Gambling Amendment Bill

I move, That the Gambling Amendment Bill be now read a first time. I acknowledge the support of New Zealand First for the bill. New Zealand First did not approve of its content going into the Statutes Amendment Bill (No 4); I acknowledge that, and I also acknowledge Dail Jones’ support for it now.

This short bill amends the Gambling Act to allow elected members of licensing trusts to be involved in decisions on the distribution of gaming-machine proceeds to the community. Licensing trust members are elected under the Sale of Liquor Act. Licensing trusts themselves are not eligible to operate gaming machines under the Gambling Act. However, some gaming-machine societies choose to operate gaming machines on licensing trust premises. Some of those societies have traditionally allowed licensing trust members to be involved in decisions on the distribution of gaming-machine proceeds and the operation of gaming machines.

The Gambling Act, which came into force on 1 July 2004, prohibits this type of arrangement. It imposes a strict separation between those who run commercial premises at which gaming machines are operated and those who control the gaming-machine proceeds from those venues. This separation of functions is designed to reduce the risk of conflicts of interest.

The potential for conflicts of interest is considerably lower in the case of licensing trust members. That is because they are publicly accountable to their local community and cannot benefit personally from the licensing trust. To reflect this, the bill amends the Gambling Act to exempt licensing trust members from the provisions that require the separation of functions. This will enable those members to be involved in gaming-machine societies’ decisions on the distribution of gaming-machine proceeds and the operation of gaming machines.

The amendment also extends to elected community trustees where a licensing trust has reconstituted as a community trust under the Sale of Liquor Act. I intend to move that the bill be referred to the Government Administration Committee and that the committee present its final report on or before 1 March 2005. I commend the bill to the House.

This bill had its genesis some time ago when the Government tried to bring a provision into the Statutes Amendment Bill (No 4) that was outside the time frame. In previous debates on statutes amendment bills, I have stated that National would not support the inclusion of any late amendments that we had not had the chance to debate at a first reading and then examine at a select committee. So when the Government tried to introduce a provision to allow duly elected licensing trust members to be able to be involved in the distribution of gaming-machine profits—which is a concept that National supports—we were not prepared to support the Government trying to do so at the eleventh hour to rectify a problem that has been known for some time. In fact, the issue came up when we debated the Gambling Bill. The key persons provision and the associated persons provisions were all part of the debates then, and it was highlighted at that stage.

The Government has had plenty of time and opportunity to rectify that situation, but what did it do? It wanted to bring in those provisions by way of a late amendment to the Statutes Amendment Bill (No 4). Of course, that has caused considerable problems for some members—Labour members, in particular. I know that in the area that David Cunliffe and David Parker come from, where licensing trusts operate, people felt that they were disadvantaged because the provision had not gone through. As an afterthought, and with the pressure that has come on from licensing trusts, the bill is now before us. The provisions in it are provisions that National is happy to support, not just to get the Government out of a problem it has got itself into but, more important, because we believe that gaming-machine profits should be back out in the community where they are destined to do some good.

What we are finding now under the Government’s regulations, especially those gazetted with the Department of Internal Affairs, is that the compliance costs now associated with the way gaming operators have to function—the site rentals that are being paid by the trusts to those site operators—are making it marginal as to whether it is worth their while being involved in having gaming machines on their premises. The return is not there, but the other compliance costs, such as harm minimisation and the other components of running machines, have put an extra burden on them. In fact, I have an internal Department of Internal Affairs memo, which I got under the Official Information Act, that states that there will be up to $100 million less in circulation to small to medium sized operators because of the regulations this Government has imposed.

With that in mind, we also have the extra costs that will be imposed by electronic monitoring. Those costs will be straight off the bottom line. Harm-minimisation programmes will cause huge compliance costs in terms of the money that will have to be expended in that area. While National supports the idea that there needs to be preventive care and that we need to look after those who have associated problems—we are not disputing that—the actual costs associated with this sort of programme are over the top. I have heard that when the charter clubs of New Zealand implement their harm-minimisation programmes, at $118 per machine over 3 years, the cost for them will be about $1 million, which is money that should be going back into the community.

It is interesting to note that in places like Australia, one can buy harm-minimisation programmes virtually off the shelf, for a very nominal amount. That could be adapted here to the venue policies, because what we are seeing is that a format to cover a number of venues is not acceptable and that harm-minimisation programmes will be based on venue to venue. Once again, it is not necessary and, in our view, it just shows how out of touch those involved in these programmes are. So we support this legislation, not to help the Government out of a bind but to make sure that the money that has been collected from the machines goes back into the community where it belongs.

I will put in perspective what the bill does. It will allow the licensing trust members, who are elected under the Sale of Liquor Act, to operate their businesses in the hospitality industry. Licensing trusts are not eligible to operate gaming machines under the Gambling Act. However, some licensed gaming-machine societies choose to operate gaming machines on licensing trust premises. This is not an argument about whether we agree with licensing trusts; it is about what will happen with the proceeds from the gaming machines that are there. That is why we support the bill. Let me make that clear. This is not an argument that says we agree with licensing trusts; it is an argument that acknowledges that they are in existence and says that the money coming in from the machines should be going back out into the community.

Many charitable societies have allowed, and want to continue to allow, the elected licensing trust members—who have been elected—to be involved in the decisions about the operation of gaming machines and the distribution of gaming-machine proceeds. That was permitted under previous legislation. It was not an issue until 1 July this year—it only came in on 1 July this year. Licensing trust members are publicly elected and publicly accountable to their communities. They cannot benefit personally from being members of the trust, and the risk of any conflict of interest is considerably lower. So with those points, we are happy that those licensing trust members are involved in the distribution. The bill exempts licensing trust members and trustees of community trusts from the definition of “key person”. That will enable them to be involved in the decisions about the operation of gaming machines and the distribution of gaming-machine proceeds. As I said earlier, that was the position prior to 1 July this year.

I finish by asking what will be regarded, as we look at the Gambling Act, as significant influence in management and as significant interests. I think those are key points in the legislation that need to be considered. A person must be treated as having a significant influence if he or she is a director of the board of an organisation that is a holder of or applicant for a licence—it could be the chief executive or a senior manager—or if he or she owns shares directly or indirectly. Those people may have a significant influence, but the Act does not limit the ways in which one may increase one’s personal influence—that could be a person’s influence as a director or a result of a decrease or increase in the number of directors or trustees who may be involved. The appointing of associated persons to more senior positions within that organisation could change the influence. It makes no difference whatsoever whether a person acquires a significant influence, or increases or changes the basis of that significant influence, as a result of the person’s actions or the actions of one or more persons. I think that those are important factors in considering what interests are identified in the bill.

The other area relates to financial interest and to dealing with trustees of licensing trusts. Trustees do not have a financial interest in trusts, so are exempt from that, but they still have an influence through the relative power of their positions. They control a huge operation. In some cases licensing trusts are very big business. We believe that those people who have been appointed from the community have the desired expertise. They are accountable to their communities, and we should give them the credit to be able to distribute those funds that were available prior to 1 July this year. The Government made a mess of the Gambling Act. It is now trying to remedy it with this Gambling Amendment Bill.

Debate interrupted.