek Cup was the week before the by-election in which I got elected. We as the Nationals in our campaign in fact sponsored the Stony Creek Cup that year, and that was a successful event for us. But, sadly, the Stony Creek Cup has been mostly less successful for me throughout the last eight or nine years; I do not think I backed a winner until this year, and I backed one at very short odds. Both those clubs are very important to our community. Sale in particular is more of a centre for trainers, so there are a considerable number of trainers, strappers and staff engaged in the district and the area.
I would like to mention, particularly from a greyhound’s point of view, that there are no harness clubs in Gippsland South, but the Sale Greyhound Club is one of the bigger clubs in regional Victoria, and we are very much a centre for greyhound training and breeding around the region. I cannot mention the industry without mentioning my adopted greyhound Maisy, who had a sum total of one race and then went sour, according to her trainer. She did not want to race again, and I can see exactly that spirit in her to this day; she does not really want to race very much at all. Despite what some newer members of Parliament in the other place would say, and indeed the Greens, there is great credit to be given to Greyhound Racing Victoria for GAP, the Greyhound Adoption Program. In my mind, certainly from my household’s perspective, it has been very successful. I do not think you ever have a dog that costs you $70 to buy and then $7000 in vet bills over its lifetime – not quite. But GRV has done a good job responding to the need for that industry to have social licence, and they are vastly improved from what they were just a few years ago. The GAP has brought joy to many families across the state, as well as given former racing dogs the opportunity to retire into a happy situation.
I think it is important to place on record the value of the racing industry and to highlight to those who are opposed to it – I mentioned a member in the other place and the Greens – that this is an industry that has value, not just economic value but cultural value for our state. Many people get enjoyment from the industry, as well as there being many people employed by it. I would expect that there will be a division on this legislation, because those Greens members are always out to capitalise on anything opposed to the industry. I am happy to say that we will not be opposing this legislation, the Gambling Regulation Amendment Bill. Should there be a division, we will vote in favour of it.
I will turn to the bill itself a bit now. Despite the fact the bill is 29 pages, it is actually relatively straightforward. In effect there are two things the legislation does. It allows the minister the opportunity to issue more than one wagering and betting licence. Currently we have a licence process, and the licence was awarded in 2011, to begin from 2012, to Tabcorp. Tabcorp currently holds that until August next year, if I am not mistaken. What this legislation does is allow the minister to issue more than one licence. That is in the context of significant change that has occurred in the wagering and betting sector, where since the last licence was issued there has been significant change and growth in the corporate and online bookies, which has no doubt impacted the likely sale price that would come from the issuing of such a licence. That raises an issue of concern not only for the state of Victoria and the taxpayer but of course for the industry that I have just spoken about.
So what this legislation does, if you look at clause 24, is allow the minister to issue any number of licences effectively – if I just turn to that. Clause 24 inserts a section that says:
The Minister is to determine from time to time the number of wagering and betting licences that may be issued.
Although it is 29 pages long, the bill otherwise largely incorporates changes to the principal act, the Gambling Regulation Act 2003, literally to change the wording in multiple clauses from ‘the wagering and betting licence’ to ‘a wagering and betting licence’, recognising the possibility that there will be more than one as under the current process.
There are a couple of other minor amendments in clause 43, recognising that in the future there may be more than one licence and that if there are changes requested by a licensee of the minister that there be a process of notification to any other licensees. For example, as I said, clause 43 inserts a new section that ensures that if an amendment to a licence is requested by a licensee and it is likely to have an impact on the other licensee or licensees, then there are requirements for them to notify those licensees and also for a right of reply from those licensees. They are, I guess, amendments consequential to the fact that we are moving from a monopoly situation to one where there may well be competition. That is the guts of the bill, without going to the ‘no less favourable’ treatment of the racing industry, which I will come to in a moment.
The question I have, with respect to the prospect now of the minister issuing multiple licences, is: what exactly will happen with that? We see in the second-reading speech that the minister refers to the possibility of a 20-year licence being issued but with an exclusivity period of only 10 years, after which there might be additional licences. But it is not clear, at least from the bill or from the public statements of the government so far, how that process will actually come about.
Now, the intention of this legislation – again, as indicated in the second-reading speech – is to try and maximise the value of the awarding of licences to both the state of Victoria and to the Victorian racing industry. We do not oppose that idea – the notion that in today’s changed world for wagering and betting you might look at different models I think is worth pursuing – but it is unclear from what the government has said so far what exactly that involves. Once this legislation has passed, is it providing further advice to potential bidders on what it is they might like to include? Is that, for example, straight competition between two licensees in the same venues, the same locations, the same retail areas? Is it perhaps a geographic split of the state, whereby there might be one licence for the eastern half of the state and one for the western half of the state, or for metropolitan Melbourne and for regional Victoria? That is not clear. It may well be that the government has provided that sort of information to the potential bidders that are currently involved in a confidential process, but it is certainly not clear to the general public and to those of us here in the chamber as to what in fact will happen.
I assume that that is something that will need to happen – that the government will have to provide some further advice – because while we would like bidders to innovate, clearly a bidder cannot put forward a bid that says ‘Well, we only want the metropolitan area’ if that does not equate to what the government’s intentions are and to what other bidders might put forward. So it is a little bit unclear and it would be useful if government members decided to respond to that question and give us some clarity on how the process will evolve, because there are significant risks in this process and there is a risk that it still could go pear-shaped. I will again come to that in a little bit.
I would like to now turn to the ‘no less favourable’ issue, which is listed in the bill under clause 29 and removes what is known as the ‘no less favourable’ treatment for the Victorian racing industry. I will go back a step: particularly at the moment there is a joint venture agreement between Tabcorp as the current holder and the Victorian racing industry. The proceeds from gambling – of wagering and betting – are shared between the operator – the licensee – and the Victorian racing industry, that is, the thoroughbreds, the harness racers and the greyhounds. The act as it stands now basically says that when issuing a new licence, there must be ‘no less favourable’ outcomes for the Victorian racing industry. Now, this bill removes that clause both for the licence but also for any temporary licences that may be issued – unlikely, but that is there in the act. It does so in a circumstance – as I indicated, the world has changed significantly since 2011, when the current licence was issued – where it ensures that we can go ahead with a competitive process and other arrangements are going to be put in place for the Victorian racing industry.
This is something that when you are first reading it, if you are a supporter of the industry, and you see that the words ‘no less favourable’ are going to be removed, you will be alarmed. This is being dealt with, though. The industry, as I understand and I am informed, is comfortable with this arrangement, because in return and in recognition of the fact that online and corporate companies have come in and are now active in the market there will be an increase in the point-of-consumption tax. The point-of-consumption tax was introduced in 2019, and the government intends through the other legislation this week to increase that from 10 per cent to 15 per cent.
I will be very careful here not to anticipate debate on the forthcoming Gambling Taxation Bill 2023, but it is a little bit difficult not to, because the two bills are interrelated. As I said, removing the ‘no less favourable treatment for the industry’ clause is offset and compensated for by the fact that the government intends to increase the POCT, the point-of-consumption tax, from 10 per cent to 15 per cent, and of that 5 per cent increase, 4 per cent will be going to the racing industry directly and 1 per cent back to government coffers. So the racing industry will have 7.5 per cent of the POCT in total, and that is intended to offset the loss of the ‘no less favourable treatment’ and the expectation that this tendering process for the wagering and betting licence will achieve significantly less than it did previously and less going forward as we have these changed circumstances.
That is also, we understand, subject to an MOU between the government and the racing industry, but that is something that we do not know anything about. Neither the Parliament nor the Victorian public has any understanding yet of what is in that MOU. We have heard that the industry is satisfied that it will be getting vaguely equivalent funding going forward under the new arrangements. We were told in the briefing that there is about $119 million, $120 million expected to go to the industry per annum over the next four years as a result of the increase in the POCT. There are some other arrangements in this MOU, we understand, that will ensure the industry is ultimately no worse off – or not dramatically worse off. The figure that we have heard is that there is effectively a guarantee from the government that the industry will have at least 90 per cent of what it previously had, yet we have not heard anything from the government. I think the government probably should actually provide some clarity on what that arrangement is. We are comforted by the noises from the racing industry that they are satisfied with the new arrangements, but there is nothing on the record that I am aware of from the government to give everyone comfort that both the industry and the Victorian taxpayer will be looked after. We suspect that perhaps the 1 per cent that the Treasurer will pocket from the increase in POCT this time around may well in fact end up going to the industry to satisfy the MOU that the government has made with the Victorian racing industry.
It would be good to get some clarity on that. I think it is something that taxpayers, punters and participants in the industry should know. I am not suggesting there should be full commercial disclosure given that there are issues of confidentiality here, but we do need to have a bit more clarity on what the industry will be likely getting, given future projections, and how the government will ensure that it is as close as possible to no worse off and able to adapt to the changing environment.
It is true too that this is likely to be a positive deal for the industry, and I think my colleagues will probably have more to say about it than me, but it is important to note that this will be a long-term deal. I expect that there will probably be a 10-year licence and that that provides some certainty to the industry, and the industry needs to ensure that it does use those funds wisely. It should not be under any illusion that it can come back to the taxpayer in future for additional money. That is something that will be pretty much set by this legislation and that coming up in the next day or two.
Business interrupted under sessional orders.
Danny O’BRIEN (Gippsland South) (14:51): Before the break I was speaking on the ‘no less favourable treatment to the industry’ requirement. I now want to move on to an issue that is more pertinent to the wagering and betting licence, and that is the issue of the intellectual property held by the joint venture – that is, Tabcorp and the Victorian racing industry – in relation to the current licence. There is a dispute, as I understand, within the industry as to who in fact owns some very commercially valuable IP, and that is effectively the data of many thousands of customers that have been –
Danny Pearson: You always were a big data guy.
Danny O’BRIEN: Not like the minister at the table, the Minister for Government Services; I am sorry. But this data is a significant part of the bid. Basically there are a whole lot of customer details that currently sit with Tabcorp and the joint venture, and there is debate as to whether that data should go forward.
Clearly Tabcorp has one view; potential bids have another. What I want to raise here, and we certainly are not taking a view either way, is this is likely a technical and legal issue in respect to the intellectual property rights and who owns what – there are potentially privacy issues – but nonetheless it is quite fundamental, in our view, to the awarding of a new licence. I can go to a report in the Australian of 16 February this year by John Stensholt. The headline is ‘Tabcorp’s rivals cry foul over customer data rights in Victorian betting licence process’. The introduction says:
Tabcorp is in the box seat to retain its exclusive Victorian wagering licence, potentially at a company-friendly price, as doubts emerge about the bidding process due to question marks about customer data ownership.
It goes on to say:
Without access to a customer database – which Tabcorp claim it owns – then Tabcorp’s rivals are increasingly unlikely to join in a competitive bidding process …
The irony, in the context of this legislation, is the intent of this bill is to increase the competition in this process and make sure that both the state of Victoria and the Victorian racing industry get a better deal. That will all be for nought if we do not have some clarity on this issue of intellectual property. There is, as I said, clearly debate as to who owns the IP. There are some questions potentially of privacy with respect to customers of Tabcorp now, and what we have seen is the government has been completely silent. I am calling for the government to provide some clarity to the public and to the market as to this situation because, as the article in the Australian indicates, there is a potential loss to the state of Victorian and the racing industry if this issue is not dealt with. The article goes on to say:
A lack of competitive tension for the licence could in turn put pressure on funding to Victorian racing, which is locked in a bitter battle with counterparts in NSW for public and wagering attention on their biggest race days of the year.
Tabcorp would not comment –
of course –
The Victorian government was approached for comment.
In other words they did not give one, so nothing was said. It continues:
Racing Victoria chairman Brian Kruger told Melbourne radio this week that the “longer [the bidding process] goes on and the longer we don’t have [funding] certainty, it will make investment decisions challenging for us.”
That is what this is about. This is about providing certainty. As I said, this legislation before us today is about providing increased competition in the process and ensuring that we get the best value for money for the Victorian taxpayer and for the Victorian racing industry. We on this side support the intention of that, but what we think is absolutely pertinent for the government to address is this issue of IP.
Now, I mentioned that there may well be a reduction in competition. Let us not be under any illusion: there are not 30 or 40 bidders for this licence, there is a very, very small number – perhaps three, perhaps four at best. One of those bidders I believe told the government on Friday that it is withdrawing from the process because this issue of the IP has not been addressed. I understand that if the issue of the IP is addressed and there is clarity on it, then the likelihood is that that bidder will go back into the process. But we have heard nothing from the government on this. My colleague the member for Gippsland East, who has joined me in the chamber, asked in the bill briefing about this issue and whether it would be addressed by the government before the process proceeds – before this legislation proceeds – and we got zip; we got nothing. There is no commitment for this issue of IP to be addressed. It is curious in the extreme I think to have legislation designed to increase the competitive tension in a public bidding process for a publicly allocated licence, to seek innovation, to seek a better return for the Victorian taxpayer and to seek a better return for the Victorian racing industry but, on the other hand, not actually address the issue that is fundamental to that competitive bidding process.
The government has, as I said, been silent on this. If it has got information that suggests the matter of the intellectual property and ownership can be settled one way or the other, it should be telling the market that, because at the moment it is leading to the situation where there will be less competition in the bidding process. We can have this legislation before us now – this bill before us now – that actually allows the minister to allocate two licences. There may not even be two bidders if they do not address this issue. We also do not want to see a situation where the current monopoly provider is left holding all the cards, basically having the government over a barrel and able to submit a lower bid to get what it wants.
As I say, I am not passing any judgement on what the legal situation will be with respect to this intellectual property. We do not have access to the government’s legal advice. We certainly do not have access to the potential corporate bidders’ legal advice. But what I say to the government is: you should sort this out, because until you do, this legislation before us is unlikely to have any impact. It is important that we have the competitors being able to put in the best possible bid for this wagering and betting licence and that we make sure that we do get the best returns for the Victorian taxpayer and the Victorian racing industry.
The government did advise in the briefing that the government expects a decision to be made on a new bidder by the end of 2023. So the clock is ticking. We are heading towards the end of May. There is a process afoot, but the government really does need to address that issue or risk messing this up. We saw it messed up in Western Australia, where the Western Australian Labor government attempted to sell its TAB over there. It had three bidders – probably some of the same bidders that will be active here. Ultimately one pulled out at the last minute, having been awarded the licence, and the TAB is staying in public hands, contrary to what the government had intended. This is an issue that needs to be addressed, and I encourage the government to do so.
In conclusion, I would just like to say that we are not opposing this legislation, because its intent is good. I hope the Greens will not try to torpedo this bill and the other one – we will support the bill if it comes to that – and I look forward to further debate.