Next Steps for the Racing Industry - Winston Peters

[Chief Stipe]

Next steps for racing industry reform

• 

  RT HON WINSTON PETERS

Deputy Prime Minister

 

Racing

Racing Minister Winston Peters says the Government will introduce two new pieces of legislation this year to revitalise the domestic racing industry.

Cabinet this week considered its response to the ‘Messara Review of the Racing Industry’ as well as advice from the Ministerial Advisory Committee (MAC) on Racing.

“The New Zealand racing industry is in a state of serious decline. The Coalition Government supports the overall intent of the Messara Report and is committed to reforms. We know we have the grass, the race animals, and the people to help the industry achieve its potential,” said Mr Peters.   

“As a result, Cabinet has agreed to a stepped approach with the introduction of two Bills to amend the Racing Act 2003.”

The first Bill, due to be enacted by 1 July 2019, will put into immediate effect a transitional governance arrangement.  This Bill proposes the New Zealand Racing Board (NZRB) be reconstituted as the Racing Industry Transitional Authority (RITA) to drive the transition of the industry.

This Bill will also bring some financial relief for the industry by making offshore betting operators contribute to domestic racing and sports codes from the bets they take from New Zealanders.

“It is essential to have this transitional governance in place.  RITA will have a legislative mandate that encompasses change management as well as the current business-as-usual functions and powers of the NZRB,” said Mr Peters.

“As a result of RITA’s work the government anticipates a second racing amendment Bill to proceed later in 2019.  It will implement the remaining reforms including post-transition governance,” he said.

The Cabinet papers are being proactively released as well as the MAC interim report. They can be found here: www.dia.govt.nz/racing-review

ENDS

[Chief Stipe]

Racefields legislation will deliver squat, zip, nada, nothing.

Even if it does return what is promised it will only cover the fees NZRB pays other jurisdictions!

[curious]

1 hour ago, Chief Stipe said:

Racefields legislation will deliver squat, zip, nada, nothing.

Even if it does return what is promised it will only cover the fees NZRB pays other jurisdictions!

Agree. Still digesting the report and at first glance it seems mostly sensible but may be too little, too late?

[curious]

1 hour ago, curious said:

Agree. Still digesting the report and at first glance it seems mostly sensible but may be too little, too late?

That said, there are at least a couple of clangers in there that may mean the whole thing never gets off the ground. I think that the PoC tax is untenable, unreasonable (since overseas bookies already pay a 15% PoC tax in the form of GST), will cause avoidance and resistance, possibly reduce revenue and be virtually impossible to enforce. Worse, it may undo the passage of Bill #1.

Second, the revenue distribution proposal needs a rethink. A percentage of revenue from overseas same code events? How will it be determined which ones are offered? If they are all or mostly dogs say (assuming that is the best revenue producer for TABNZ), then the TR code won't get much will they?

[curious]

And wtf does this mean?

50% on each Code’s contribution to NZ economy.

50% of what and how the hell would that be calculated?

[Dark Beau]

11 hours ago, curious said:

That said, there are at least a couple of clangers in there that may mean the whole thing never gets off the ground. I think that the PoC tax is untenable, unreasonable (since overseas bookies already pay a 15% PoC tax in the form of GST), will cause avoidance and resistance, possibly reduce revenue and be virtually impossible to enforce. Worse, it may undo the passage of Bill #1.

 

Who is the 15% PoC tax in the form of GST paid to now?

Are you saying that every overseas betting agency pays the NZ Government 15% GST?

 

[curious]

33 minutes ago, Dark Beau said:

Who is the 15% PoC tax in the form of GST paid to now?

Are you saying that every overseas betting agency pays the NZ Government 15% GST?

 

Yes, most anyway where turnover is more than NZ$60,000 from NZ resident customers. Paid to IRD. http://taxpolicy.ird.govt.nz/publications/2015-commentary-rlwtgstossl/supplies-remote-gambling-services

Last I saw, compliance is high.

See also the DIA RIS.

Since October 2016, offshore operators have been subject to the requirement to register for and pay GST on qualifying supplies to New Zealand.  Each offshore operator will be also be subject to taxes in its domestic jurisdiction.  However, they are not required to make any payments to the New Zealand racing and sports industries, nor are they required to pay New Zealand’s betting duty or problem gambling levy

[curious]

Also see the Messara report:

In this regard, arguments have been advanced that application of these charges would amount to double taxation as the wagering operators already pay GST to the New Zealand Government. It has also been suggested that it would be difficult for wagering operators to determine the location of persons placing bets with them.

I note that the MAC report seems to have ignored this issue.

Edited April 17, 2019 by curious

[Freda]

So..now that your very adept analysis skills have had a chance to digest the initial news - what do you take out of it that is positive?  if anything?

I note that a PoC tax has slaughtered South Australian racing,  and would have seriously impacted on Queensland too if the stakeholders hadn't protested.

[Mark D]

Nothing new here.  Deliberately released I suspect while Winnie was crowing about the derailment of the CGT.  All about Reform and Revenue so Deano told us.  Should be prefaced by "Negligible" IMO.

[curious]

5 hours ago, Freda said:

So..now that your very adept analysis skills have had a chance to digest the initial news - what do you take out of it that is positive?  if anything?

I note that a PoC tax has slaughtered South Australian racing,  and would have seriously impacted on Queensland too if the stakeholders hadn't protested.

I'm afraid the positives are only potentially positives Freda.

Included though are:

1. The NZRB reverts to a wagering organisation as referred to in the report TABNZ or WageringNZ. I don't give a stuff what they call it as long as it focuses on the wagering business and stops meddling in other things like the RIU, pokies, etc.

2. The much needed review of the RIU.

3. The P&E audit, which should have been done under the current legislation anyway but another nudge won't hurt.

4. Improving requirements for governance appointments so the likes of Wagering NZ has a board dominated by wagering expertise for example.

5. The RIOEC review of whole or partial outsourcing options. It would be good if this includes outsourcing all FOB and retaining the tote business and then making it globally competitive.

6. Legislating a Racing Information Use charge. Should have been done yonks ago though won't lead to much additional net revenue, if any. Ignore the bandied figures.

7. The Industry Future Venue Plan Group which might hopefully come up with a better plan than what we've seen from NZTR so far who seem to have stupidly jumped the gun on this. It needs to be a 3 code plan.

8. The animal welfare strategies.

9. Requesting prizemoney policy information from codes that indicate a prizemoney structure that will increase participation, increases field sizes and generate revenue growth. We don't have that now.

That's about it. Would have been nice to see something that was correlated with increased revenue but other than stealing from the taxpayer at considerable political risk, I don't see anything definitive.

 

Edited April 18, 2019 by curious

[Freda]

Thanks.

[curious]

No worries Freda. I should say that I made those comments based only on the MAC report. I'm still wading my way through the 3 related cabinet papers.

From the first however, I note a couple of things that concur with my above comments.

Firstly, in relation to shedding the pokie business:

I see the following comment with respect to the 1700+ submissions on the Messara report:

The most significant volume of feedback received related to a sub-recommendation within the Report, which proposes removing the legal restrictions in section 33(3) of the Gambling Act 2003 that prevents the NZRB from acquiring class 4 gaming licence venues. 1 187 submissions were received, almost all of which were form-style submissions which opposed the sub-recommendation.

It seems clear from that, MAC should have or at least should be in their final report, recommending that RITA transition NZ Racing out of the pokie business in the interests of social responsibility and the image of the game.

Secondly, the political risk I refer to is highlighted by the comments from Treasury. Some budget sensitive matters are blanked out but I think this comment is telling.

Treasury comment 51.The proposals in this suite of papers have significant regulatory and financial implications for the Crown, the racing industry, and consumers and the public. The evidence supporting the problems identified and the case for the proposed interventions has not been presented here, so the nature and causes of the problems facing the industry are not clear. Further analysis of the problems, the intervention options, and the impacts expected would help inform Cabinet decision-making. In particular, this analysis could consider:

51.1 the risks relating to greater gambling harms as a result of the proposals, including any wider impacts on well-being;

51.2 the impacts on New Zealand consumers (gamblers), including whether they will face higher or lower costs;

51.3 the impact on overseas operators, including whether or not they may exit the New Zealand market;

51.4 the impact on the financial position of the New Zealand Racing Board;

51.552. Without this analysis, it is difficult to assess whether these proposals will revitalise the industry as intended or whether the industry will continue to decline (as other factors may be driving this).

This needs to be done before this is further advanced and MAC need to address this in their final report.

[curious]

Hey chief. Can we have a little more editing time here please?

 

No worries Freda. I should say that I made those comments based only on the MAC report. I'm still wading my way through the 3 related cabinet papers.

From the first however, I note a couple of things that concur with my above comments.

Firstly, in relation to shedding the pokie business:

I see the following comment with respect to the 1700+ submissions on the Messara report:

The most significant volume of feedback received related to a sub-recommendation within the Report, which proposes removing the legal restrictions in section 33(3) of the Gambling Act 2003 that prevents the NZRB from acquiring class 4 gaming licence venues. 1 187 submissions were received, almost all of which were form-style submissions which opposed the sub-recommendation.

It seems clear from that, MAC should have, or at least should be in their final report, recommending that RITA transition NZ Racing out of the pokie business in the interests of social responsibility and the image of the game.

Secondly, the political risk I refer to is highlighted by the comments from Treasury. Some budget sensitive matters are blanked out but I think this comment is telling.

Treasury comment 51.The proposals in this suite of papers have significant regulatory and financial implications for the Crown, the racing industry, and consumers and the public. The evidence supporting the problems identified and the case for the proposed interventions has not been presented here, so the nature and causes of the problems facing the industry are not clear. Further analysis of the problems, the intervention options, and the impacts expected would help inform Cabinet decision-making. In particular, this analysis could consider:

51.1 the risks relating to greater gambling harms as a result of the proposals, including any wider impacts on well-being;

51.2 the impacts on New Zealand consumers (gamblers), including whether they will face higher or lower costs;

51.3 the impact on overseas operators, including whether or not they may exit the New Zealand market;

51.4 the impact on the financial position of the New Zealand Racing Board;

51.5 Budget sensitive

52. Without this analysis, it is difficult to assess whether these proposals will revitalise the industry as intended or whether the industry will continue to decline (as other factors may be driving this).

This needs to be done before this is further advanced and MAC need to address this in their final report.

[Chief Stipe]

Good stuff Curious 

[porky]

blinken heck..this Messara report and digesting all this info Curious, has had me in a spin and confused !

BUT thanks for making some sense of it and readable to digest!

UNBELIEVABLE ...TAX LAWS...AKA...CAPITAL GAINS TAX...CAN BE CHANGED OVERNIGHT !

AND THE RACING INDUSTRY STILL AWAITS MEANINGFUL CHANGES...EH WINSTON

MUST BE NICE HOLDING THE BALANCE OF POWER    UP STAKES...SORT THE REST OUT LATER !

[Freda]

47 minutes ago, porky said:

blinken heck..this Messara report and digesting all this info Curious, has had me in a spin and confused !

BUT thanks for making some sense of it and readable to digest!

UNBELIEVABLE ...TAX LAWS...AKA...CAPITAL GAINS TAX...CAN BE CHANGED OVERNIGHT !

 

Well...actually,  no...tax laws haven't 'changed overnight' ....nothing has  changed...that's the point.

[Mark D]

Important thing to note, and the Treasury comments highlight this point, is that thus far this so called reform has existed inside the "racing" bubble and progress has been slow.  But once it gets opened up and other Departments such as Inland Revenue etc etc and general "social' groups get involved, where the health of racing is not the sole focus, then things get far more complicated and troublesome.  The general perception I believe is, and this is shared by many in the racing industry too it's just that they have been ignored, is that it is a bunch of fat cats feathering their own nest - with of course the perfunctory nod to how many (poorly paid) jobs exist in the racing industry.

Its been easy so far.

[curious]

14 hours ago, Chief Stipe said:

Good stuff Curious 

So, have you changed the editing time Chief? 20-30 minutes would be good. I go make a cup of coffee, see a typo in my post and then can't fix it.

[curious]

30 minutes ago, Mark D said:

Important thing to note, and the Treasury comments highlight this point, is that thus far this so called reform has existed inside the "racing" bubble and progress has been slow.  But once it gets opened up and other Departments such as Inland Revenue etc etc and general "social' groups get involved, where the health of racing is not the sole focus, then things get far more complicated and troublesome.  The general perception I believe is, and this is shared by many in the racing industry too it's just that they have been ignored, is that it is a bunch of fat cats feathering their own nest - with of course the perfunctory nod to how many (poorly paid) jobs exist in the racing industry.

Its been easy so far.

Aside from the Treasury comments, the MAC seems already to have largely ignored the DIA Regulatory Impact Statement which questions some of the numbers being used. Hopefully, cabinet will apply some common sense.

Edited April 18, 2019 by curious

[Dark Beau]

Curious, thanks for posting the International  GST ramifications (which I certainly was not aware of) and all your other detail analysis. 

[Freda]

 Curious warrants a big thanks from all of us - not just on this issue either -  for his ability to analyse material and explain concisely what [ to me,  anyway ]  is often jargon that is very hard to comprehend.

I' ve learned heaps  as a result,  so,  cheers to you,  Curious,  for your work and the fact that you are prepared to share some of it with us.

[curious]

Thanks Freda.

I'm sitting here marveling at the fact that according to cabinet paper #3 on this, the MAC, cabinet and NZRB seem to think that kiwi punters are turning over 1200 million with off shore providers while managing to turn over 2/3 of that with the NZTAB. Surely there is something amiss with the ANZ data referred to in cabinet paper number 3, or the interpretation of that, or the NZRB are wildly making things up to suit themselves. I think we need to employ people in the likes of cabinet and the MAC who can count (at least up to 100).

Edited April 19, 2019 by curious

[Freda]

I'm getting the feeling from this, that the members of MAC and also those Cabinet personnel,  didn't bother to check the figures that were given to them by NZRB,  but just accepted them.

That I find disappointing,  given the [ supposed ] quality of the people concerned.

I hope that Treasury - and the DIA - apply more diligent scrutiny.

[Chief Stipe]

The DIA has but no one has listened.