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Dunne speech to NZ Gaming Expo

Peter Dunne speech to NZ Gaming Expo James Hay Theatre, Christchurch

I am pleased to join you this morning to offer some views on the new gaming legislation passed last year and how it will work in practice.

Before I do so, however, I need to recall a little history.

During the 1980s and 1990s gaming law in New Zealand was all over the place.

Every time a new gaming opportunity arose, we developed a new piece of legislation.

Or in some cases, we just relied on regulation.

When we set up Lotto, we passed special legislation.

We set up the Casino Control Authority to oversee licensing and operation of casinos in New Zealand.

But when it came to poker machines, I know from my own experience when Minister of Internal Affairs that a stroke of the pen was all that was required, and I still have the pen that Roger Parton gave me and with which I made that stroke!

At the same time, the Gaming and Lotteries Act 1977, which supposedly set up the overall regulatory framework remained untouched, and there was no attempt to develop anything in the order of a rational and fair approach to the taxation of the various forms of gaming activity.

Meanwhile, traditional forms of gaming like monster lotteries and raffles were waning as new forms of gaming exploded the world over, and the home personal computer became the instant gambling gateway for many people.

Whatever way you looked at it, the system was messy and unsatisfactory.

Rival gaming modes claimed they were unfairly or capriciously treated in comparison with others.

The restrictions on opportunities often seemed petty and not especially well thought out.

The tax system was distortionary.

There were rows between pubs and clubs about the "authorised purposes" definition in the Gaming and Lotteries Act.

In short, the system seemed out of control.

The only constant was that the Department of Internal Affairs kept tight control of the regulations and ran the system a little like a personal fiefdom.

It is hardly surprising that the combination of a weak Minister in the late 1990s, the arrival of beady-eyed Alliance and Green zealots in Parliament about the same time, the advent of a politically correct government after 1999, a strengthening problem gaming lobby, and a messy system produced the smelly cocktail that became the Bill that became the 2003 Act.

The one consolation of that smelly cocktail was that nothing much really happened - save for a rather kneejerk move to put further casino development on hold - while New Zealand First was in the government frame.

However, beady eyed zealotry stepped up to the plate after 1999 when the Alliance became involved in government, and with that, a rather fanatical and crazed junior Minister, who thankfully became a political casualty a short time later.

You will recall that when the Bill was introduced in October 2001 it included a permanent moratorium on the development of more casinos, restrictions on the numbers of gaming machines that could be permitted on new sites - however they were defined - and the clear hint that the existing distribution for the proceeds of gaming machines would undergo radical change.

The prospects that common sense would prevail and that the hitherto implicit understanding that gaming proceeds derived locally would be distributed locally would remain did not seem great.

Central government seemed destined, one way or another, to get its hands on the distribution mechanism, thus potentially opening up a whole new industry in support of politically correct and extreme causes.

Moreover, the calls from the problem gambling lobby for greater funding to be met by steeper levies on gaming operators seemed likely to fall on sympathetic ears, given the government's politically correct predilection for blaming people like brewers, cigarette manufacturers and gaming machine operators for the problems incurred by those using their products.

Amidst this mounting gloom, three silver clouds emerged.

First, the Alliance imploded because its fundamental anti-Americanism came too strongly to the fore in the wake of the launching of "Operation Enduring Freedom" in Afghanistan, and it thankfully disappeared from Parliament.

Second, the Greens showed what all rational beings had long suspected that when faced with the choice of acting responsibly, or behaving instead like superannuated aged student protestors, they showed themselves to be firmly in the latter camp on the GE issue, and thus ruled themselves out of any consideration by Helen Clark as a potential coalition partner.

And third, United Future - moderate, sensible and reliable - emerged holding the balance of power after the 2002 election.

We began discussions with the government in late 2002 about the gaming legislation, with a view towards reaching some form of workable compromise that would reasonably meet the concerns of both the general public and the gaming industry, and provide a workable way forward.

It became clear early on that there were essentially two no-go areas, both from the government's point of view and, I suspect, that of the wider community as well.

They were that there would be no extension on the number of casinos and that the restriction proposed for the number of gaming machines on new sites would not be lifted.

In both the public interest, and the interest of making progress on other aspects of the legislation we took the view that it was not going to be worth it to try and flog these dead horses.

Instead, we focussed our attention on the areas we regarded as critical to the future of a rational gaming policy for New Zealand, namely, that:

* Gaming machine profits should continue to be available for local distribution; * The process by which any problem gambling levy was struck should be transparent and not at the whim of the Minister of Health; * An independent Gaming Commission should be established, separate from the Department of Internal Affairs.

In the event, we achieved all of those objectives in the legislation's final form in September last year.

The one wild card that completely skewed the whole public debate and was the subject of what I can only regard as deliberate, misinformed, ignorant media reporting related to Internet gambling.

Let me put on record, here and now, in words of one syllable, so that even the meanest intelligence might understand, what actually happened.

At no stage, did either United Future or for that matter the Labour Government seek to promote Internet gambling clauses into the legislation.

Late in the process, the government was approached by the Lotteries Commission seeking approval to be able sell Lotto on-line.

The approach seemed reasonable, given the fact that on-line betting through the TAB and off-shore agencies had been permitted for some years, and both Labour and we agreed that the Lotteries Commission request should be accepted.

That is the beginning and the end of that story, and I say to all those, without exception, who accused us of promoting Internet gambling that they were wrong, some maliciously so.

All of them should now have the courage and the basic courtesy to publicly apologise.

Their ongoing silence speaks volumes for their integrity and true agenda.

The question that now arises in the wake of the passage of the legislation last year is where to from here?

Despite the fact that the new legislation has been passed and widely welcomed by industry groups, I have to tell you there is no cause for complacency.

The issues that were of concern to you and the hospitality industry at the time of the Bill remain real, and are likely to resurface in new guises.

The negative perceptions of the beady eyed zealots in the public health section of the Ministry of Health about the hospitality industry remain strong and influential.

Moreover, the somewhat querulous attitude of local government should not be overlooked.

Nor should the sulking of the Department of Internal Affairs, worried that it is being cut out of the loop.

And the problem gambling lobby will remain strong and always able to attract sympathetic media.

Let me consider each of those in a little more detail.

The public health directorate of the Ministry of Health knows everything about everything.

It knows, for example, that tobacco ventilation systems do not work, despite the National Institute of Water and Atmospheric Research's evidence to the contrary.

It knows that a sum of at least $20 million should be dedicated to problem gambling causes, and that the industry should pay this, despite the fact that no evidence in favour of this has been produced.

It knows that while its motives are as pure as the driven snow, the hospitality and gaming industries are evil people who live solely for the exploitation and misery of others.

Even worse, it needs no evidence for any of these prejudices - it just knows inherently by virtue of being a public health directorate that these things are right.

And to make matters worse, like rust, it never sleeps.

In its view, public health matters are obviously too important to be left to mere governments and Parliaments to deal with.

So expect more righteous guerrilla raids from the Ministry of Health.

Do not be surprised if you start to see spurious studies from some of its tame acolytes - usually ex-Departmental officials now working as consultants with an inside track to Ministry funding - claiming to prove things like an association between gaming machines and obesity, or between time spent playing the pokies and alcohol consumption, or whatever.

And do not be surprised at the accompanying message that greater controls and higher taxes on the industry are therefore needed.

But never, ever expect there to be any justification proffered for any of this - public health advocates, after all, do such wonderful work that they are above sordid things like accountability.

Worse still, whoever the government, there will always be a Minister gullible enough to accept this rubbish, so I think the likelihood of further gaming legislation of an amending nature is reasonably high in the term of the next Parliament.

Second, local government looms as a major threat.

What you need to know about local government is that it is always on the look-out for more power, just so long as someone else does the paying.

After all, the best way of staving off calls for more local government rationalisation is to prove how indispensable the existing local authorities are.

And you establish that by making yourselves look important.

Local government was dead keen to get its hands on the distribution of gaming proceeds as a way of building more monuments to local councils, and is put out that this did not happen.

They will have a powerful ally in the Greens for this approach, which should be a clear sign how wacky the plan is.

There are, more seriously, some elements in the Labour Party, who share a similar view, for reasons more related to the old socialist sense that governments should control everything, and these should not be overlooked.

At the same time, while local government was keen to get a greater say in planning issues, it wanted a new revenue stream to pay for that say, and it did not get that.

So expect ongoing difficulty in that area, as local government tries to prove its point, and keep the support of its ratepayers who do not like footing the bill.

They will be pernickety over planning provisions, and ever quick to point out when problems arise out of their decisions, that it is not their fault for behaving the way they have, but Parliament's fault for having passed the law in the first place without giving local government sufficient resources to implement it.

Local authorities will use any criticism of their actions under the law as a way to criticise the law and to push for further changes to their way of thinking.

Your industry will continue to be the meat in their sandwich.

As for the Department of Internal Affairs, it was not at all in favour of the establishment of the Gaming Commission, viewing it as an assault on its long regulatory domination of the sector.

It will therefore do all it can to limit the role of the Commission, lest it become too independent, with the ultimate aim of proving its ineffectiveness.

Expect the first assault to come through the Department's existing regulation making powers.

This assault will have two features.

The regulations are almost certainly likely to be pin-pricking and niggardly, and they will designed to reinforce the view that while there might be an independent Commission in place, the real power will remain with the Department.

Expect too to be told by the Department that it will remain the Minister's major policy adviser, not the Commission, so that the Department will be driving changes in the future, not the Commission.

>From my vantage point, the establishment of an independent Commission is one of the most important features of this legislation.

It provides the first genuine hope of the development of rational gaming policy for the future, free from the vested interests and the prejudices.

I was very keen to see this body put in place, quite separate from the Department.

Over time, I expect the Commission to assert itself so that it becomes the pre-eminent regulatory body in the gaming area, and that was certainly my objective in promoting its establishment.

And then there is the problem gambling lobby.

I need to make it absolutely clear my comments should not be interpreted as unsympathetic to the concerns of compulsive gamblers, their families and associates, or those who work with them.

Many years ago, before going to Parliament, I worked in the alcohol and drug field, and know directly of the awful personal, social and economic impacts of addictive behaviours.

We need to do all we can to alleviate these impacts, and I salute unreservedly those who work in this field.

At the same time, I know how easy it is to whip up public sympathy regarding the human tragedies involved, and to propose superficial solutions that will not always work, but which look good.

The World Health Organisation has survived on this type of an approach for years, and has been a good teacher to many in this country who have lived off its gravy train.

It will always be easy to convey the gaming industry as the cause of the problem, no matter what you do to help, and that will always be seen as not enough.

Yet you cannot afford to react against this because to do so will merely reinforce any perception of heartlessness, and profits before people.

Therefore, you will need to develop constructive and positive relationships with the problem gambling lobby, and seek to accommodate their concerns as best you can, while at the same time remembering that you will never gain their loyalty.

All these particular agendas notwithstanding, I think the 2003 legislation is sound and should not require significant amendment for some time.

That does not mean that there will pushes for changes in other areas that will have an impact on the gaming sector.

An obvious example is the recently passed smoke free legislation which will ban smoking in bars, restaurants and clubs from the end of this year, and which will have an impact on the patterns of usage of poker machines.

In another area, I fear there is a distinct possibility of upcoming changes to various gaming taxes, partly to recoup some of the revenue the Crown fears may be lost as a result of the new consultative process for setting the problem gambling levy, which makes initial hopes in some quarters of this rising to $20 million a year, now quite unlikely.

At present there are many distortions within the tax system as it applies to various forms of gaming, and a strong case can be made for reviewing and rationalising it.

That is not what I am talking about, however.

My fear is that the pretext of the current uneven tax arrangements will be used to review gaming taxes, not from the point of view of rationalising a complex system, but more from the view of gouging extra revenue from the sector.

Last year's legislation should see some of the heat that has been part of the gaming scene for some years now reduced.

That is because it is largely rational, and has had significant amounts of common sense injected into it.

However, that is unfortunately no reason for complacency.

The other factors I have discussed this morning, let alone any new ingenious moves to get around the law's various provisions that may develop, mean it is most unlikely that gaming related issues will go off the agenda in the next few years.

I wish you luck!

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