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Gambling Amendment Bill (No 2) — Second Reading

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Gambling Amendment Bill (No 2)

Second Reading

Hon Dr RICHARD WORTH (Minister of Internal Affairs) : In a crowded House and before a full gallery I move, That the Gambling Amendment Bill (No 2) be now read a second time. The bill amends the Gambling Act 2003. We have progressed this bill, which was introduced by the previous Government, because it responds to a number of issues that have been identified while implementing and administering the Act. I think it is important to resolve those issues, and clarify the law, because large sums of money are at stake in the gambling sector. The bill does not contain any major policy changes. Instead, a few small policy amendments and many technical amendments proposed by the bill are all about making the Act operate as originally intended.

I would like to briefly summarise some of the measures contained in the bill. One of the Act’s objectives is to ensure the fairness and integrity of games. To further assist with the achievement of this objective, the bill introduces minimum disclosure requirements for non-cash prizes. The Act, of course, already contains a prize disclosure regime, but it is only partially achieved, and in quite a fragmented way. Introducing a statutory requirement for the accurate disclosure of all non-cash prizes would increase certainty, and it would remove any inconsistencies between different types of gambling.

The bill contains a number of measures intended to assist its community funding objectives. I just highlight these in the opportunity I have to speak. First of all, these include clauses requiring venues that host gaming machines on behalf of gaming-machine societies to bank community profits directly into the society’s dedicated account. This amendment responds to the practice whereby some venues have been banking society money in their own accounts for a few days, and occasionally have not been able to account for it when it is time to bank the money into the society’s bank account. Second, there are also explicit obligations on community grant recipients to use grants from gaming-machine proceeds appropriately, including an offence for non-compliance. That measure obviously reduces the risk of grant recipients misappropriating gaming-machine proceeds. Third, conflict of interest safeguards are extended to all persons who make decisions on gaming-machine grants. Currently they apply only to those people with key roles in the management of the society. Fourth, the bill specifies in more detail the circumstances in which a gaming-machine society, such as a club, can apply gaming-machine proceeds to its own purposes, as opposed to when it can make grants to community groups. At present the Act does not provide sufficient clarity on that point.

There are also a number of measures intended to assist with the achievement of the Act’s harm prevention and minimisation objectives. One provision clarifies a grey area relating to the identification of problem gamblers by gambling venues. New section 309A, inserted by clause 82, states that gaming machine and casino operators have an ongoing duty to “take all reasonable steps to assist a person” they have identified as a potential problem gambler. Essentially, this means it will not be enough for an operator to just approach a person on one occasion, provide information about problem gambling, and then take no further action if the person’s gambling behaviour continues to cause concern. The bill also provides that gambling venue staff do not have to issue venue exclusion orders to persons who approach them and identify themselves as problem gamblers, if those persons do not provide a reasonable means of identification, such as a recent photograph. The requirement to provide a recent photo will assist venue staff with the re-identification of excluded problem gamblers who return to a venue in defiance of their exclusion orders. The bill also makes a number of modifications to the Act’s harm prevention and minimisation regulation-making powers.

The bill recognises the importance of gambling-related research with the inclusion of a clause designed to make it easier to conduct research on gambling in real-life gambling environments. The clause authorises the Secretary for Internal Affairs to temporarily approve the operation of gambling equipment in a venue for the purpose of testing whether the equipment’s introduction is consistent with the Act’s objectives.

The bill provides more flexibility for clubs who wish to merge in order to address financial viability issues. By clubs, I mean organisations like RSAs and chartered clubs. The Act currently allows two or more clubs to apply for ministerial approval to operate up to 30 gaming machines at the venue on which they merge. However, they may merge only on to an existing 18-machine venue. The number of 18-machine venues is limited. So the bill will allow clubs to apply for ministerial approval to operate additional machines at any venue, even if that venue would not otherwise be an 18-machine venue. They would still be subject to territorial authority consent. Other provisions in the bill and, in fact, in the Act would mean that this would lead to an overall increase in the number of gaming machines.

In addition, a number of clauses in the bill are designed to assist the Gambling Commission with the performance of its functions. One clause enhances the Gambling Commission’s protection from liability, along similar lines to the immunities provided to statutory entities under the Crown Entities Act 2004. The clause provides the commission with the flexibility to determine when it sits as a division and to decide whether the division includes the Chief Gambling Commissioner.

The bill, of course, was reported back by the Government Administration Committee during the last Parliament. I would like to take this opportunity to thank the committee for its work on the bill during the last Parliament. I note that the committee reported the bill back with a number of amendments for the House to consider. These amendments have the Government’s support. I would like to make a few comments on some of them.

One of the amendments recommended by the committee is the insertion of a new clause clarifying and enhancing an existing provision that allows the Secretary for Internal Affairs to collect gambling-related information from gambling operators, together with an obligation to make the information that is collected available to the public. Information on grants made to the community by gaming-machine operators is a very good example of the type of material that could be collected under this clause. I believe there is a clear desire on the part of the public to be more informed about what happens to the community funds generated by gaming machines in their district. In fact, I have very strong views on this issue. A more informed public is in a better position to form a view on whether there is a net benefit from gambling in its district. For similar reasons, more information on grants will also assist territorial authorities and community groups when territorial authorities review their gambling venue policies. Essentially, this clause will assist in facilitating community involvement in gambling, which is one of the Act’s key objectives, and for that reason it is a worthwhile addition to the bill.

Another amendment that was recommended by the committee concerns the definition of a “gaming machine”. The current definition is very wide, and it has the potential to unintentionally capture ancillary gambling equipment like electronic card shufflers used in casinos, which do not need to be regulated as gaming machines. The committee has recommended changes to the definition, which should eliminate this problem.

The committee has also proposed some useful enhancements to the Act’s processes for identifying problem gamblers and excluding them from gambling venues.

Finally, the committee recommended a number of amendments that protect the privacy of excluded problem gamblers. All of these clauses will assist in preventing and minimising gambling-related harm, which, as members will know, is one of the Act’s key objectives.

In closing, and in a message to Labour, I would like to touch again on the issues around the distribution of funds generated by gaming machines. I just say, and place it on the record, that I am particularly keen to ensure two things.

Mr DEPUTY SPEAKER: The member’s time has expired.

CHRIS HIPKINS (Labour—Rimutaka) : The anticipation was building up, and we felt that the Minister of Internal Affairs was cut down in his prime. I have to confess that I am still slightly in shock about being lectured on conflicts of interest by the Hon Dr Richard Worth, although it would appear that he certainly has superior knowledge of the issue of conflict of interest in the House.

I am happy to take a call on the Gambling Amendment Bill (No 2). The Gambling Act 2003 is a large, complex, and very prescriptive piece of legislation, which was passed by the previous Labour Government in 2003. As with any Act that is as prescriptive and complex as this, a number of issues that were going to be identified as it was implemented would need to be addressed through a fairly technical amendment bill. That is what this bill is.

I would like to acknowledge the work of the former Minister of Internal Affairs the Hon Rick Barker, who I know put in a lot of work to get this bill before the House. I would also like to acknowledge the members of the Government Administration Committee in the last Parliament, who put in a lot of work to get the bill through the select committee process and back into the House. I acknowledge the work of my colleague Darien Fenton, who was the deputy chair of the Government Administration Committee in the last Parliament.

The bill contains several small policy amendments and technical amendments. The purpose is to allow the Act to operate as it was originally intended. The Gambling Act brought about the biggest changes to the gambling sector in over 20 years when it became fully operational on 1 July 2004. Among the things it aimed to do was to control the growth of gambling. There has certainly been significant growth in the gambling industry. Turnover in the gambling industry increased from $6.1 billion in 1998 to $14 billion in 2007. I think we would all agree that that is very significant growth in gambling. Another aim of the Gambling Act was to prevent and minimise gambling harm. I will talk a little bit about that in a moment.

I will talk largely about pokie machines rather than casinos. It is worth noting at this point that one in five regular pokie players has been identified as having a gambling problem. The Gambling Act also authorises some forms of gambling and prohibits the rest. It ensures the integrity and the fairness of the games involved. It restricts the opportunities for crime or dishonesty, it ensures that money from gambling benefits the community, and it facilitates community involvement in decisions on the provision of gambling.

It is useful to inject some more facts into the debate at this particular point. The gambling industry’s turnover, as I noted, was a little over $14 billion in 2007, and money lost was just over $2 billion, of which about $950 million was lost on non-casino pokie machines. That is a very significant amount of money. I am told that the money collected from non-casino pokie machines is roughly the equivalent of the entire operating cost of the New Zealand Police. Up to 42 percent of the revenue from pokie machines is from problem gamblers—people who have been identified as having a problem. They make up around 3 percent of gamblers, so a small number of people are gambling a very large sum of money through these pokie machines. Six major societies distribute around 60 percent of all non-casino expenditure funding to community organisations and each pokie-machine grant is approximately $2,438. There were 1,537 gambling venues and nearly 20,000 pokie machines in New Zealand as at December last year. Every day, $2.7 million is lost on non-casino pokie machines.

I think we would agree that there are some significant issues around gambling that we need to look at. This bill, which is largely a technical bill, does not necessarily address those issues. It tidies up the Gambling Act to ensure that it operates as intended, but I think we would agree that some significant issues still need to be addressed and may warrant further investigation. It is a tragic reality that hundreds of sports clubs and community groups throughout the country rely on the proceeds of gambling in order to survive. The Gambling Act was an attempt to ensure that the proceeds of gambling are invested back into the community in a way that is transparent and fair. It is fair to say that before the Gambling Act was passed, there was a lot of rorting of the system.

I was given pause when reading through this material to recall that back in the late 1990s - early 2000s, when I was involved in the students association movement, one of my jobs was to secure funding for our sports teams. We used to send a sports team to the New Zealand Uni Games, the winter games, and so forth each year. One of the major sources of sponsorship was the pubs, and the money they gave us had been obtained from pokie machines. But it came with a lot of conditions. Although there were some potentially quite significant sums of money involved, the conditions usually involved most of the money going back to the establishment that it was obtained from. So we would be told “Yep, you can have $20,000 for uniforms for your sports teams.” The uniforms themselves might have cost a couple of thousand dollars and they had to have the name of the sponsoring pub on them. The remainder of the money was expected to flow back across the bar of the pub involved. That was very commonplace. Of course, there were some significant issues with that, because the pubs involved would select groups for sponsorship that were more likely to put most of their money back across the bar. If a sport typically did not involve people who were likely to be heavy drinkers, it was less likely to get pub sponsorship. The organisations that typically had an after-match function would get the money, because the establishment owners knew that they were likely to get most of that money back across the bar. That situation needed to be cleaned up, and that was one of the things that the Act was designed to achieve.

It is fair to say that the gambling sector has cleaned up its act significantly since 2003, but there are still some significant issues to be dealt with. One of the issues that has come up is the use of pokie money by the racing industry and, effectively, the transfer of the proceeds of one form of gambling to another form of gambling. It would be fair to say that even though I agreed with much of what the Minister of Internal Affairs said, I am still a little confused as to what the Government’s position on the racing industry is. I particularly refer to the Otago Daily Times on 27 April. The headline is “Shake-up possible for pokies” and the Minister said: “My priorities in this area are to maximise the community funding generated by non-casino gaming machines and to resolve questionable funding practices in the sector.” A further article appeared on 1 May, which stated under “Racing bodies fear for future” that the Minister of Internal Affairs had indicated he may scratch charitable gaming trust grants to the racing sector, a move that could result in the collapse of the industry, according to some. Another article on 2 May stated that the Minister of Internal Affairs did not intend to look at the issue of pokie money being used for racing. I think everybody is a little bit confused, and we would welcome, at some point in the proceedings, a clarification of the Government’s position on the use of pokie money in the racing industry.

I will turn very briefly, in the remaining minutes that I have, to congratulate the Government Administration Committee on its work. It received 168 submissions on this bill, which is obviously a very significant number. Of those 168 submissions, 32 expressed general support for the bill. Many of the submitters proposed additional amendments or commented on specific matters that were outside the intent of what this particular bill was designed to achieve—the effective running of the Act as it was passed in 2003. But many of the issues that were raised were genuine and worthy of further consideration. The committee decided not to consider those issues, according to its report, because they were outside the intent of the bill. But that is something the new Government and the Department of Internal Affairs will want to consider.

A number of the issues raised also related to regulation, and to issues that could be better dealt with through regulation rather than through changes to the Act. They included things such as reducing maximum gaming-machine prizes, regulating a gaming-machine’s spin speed, pre-commitment and player tracking systems, advertising standards, and the accumulation of gaming-machine profits. I encourage the Minister and the Department of Internal Affairs to look closely at those issues and consider whether any further action may need to be taken on those particular concerns.

One area that the committee could not agree on, and that we in the Labour Party have a strong view on, is the location of gaming machines in outside areas. Our view is that gaming machines should be located indoors, and that any attempt to move them outside is clearly designed to circumvent the Smoke-free Environments Act 1990.

Hon Dr RICHARD WORTH (Minister of Internal Affairs) : I seek leave to make two comments lasting no more than 20 seconds. They arise from what the member, Chris Hipkins, has said.

Mr DEPUTY SPEAKER: Leave is sought for that purpose. Is there any objection? There is none.

Hon Dr RICHARD WORTH: I would just like to say this—and I think it is very much on a non-partisan basis; I certainly hope it is. I am particularly keen to ensure two things. The first is that we maximise community funding generated by non-casino gaming machines in commercial premises. I think that is really important. The second thing is that we resolve questionable grant funding practices in this sector. I hope that there might be, in the context of work that I plan to do, a broad commitment to achieving that sort of outcome.

JACQUI DEAN (National—Waitaki) : In speaking to the second reading of the Gambling Amendment Bill (No 2) I guess there is no question by members from across the House that gambling damages people, damages homes, and has damaging effects on whole communities. I think that this bill is a good attempt to make several policy amendments and a number of technical amendments to the Gambling Act 2003.

That Act is quite a large piece of legislation. It is technical and complex. It brought a number of reforms to the gambling sector that I believe were quite welcome at the time. Those were a moratorium on the opening of additional casinos and a reduction in the number of class 4 gaming machines and new venues. There was also a significant shift in focus towards the minimisation of the harm associated with gambling. I know that the Minister of Internal Affairs has shown a lot of concern about the effects of problem gambling. Recently I have had several conversations with the Minister on just that subject, and I know that he has a deep and ongoing concern and would like to see more work done on the issue of problem gambling.

But here we are this evening, facing the second reading of this bill, which does bring in a number of provisions. I guess it is worth noting, because it is a little unusual, that there were 168 written submissions on this bill to the Government Administration Committee of the previous Parliament. Although 32 of those submissions expressed direct support for the provisions within the bill, the remainder of them were supportive in ways that fell outside the scope of the bill. That tells us something very significant. It tells us that around 136 people were concerned enough to submit on this bill. Their concerns were outside the scope of the bill, but they were concerned enough about problem gambling in New Zealand and in our communities, and about the effects of it on individuals, to make a submission to the select committee of the day. I think that is significant and is worth noting in this House. It is something that the Minister of Internal Affairs, the Hon Dr Richard Worth, has certainly taken on board and is very concerned about.

Turning to the amendments that the bill makes to the Act, I say there are many, but I think it is worth rehearsing them in this second reading. I know they have been raised by members across the House, but it is important to restate some of the amendments. One is a requirement to bank gaming-machine profits directly into the gaming-machine society’s bank account. Of course, the reason for that amendment is that some societies have been utilising profits to ease the cash flow, which is a rather delicate way of saying that the cash could not then be accounted for. That must be a very useful amendment to be brought in as part of this bill.

I pause here very briefly to comment that members across the House have noted the fact that I have been speaking rather slowly and carefully. Of course, there are people who are unable to hear my words. This is a very special week, and I think it is incumbent on us as parliamentarians, particularly in Deaf Awareness Week, to recognise that slow and careful speech can be useful to those who do not hear as well as we do.

Returning to the policy amendments, there will be a requirement in this bill that community grant recipients use those grants only for the specific authorised purpose for which the grant was made. The justification for requesting the grant cannot be changed. That is a rigour that I believe will be very welcome in this context. The legislation will set out the circumstances in which a gaming-machine society may apply gaming-machine proceeds to its own authorised purpose, as opposed to making grants to the wider community. It will also set out the duty for gambling venues to assist potential problem gamblers where ongoing problems are suspected. Essentially, this means that it will not suffice for a venue to approach a person on one occasion, provide him or her with information on problem gambling, and then do nothing further. What would be the use of that? I would argue that it would not be particularly useful. It will not be sufficient to provide information about problem gambling and do nothing further if the person’s gambling behaviour continues to be of concern. It is not adequate for someone in a gambling situation to approach someone whom they perceive to be a problem gambler only once, when they suspect that ongoing problems are occurring.

The amendments to the Act will tighten the regulations around the monitoring of gaming. Organisations or people who receive grants from gambling societies will need to be accountable for how that money is spent.

  • Debate interrupted.