Gambling Amendment Bill (No 3)

We now move to debate on Part 2, which is debate on clauses 17 to 20 and the schedule.

Can I also thank the Minister for his previous contribution. I think it was important for us to hear it. I know that the most substantive issues are in Part 1. There was not as much discussion at the select committee on Part 2, or submissions on this particular part, but there was some concern, especially from societies who did not like clause 17 in particular, which inserts new section 235A into the Gambling Act 2003. They had some concerns around the appeal process to the Gambling Commission and they expressed that quite clearly to the select committee. I think that the select committee has done a very good job, though, on that particular part in new section 235A(1)(a), where it says: “that person exercises that right of appeal;”. I think when we heard from those submitters we heard very clearly what their concerns were.

I think I also have to reflect on the whole issue around running venues, as a business model, as opposed to the original intent of the 2003 Act of it being a community service. I would explain it like this: over time since 2003 the way that things have been operated by the organisations and societies that own the class 4 machines has changed. I think that in the overall bill, and coming to Part 2 in particular, the process for making appeals to the commission highlights the very fact that things have changed and they need to reflect what is actually happening. We did hear from those operators, and the societies in particular, who expressed their concerns. I think the bill is much better for the changes that have been made.

I would further note that our particular opposition to the two parts within this bill are, in fact, as I said before, about the whole nature of the changes that the societies have had to make to the way that they operate. There is not a lot to say in this particular part except that overall we support this bill but the changes to that process are important mainly to the societies. But one thing I would also add is that it has been a missed opportunity to address those real issues around harm minimisation. Thank you.

I rise to take a call on this part of the bill—Part 2, “Miscellaneous matters”. But what I want to address my comments to is clause 18, which amends section 371. I have a Supplementary Order Paper that, essentially, deletes this clause. As the previous speaker explained, this is the clause that deals with and allows for commission-based payments for venues. I would be interested in hearing a response from the Minister about why this clause is here, given that there has been such strong opposition to it for so many years. It was explicitly prohibited in previous legislation. I am really keen to know why there has been a change and why allowing commission-based payments is going to be a part of this legislation, when, really, it did not come out of anywhere or from any evidence.

The arguments that we heard from the Minister at the time that this bill was introduced were around the fact that the payment for venues was complicated. Without a doubt, the payment for venues is very complicated—there is a very strict equation—but it is for venue operators receiving payments for having pokie machines on their premises that they be paid actual, reasonable, and necessary costs. That is the exact wording: “actual, reasonable, and necessary costs”. Yes, even though it is complicated, there has been an enormous amount of work done by the Department of Internal Affairs over several years, working with venue operators to try to ensure that they are able to claim what they are meant to claim for. In the past, there had been other rorts perpetrated by venue operators for things like claiming for wages and for premises upgrades, which were above and beyond reasonable. This is where we come to “reasonable”. There had been court cases about that.

So the complexity of the regulations has been the subject of much discussion and much education, actually, with the Department of Internal Affairs and with the venue operators. In fact, in 2009 the department began working with gambling societies to standardise venue cost schedules, and it encouraged gambling societies and hosts—the venue operators—to participate in what it called the Venue Costs Resubmission Project. That was to get venues to put in their submissions, so that they could work with them to make sure that they were getting it right. The Department of Internal Affairs did a report on this in September 2013. That was after 4 years of work. The department reported on the project. It was called the Venue Costs Resubmission Project. It included a series of recommendations about the calculations for venue payments, including for a full review, and to initially adjust some of the limits to cover where there had been increases in inflation and, for example, wages.

This is not unreasonable. This is good practice. This is the regulator operating with the industry in a very responsible manner and the industry responding in a very responsible manner. But nowhere in the report with these recommendations did it recommend introducing a commission-based payment system for venues. So my question to the Minister is: where did this come from? Who put this forward? It did not come from the Department of Internal Affairs. The only submissions that supported this part of the bill were from the industry, from venue operators themselves and from gambling societies. In fact, the opposition to this part of the bill came from everyone else—the people who have been harmed by problem gambling, the people who have been problem gamblers themselves, and their families. They went into great detail when describing how problem gambling had impacted on their lives.

If you think about who benefits from commission-based payments, it is the venue operators. Who does not benefit from that? That is what is not clear to me. I do not believe that there has been a relevant cost-benefit analysis of commission-based payments to venues, because surely they have not—

The CHAIRPERSON (Hon Trevor Mallard): Order! I am now going to ask the member to resume her seat. I remind her that we are now on Part 2 of the bill, which is a very, very narrow area. The member—and she has not been the only one speaking on this part—has strayed well past it.

I raise a point of order, Mr Chairperson. I would like an explanation. Clause 18 refers specifically to commission-based payments. If you look over the page, to subparagraph (iii), that is where commission-based payments are. I am referring to the submissions that we have received on this aspect of the bill.

The CHAIRPERSON (Hon Trevor Mallard): I just want to remind the member that we had a substantive discussion on that area in an earlier part. The main new part—the new thing in this—is around the review of the secretary’s decision. That is really the substantive part of it, and the schedule. There is quite a lot of room in the schedule, but both in the second reading and in Part 1, the principle that the member is now discussing very widely was already accepted by the Committee.

Thank you, Mr Chair. I will confine my comments basically to clause 18 and to Supplementary Order Paper 120 that I have in my name, which states: “In clause 18, delete new section 371(1)(dd) and (de) (page 15 line 32 to page 16 line 7).” I will probably discuss this more in the next part, in the schedules, because I also have a Supplementary Order Paper pretty much along the same lines to that one. I do want to know from the Minister, though, the justification for this clause for venues to receive commission-based payments.

The CHAIRPERSON (Hon Trevor Mallard): I am sorry, and I do not know whether or not I should be coaching you from the Chair, but we are actually discussing the schedule now. If the member waits until after the vote on this bit, then she will be too late.

Thank you, Mr Chair. I think I have probably said enough. I actually want to thank you for your assistance in this matter. I appreciate the coaching.

I raise a point of order, Mr Chairperson. Could I just seek your clarification? It was not until the member spoke just now that I realised that her Supplementary Order Paper 120, which we have already voted on, over the page has amendments to clause 18 and the schedule. I do not recall you saying that we were voting on just clauses 6 to 13. Have we voted on that inadvertently, in which case we need to go back, or did I just miss the fact that you said “part of Supplementary Order Paper 120” when we voted earlier?

Just to make it clear, Denise Roche’s amendments set out on Supplementary Order Paper 120, which relate to anything in clauses 17 to 20 and to the schedule, are currently the subject of this debate. We have voted already on that part of Supplementary Order Paper 120 that relates to Part 1. I think it is fair to say that at that point we dealt with the principle and the substantive part of it. We are now talking about the method of regulation, and, frankly, it is a close call whether the Supplementary Order Paper should be ruled out or not, having already made the decision in a previous part. The Committee has made the decision on a previous part that it does not want the approach suggested in Supplementary Order Paper 120. We are more or less dealing with the same question again, but I have been quite liberal in letting it run so far.

I am going to take a very short call, probably much to your pleasure, on Part 2, clause 13 amending section 115, which is actually an amendment that New Zealand First has got there in Supplementary Order Paper 95. Quite simply, what we are asking to do is to delete, in clause 13, “Section 115 amended (Payment of commission prohibited)”, because, clearly, despite not getting the support in the Committee for our first part, Part 1, we will see this through to the end—

The CHAIRPERSON (Hon Trevor Mallard): I am sorry if I have confused the member. We are currently dealing with clauses 17 to 20. The member has had his chance on clause 13. He spoke to it earlier, actually, and the amendment has been rejected by the Committee. Does the member want to have another crack?

No, that is fine. I have got a Supplementary Order Paper. You are into schedules here.

You will be delighted to know, Mr Chair, that I want to speak to Part 2, which starts at clause 17—

The CHAIRPERSON (Hon Trevor Mallard): Well, it will be a novel approach.

It goes through to clause 20 and includes the schedule in this particular debate, and it includes Supplementary Order Paper 120, which deals with clause 18 and the schedule. As you quite correctly pointed out, the main content of this part is in relation to the review of the secretary’s decisions and what that involves. These were changes that the Government Administration Committee took some time to consider because it is not something that we normally deal with, in terms of policy issues, unlike the other matters that have been the subject of the majority of the vote.

What I found really interesting when we discussed whether an organisation had an appeal right after the secretary had made the decision—and this is in relation to class 3 or class 4 gambling—was whether they could appeal then to the Gambling Commission, how long they had to appeal, and what the grounds were. What the debate indicated to me was that the nature of the organisations that we are dealing with has changed substantially since the first major gambling legislation in 2003. I think that is something that the House, not during this debate, should at some time give quite a lot of consideration to. I do not think that our Parliament has done that in the consideration of gambling legislation.

There is the highly competitive nature between the organisations seeking to get more pokie machines, basically, and then, after that, when they are granted a licence, or, if they are refused a licence, there is the issue of how they are able to appeal and how long that is going to take. The reason that it was so important for the organisations, and why they made such a song and dance about it, was that their businesses depended on it. I do not think that is how these organisations were originally established. It was certainly never the intention of the gambling legislation originally, but what we have got now is an entirely different sector. We have vending operators that are dependent on their pokie machines in order to run their business. It is cart before the horse. That is why the secretary’s decision, the appeals to the Gambling Commission—how long that takes, how many licences they are allowed, what the terms for withdrawing a licence are; all those issues—were drawn into far greater tension, I guess.

The other issue that became very obvious in relation to this was the groups that now get pokie money. All the electorate MPs in the Committee would be very familiar with their organisations that every year apply for pokie money and are dependent on it. The nature of their reliance, I think, is another problem that at some stage this Parliament needs to grapple with. They had exactly the same concerns about the issues that are outlined in clause 17, which inserts new section 235A, about the review of the decision, the grounds for the decision, the appeal to the Gambling Commission, and the opportunity to apply for a judicial review. Some of them talked about how they would have to basically get pokie money to apply for a judicial review to then be able to maintain the pokie operations of the organisation that they had a relationship with. So it is not a healthy situation, actually.

Clause 17 deals with the nuts and bolts of the operation. It does not deal with the fundamental policy questions about whether we think that having gambling that does public health damage should drive dependency of very good, worthy community and voluntary organisations to the point that in this clause they were so anxious about the rigidity or the rigour of the licence issuing and appeal process—not because of wanting to have integrity in the gambling system but because of the potential harm that that it would do to them either as a vendor running their business, dependent on gambling money, or one of our really great community and voluntary sector organisations that is dependent on the pokie money for their survival. So although we looked at these provisions in clause 17, originally it was just a “Well, this is just a standard process, how you would go through this.” Of course, you need a proper process to have a licence issued. You need a proper appeal process if there is some concern about their behaviour, and all those rules in both class 3 operators’ licences and class 4 operators’ licences or class 4 venue licences are clear in here.

What we learnt during our debate on this clause was entirely different. It was about the changing nature of the organisations that run pokies, the huge competition that there is now, and, of course, with more and more local authorities taking the opportunity to have sinking-lid policies on their pokie machines, that heightens the tension, and the inability of organisations to move their operation from one part of a city or town to another—all those issues came up during this process.

I think that we did good work in considering that. I think that the small changes that we have made in these provisions—you will notice that we made small provisions right at the start of clause 17 and in 17(a) and then a deletion in clause 19, which affects new section 378, and very minor changes in the schedule. I think the changes were good, but what it has left open, and I would, again, urge Parliament in future—the Minister of Internal Affairs himself has always been interested in big policy issues. He may want to instigate a cross-party forum discussion for the issues that are not dealt with specifically in the legislation but that were debated because they were generated by the provisions in Part 2, and that is how different the organisations are now that run these machines and how the competitive nature and the licensing regime that we are discussing in this provision, plus the sinking-lid policy of the territorial local authorities, have combined to make it a pretty hostile environment, actually. It is certainly very finance driven.

The other concern that I have is the total dependence of groups on pokie money. I do not think that is a good environment, whether it is a surf life-saving club or the local kids’ rugby or netball club or whatever it is. There are hundreds of examples where organisations are dependent on pokie money. I think those bigger issues need to be debated as we go forward. They were generated, absolutely, as a result of the specificity of the issuing of the licences, of the appeal procedure, and, as I said, of the provisions that are in clause 17(3) for the judicial review. The bigger issues, I think, need to be debated, and I offer the Minister a gentle challenge. I think that this Parliament is up to that debate, I think the members of the select committee would be happy to assist with it, and I think that, if we are going to make good progress on gambling legislation in the future, those are hard issues that need to be tackled.

Just in conclusion, I want to briefly refer back to the provisions that are in Supplementary Order Paper 120, in the name of Denise Roche, dealing with clause 18. I listened very carefully to the Minister’s explanation of why the prohibition on commission-based payments had been made. This is another attempt—your consideration earlier on is exactly right—but I think the Minister is, unusually for him, dancing on the head of a pin. He is certainly saying that this is not the way it is necessarily going to go because the regulations have not been promulgated. Sometimes when a politician says “Trust me.”, you would laugh. I do actually trust that what the Minister says when he makes a contribution in the Chamber is what he believes and what is true, but I do not think that this is a small issue. I want to have more confidence. Even though I do have that trust in him that it has not been made yet, it does not mean that it is not going to be made. And the fact that that is now an available option remains the biggest consideration of the Government Administration Committee, which heard it, and, I think, of Parliament as a whole, and certainly of the overwhelming number of submitters.

I think that Part 2, minor though it may seem in terms of the policy issues that it contains, leads us to the need for much bigger policy debate.

I move, That the question be now put.

I am happy to take a call on Part 2, “Miscellaneous matters”. It is very brief, and, therefore, I will try to keep my comments brief as well. I do want to refer immediately to clause 17. As I understand it, the Gambling Commission follows the judicial line when it comes to the appeals process. What I am noting is that before any person can apply for a judicial review, they have actually got to exercise their right to appeal.

The question I would ask the Minister of Internal Affairs is to do with the fact that I thought the purpose of this particular section was to ensure that the appeals process was done efficiently. Therefore, there is an expectation that the appeals be conducted quite quickly. The way I read it, a person could not seek a judicial review in the immediate sense unless they conducted the appeal and it reached an end. Therefore, it seems like in this particular process we have actually prolonged the whole appeals process, and if a decision has been made about cancelling or suspending or revoking a licence, how long will this process take before a final decision is made?

The reason why I ask that question, Minister, is that, as many in the Chamber will be aware, there are many sports organisations that may be dependent on the funding that comes from that particular pokie machine. To not be specific about the length of time that it will take in order for appeals to take place, particularly where a licence has been suspended, actually leaves those sports organisations in a bit of limbo. That is the first question.

The second thing I would say about the appeals process is that what is not there, which I think the Minister ought to be concerned about, is the fact that the community and local government have, over successive years, taken a keen interest in this particular industry, particularly where gambling-licensed pokie machines are concerned. What is not there is where local government can play a role or communities can play a role in the instance where a licence has been granted. What happens if local government or the local board has a policy where it is saying that it has a sinking-lid policy? Does it then have a right under this political process to appeal a decision by the Gambling Commission in order to maintain that sinking-lid policy, despite the fact that a person might be applying for an extension of that particular licence?

I know that the Minister would be very well aware that many communities, and particularly impoverished communities, have become reliant on pokie-machine gambling, in fact, as a natural part of them attempting to just make ends meet. There are organised communities, including church organisations, that would want to have the right to have a say in decisions that have been made by the Gambling Commission, and, in particular, with the granting of particular licences in certain aspects of our community. Again, that seems to be missing from clause 17. If the Minister has any intention of including the rights of local government and local boards—the rights of communities to be part of the appeals process—then it should also be in clause 20 in terms of the new schedule there. Again, because it is missing in clause 17, it appears to be missing in clause 20.

But, ultimately, if this bill is about being open and being transparent, then there is nothing in here about how the Gambling Commission intends to minimise the harm that pokie machines bring to the local communities. Some years back when I was on local government, on that famous Manukau City Council before it was rudely destroyed by this Government, the council undertook to do a review of the impact of pokie machines on that particular city. After the council had conducted the review in 2004, it found that after taking all the money that came in and disbursing the money to the sports organisations, what it ended up with was a deficit of $100 million in that community.

So I would have thought that ultimately the fundamental legislation was about reducing harm. Ultimately, this bill here is about being open and being transparent, and yet it fails to highlight how these procedures would enable the community to have a say, would enable local government to have a say, and would also enable the community to see how these processes are going to ensure the reduction of harm to the local community.

But I want to emphasise that I think if the Government is quite serious about being open and transparent in how it conducts this particular industry, then what is missing in Part 2, clause 17, is where community organisations and local board organisations can intervene and have a say on the Gambling Commission’s decisions where licences have been granted, and yet the communities may have wanted that particular licence to be no longer established, or where the community has a policy, or the local board may have had a policy, a sinking-lid policy, pertaining to that community. I am genuinely asking the Minister whether he would entertain making an amendment that can ensure that local boards and communities can have an input in terms of the appeals process in clause 17 and also in clause 20.

I move, That the question be now put.