Racing Bill

It was very interesting to hear the Minister’s comments about the uniformity and consensus between the three racing codes—I know they put a joint submission in to the Government Administration Committee. I was on that select committee. Why, then, did the Minister commission a report after the select committee had deliberated and after we had moved to report back? The introduction to the PricewaterhouseCoopers report states: “This report has been prepared in response to terms of reference developed by the Department of Internal Affairs on behalf of the Minister for Racing and the Minister for Economic Development.”. If that report is so important, and if a working group has been established, which has not yet reported back to the Racing Industry Board, why are we debating this bill tonight? Why are we debating this bill tonight when a week would have allowed those submissions from the working group to be considered by the Racing Industry Board and to be taken to the Minister—or has the Racing Industry Board already reported back to the Minister without hearing what the meetings around the country have been deciding?

I went to the working group meeting in Hamilton last Wednesday. At that meeting, the chairman told those who were present that they had an opportunity to make comments on the working group’s report by Friday, 8 March—that is, this Friday. The Racing Industry Board would then look at the submissions from around the country, deliberate on them, then talk to the Minister about whether any changes to the bill were needed. I would have thought that that was pretty important to the consultative process. The industry needs all the support it can get—we acknowledge that—and that is the point of having a report commissioned by PricewaterhouseCoopers. The report makes certain recommendations. I do not know what the cost of that report was, but a report prepared by a firm like PricewaterhouseCoopers would have cost megabucks. Then the working party said it would travel the country with that document so that members of the codes could have input. There would have been a couple of hundred people at the meeting in Hamilton last Wednesday, and there was a lot of discussion. It was a well-run meeting, and there were a lot of opportunities. People at that meeting were told that they had the opportunity to have a say on the recommendations that were made in the working party’s report. If those people have not had a say—which is the case now, because we are debating the legislation—all those people have lost an opportunity.

I can tell the Minister that a lot of people out there are pretty annoyed and upset because they were led to believe that they still had an opportunity to have a say on the report of the racing industry working group. In fact, today I got a letter from a solicitor who is well known in the racing industry and in my electorate, Piako—he comes from Cambridge. The letter stated that he was at the meeting on Wednesday, which was chaired by the chairman of the Racing Industry Board, and that at the meeting people were told that submissions in relation to that report should be in by 8 March. That is why I am saying that the commencement date of this bill is being rushed. I am suggesting that we could have had a week longer in order to hear what the working group had to say. I am not saying that the answers would have been changed—I am not saying that at all—but people were led to believe that they had an opportunity to make submissions. Those meetings were well attended—there were full meetings around the country—and those people are being disenfranchised by our having this debate and moving the bill through the Committee stage tonight. I am not saying that the findings of the Racing Industry Board would have changed the bill in any way, but that those people have been disenfranchised. There are a lot of unhappy people in the racing industry tonight who are concerned that their voices have not been heard.

We heard some very fine words from the Minister when she spoke. She made a gripping speech that indicated her strong knowledge of all the legislation, but she did not answer the question that Lindsay Tisch and I put to her earlier. That question is: what is she doing about the report of the racing industry working group? Is she telling us that it was all a waste of time and that the Government has no intention of adopting it? Is it the Government’s view that the PricewaterhouseCoopers report is purely an internal matter and that the report of the racing industry working group is also an internal matter? Does the Government have no intention of taking any notice of either report? I am sure that that is totally contrary to all the ways in which we operate in this country.

The bill was delayed while a five-member working group was considering the matter. I am sure that everyone in the group, and all those who made submissions to it, would have been under the impression—which, we now take it, was a mistaken impression—that the Government was going to take some notice of their report. It now appears that this minority Labour Government has no interest in the views of the people in the racing industry and will just put this bill through as it was reported back from the select committee, with a few minor alterations here and there, and without any regard for the views of the racing industry working group. There is another view. Perhaps the Government has totally forgotten about the racing industry working group. Perhaps the Government was short of work this week, and perhaps Government members thought they would just bang the Racing Bill in, get it through, and keep Parliament going for a little while in order to spare them the embarrassment of adjourning Parliament early tonight because they do not have much to do. Perhaps the Government thought it would just fill in the time with the Racing Bill, and that a few members might just keep things going. That is hardly the way to run a democracy.

I note the submission from the Hon Doug Kidd, which refers to the first part of the bill and the way in which it was changed. In paragraph 16 of his submission he states that even without the benefit of the two reports now to hand, the select committee clearly had a sense of the need to refocus for the future, when, with a small but critical amendment, it changed the first objective of the New Zealand Racing Board from “promote the sport of racing” to “promote the racing industry.”

It then sought to emphasise and underline the enormously important change of adding new clause 9(1)(aa), and the significant new provisions of clauses 18A and 20A, relating to business plans. That is really what the PricewaterhouseCoopers report is all about. The report of the racing industry working group is also a reflection of the PricewaterhouseCoopers report. Reference is made to the fact that we are dealing with the racing industry and that its views should be taken into account by the Government.

I conclude with one simple question. Is the Minister saying she will take no notice of the report of the racing industry working group and that all those people who have made submissions are just wasting their time?

We have just heard the Minister talk about the three codes being at one on this bill. Undoubtedly, National does indeed support the bill, and we agree with that. The Minister in the chair, Annette King, talked about the bill serving an important industry, and National absolutely agrees with that. She talked about the bill being important for New Zealand, and there is absolutely no doubt about that. But let us have a look at the purposes in Part 1. They include “to provide effective governance arrangements for the racing industry;” and “to facilitate betting on galloping, harness, and greyhound races, and other sporting events;” and, finally, “to promote the long-term viability of New Zealand racing.” The Minister said in her speech that the report we have been talking about—the report of the racing industry working group—was about looking at the economic implications of the industry, in line with the purpose of this bill, which is to promote the long-term viability of New Zealand racing. Therefore, she has been telling us that that report is of importance. I absolutely agree with my colleague Lindsay Tisch—why did we have to bring this bill in tonight when a delay of just 1 week would have allowed consideration of the very important report of the racing industry working group?

The genesis of that report came from the initial PricewaterhouseCoopers report of July 2002—in plenty of time for tonight; over 6 months ago now—which contained some very important implications. They are very important implications when one ties them down to paragraph(c) of the purpose clause of the bill, “to promote the long-term viability of New Zealand racing”. In fact, it stated: “Our discussions and analysis led us quickly to the conclusion that a report that recommended particular areas of initiative for further development and/or investment might be interesting but will not, in itself, address the factors that have inhibited long-term economic growth in the Industry. In fact, it could be both misleading for those involved and create even further impediments to rationale economic performance and investment. There is need for major reform; tinkering around the edges will not help.”

The recommendation was indeed to set up the industry working group. It is of huge worry that the Government and the Acting Minister for Racing, Annette King, chose to commission an expensive report, went about getting some eminent New Zealanders—including Bill Falconer the chairman, Brian Beattie, Tom Jamison, Wendy Pye, and Steve Thompson, who put considerable effort into the report and held four meetings around New Zealand amongst the racing industry and interested people—then ignored the report, or at least brought in the bill before there was time for a full report on the submissions. It seems absolutely wrong of any Government to do such a thing. We ask the Minister to take a call and tell us why she has done that when a purpose of the bill is to promote the long-term viability of New Zealand racing. She has said: “Oh, no. This report was to look at the economic implications of the industry.” The economic implications of the industry are absolutely vital for its long-term continuance. As Mr Tisch said, there will be large numbers of people in the racing industry and the area surrounding it who will be very disappointed with the Minister and the Government for having hurtled into the bill tonight when waiting for only a week or a couple weeks could have resulted in a much more considered and refined bill that would adhere to the purpose of looking at and promoting the long-term viability of New Zealand racing.

I refer the Committee’s attention to clause 3, “Purpose”. Clause 3(c) states: “to promote the long-term viability of New Zealand racing.” This bill is about governance, and nothing more. In my view it does absolutely nothing to improve the lot of racing. It does not put more money back into stakes, and does not help owners or trainers. It is about governance: bringing together the codes and the TAB under one body. There may certainly be savings in terms of administration, and I have no qualms about that—I support that—but what we are really looking for, and what clause 3(c) provides for, is for the bill “to promote the long-term viability of racing.” What the bill does not do—

💬 Jill Pettis: Why didn’t they do this during the select committee process?

I am actually making a very important point here about the purpose of this bill. The bill does not identify where the viability, the long-term prospects, and the growth and investment that we need are. The bill does not deliver on that. It is about governance.

💬 Hon Annette King: It’s not supposed to.

Why, then, do we have clause 3(c), which states: “to promote the long-term viability of New Zealand racing.”? I would have thought the viability of an industry was about where it would be heading in the future economically, where it would be positioned in the world, and where investment would come from.

This bill does not—and this is why there are major concerns in the industry—address in any way the viability of the industry or the taxation regimes. However, further on, it allows opportunities to have pokie machines, and we will come to that point in a later part. But one of the areas in which the industry needs to be very focused is on having one vision, one plan, one industry, and accountability of all the codes. One part of that that the industry is looking for is to have as close to an equitable basis in terms of taxation as one could possibly get.

National’s policy at the last election talked about the depreciation rates on stallions and brood mares. This Government has not moved on that matter. I tell the Minister that it is one of the areas that, in terms of viability, makes the investment and the greater prospects that this industry needs. There has been no move on, or attention given to, the shuttle stallions that we have to bring in from overseas. We pay thousands and thousands of dollars—it is all tax deductible; that is fine—but that $800,000 or $1 million that we pay in shuttle fees goes off shore. We do not get that money, and it is not retained in New Zealand. If we had attractive depreciation rates then there would be investment, and people would invest in stallions and brood mares.

The other area—

💬 Hon Annette King: We did change the depreciation of brood mares.

Oh, yes. That was done. It was moved from 15 years down to 11 years. OK. We are looking here for—

💬 Hon Annette King: You said we had done nothing.

Well, the Government removed the GST payable on dead horses. I know that—

💬 Hon Annette King: That’s good.

She said: “That’s good.” Oh, well, here we are. That is the highlight of the Minister’s speech—she removed the GST payable on dead horses. But if we are serious about this industry, the Government needs to look further at taxation. I tell the Minister that I have here a very good publication. I do not know whether she or her advisor has had the opportunity to look at it. It is about the taxation of bloodstock in New Zealand, and it encompasses all the things that the industry needs to look at, in order to be able to grow and create investment. At the end of the day, we need to make the industry attractive for the 30,000 people involved in it. The stakeholders of this industry are the owners of the horses, and the punters—the people who go and put their money on the horses. If we do not have punters, we do not have an industry.

The long-term viability of the racing industry—and I talked about this at the Government Administration Committee—is not covered in this bill. While it sounds very grand to promote the long-term viability of New Zealand racing, the bill does not go anywhere because it is about governance. We also need to have some detailed plans of where the Minister will be taking the industry in terms of taxation and the 20 percent duty that is paid in the racing industry, versus the level of duty paid in the other gaming industries.

I rise on behalf of the ACT party, which is now in support of this bill. I say to the Minister that it is a step in the right direction, and ACT members think it will be better for the racing industry. The bill does not go far enough in our terms, but we realise that the Minister has done her best given the industry and the issues involved.

The racing industry is a great industry. It is actually a great New Zealand industry, and we should be very proud of the bloodstock industry, of racing, of the success that New Zealanders have had in developing the industry, and of the pleasure that they give to hundreds of thousands of New Zealanders. Racing is not my particular cup of tea, but I understand that people get passionate when watching horses go around a track, and, indeed, having a punt. Why should they not?

💬 Hon Dover Samuels: And the jockeys.

Well, yes. I did try out to be a jockey, but they sent me off to be a hooker—in the local rugby team. So ACT does support this bill, but I want to make some general comments about it. I think that this bill should go through quite quickly, and I will not take another call—unless something upsets me.

My question to members is this: what do politicians actually know about this business? I would suggest we do not know much. We certainly do not have anything particularly invested in the business of racing. I know that some people here like a few bets, and that some even have a part-share in a horse. But that is it. The ACT party and I are a bit disturbed about the fact that we are trying to micromanage this industry. We talk about changing the depreciation rate or a particular rule, but I say the ACT party looks forward to the day when the racing industry is treated like every other industry in New Zealand. There should be nothing special about its treatment. Looking across at my United Future friends, I say that there is nothing particularly naughty or bad about the racing industry. People like to have a bet. It is their money; they should be allowed to do so.

💬 Marc Alexander: Is that bad?

Marc Alexander calls out. Does he think it is bad? Well, he does think it is bad on some days.

We say that it is up to the punters themselves, and the racing industry itself, to choose. So we look forward to the day when the racing industry can flourish like any other industry, without having politicians pretending they are experts—without knowing much about the industry. Other politicians probably know a bit more about racing than me, but I know nothing so that would not be hard.

💬 Marc Alexander: Amen.

Now we have the United Future party saying prayers in the Chamber on my behalf. I thank it for that. I say to the Minister that if she wants the industry to go ahead, the way to do that is the same as for any other industry—let us get the taxes down on the racing industry. And let us not get the taxes down on just the racing industry but on every business in New Zealand. Let us also cut out some of the mad rules and regulations. Let us try something radical in the racing industry, and it might spread to the rest of New Zealand. Let us just trust the people, for a change.

Looking at the purpose of the bill and, as I mentioned before, speaking of racing as an industry, I say New Zealand First agrees that changing the Racing Act and merging the Totalisator Agency Board and the Racing Industry Board is all fine. But we ask what we are doing for the racing industry in this legislation. What does the Minister propose, for example, in terms of changing the tax policy for breeding, or of having a reduction in duty relative to other forms of gaming, in order to make racing competitive with them? The Government should start being fair, and adopt the same tax rate that applies to casinos for the racing industry. Does the Government have any proposals to adopt that approach?

I understand that the English, Irish, and Australian racing industries had similar problems to the New Zealand industry’s in the past, but those countries have gone out of their way, in different ways, to solve them, and the industry in those countries is doing very well. We have asked the question in the past of why people should bring, for example, a stallion to this country, get no depreciation write-off whatsoever, and try to compete against Australia and other countries. What proposals does the Minister have to really assist the racing industry where it matters? She suggests that this is a bill to set out how the racing industry is governed. But really, if this Labour Government is concerned about the industry itself—about the 32,000 or 33,000 people who work in this industry all around the country; and probably mostly in some of the provincial areas rather than in the city areas—what will the Government do to support this industry?

Nowadays the racing industry’s share, as I understand it, of the gambling dollar is only about 17 percent, and is going down. What will this Government do to support the racing industry and enable it to get more income? Obviously, without income racing will no longer be an industry. It is a wonderful sport; and it has always been supported in this House in one way or another—

💬 Hon Annette King: It is an industry.

The Minister says it is an industry, but for some people who have the occasional flutter it is a sport, depending upon the way that we look at it. Racing has always been the sport of kings, and if for a day a worker can be a king that is great.

💬 Rodney Hide: What about queens?

I will leave that interjection to one side. But all New Zealanders can enjoy racing, and be a king for a day. The question to be asked of this Minister and the Labour Government is this: what will they do to help the industry where it really matters—where its income and tax rates are concerned? The question was put that the amendments set out on Supplementary Order Paper 16 in the name of the Hon Mark Gosche to Part 1 be agreed to.

💬 Lindsay Tisch: I raise a point of order, Mr Chairperson. There are a number of amendments. Which one are we referring to?

These are the amendments on Supplementary Order Paper 16. They are all being taken together, Mr Tisch. I now put that motion.

Amendments agreed to, and Part 1, as amended, agreed to.

Part 2 New Zealand Racing Board

Part 2 is a very important part of the bill, and I draw members’ attention, in particular, to clause 15(3). I have Supplementary Order Paper 282 in my name about this clause, which relates to the distribution of profits. Clause 15(3) states: “Unless each of the racing codes otherwise agrees in writing, the amount referred to in subsection (1) must”—I ask members to note the word “must”—“be distributed among the racing codes in the same proportions that the Board considers are the proportions to which the codes contributed to the New Zealand turnover of the Board for that racing year.”

There is a lot of dispute in this area. There was much discussion at the Government Administration Committee, as the members of that committee will know. There have been huge increases in the turnover on overseas thoroughbred racing. I have the figures from 1 August 2001 through to 31 July 2002. The turnover from overseas gallops is referred to as being $276 million, which is an increase over the previous 12 months of $21.5 million or 8.4 percent. In terms of overseas harness racing, the figure is now $32.4 million—an increase over the previous 12 months of just over $6 million. The figure for overseas greyhound racing overseas has increased by $583,000. Those are huge increases.

My point—and I ask the Minister to respond on this—is that the overseas gallops are contributing 89.3 percent to the profits from overseas racing. But if we are to base the distribution of surpluses to the codes on their New Zealand turnover—and this is the important point—the gallops in New Zealand are returning 62 percent. Let us just make it very clear that there have been huge increases in local people betting off shore. In fact, the last figures that I have, as at 31 July last year, show that thoroughbred racing has contributed 89.3 percent to the overall overseas total. The New Zealand domestic figure is 62 percent. The bill states that the distribution of offshore profits is to be based on the New Zealand turnover—the domestic turnover. That means that all the extra money that is coming in from overseas will only be allocated out to the thoroughbred racing code on the basis of its New Zealand turnover average, which is 62 percent. It makes up 89 percent of the offshore total, and 62 percent in New Zealand.

The point I am making here, and I ask the Minister to take a call on this point, is that in my Supplementary Order Paper I state that the board should determine the distribution of surpluses. We should not put a payout formula in this legislation. We do not do that for the dairy industry or anywhere else. There is no flexibility. When we put a formula in legislation, there is no discretion and no flexibility. I tell members that if the racing industry is falling over and we put in place a formula that is set in concrete, as this bill states it will be, then that will rest on the votes in this Chamber. I say we should give flexibility to the industry. That is what my Supplementary Order Paper provides for. It is very, very clear. It simply states: “The amount referred to in subsection (1) must be distributed among the racing codes in such proportions and on such basis as the board from time to time determines.” Let the board have the flexibility to determine the payout and make those distributions, rather than this Committee setting in legislation what the formula should be.

I refer to the role of the governing body, the membership of the governing body, and the nomination of the advisory panel, as set out in Part 2. The bill states that the governing body should consist of seven members, and the racing working-party group refers to that in paragraph 4.5 of its report. It states that the governing body should consist of seven members and an independent chairperson appointed by the Minister, one person appointed by the Minister on the nomination of New Zealand Thoroughbred Racing Inc., one person appointed by the Minister on the nomination of Harness Racing New Zealand, one person appointed by the New Zealand Greyhound Racing Association, and three persons appointed by the Minister on the advice of the nomination advisory panel. Clause 12 refers to the nomination advisory panel.

Let us remember, then, that the nomination advisory panel is to nominate three persons for appointment to the governing body. Clause 12 states that the nomination advisory panel consist of five persons: the responsible Minister; the independent chairperson of the board; and the chairpersons of the three racing codes. How the panel will ultimately appoint those three persons, who will be the chairman of the advisory panel, and on what sort of basis the nominations will be made, are interesting questions. I presume that in some cases the nomination may end up being determined by a majority vote. I see with interest that the working-group refers, at paragraph 4.5.2 of its report, to the composition, qualifications and experience required of board members, to the term of the appointments referred to, and to the appointments advisory panel.

When I looked at all those things and heard the comments made by Mr Lindsay Tisch on the very important question of how the income earned by the new board is to be utilised, it seemed to me that there is a very good case for holding this bill back for a couple of weeks while some of these matters are further considered, as has been suggested by New Zealand First. I will be interested to hear the Minister’s comments on that matter.

Part 2 is very important. I would like to emphasise the value of my colleague Lindsay Tisch’s Supplementary Order Paper 282 regarding clause 15(3). The principles are quite clear and, indeed, quite important. Just to reiterate the wording of that amendment, he has suggested that the amount referred to in subclause (1) must be distributed among the racing codes in such proportions and on such basis as the board from time to time determines. In line with what my colleague from ACT Rodney Hide was suggesting, I say the principle of the industry being able to govern itself should be exercised as much as it can be, if at all possible. That is the principle behind Lindsay Tisch’s amendment. Surely it is right and proper for the board itself to determine what the distributions should be. Undoubtedly, there are variations in the overseas and the domestic takings from time to time, and undoubtedly considerable unfairness could arise from the disproportionate takings that occur. Surely, rather than having a rigid system that has come from central government, it would be preferable to allow the board discretion to determine what the distributions should be. Again, as I think was pointed out, the dairy industry does not have that principle, but it does have flexibility. Surely that amendment is one of the minor areas that would improve this bill considerably.

The other important aspect of this part is the functions of the board. I note in the commentary on the bill that the Government Administration Committee recommended amending the functions of the board so as to include developing policies that are conducive to the overall economic development of the racing industry. Undoubtedly, the Lindsay Tisch amendment is in absolute sympathy with that. The committee also recommended that those functions include research, development, and education, and a general advisory function. It believed that those additional functions would provide a better balance to the work of the board. It is absolute right and proper that there is some emphasis in the areas of research and development and education. So many industries in New Zealand have not formalised that part of their development, which is obviously very important, not only in terms of new innovations and ideas but also in terms of measuring and monitoring in the operational research side that is so vital to see whether one particular aspect works.

In terms of the functions of the board and the appointments to it, the working-party did comment on that aspect. It made a valuable contribution that could have been considered, had the Minister been prepared to delay the reading of this bill until such time as we did receive the working-party’s deliberations. The working-party suggested it was sensible that all appointees to the board be independent, again taking the principle of letting the industry have the maximum amount of governance and determination of its own destiny. Once again, I say it is very regrettable that both the Price Waterhouse report and the working-party report have been ignored by the Minister so far. That just does not add up, when she says that she agrees it is very important to promote the long-term viability of New Zealand racing and that the economic aspects are vital.

In this part of the bill that deals with the role and membership of the new New Zealand Racing Board, the Green Party is putting forward an amendment with regard to clause 12. That clause deals with the make-up of the advisory panel that will assist the Minister in working out who three out of the seven members of the board will be. While we have no problems with the current members of the panel, as outlined in the bill—that is, the Minister, the independent chairperson, and the chairpeople of the three racing codes—we believe that alongside them there needs to be a representative of clubs with three or fewer race days. That is not a radical suggestion. My original intention had been to seek a representative of those clubs for the board itself. However, as there seemed to be no way that the delicate balance on the board, already worked out by extended consultation and negotiation between the codes and the Government, could be changed, I am looking for support now for this much-reduced attempt to make sure that country and provincial racing gets a voice, in terms of who makes up the board.

There are many contentious issues within racing, as anyone involved in the industry knows all too well. However, a bottom line for me throughout the process of consideration of this bill has been a recognition of the threat that underpins the survival of the small clubs in particular, not just in relation to the clubs themselves but to the owners, trainers, breeders, and the wider community in the local districts. Once a local race club loses its viability through the loss of race days or of funding, or both, that loss is felt not just by those directly affected but by the whole district around them. The Green Party believes that the continued erosion of race days and of the funding allocated to small clubs is a threat to the heart of racing, and that if this bill does anything, it must be to do what it can to redress the balance between the big, rich, and powerful players within the racing world and the smaller bodies that are struggling for survival. That particular amendment to clause 12 is one of several that we are proposing in order to try to do what we can to make sure that the voice of those who have the least is heard by the Minister and the other major players when it comes to making nominations for the new board. That amendment will not cost the Government lots of money, nor will it threaten the delicate balance on the board itself. I call on all parties in this Committee, including Labour, to consider giving it their support.

In respect of another aspect of this part of the bill that Lindsay Tisch has been talking about, the Government has put up a Supplementary Order Paper relating to clause 15, as has Mr Tisch. Late last year there was a lot of pressure from some parts of the racing industry to look again at that clause, because it deals with the critical issue of the distribution of reserves and surpluses to the codes. The Green Party does support Mr Gosche’s amendment to that clause, as we believe that it moves to a necessary compromise between the two positions—that of Mr Tisch and some parts of the racing industry, who would like to see the board have complete discretion over determining who gets what, and the original clause as reported back to the House, which is perhaps overly binding in terms of the proportions to be given to each code. The Government’s Supplementary Order Paper 16 moves to a situation whereby the proportions distributed to the codes can be changed, as long as two out of the three codes agree to that. We think that is fair and reasonable, and we will be supporting it accordingly.

I want to comment on clause 15, which, as it stands at present, provides for the distribution of profits from the board to the racing codes. It currently provides that unless each of the racing codes otherwise agrees, the board surpluses must be distributed amongst the racing codes in the same proportion that the board considers are the proportions to which the codes contributed to the New Zealand turnover of the board. That was how the clause was in the bill as introduced. When the bill went to the Government Administration Committee, the Racing Industry Board, the Totalisator Agency Board, and the three racing codes supported the clause as drafted. However, during the select committee stage there was some opposition to it, particularly from some within the thoroughbred code. So the Government has moved a Supplementary Order Paper that will enable some of the flexibility Mr Tisch was talking about in terms of changes to the funding formula.

The Government’s Supplementary Order Paper allows flexibility for the new board to depart from the statutory formula for distributing betting profits, but it has to have the agreement of at least two of the three racing codes. So it does allow for more flexibility. It is saying that when two codes—for example, thoroughbred and harness—agree that there should be a change in the distribution, then that can take place. It seems to us that that not only gives some flexibility but also ensures that one code cannot at some stage out-vote the other two codes and put in place a funding that disadvantages the other codes within that group.

We think that the provision does provide some flexibility, but that agreement is needed. It seems to us that having two of the three codes agree gives that flexibility and a democratic approach to those changes.

Madam Chair—

💬 Dianne Yates: Give it a rest.

This is important legislation we are debating tonight, and comments by the member do not add to that.

💬 David Cunliffe: Don’t filibuster then.

I am not filibustering, at all. This is important legislation, and we have to get it right. In relation to the amendment to clause 15(3) on Supplementary Order Paper 282, I want to pick up on the Minister’s point that two out of the three codes can change the policy. At the moment there are only three codes—thoroughbred racing, harness racing, and greyhounds, so it could well be that harness racing and the greyhounds codes could out-vote the third code, the thoroughbred racing code. The difference between the Minister’s Supplementary Order Paper and my Supplementary Order Paper is that mine talks about the board, which comprises seven members, making the decision, whereas the Minister is saying that the decision is made by the three codes. That is the difference. I am saying that there is more discretion and flexibility with seven members of the board making the decision, as opposed to two out of the three codes making it. I do not think that what the Minister is suggesting will work.

I make that point so that it will be very clear when we come to vote on it. I am saying that a board of seven should make the decision, not the two or three codes. I do not think it will work. I ask The Minister to reconsider that in terms of Mark Gosche’s Supplementary Order Paper.

💬 Hon Annette King: But the member set out his agenda when he spoke on overseas racing.

I am saying there needs to be clarity here. It should be remembered that the board has seven members, not a board of three members, or three codes—which is what the bill states. The board has much wider interests. Why would only three people, or two of the three codes, have the final say when the board has seven members? I tell members it will not work. I ask the Minister in the chair, Annette King, to delete the amendment to clause 15(3) on the Minister’s Supplementary Order Paper, because I tell her now that it will not work. It is not fair. It does not actually change what is in the bill now. The bill states there can be discretion, but Mark Gosche’s Supplementary Order Paper states that two of the three codes can determine what it will be. But what about the other members on the board? There are seven members on this board, not three members. It is important that members realise the difference. I am telling the Committee that this will not work, and the proposed amendment will not work.

💬 Hon Annette King: The board has to agree.

The Minister said that two out of the three codes could make the decision. That is what it states.

I bring the Committee’s attention to clause 11, “Membership of governing body”. As I said in a previous debate, one of the areas in this clause where there have been some changes relates to the statement that: “The governing body consists of 7 members, acceptable to the Minister”. That means that all members “must” be acceptable to the Minister. If we were to go back to the draft report of 2000, we would see that it states that appointments have to be “concurred” with by the Minister. There is now a big difference between what was originally recommended, way back in the 2000 report, and what is actually in the bill today, which states that all members “must” be acceptable to the Minister. That is one of the areas I am not happy with. It is a change from what was mooted back in the draft, and that is a concern.

I also draw members’ attention to clause 11(3)(b), which states that “if a vacancy occurs during the period, an appointment may be made by the Minister to fill that vacancy”. It does not state that the appointment “must” be made, but that it “may” be made. One of the areas that I believe is important here is that we have only a seven-member board. A vacancy could occur at any time—and remember, these appointments are for 3 years—so why is it that the bill states that an appointment “may” be made by the Minister? I would have thought we would want some certainty here.

I move, That the question be now put.

Motion agreed to.

The question was put that the following amendment in the name of Sue Bradford to clause 12 be agreed to:

to amend subclause (1) by omitting the expression “5”, and substituting the expression “6”.

I will take just a brief call on Part 3, in reference to clause—

💬 Darren Hughes: Say it seven times.

No, I will not say it seven times. I raise a point of order, Madam Chairperson. The member is interjecting while not in his seat. Under Speaker’s ruling 52/6, he should abstain from interjecting—

The CHAIRPERSON (Ann Hartley): I have called the member to order. There is no need for those interjections.

I will look briefly at clause 25, which deals with the wind-up of a club. One of the areas of concern relates to the disposal of funds. Subclause (1), which states that “racing, public, charitable, or other purposes in the manner that the club, with the approval of the racing code with which it is registered, determines.”—gives flexibility in terms of where the club should put its money if it does wind up.

One of the issues that came up during the select committee process—one that I am very certainly very mindful of—relates to an industry that is looking for investment and wants to improve its position and grow. I would have thought that any proceeds, any assets, to be distributed should go to racing-related industries. That is what we should be looking at. It could well be that the money go into training in the equine industry. It could go into training jockeys, or it could be retained and used, possibly, for investments in certain areas. The bill is quite wide as to where money may go, and this was debated at the select committee. In my view it needs to relate to the industry. It is important that we have money retained in the industry.

Clause 20A, “Racing codes must prepare statement of intent and business plan” is a very important clause. One of the things we have noticed over the years, certainly in the work I have done as a consultant in a previous life, is that it is very important for a lot of businesses to have a business plan—and we are treating this as a business; it is an industry that needs to understand what the principles are. Clause 20A was inserted by the select committee. There was much discussion about it, and I certainly want to reinforce the importance of putting this industry on a business footing. Part of doing that is preparing a statement of intent and having a business plan that allows for transparency and accountability as the industry grows. Those points will be important when we look at distribution. When the codes are paying out to the clubs, we want to make sure that the clubs that will be getting the money are in a position to use it and to make sure it is not squandered.

That brings me to clause 22, “Distribution to clubs of funds received from Board”. I know that within the galloping, or the thoroughbred racing industry, there could be about $32 million that will go out. We are talking big money. We are talking about large sums of money, and it is very important that the transparency and accountability mentioned in clause 20A is there. We do not want to see money being wasted. We want to make sure it is used for the right purposes and we want to make sure there is a return on the investment. It is important that the industry has that opportunity to invest and grow, and we do not want to see that money wasted.

I assume, as I look at clause 25, that most racing clubs are incorporated clubs under the Incorporated Societies Act, or are registered in some form, perhaps, under the Charitable Trusts Act.

💬 Hon Annette King: Most are incorporated.

Yes. If they are incorporated, then the rules of the Incorporated Societies Act require that they specify what happens on a winding up, anyway. There is a slight ambiguity between that and clause 25, which suggests that on the dissolution of a club, the assets must be disposed of for racing, public, charitable, or other purposes, because if they are incorporated societies, they are bound in terms of the Incorporated Societies Act to wind up and to pay out the assets of a club in terms of its incorporated societies rules.

I see that subclause (2A) deals with the possibility of a dispute. I would have thought that whether or not a dispute occurred, if the society was an incorporated society then it must be paid out in terms of that Act. Similarly, if registered under the Charitable Trusts Act, it would be obliged to pay out in terms of that Act. Clause 25(1) is somewhat ambiguous and might cause problems as it stands.

I want to take just a very short call on Part 3. My comments are in relation to clause 20A, “Racing codes must prepare statement of intent and business plan”. Undoubtedly, National concurs absolutely with that. It is vital to be accountable and to have a clear business plan in mind. What I do think of huge concern, however, is the lack of ambition and vision that has been encapsulated in this bill, and, once again, the lost opportunity that the Government has caused by not taking notice of the PricewaterhouseCoopers report and the subsequent working-group report. One of the points they did make was that whatever is done with the racing industry in New Zealand, it is extremely worthwhile to go from the current 33.5 percent across all codes, in terms of the amount that comes back, to double that amount in dollar terms; or in other words, to increase stake money from about $50 million to $100 million a year. While we absolutely agree with the requirement for the racing codes to prepare statements of intent and business plans, it does seem a hugely lost opportunity not to have some objective purpose in terms of what we can reach. That, as I said, is one of the great lost opportunities that the Government has caused by not using the very useful advice of the working-group on this bill.

The Green Party has put forward two substantial Supplementary Order Papers to Part 3, which deals with racing codes and clubs. The first of our amendments is to clause 20A, which defines the way in which codes have to prepare statements of intent and business plans. One of the things that came through really strongly during the select committee process was the need to make the accountability structures between the codes and the board as clear and as strong as possible. The codes and the board will be dealing with matters at the very heart of the future of all parts of racing, including the allocation of race dates and the distribution of surplus funds.

The Green Party believes that as part of this mutual accountability the codes must be required to demonstrate that firstly the codes’ own statements of intent and business plans are consistent with their own objectives, and secondly that the codes’ rules must not be unreasonable, undemocratic, unfairly discriminatory, unfairly prejudicial, or contrary to law. Our amendment aims to make sure that this happens and is an attempt to improve code accountability. I welcome the Government’s promised support for this amendment, and I hope that other parties who also seek greater fairness in the new structures will support us likewise.

Our second amendment to this part calls for the establishment of a review and appeal procedure that is able to review decisions of the Racing Board. Our Supplementary Order Paper asks that the Minister appoint a formal racing industry reviewer, for a period of not less than 3 years, and with the power to respond to appeals not only in the area of fund distribution and racing dates, which are, of course, likely to be the most contentious issues, but also in relation to any decision that appears to be unfairly prejudicial or discriminatory. The Government Administration Committee did consider the possibility of establishing a disputes resolution process during its consideration of the bill, but unfortunately the majority of the members on the committee were adamant in their rejection of it, despite the fact that in almost all similar legislation that I am aware of some form of review and appeal process is seen as essential and integral to the structures.

The racing industry is plagued by vested interests, mistrust, warring factions, and fears for the future. It is as plagued as any other struggling part of New Zealand society or the economy. This mistrust and factionalism is being used as an excuse for not introducing an appeals process in this bill. Yet logic and common sense tell me—and, I believe, many in the racing fraternity—that unless we do establish some form of accepted legislative review and appeal structure as part of this bill, things may well continue in the same difficult vein that they have so far. We should be trying to improve this bill and make it as good as we can tonight and not let things go backwards. This is our opportunity as responsible legislators to ensure that the new governance is fair and just to all parts of the industry, not just some of it. In all likelihood, and judging on past history, it will be the smaller and rural clubs that will suffer the most if no clear and transparent method of appeal is accessible to all parts of the industry. As I mentioned earlier, I think it is at our peril that we neglect the future of country racing.

The question was put that the following amendment in the name of Sue Bradford to clause 20A be agreed to:

to amend subclause (2) by inserting the following paragraph:

(aa) the code’s rules, as required by section 6 of the Incorporated Societies Act 1908; and

Amendment agreed to.

The question was put that the following amendment in the name of Sue Bradford to clause 20A be agreed to:

to omit subclause (4), and substitute the following subclause:

(4) Without limiting the generality of subsection (3), the board may decline to approve a racing code’s proposed statement of intent or business plan if the board considers that—

(a) the code’s objectives are inconsistent with its own objectives; or

(b) any of the code’s rules are:

(i) unreasonable; or

(ii) undemocratic; or

(iii) unfairly discriminatory; or

(iv) unfairly prejudicial; or

(v) contrary to law.

Amendment agreed to, and Part 3 as amended agreed to.

New Part 3A Review and Appeal Procedure

The question was put that the following amendment in the name of Sue Bradford to insert new Part 3A be agreed to:

Part 3A

Review and Appeal Procedure

26A Interpretation

In this Part—

applicant means the recognised industry organised that has requested a review by the Racing Industry Reviewer

reviewer means the Racing Industry Reviewer

26B Appointment of Racing Industry Reviewer

The Minister must—

(a) appoint a Racing Industry Reviewer for a period of not less than 3 years; and

(b) consult with the members of the New Zealand Racing Board and other parties as the Minister thinks fit, before making the appointment; and

(c) take into account any representations made under paragraph (b).

26C Review of Racing Board Decisions

(1) Any recognised industry organisation may ask the reviewer in writing to review the decisions made by the board under section 9(a) or (c), the determination of the racing calendar and the distribution of funds obtained from betting to the racing codes.

(2) The reviewer may agree to review any other decision of the board, if in the reviewer’s opinion the decision appears to be unfairly prejudicial or discriminatory.

(3) If such a request is made the reviewer must, as soon as practicable, review the decision and report the results to the board and the requester in writing.

(4) In considering the decision the reviewer must give consideration to the purpose this Act and the objectives of the board.

(5) The board must, within 10 days of receiving the report, implement the recommendations of the reviewer’s report or, if the board does not implement the recommendations, notify, in writing, the reviewer and the applicant of the board’s decisions for not doing so.

26D Appeal to arbitration

(1) Where the board does not implement the reviewer’s report under section 26C, the reviewer or the applicant may refer the matter to arbitration by an arbitration tribunal.

(2) The tribunal shall consist of 3 independent arbitrators who shall be formed and decide the dispute under the Arbitration Act 1996.

(3) Each of the parties in the dispute will have the right to appoint to the tribunal 1 arbitrator. The 2 arbitrators selected will then select the third, who will chair the tribunal.

(4) All members of the arbitration tribunal must be acceptable to the Minister of Racing.

(5) All parties must meet their own costs, with the costs of providing the tribunal to be met by the racing board.

I seek leave to have the question on Part 3 put again because I cast an incorrect vote on it.

The CHAIRPERSON (Ann Hartley): Which part?

You moved that Part 3 stand aside?

The CHAIRPERSON (Ann Hartley): Part 3 has been approved as amended.

I am seeking leave that that vote be recorded, because I voted against it, and I should have voted for it. I am seeking leave that Part 3 be voted again.

The CHAIRPERSON (Ann Hartley): The member is seeking leave for that purpose, is there any objection? There is no objection. The clerk will conduct the vote again.

💬 Rodney Hide: I agree the need. I just need some clarification as to what the vote is now for.

The CHAIRPERSON (Ann Hartley): The vote is that Part 3 as amended be agreed to.

I just want to take a brief call on clause 40, and give a little background to how clause 40 runs into clause 43, and then later on through into clause 48. If we go back to the Racing Act of 1971, section 38 talks about win betting, place betting, double betting, and so on. An important amendment was made back in 1992 to the Act, and provided for totalisator clubs to use totalisators as they saw fit for the purposes set out in this new section 38, which is including win, place, double, and forecast betting, and so on. However, under the Racing Bill, that has gone. There is no equivalent to the old section 38 as originally set out in 1971 or in the 1992 amendment. Instead there is a structure under the board committee to determine and allocate racing dates, which is clause 40. Once the dates allocation and conditions have been determined, the board is to issue betting licences to the racing clubs for which dates have been allocated, and that is clause 43.

It is an important point to note, Madam Chair, that the actual conduct of betting is now in the hands of the board, either by itself or by means of racing clubs or agents appointed. That is clause 48. It is not with the clubs, as in the earlier position. I just make that point now, that the board will be a very important part of this new legislation. Also, that both on-course and off-course totalisator betting will be completely under the control of the board, whereas under the 1971 Act the on-course totalisator betting was the domain of each club, once licensed.

That is the difference that I bring forward. I am not arguing against it. I am just saying that there is a difference between what has happened under the 1971 Racing Act and what is proposed here under this Racing Bill.

The question was put that the amendments set out on Supplementary Order Paper 16 in the name of the Hon Annette King be agreed to.

Amendments agreed to.

The question was put that the following amendment in the name of Donna Awatere Huata to clause 42 be agreed to:

to omit this clause, and substitute the following clause:

42 Unlimited restriction on racing days

Racing will be permitted, without exception, every day of the calendar year.