Gambling Amendment Bill (No 3)

I would like to start off by going straight to clause 6 of the Gambling Amendment Bill (No 3) and speaking about commission-based payments. I want to reflect also on the original Act, the Gambling Act 2003. The real purpose of the venue payments, as I understand it from the original Act, was based on cost recovery for those venues that hosted class 4 gambling machines, or pokies. I understand and believe that in doing so, the intent was for commission-based payments to be prohibited at that stage, because this was seen as a community service, and as for the real payment back to the community, the funds would be distributed to the community that those funds came from. Clause 6(b)(ii) reads: “the only commission that is paid to or received by a person for conducting the gambling is a commission payment to a venue operator that complies with regulations made under section 371(1)(dd);”.

So that is a fundamental change to the original intent of the Gambling Act 2003. We pointed this out in the Labour Party minority report and provided information on exactly why we are against commission-based payments, and it is for that very reason. The original intent was for communities to benefit from gambling machines and from the profits being distributed back to that community. Ever since that time, venues have created ways that they can maximise the return that they get from cost recovery, and I think that has been well documented. So this is a fundamental change, which we believe will incentivise gambling so that venues have an interest in seeing more money going through the machines that they host, and we are fundamentally opposed to that. There are—and I will get to that in later calls, perhaps—the issues around the areas that we do agree with, but this is a key area.

Another issue that we have, as I said, refers to another section. We are concerned about that because we do not actually know what the model is. We do not know what the commission-based model will be for making those commission-based payments. That is a problem. It is a problem because it could be anything. There is a Supplementary Order Paper that suggests that it should be set at a certain level. I think that it is not a good idea to leave the model to be created by regulations. It should have been part of this bill.

Every single provider organisation that made a submission to the select committee opposed commission-based payments to venues. They all cited that they believe it would incentivise gambling. It would also, in their opinion and certainly in my opinion, provide another reason for the venues not to fulfil their host responsibilities, and as we saw in the mystery shopper project that the Department of Internal Affairs ran in December last year, only one out of the 102 venues was compliant. I believe that it is not unreasonable to think that commission-based payments organised and run by those venues are going to provide us with a better outcome. I have not seen the evidence. I refer to the submission made by the Problem Gambling Foundation, which is adamant that this kind of process and this kind of payment system to venues will indeed make its job a lot harder, and every other provider also had that same opinion about commission-based payments.

Also in Part 1, I want to talk about the “key person” issue. There were a number of submitters who made some very good submissions about the “key person” issue because of the difficulty it would provide and the way that it was originally stated within the bill as it appeared in the first reading. So the work that the Government Administration Committee did on this particular issue, I think, resolves it to a better outcome than was originally stated, which we see in the bill today. For example, the Racing Board told us that because of the way the bill was written, it would not be able to pay its employees. Of course, that is not a good outcome for this part of the bill, so I wanted to highlight that.

I also wanted to address the submitters who were in support of these payments, and acknowledge some of the things that they actually said about their reasons for commission-based payments. I do not agree with the outcome, but I acknowledge that the current system is not being implemented in the way that it should be, and I think that the Department of Internal Affairs could be doing a lot better. That is all I have to say on Part 1. Kia ora.

I am very pleased to be standing here tonight, after our scheduled meal break, to talk about the Gambling Amendment Bill (No 3). You are looking at me a little bit confused as to a scheduled meal break, Mr Macindoe. It is what we do, but, unfortunately, this Government has taken that away—I am just letting the world know. Anyway, I digress and I am really wanting to get back to the bill.

The Gambling Amendment Bill (No 3), I think, is actually heading very much in the right direction, and I would really like to put it out there to the Minister to give me some feedback on his thoughts in relation to Supplementary Order Paper 95, which we have got in for an amendment. It is to do with section 30, in clause 6, amending the meaning of class 4 gambling. Unlike the Labour Party, New Zealand First strongly believes that the current situation with “actual, reasonable, and necessary costs” is a very clunky way to work out how site venue operators are going to be remunerated for the cost of having those machines in their venues.

There is a real cost associated with having licensed machines in a licensed premises, and it is very difficult to work out what you are actually entitled to receive as far as payment goes. I think the fairest and most equitable way of working that out, despite what Labour says, is through a commission-based payment. You only have to look at other parts of gambling throughout New Zealand that operate under a similar method. When you look at the TAB, which of course does exactly the same thing, it works on a commission-based payment for its venue operators on the turnover of their site. It is 1.5 percent commission—I believe it is 1.5 percent commission for their venue operators. If you have got a busier operation you are obviously going to get a higher return, but at 1.5 percent of your gross turnover it is hardly a significant incentive to have a racing organisation like the TAB, for example, in your establishment.

What we are proposing here—what New Zealand First is putting forward on the table—is exactly that. A fair, reasonable, and actual cost to be calculated is very clunky. It is very antiquated. It is very difficult to actually determine what you are entitled to. With rents going up all the time and as wage costs alter, you are virtually going through uncertainty from month to month and from quarter to quarter as to what you are actually going to receive as a payment to have those machines on your premises.

What this amendment will do is amend this bill by bringing in a 1.5 percent commission-based payment on the gross turnover of class 4 venue operators’ licences. We looked at the different scenarios that may work in a commission-based system. We looked at 16 percent of net turnover, but the fluctuations that you get from net turnover as opposed to gross turnover are, of course, how often those machines pay out. You have some weeks where, of course, you have a negative banking situation, where you have actually given more money to your gamblers—your punters, who are in your venue—than you actually took in, in kind. So some weeks you find yourself under a net turnover adjustment of actually getting a negative fee. On gross turnover, you look at the overall turnover of the venue and you are putting a 1.5 percent loading on that.

We think that that is a very fair, very reasonable, and respectable amount. It is hardly going to justify venue operators going out there to promote gambling, and, of course, there are laws that already prevent that from happening in your licensed premises. It is very, very heavily monitored. You cannot even have a display on your monitor to show what your jackpots are to the outside world. When you enter a gaming room you know you are doing so for the purposes of having a punt on the gaming machines, and you do not know what the jackpot is until you enter that gaming machine, so you can hardly go out there handing out flyers or go out with a megaphone promoting that your gambling room is going off like a bucket of pipis in the sun—“Get in there and have a quick punt in my pokie-machine room because it is going to be fantastic.” That is not how the system operates.

I think, to be honest, the Labour Party is creating ghosts where there are not any—ghosts, goblins, and ghouls in its brain—to come up with an idea that, somehow, getting a commission-based payment for licensed venue operators is a bad thing. We do support that. We hope that the Supplementary Order Paper gets the support in the Committee. I clearly see that it is not going to get support from the Labour Party. We certainly do hope, Mr Dunne, that we get your support and the support of the National Government.

We would be a strong supporter if we could get that through in this piece of legislation. We do believe that the amendments that have been put forward are heading in the right direction. When the first and the second readings were put through, we were a little bit concerned about some of those clauses, particularly around key operators. I do believe that that has been ironed out.

We certainly had some issues in regard to what constitutes a conflict of interest, particularly in the light of New Zealand being so small that only one degree of separation is going to basically negate you from getting any sort of financial support, if you are in a club organisation, from those societies that are handing them out. I think that you have tidied that up very nicely, too, Mr Dunne, so thank you for that.

This very important piece of legislation has five areas that we largely support. It creates further transparency. It makes it a lot clearer about who is getting what and why. It identifies a much better way of who are going to be the key people who are now going to be held responsible. That is what this legislation is about, too; it is about personal responsibility to make sure that you are operating within the confines of the law. And what it really is about, which I like the most, is cutting through a little bit of the red tape. It is about cutting through the bureaucracy to ensure that we can actually get more money returned to those communities, which is what class 4 operating licences in venues are there to achieve.

Unlike the counterparts that we have got—Skycity Casino—which operate under a completely different model from what we are operating under here, this is sensible. This is for the community. This is about returning as much as we can back to those communities. We will support this if we get the support for our Supplementary Order Paper 95 put forward by New Zealand First, which amends the 1.5 percent of gross turnover for those venue operators. We hope that it does get through for the final reading. Thank you.

I am really pleased to be speaking in the Committee stage of the Gambling Amendment Bill (No 3), but I have to say that I am also disappointed that this is not a bill that we can wholeheartedly support. We are going to put our vote in favour of it in the end, but we have got a major reservation about a key part that is in Part 1. I think that that is disappointing. With regard to public health issues such as gambling, and there are many others that this Parliament debates, I always think that it is good to have as broad support as possible, and I think the Minister of Internal Affairs has himself been inclined to that view on occasions. So I would like him to take the opportunity of the Committee stage—because it is the only chance that he will have—to tell us why he had such reluctance to move to an agreed, different approach rather than take the commission-based approach, which is what Labour is opposed to in this part.

This part is really the guts of the bill, if you like. It covers clauses 4 to 16. We have got four Supplementary Order Papers on the Table, I understand. One is from Clayton Mitchell from New Zealand First—in amongst some rather disparaging comments that I am sure he will regret making in the Chamber by the end of the evening—and, not on the basis of his contribution tonight, but on the basis of the content of the Supplementary Order Paper, we will be voting against it. There are two Supplementary Order Papers in the Minister’s name, both of which seem sensible amendments, and we will be supporting them. And there is one that Denise Roche has recently tabled, which we will also be supporting.

I would like the Minister to take a call and just give us a straightforward explanation. Every single one of those submitters who did refer to commission-based payment agreed that we should look at a different model that was less onerous, less time-consuming, and more efficient and effective and that either retained or enhanced the level of transparency that the current system has. If everyone agreed with the problems and said we would work together on the solutions but that we opposed the proposed solution in the bill, which is the withdrawal of the commission-based exemption—you know, currently you cannot have a commission-based payment. This bill takes away that prohibition. It does not say that we are going to have one, but, of course, it leaves the door wide open to having that happen.

So I want the Minister to just explain why he was right and the rest of the world that was involved in this discussion was wrong. Everyone put their hands up and said “We will work together to find an alternative that meets the concerns that have been identified.”, because everybody agreed with the concerns. We want something that is transparent, that is not time-consuming, that is not onerous, and that makes sense for everyone who is involved in the industry, but people do not want to move to this commission-based payment. So I want to understand what drove the Minister, in the face of that opposition, to continue to leave it in the bill. Or, perhaps, you know, ever-hopeful that I am that the Minister will use the common sense that he is renowned for, I am ever-hopeful that he might say “Well, I didn’t even know that.”, and now the Minister might table a late Supplementary Order Paper just to say: “Let’s, in regulation, make this a payment system that meets the concerns of the submitters.”

As I said at the beginning, Labour would have really liked to support this bill 100 percent, because on issues that address public health concerns such as those that gambling causes, it is best to have a consistent approach and an approach that is supported by the majority of Parliament. But in this case I am not sure where the Greens are going on their final vote. I know that New Zealand First has got some different concerns from what we have in that regard, but this issue is one that was certainly, I think, quite fundamental.

Commission-based payment has been acknowledged as not being the best method of payment since gambling legislation was introduced in New Zealand in 2003, and that is because it can drive the incentive to increase gambling. It does not do it deliberately; it does not necessarily do it in every case, but, unlike all other types of payment, a commission-based payment system does have the opportunity and the incentive to incentivise increased gambling, and that seems to me to be the last thing that anyone in this Parliament would want. We will have the debate about how much we regulate and how much we introduce harm reductions—you know, they are all legitimate debates—but I do not know of a single member of Parliament who would say that incentivising increased gambling because of the payment system dictated in legislation is a good idea. That is why I cannot understand why we have still got it in this legislation, and I really want the Minister to explain it.

I want to talk about one other concern that Labour has with this bill, and that is not what is in it; it is what is not in it. We have a lot of gambling legislation, so it is certainly not the last opportunity. I hope the Minister has got another bill coming to Parliament soon.

💬 Hon Peter Dunne: At least.

At least one. We might have a few in this term of Parliament. It is something that needs to be worked on on an ongoing basis, not because anything is faulty in the legislation that is before us now, although it is, but that is not the reason that we need to continually revise gambling legislation. The reason is that technology changes. People’s habits change. We now have a situation in regard to online betting that none of us would have envisaged when the original legislation was introduced in 2003. The world is a different place, and if we want to maintain the contribution going to community organisations and the harm reduction protection of problem gamblers, then we need to continually revise the legislative framework. That is the other area on which this bill misses out.

This was an opportunity for some serious measures to be introduced in terms of gambling harm minimisation, and, again, this was a very strong point of contribution from a large number of submitters. The submitters we talked to and heard from were very moving. A number of them were people who told their life stories to the committee about the harm that they had caused to themselves and to their families because of their addiction to gambling, and that takes a lot of courage. It takes a lot of incentive to want to do good, actually—to tell their stories in that way. People came to the committee and said “This bill should have more about harm minimisation in it. Here is what happened to me because I wasn’t protected against myself.”, basically. So this is a missed opportunity. I think we do those courageous people who fronted up to the committee a disservice by not having a serious contribution to harm minimisation in this bill.

I know that the Committee stage is not generally the time to be talking about a lot of what happened in the select committee, but because the bill was introduced and considered so long ago, I had almost forgotten how much alteration the committee made. I just want to commend all the members of the Government Administration Committee. If you flick through the track-changed bill that we have before us now, you will see page after page after page of unanimously agreed alterations, and I think that was a result of the serious work done by all the committee members. We listened not just to the officials but also to the submitters, and I think the officials worked really hard to answer our questions and to make sure that, despite our reservations about some parts of the bill, we were truly satisfied with the level of advice we got. You know, that is pretty well always the case, I guess, but not 100 percent.

I think, in this quite complex bill, short though it is, we should commend the officials for the work they have done. I am sure they are looking forward to staying here until 10 o’clock as we debate this bill tonight. It is one of the few joys and opportunities that public servants have when they have worked on a bill—that they get to sit in Parliament until 10 o’clock alongside us.

I have not yet seen the Minister in the chair, Peter Dunne, move in a way that indicates that he is going to take a call, but I certainly would strenuously encourage him to do that. I think that this Committee deserves an explanation from the man holding the pen, and he is the Minister in the chair at the moment. Why did we leave that door open to commission-based payments when so many people said that this could incentivise harm and we had an opportunity to get an agreed better system?

It is my pleasure to take this first call for the Greens on the Gambling Amendment Bill (No 3). Like the previous speaker, Ruth Dyson, I also did have to go back and review what had happened at the Government Administration Committee and in the second reading because it has been quite a long period of time since we were here in the Chamber debating these issues, and a long period of time, actually, since we heard the submissions during the select committee deliberations.

I am not usually a member of the Government Administration Committee, but I stepped in because I am the gambling spokesperson for the Greens. I want to acknowledge the chair and the other members of the Government Administration Committee for the excellent way that we examined all the evidence before us and made our report. Unfortunately, I do not agree with a lot of things that are still in the bill, and it is for this reason that I have put forward Supplementary Order Paper 120, which actually covers several issues.

We spend an enormous amount of money on gambling in this country. There are 1,300 class 4 gambling venues across the country, and it is acknowledged that these need to be regulated. I am pleased to see that the Minister in charge of that regulation, Peter Dunne, is in the chair, because I do have some questions for him. The area where gambling venues need to be regulated is around where there is the potential for the funds that are generated from gambling—around how those funds are gathered, where those funds come from, and where those funds go to.

There are parts of this bill, particularly in the first part, that we agree with. Things like transparency and dealing with conflicts of interest are very sensible and reasonable adjustments to the legislation. But where we do not agree is around the issue of the controls and mechanisms that should be in place in the regulation to control problem gambling and to control the ease of access to the gambling machines if there is a problem in the community. It is also about the fact that we have to acknowledge that class 4 gambling—electronic gambling machines—does create problem gamblers.

There is international evidence that actually supports the fact that the machines themselves are designed to ensure that there is a percentage of gamblers who gamble regularly, and that they will become problem gamblers. It is here that I believe our regulation should be focused. It should be focused on minimising harm, and I think it is the duty of a responsible Government to ensure that our laws are in place to protect our citizens. That is surely what we all want, across the Committee, and I am sure that I would get cross-party support on that statement. It is how we go about it—fundamentally, we disagree with some of the provisions in this bill, in Part 1, that will liberalise access to gambling and, subsequently, will incentivise venue owners, particularly, to not control problem gambling or monitor it in the way that they are required to under the Gambling Act.

Since 2003, I think it is, when the first Gambling Act was modernised, there has been a strong opposition to having commission-based payments for venue operators. This, I am sure, will be outlined time and time again tonight. The reason—and it is the reason that we have heard put forward time and again by submitters—to not have commission-based payments to venue owners is simply that it does incentivise the venue operator to not do the correct host responsibility and to promote problem gambling.

We have a situation where 40 percent of the funds that are generated for community purposes from class 4 gambling—40 percent of those funds—come from people who have gambling problems. They have limited control over their gambling behaviour. We also know that where those 1,300 venues are placed, they target poorer communities. Essentially, they sell hopes and dreams, in a very cynical way that lures people in, in the mistaken belief that they will be able to get rich, get out of their financial problems, and, basically, make a life. They are false dreams. They are definitely false dreams, because it is a cynical ploy by the industry to ensure that they entrap people with limited control over their gambling. It creates that sort of gambling behaviour.

So we have got a few Supplementary Order Papers to Part 1—well, they cover a few things. One is around removing the ability for venues to be paid on a commission basis. The other area is around removing what I think the officials have described as an incentive to venue holders with licences, to extend those licences for 3 years. The reason we oppose that is that we have seen that there is very limited good behaviour in the pokie sector—not much at all. The sting, which other people have referred to, by the Department of Labour, where its compliance team in December last year visited pokie gambling venues across the country and only one complied with good host responsibility behaviour—that seems to imply that there are very few venues that are currently operating in a way that actually says they should be rewarded for good behaviour. What I would like to see is more compliance and evidence of compliance well before we regulate to offer a 3-year licence with few controls or regulations or even oversight.

The other area is around harm minimisation, which is completely missing, and this was one of the issues that came up time and time again in the submissions that were put forward. Some of them were really heart-breaking. What we would like to do, in order for us to support the bill, would be to amend the bill to ensure that there are effective harm minimisation practices in the regulations, which would then have to happen in class 4 venues across the country.

The sorts of harm minimisation suggestions that I have in my Supplementary Order Paper are around things like player tracking—real-time player tracking—and pre-commitment cards. This hands control over to the gambler. With a pre-commitment card they can determine, before they start gambling, how much they are going to spend, how much time they are going to spend, and then once their card has expired they are finished. This, in effect, limits—it is a very effective limit—the amount of gambling. Someone who wants to have a flutter can basically just go ahead and have a flutter, and it will not be a problem. But for those who are starting to emerge with problem gambling behaviours, it is a way for them to regulate or self-monitor their own gambling behaviour.

We have also suggested that there be player tracking, and this is something that we could be doing as the technology improves. I think there was some discussion—and there has been in previous bills as well—around facial technology. If you use facial technology you can actually ban people from playing on the machines and losing money. I guess we could be going down that track, but actually we need to be looking at prevention before the problem happens rather than at restrictions on gamblers who already have the problem gambling behaviours in place.

I was pleased to be part of the select committee to hear the submissions that we heard on that. There was some very, very good and compelling evidence from places like the Auckland Council, for example, which, although it supported the bill in many aspects—certainly around distribution of funds and increasing that to 40 percent from where it has been at 37 point something percent, the issues around conflict of interests, and the issues around greater transparency—

Kia ora, Mr Chair. I would like to take just a short call to support the contribution by my colleague Clayton Mitchell, and it is an appeal to the Minister in charge of the bill, the Hon Peter Dunne, with regard to Mr Mitchell’s Supplementary Order Paper 95.

What I hope the Committee heard was a gentleman who is actually following the values of New Zealand First, which we articulated when we first came into this House. Those are that we will not oppose legislation just for the hell of it; we will oppose legislation that is in our view badly written. What Mr Mitchell has articulated is as a person who knows this industry and who understands the practicalities of it. He complimented the Minister several times during his contribution, because the Minister had written a bill that in his view and in his knowledge of this industry—down on the street where this bill is going to land, where the New Zealand businesses are going to have to work with it—he understands what those businesses are going to have to do. He complimented the Minister on changes that he had made and he asked the Minister to recognise that New Zealand First would like to support this bill.

But there is one change that we feel needs to be made, and that is around the payment structure. I have heard the Labour Party contribution and the Green Party contribution with regard to not having commission payable for class 4 gambling because it incentivises it. Mr Mitchell in his contribution argued from the real perspective, from the perspective of the business owner, how that does not make sense. It may very well be that for politicians sitting in this Chamber it might make perfect sense in theory and on paper. But when you are in business, and Mr Mitchell told you all the other criteria that are there by which you cannot promote gambling—and I thought the pipis going off in the sun was a particularly good metaphor and one I had not heard before. It was the voice of reason about a small change that is required to gain another party’s support for this piece of legislation.

I want to also comment on the fact that the contribution from the Green Party talked about problem gambling and harm minimisation. We have heard this conversation before, and all due credit to them—they stay on track; they stay on message. What we know to be true is that small bars and RSAs and so on who have a few gambling machines report more problem gamblers than any casino in New Zealand, and they get levied for it. They get charged because they report more problem gamblers to organisations to actually assist them to work with their problem. You could argue that that is because they create more. Or you could argue that the casinos do not report them because the casinos do not know them, and that bars and RSAs are actually doing these people a service by having them come and gamble with them.

I heard Miss Roche also say that Auckland Council supported many parts of this bill. Auckland Council has a sinking lid on gambling machines, on pokie machines inside the Auckland city boundaries, and yet the Government supports Skycity. So from that perspective, to suggest that there should be more harm minimisation inside this bill is the wrong place to be directing that criticism in our view. Small bars, RSAs, and local community organisations that have pokie class 4 gambling machines are reporting more often. They know their clients more regularly. They care about those individuals. They do not wait until an individual is incredibly in debt before they put in face recognition. They do not wait until a person is beyond the pale, as casinos have been doing, and so we see that as a non-argument inside this piece of legislation.

So again we appeal to the Minister. This is a small Supplementary Order Paper. It is a small change that we believe would improve the bill. We hope that the Minister has an open mind. I hope that the Minister listened and believed that Mr Mitchell came from a place of knowledge and a place of good intent around actually improving this bill. It was not from a place of politics; it was from a place of intent. So with that contribution I say that, unfortunately, unless this Supplementary Order Paper is able to be supported by the Minister and the National Party members and the majority of the Committee, New Zealand First is unable to support the rest of the bill. Kia ora.

This is my first opportunity to speak on Part 1 of the Gambling Amendment Bill (No 3). Part 1 deals with class 4 gambling, which if you read the website of the Department of Internal Affairs, you will see that class 4 gambling not only is defined as gambling that occurs in pubs and clubs, which members will be aware of, but it also represents high-risk and high-turnover gambling.

I was not on the Government Administration Committee, and I have not heard all the deliberations. I have a number of questions both for the Minister in charge of the bill, the Hon Peter Dunne, and for members about the Supplementary Order Paper that has been offered up in Clayton Mitchell’s name and this question of commission payments, which has been the subject of some discussion this evening.

I have been trying to get my head around why it is that we need to change the system to allow for commission payments. I appreciate that venues do need to cover some administration costs, and we have systems already that allow venues to cover for their administration costs. What I do not fully understand and what I have not actually heard anybody talk about this evening is why the change is necessary. I have certainly heard a lot of convincing arguments against using commission payments, but what I have not actually heard from the Minister or from anybody else contributing this evening is why this change is necessary. We already have systems in place for covering the administration costs of venues, and I am unconvinced. To be fair, I read the explanatory note on Clayton Mitchell’s Supplementary Order Paper, and that was the closest thing to an explanation that I got.

What I do not understand is why a venue, with x number of machines, that has a high turnover ought to receive more in payment for administration costs than a venue with the same number of machines with a lower turnover. I do not understand where the additional costs come from. If you have got a certain number of machines you need a certain number of staff to keep an eye on those machines. You have got certain maintenance that goes along with them. With higher turnover I cannot see where the additional costs come from.

That is a genuine question. If Mr Mitchell wants to respond to it I would welcome that. If the Minister wants to respond to it I would certainly welcome that as well. I do not understand how the mechanism lines up with the need. What is the problem that this change is actually trying to solve? I would appreciate some support. Or, indeed, is there a better way of doing it? Were submissions heard at the select committee that described a better way? If there are improvements that can be made, are there other ways of doing it? That is a genuine question and I would really appreciate an answer to it.

Another concern that I found in Clayton Mitchell’s explanatory note is that his Supplementary Order Paper 95 appears to align the commission rate with what the TAB and Lotto retailers receive. There is a fundamental difference between those. The TAB and people who sell Lotto tickets—that is their business. That is their primary source of revenue. They are doing that as a commercial practice. That is very different to class 4 gambling, where, actually, the primary purpose for those venues is, usually, that they are a drinking establishment. There is some other activity going on and the gambling is sort of tacked on as an addition. Gambling, under a class 4 licence, is not meant to be for commercial purposes. It is not actually meant to generate any revenue for the venue. The funds generated are to be distributed by a charity and to be used for public good works—for all manner of different reasons—but not to make a profit for the venue where they are actually located.

I am concerned that we are starting to blur the lines a little bit here between the way gambling for commercial purposes operates and the way gambling for the non-profit raising of charitable funds operates. So, again, I am very, very happy to hear an explanation of that. [Bell rung] Mr Chair?

The CHAIRPERSON (Hon Trevor Mallard): Oh, Iain Lees-Galloway.

A good choice, Mr Chairman.

The CHAIRPERSON (Hon Trevor Mallard): Well, only just.

I am very keen to hear what explanation members have for those issues, as well.

I am also interested in why the requests made at the Government Administration Committee for more active and proactive harm reduction activities were not taken up and not included in the legislation. I am not a prohibitionist. I am not a fan of prohibition; I do not think it works well. But I am a big fan of harm reduction, and having a legalised but tightly regulated market can be a far safer way of dealing with harmful activities than prohibition can.

Obviously, harm reduction is vitally important to any system governing and regulating gambling, and there were recommendations made to members on the select committee for identification and tracking of gamblers, particularly people who demonstrate tendencies towards problem gambling, and also for prepayment cards, so that before people start gambling they could set the amount that they actually want to pay and that could be monitored by the venue owner. These were all rejected, it would appear, by the select committee, but, again, I have not seen an explanation either in the commentary on the bill or from any of the members who have spoken this evening as to why that was.

Again, I have heard strong arguments from Denise Roche in favour of including such aspects in the legislation. What I have not heard is the arguments either why it is not the time, or that the technology is not there, or that the research does not support those approaches. Why is it that that was not included in the original bill? Why was it not included at the select committee as well?

I got the feeling when I was called that the Minister might be enthusiastic about responding to some of these questions. If that is the case I would be very happy to hear some responses to the questions I have asked, and look forward to asking more if the Minister’s contribution requires it.

Let me respond to some of the points that have been raised during the course of the debate so far. Can I begin by acknowledging the support for the general principle of the bill that most members of the Committee have espoused. This is a constructive piece of legislation, and I acknowledge the general support that it has received.

The issue that has attracted the most interest is around clause 6, and I will talk about that in a moment. I also want to address the point about harm reduction issues. I need to say to the Committee that I am in a somewhat unusual position. As Minister of Internal Affairs, I am the regulator; as Associate Minister of Health, I am the Minister responsible for problem gambling issues, which puts me in a unique position that I have to talk to myself constantly. That is quite relevant in this particular discussion.

With regard to clause 6, which is the issue that has exercised the Committee—what clause 6, in effect, does is open the possibility for commission payments. It does not per se introduce commission payments. What we are doing is changing the venue payment system, which is inefficient and clunky and outmoded and very complicated, to a more facilitative arrangement that will be devised through consultation with the sector, with the Problem Gambling Foundation, and with anyone else who has a particular view to express. We have not finalised decisions on that model, but we want to leave open a range of possibilities.

I also want to acknowledge in my health role that there are serious issues relating to problem gambling, and I am not in favour of using a commission-based system to incentivise further gambling opportunities. But when we have, as a result of the 2003 Act, a national sinking lid, and when we have work that is required as part of that legislation every 3 years to set a problem gambling levy and to set in place a programme of work that has to be done regarding harm minimisation and related issues, you have got to look at the total package.

The issues that Mr Lees-Galloway and others have referred to are more appropriately dealt with through the work around the problem gambling levy. We are currently in the process of striking that levy for the next 3 years. The consultations are going on literally as we speak; the recommendations will come back via the Gambling Commission later in the year, and I expect that levy, from memory, will be promulgated in the first quarter of next year, for the next 3 years, and a series of activities will be identified as part of that process. That is where a lot of the issues regarding harm minimisation are likely to be addressed.

On the commission one, as I indicated, this is a facilitative clause. At this point we will be consulting further about the detail and nature of that before a new payments regime is implemented, but the important point is to get something that is more efficient, more effective, and less administratively complex.

That brings me to a final point that I want to make, which really underpins this legislation and, I think, goes to the point that the Hon Ruth Dyson was driving at. The speed of change in this environment is intensifying, and what we need to have in our legislative structure is sufficient flexibility to be able to meet new challenges as they emerge. The preceding bill to this one, as members joked at the time, with a degree of accuracy, took 7 years to pass. This bill is actually far quicker than that, but it is still a long process to change the law every time we meet new situations. So what we are trying to do here is move to a more streamlined approach where we do have a greater degree of flexibility to meet some of the new challenges that will emerge in the future. I have indicated previously, and I repeat it tonight, that there is further work under way, beyond the scope of this legislation, that I expect to come to fruition over the next little while.

But if I can just sum up for the Committee, we have a situation at the moment where we need to make the gambling industry fair and responsible. We need to deal with the issues around harm minimisation and problem gambling. We have constructive and comprehensive strategies on both. This is the legislative, regulatory framework. The other matters are dealt with through other mechanisms. Overall I believe this bill, as it is before the Committee at the moment, is a step forward and ought to be supported.

It is a pleasure to take a brief call in this Committee stage debate on the Gambling Amendment Bill (No 3), a bill that the Labour Opposition supports with reservation. The reason that we support it is that we commend the objective of increasing the transparency around the proceeds, the conditions, and the regulated persons who are and who are not able to undertake the management and regulation of a class 4 gaming establishment, which includes pubs and clubs. The background to that is, of course, that clubs such as RSAs, cosmopolitan clubs, and many others are integral parts of our community and we do not seek to totally ban legitimate gaming from those venues where it is the wish of the community to retain them.

Having said that, we have some significant reservations about the bill’s failure to prohibit—in fact, its willingness to provide for—commission payments to venue operators. I turn the attention of the Committee to clause 6, which amends section 30, on page 6 of Part 1 of the bill. It states: “the only commission that is paid to or received by a person conducting the gambling is a commission payment to a venue operator that complies with regulations made under section 371(1)(dd);”, which sets out a bunch of regulations.

What is interesting is that it is a weakness in the current law that although there are no commission payments allowable, there are cost payments available for venue costs in gaming premises. There is some history, which I am sure the Department of Internal Affairs officials would attest to, about operators bulking up those venue costs as a way of, shall we say, maximising the operator margins and minimising the payout. It is a matter that officials have worked hard to police across the sector, as one issue.

Embedded in that is the potential issue of conflict of interest in the way in which recommendations for disbursements are made, particularly by some of the large gaming trusts, which rely quite heavily on the recommendations of individual proprietors of pubs and clubs. The story goes something like: “We’ll get a grant for your rugby league club”—or other club; fill in the blank—“to have some new uniforms or sport equipment if you, wink, wink, nudge, nudge, continue to get your wholesale supplies from my outlet for the next 3 years.” That is why there must be an arm’s length relationship between the proprietor and the decision-making body of the community grant disbursement as part of the increased transparency provided for in Part 1 of this bill.

The ability to make commission payments, rather than increasing the transparency of that system, actually decreases it. Clause 6 is a clause that we remain concerned about and will track in the implementation of the bill, because it allows more discretion for the venue operator to build into those commission payments what might otherwise be considered to be margin, and that, in turn, conflagrates with the conflict of interest issue that I referred to earlier.

Some of the more useful parts of Part 1 include some more transparency about prohibited relationships between operators, immediate family, and family members, and other transparency measures, which we support. We try to take a balanced approach to this legislation, and, again, I would note that we would not seek to prohibit well-managed gaming from community venues.

In making a short contribution on Part 1, I do wish to draw attention to the—perhaps we would call it—irony of this bill, which is seeking to improve transparency, and the lack of transparency in the process around the largest single provider of gaming venues, the Skycity convention centre; and to the importance of ensuring that there is good process around the way in which any future consents for gaming machines, gaming licenses, the term of such licences, and the conditions under which such licences are operating, are consistent with Part 1 of this bill.

I rise to take another call on Part 1 of this bill, the Gambling Amendment Bill (No 3). In speaking to this bill I appreciate the Hon Peter Dunne taking a call and clarifying just a couple of things. That probably leaves a little bit of an untold story there, and I just really want to refer again back to New Zealand First’s Supplementary Order Paper 95 around clause 6, and new clause 6AA which is about commission-based payments.

Mr Iain Lees-Galloway along with the Greens and Labour have been sort of talking more about the Gambling Amendment Bill (No 2) and harm minimisation. This bill is not strictly about harm minimisation. This is about transparency and a clearer, easier way to fundamentally work out what, and how, we are going to be paying those venue operators. The question was asked by Mr Iain Lees-Galloway—he cannot get his head around or fathom why a higher turnover venue would justify a higher payment.

Under the current scheme it comes down to fair, reasonable, and necessary costs to operate a licensed premises. The difficulty you have got when you try to work out what your premises is entitled to comes down to the floor area of your gaming room compared with the floor area of your entire establishment, whether you have got carpet, what the wall coverings are, what sort of fittings you have got in your room, how many staff it takes, what the turnover is on your bar, what your hours of operation are, and what your power costs are. You can imagine the sort of conundrum you have got, to work out where you sit for a payment under the current scheme. What we are simply saying, under a simple scheme—and let me give you some numbers so you can rattle those around in your brain. An average to high turnover—

The CHAIRPERSON (Hon Trevor Mallard): Order!

Mr Chair?

The CHAIRPERSON (Hon Trevor Mallard): Nothing is going to rattle in my brain.

Mr Chair, I do apologise. It is a bad habit—I will get out of it. I mean Mr Iain Lees-Galloway’s brain. To get that clear inside Mr Iain Lees-Galloway’s brain—if you took an averagely high turnover of $9,000 a week of banking in a gaming site, which is over the average but we are working on that, and if you look at a current site payment of around about $150 per machine, it would work out somewhere around about $1,350. Of course, they fluctuate. The rents in Auckland can be astronomical and they could be paying twice or three times what they are paying, or even five times what they are paying, in Invercargill. So a site rental in Auckland might be getting $200 for a site machine and therefore generating more turnover because of the location, and so forth.

With each increase in turnover comes an increase in foot traffic and that becomes costs in staff. Staff costs are the largest unfixed variable business cost in hospitality. Rent is fixed, power is generally fixed, and a lot of those other associated costs are fixed. But the moment you have to increase your staff to cover a higher turnover venue, you have got more wear and tear on the fixtures and fittings in your premises, then you could surely understand economically that you could not sit within the current regime.

What we are suggesting—putting it under a commission-based system—allows for higher turnover. At a turnover of $9,000 a week, and earning $150 a machine, that is around $1,300 a week—you are hardly saying that you are making a lot of money out of that. It is not even covering a portion of your rent let alone all the other running costs that go with it. What we are saying is that establishing a fee that is based on the gross turnover of gaming machines ties in with the actual running costs attributed to that site, and the ongoing costs of that. That is why we think that commission-based payments are better than not.

We have gone through the Gambling Amendment Bill (No 2), which talked about harm minimisation, and the Minister has talked about other areas where that is going to be picked up on. We too are concerned about issues of problem gamblers. They do make up 0.03 percent of the population. That as a percentage seems pretty small—I think it is about 20,000 problem gamblers—but that is not broken down into the types of problems we are having. There are problem gamblers that have TAB problems, there are casino problems, and there are pokie machine problems, and none of that is really captured in an overall breakdown of what class 4 gambling is actually directly proportionally responsible for.

The biggest problem that we have got, as this very fast world of gambling changes, is the new onslaught of online gambling. That is the elephant in the room. That is something that needs to be addressed that we have not even started to consider. Yet we are throwing a lot of stones and a lot of weight, and a lot of anti - commission-based payments talk, when it is just a simple and easy way to work out payment for the venue operators, and for the Government to assist in those payments.

I move, That the question be now put.