Chapter 9 - Other issues: Utilities, credit, gambling
A number of other issues were raised during the inquiry that
particularly affect people on low incomes and impact on the incidence of
poverty in the community. These issues include:
- access to utilities such as electricity, gas and water for people
on low incomes;
- the availability of credit and the adequacy of consumer credit
- gambling, especially problem gambling, and its impact on poverty
among low income groups.
Access to utilities
Evidence indicated the importance of ensuring access for low income
households to essential utilities such as electricity, gas, water and telephone
services. These services provide the basic means by which any household is able
to function in a modern society.
Submissions and other evidence argued that the application of the
National Competition Policy to essential utility services in recent years has
led to debt recovery practices which penalise low income households and result
in disconnection for inability to pay for these services. This in turn
adversely affects the living standards of many low income households. The
impact of power supplies being cut-off was graphically illustrated in evidence
– loss of refrigeration, inability to keep fresh food, frozen food being
spoiled, no hot water for cooking or washing, no heating or light. Indeed, submissions
argued that access to light, heating and cooking are essential elements to a
reasonable standard of living.
One submission noted that disconnection is particularly stressful for people
with young children, the elderly and infirm and those living alone.
Another submission noted that if a household is unable to pay a utility bill 'then
modern views of what constitutes a reasonable standard of living requires that
policies and programs are in place to ensure on-going access to essential
WACOSS stated that in the past 12 months emergency relief agencies in Western
Australia have paid approximately $1.34 million to utility service providers
to prevent disconnection or restriction of supply to low income and
The escalating nature of this issue was exemplified in one submission that noted
that in Victoria in the 1980s, electricity disconnections averaged 0.7
households per thousand domestic customers each month. The rate of domestic
disconnections increased in the late 1980s when Competition Policy was
introduced. By 1994, the disconnection rate had doubled to 1.6 households
disconnected per month per thousand domestic customers. Later data show that in
Victoria there was a 30 per cent increase in electricity disconnections for
residential household customers in 2001 compared with the previous year.
The need for a national approach to ensuring that low income households
have guaranteed access to essential utilities has been argued for some time. Consumer
advocates have pushed unsuccessfully for many years for mandatory hardship
provisions which would require utilities to reduce or waive debt for people who
are unable to pay their bills for reasons outside their control. It was indicated
in one submission that, to date, no company provides a satisfactory system to
meet the needs of people in hardship.
In Victoria there is an agreement that the utilities will not disconnect for
debts of under $100, however it was claimed 'that is kept a dark secret, for
fear that low income households will exploit that knowledge...what it does mean
is that the utilities can trick households into thinking that, even for debts
of under $100, they can lose access to this essential service'.
It was noted that, as a public service, the former publicly owned Victorian State
Electricity Commission had a policy of not disconnecting customers who were
genuinely unable to pay their electricity bills.
Evidence also indicated that advice needs to be provided via home energy
advisory services and/or utility companies to assist low income households in
relation to energy efficiency. One witness commented that one of the water
companies in Victoria operates a particularly effective program for its
low-income customers –'it is a combination of assisting them to identify ways
of reducing water consumption while negotiating regular payments that are
affordable to the household....They are keeping good relationships with the customers,
getting the maximum payment from those households and assisting the households
to keep their consumption at an affordable level'.
Submissions noted that the energy concessions provided by State
Governments often exclude some categories of people on low incomes. NCOSS advised
that in NSW the State Government provides energy concession rebates of $112 per
year but this is limited to people who hold a Centrelink or DVA Pensioner
Concession Card; receive a DVA Disability Pension; and whose electricity
account at their principal place of residence is in their name or jointly in
their name. NCOSS stated that these criteria exclude some people on low incomes
from receiving the rebate, such as unemployed people, students, sickness
beneficiaries and people unable to have an electricity account in their name
because of the nature of their housing, such as caravan park and boarding house
That public and private utilities have in place hardship provisions that
provide for the reduction or waiver of debt to ensure that customers genuinely
unable to pay for the provision of utilities retain access to these essential
Consumer credit regulation
Concerns were expressed during the inquiry at the lending practices of
some credit providers and the problems caused by the easy availability of
credit, especially as it impacts on low income households. One witness noted
The financial cost to individuals who use credit, payday lenders
or sell or pawn their belongings in order to survive is excessive and again
highlights the inequalities in this society that allows the financially
vulnerable to be exploited.
9.10 The Australian
Consumers' Association (ACA) articulated this concern:
...we have become increasingly alarmed at levels of debt among
Australian households. While that is certainly spread across all income levels
and encompasses a variety of sources of credit – not just credit cards but
personal loans and, of course, mortgages – we are particularly concerned about
the impact on low-income households who have quite high debt to income ratios
and their capacity to manage that debt, particularly in the case of illness or
other unexpected life events such as unemployment, and to maintain their
capacity to stay out of bankruptcy in particular.
9.11 The ACA stated
that, based on numerous studies, it was single parents, renters and others on
low incomes that experienced the most difficulties in managing credit card
debt. The ACA noted that not only are increasing numbers of these people
presenting to financial counsellors with problems arising out of credit card
use and other inappropriate levels of lending by financial institutions, but it
is also exacerbating the degree to which they can be caught in a poverty cycle through
Not only are these people going through the stress of being in a
situation of being overcommitted when it comes to their debt levels and their
credit card use, but they then become targets for refinancing and the churning
that goes on by a variety of agencies wishing to charge them fees to put them
into other credit products and further exacerbate the extent to which they are
caught in that debt trap.
9.12 Another emerging
problem is the increasing debt levels of young people through the use of mobile
phones. One financial counselling service noted that many of its younger
clients have multiple mobile phone contracts, and they have no understanding of
the real costs, the cancellation fees or the consequences of non-payment of
9.13 Regulation of
most personal credit is covered by the provisions of the Consumer Credit Code
which is a set of uniform acts and regulations passed by all the States and
Territories. The legislative structure is based on a template scheme. All
States have passed enabling legislation which adopts the template legislation
and applies it in the particular State or Territory. Any amendments to the Code
or Regulations only need to be made to the template legislation; they will then
automatically apply in other States without amendment to the States' Enabling
9.14 The Code covers
most types of personal loans and credit arrangements from banks and other
financial institutions but does not cover loans for business or investments. It
stipulates what sort of information should be disclosed in loan contracts and
provides procedures for defaults. States are able to pass legislation on
related matters or matters not contained in the Code but cannot pass
legislation which conflicts with the Code. Under the Australian Uniform
Consumer Credit Laws Agreement 1993 (AUCLA) the Ministerial Council for Uniform
Credit Laws has to agree to amendments to the Code by a two-thirds majority.
All States are required by the AUCLA not to introduce legislation which
conflicts with or negates the Code.
9.15 The Code does
not set maximum annual interest rates. States and Territories are free to set
their own rates. In Victoria, for example, the Consumer Credit (Victoria)
Act 1995, stipulates that the annual interest rate should not exceed
48 per cent for most matters and 30 per cent for mortgages.
9.16 A number of
issues were raised relating to consumer credit availability and practices
- the availability of credit;
- loan defaults;
- fringe credit providers;
- the need for more consumer education; and
- the need for more funding of financial counselling services.
Availability of credit
indicated that credit from a variety of different sources is too readily
available and that many people on low incomes are overcommitted and are at risk
of default on their loans.
The ACA noted that:
While we see a very rapid rise in levels of credit card spending
and credit card indebtedness among [low income] households, we are very
concerned that those people are least able to manage what is often very high
cost credit. It is the experience of caseworkers and also more detailed
analysis of outstanding levels of debt that show it is particularly low-income
households who are most at risk of default and of overcommitment when it comes
to their credit card usage.
9.18 While the
Consumer Credit Code requires an initial credit assessment to be conducted it
is silent in relation to any subsequent increases in credit limits. Witnesses
argued that the onus should be on credit providers to do adequate credit checks,
with one witness asserting 'they are fast enough to chase people when they do
not pay; they should be put in the situation of checking'.
9.19 The ACA stated
that there is a need to extend nationally the legislation currently in
operation in the ACT concerning assessment of capacity to repay – 'to ensure
that when people are granted additional credit it is actually done with
reference to their income levels and what other levels of debt they might
9.20 The ACT's Fair
Trading Amendment Act 2002 requires ACT lending institutions to undertake a
satisfactory assessment of a borrower's capacity to repay an amount of credit
on offer. This has meant that the execution of a satisfactory assessment
process has become an integral part of the lending process. A credit provider
who fails to comply with these requirements may be subject to criminal penalty
provisions under the Act. The Act states that:
- a credit provider must not enter into a continuing credit
contract for a credit card unless the credit provider has carried out a
satisfactory assessment process; and
- a credit provider must not increase the amount of credit
available under a continuing credit card contract unless the debtor has
requested the increase in writing, or the credit provider has offered the
debtor the increase and the debtor has accepted the offer in writing; and the
credit provider has carried out a satisfactory assessment process.
9.21 That all States
and Territories require credit providers to undertake a satisfactory assessment
process prior to an increase in the credit limit available to a client to
determine that person's creditworthiness.
Loan defaults and debt recovery
9.22 Concerns were
raised regarding the debt recovery practices of some debt collection agencies.
9.23 Loan default
procedures are addressed under the Consumer Credit Code. When a default in
payment occurs, the credit provider will usually have to serve a default notice
before they commence enforcement proceedings. This default notice will give 30
days to allow the debtor to meet the payments, seek further advice or apply to
the credit provider for a change to the contract on the grounds of hardship.
Before a credit provider or lessor can repossess goods, they have to give 30
days notice and, in some circumstances, obtain a court order.
9.24 Evidence to the
inquiry indicated that there is an increasing trend for debt collectors to use
intimidation and fear tactics and to make threats to clients that have no legal
One witness noted that 'scare tactics are the order of the day, not resolution.
If a debtor makes a realistic offer, based on their budget, to pay back a debt,
they are routinely rejected'.
9.25 The outsourcing
of debt collection was also cited as exacerbating the problem by removing the
link between the granting of the credit and the collection of the debt. The
outsourced debt collectors, it was argued, are less responsive to the needs of
clients and the lending agencies are removed from the need to seek solutions
when their customers have problems meeting repayments.
One witness also argued that many debt collectors have little understanding of
the law governing debt collection or bankruptcy.
Submissions argued that there is a need for stricter rules and monitoring of
debt collectors to ensure compliance with the code of practice.
Fringe credit providers
9.26 Evidence drew
attention to increasing problems associated with the insufficient regulation of
fringe credit providers, especially payday lenders. Payday lenders offer short
term loans of relatively small amounts of money to be repaid on the borrower's
9.27 There are
various credit products available in the fringe credit providers market such as
payday loans, cash advances, short term loans and micro-loans. These products generally
have the following characteristics:
- money is lent for any purpose, including purposes where
traditional lending is typically not available;
- money is typically lent in exchange for a fixed fee rather than
charging an annual interest rate;
- some credit providers require security for loans, including bills
of sale over motor vehicles or goods (including essential household goods) –
others offer unsecured loans;
- the ease and speed with which money can be obtained is promoted;
- money is lent to consumers who have a regular source of income,
which includes social security payments;
- loans are for a short term ranging from one week to several
- the most common method of repayment is via a direct debit
9.28 Fringe credit
providers often charge excessively high rates of interest on short term loans
(often in excess of 200 or 300 per cent per annum and in some cases higher).
One witness noted that 'the worst part of some of those payday lending products
is that they apply interest rates of between 200 and 2,000 per cent'.
These organisations also appear to often target poorer members of the community
in need of ready cash to address a debt situation.
The problems associated with this form of credit were described in evidence:
'Pay Day' lenders are now preying on the weakest in our
communities. High interest (some up to 240 %) secured over vehicles or
household furniture further impacts on their already dire circumstances....They
advertise as being able to help anyone, whatever their circumstances, and this
appeals to desperate people needing a quick fix.
People who cannot access credit are now using payday lenders to
get advances on their incomes. They then are unable to repay this and they are
sometimes charged up to 897 per cent interest on those particular debts.
9.29 Evidence also
pointed to other fringe lending operations, often franchise organisations
providing relatively small loans of up to $2000 and charging very high interest
Other evidence pointed to some organisations attempting to circumvent the laws
in one State by operating in another.
9.30 In 2001 the
Consumer Credit Code was amended to cover fringe credit providers who were
previously exempt from its provisions. The Code now requires that contracts be
in writing and that fees and charges be disclosed. The Code also provides
borrowers with the legal capacity to challenge harsh and unfair contracts.
9.31 However, a
number of continuing concerns with fringe credit providers were raised with the
- borrowers' difficulties in determining the true cost of credit
- the imposition of fees that translate to exorbitant rates of
fringe credit providers taking security over essential household
fringe credit providers use of direct debit authorities; and
- fringe credit providers attempting to circumvent the application
of the Code.
9.32 Many consumers
have problems in establishing the 'real cost' of loans provided by fringe
credit providers. The Code requires interest to be disclosed as an annual
percentage rate (APR). This allows consumers to make comparisons between credit
providers and to better understand the cost of credit. However, in the fringe
credit market, a number of fringe credit providers do not charge borrowers an
APR but a flat fee or sometimes a monthly interest rate. For example, a typical
payday loan of $200 over 2 weeks which attracts a 'fee' of $40 translates to an
APR of 522 per cent. A study prepared for the Ministerial Council on Consumer
Affairs in August 2003 noted that there is 'uncertainty' surrounding whether or
not fringe credit providers who impose a flat fee only are required to
disclose an APR under the Code.
9.33 This study
proposed that extra disclosure requirements should be imposed for 'high cost'
loans provided by fringe credit providers. These loans would require credit
- to state the comparison rate in the high cost loan offer. A
comparison rate is a method of calculating the total cost of a loan, including
interest and all fees and charges, to a single percentage rate. This would allow
consumers to compare the overall cost of the loan with other loan products in
- to disclose a statutory warning before the contract is signed
which would warn consumers that the particular loan is an expensive form of
9.34 Another concern
is the imposition of fees charged for fringe credit loans which can range
upwards of 200 per cent per annum. This is a problem in those jurisdictions
which do not have an interest rate cap. Currently only three jurisdictions have
implemented interest rate caps. In NSW and the ACT the maximum APR that can be
charged by a credit provider is 48 per cent. In Victoria, the maximum APR for
a mortgage relating to a credit contract is 30 per cent, and for all other
credit contracts it is 48 per cent. Interest rate caps are not covered by the
AUCLA on which the Code is based.
9.35 The study for
the Ministerial Council stated that one way to address the problem of the
imposition of fees that translate to exorbitant rates of interest is for
jurisdictions to implement an interest rate cap. The study noted that if a cap
is to be introduced, fees and charges need to be included in the calculation of
the cap. This would prevent rogue fringe credit providers from reducing
interest rates and increasing fees and charges to get around the interest rate
9.36 An additional
concern raised is the practice of some fringe credit providers that are taking
bills of sale over essential household goods. Bills of sale of this nature have
been described as 'blackmail securities' as the goods required as security are
often worth very little and are only taken as security to ensure payment by the
borrower through fear of losing their most basic and essential household
possessions. One witness argued that there should be a prohibition on bills of
sale over household goods.
The prohibition would remove the threat of repossession of essential household
9.37 Another problem
raised is the use of direct debit authorities by fringe credit providers. Some
credit providers repeatedly access bank accounts even when there are
insufficient funds available in the account. As a result, fees and charges are
imposed on the borrower by the bank. Other concerns raised are that fringe
credit providers often access borrowers' accounts as soon as their wage or pension
is deposited into the bank account. This may leave insufficient funds to pay
for the necessities of life, such as food or rent.
9.38 The study for
the Ministerial Council argued that if a consumer signs a direct debit
authority, the credit provider should be required to disclose the following in
writing to the consumer:
- the consumer can cancel a direct debit authority at any time by
contacting their bank;
- the consumer can lodge a complaint with their bank if there has
been an unauthorised debit; and
- the consumer can contact the Australian Banking Industry
Ombudsman for assistance in resolving complaints regarding unauthorised debits.
9.39 A further
emerging problem is that some fringe credit providers are attempting to avoid
the application of the Code by setting up the credit transaction as a
quasi-pawnbroking arrangement or broker arrangement.
The study for the Ministerial Council argued that the Code should be amended to
prevent fringe credit providers from circumventing the Code in this manner.
9.40 That the
Consumer Credit Code be amended:
impose additional requirements for high cost loans provided by fringe credit
providers, relating to:
- disclosure of
the comparison rate (the total cost of the loan, including interest and all
fees and charges to a single percentage rate) on the loan offer;
- disclosure of a
statutory warning on the loan offer that the particular loan is an expensive
form of credit; and
- disclosure of
information regarding the cancellation of direct debit authorities and avenues
for complaints on the loan offer.
- to clarify
that all credit providers must disclose an annual percentage rate (APR).
- to prohibit the taking of security over essential
- to prevent
fringe credit providers from circumventing the application of the Code by
setting up the credit transaction as a pawnbroking or broker arrangement.
9.41 Concerns were
also raised in relation to the operation of pawnbrokers and the high interest
rates often charged. The Financial Counsellors Association of NSW (FCAN) stated
...they do charge quite large interest rates – something like 25
per cent a month...Quite often people cannot manage that interest either and they
end up signing over those goods to the pawnbroker. Except for legislation
changes, I do not know what would be possible to stop that happening.
9.42 One witness
noted that people struggling to 'make ends meet' and other people, such as
those with a gambling problem, often use pawnbrokers.
Cash Converters, which operates through a series of franchised shops and offers
both pawnbroking facilities and trading in second hand goods was also referred
to as a source of ready cash for many low income people.
9.43 Pawnbrokers are
not generally regulated by the Consumer Credit Code, except for unjust
transactions. Pawnbrokers (those who advance money on the security of pledged
goods) and traders in second hand goods are regulated by separate State and
Territory legislation. Pawnbrokers are seen primarily as dealers in second hand
goods rather than credit providers and some jurisdictions combine the
regulation of pawnbrokers and second hand dealers into the one Act. For
example, in Victoria they must be registered and abide by the provisions of the
Second-Hand Dealers and Pawnbrokers Act 1989 and the Second-Hand
Dealers and Pawnbrokers Regulations 1997. Some brokers are members of the
Pawnbrokers Guild of Australasia, a self regulating industry body.
9.44 That a
Ministerial Council on Pawnbroking be established to review the adequacy of
existing regulation of the industry.
9.45 Evidence pointed
to the need for more community education programs, starting in schools, to be
available to focus on educating people generally in understanding credit
contracts; understanding their rights as consumers of banking and finance
products; and providing the means for people to take control of their spending.
FCAN noted that:
When we go out and do education for community groups, people do
not understand how credit is charged. They do not understand the debt recovery
process. They do not understand that a signature binds them to a contract.
These are the things that are really important about financial literacy for
people. It should start in schools.
9.46 People from low
SES backgrounds or with a low standard of education are particularly vulnerable
and often have 'no idea' what a contract entails – 'they just want the money.
They have no ability to understand the contract'.
9.47 Witnesses argued
that more information should be provided by credit providers to allow borrowers
to make informed choices when purchasing credit. Clear, 'plain English'
information on the contract to be entered into needs to be given to the
purchaser by the credit provider before a contract is signed.
clients know nothing about their rights. Day after day and week after week we
have to go through the very basics of the law on debt recovery. This means that
disenfranchised people in poverty are easy prey to pressure, scare tactics and
undue harassment...[These people] do not have a clue what their rights are. The
credit providers damn well know that and exploit that to the maximum.
Committee Hansard 1.7.03, p.820 (Lismore Financial Counselling Service).
9.48 That State and
Territory Governments fund more community education programs in relation to
credit and credit-related matters.
9.49 That credit
providers be required to provide clear, 'plain English' information on credit
products to potential clients.
Funding of financial counselling
9.50 Groups argued
that there needs to be increased funding for financial counselling services to
enable them to provide for the high level of unmet need that currently exists
in the community.
One financial counselling service noted that in the first half of 2003 they
experienced a 30 per cent increase in the number of people approaching the
service experiencing severe financial stress.
counselling is a very cost effective way to alleviate financial crises and to
deliver strategies to allow people in poverty to address their financial
problems. FCAN noted that a recent cost-benefit analysis of financial
counselling services found that the ratio of benefits to costs for the
community generally was 2:1 – every $1 provided for these services yielded $2
in benefits in terms of costs of bankruptcy avoided; reduced debt recovery
costs; reduced demand for social security benefits; reduced absenteeism; and
reduced illness and related Medicare costs.
Commonwealth and State and Territory Governments increase funding to financial
9.53 Evidence to the
inquiry raised concerns in relation to the easy availability of credit and the
lending practices of some credit providers and the adverse financial impact
this has had on low income households in particular.
9.54 The Committee
believes that there needs to be greater regulation of credit providers to
minimise the 'debt traps' often faced by low income people; improved consumer
education on issues related to credit; and additional funding for financial
counselling services so that these services can expand their important work in delivering
strategies to allow people in poverty to address their financial difficulties.
The Committee believes that the recommendations it has made will address the
concerns expressed during the inquiry caused by the easy availability of credit
and the lack of effective regulation in this area.
9.55 Gambling, and
especially problem gambling, was identified during the inquiry as a significant
problem for many people on low incomes and a contributor to the incidence of
poverty amongst this group. While gambling in Australia takes many forms, the
primary focus of evidence to the Committee related to the proliferation of
poker machines in casinos, clubs and hotels.
emphasised the many negative impacts of gambling on the individual concerned,
their family and friends and the wider community, including relationship
breakdowns, problems at work, bankruptcy, violence, crime, depression and even
Evidence to the Committee argued that problem gambling is often a reflection of
other underlying financial, social or personal problems for the individual
You find that gambling, like any addiction, is usually secondary
to the initial problem. When you look at poverty, you look at family breakdown
and at unemployment. So you look at all these other triggers of which gambling
is just one of the symptoms.
9.57 Social reasons
such as the need to combat loneliness also play a part. One witness stated that
...gambling is there but all it is doing is putting people
further into debt – it is not making them poor; they are already poor. They are
poor people reaching out for some joy in their life – a quick fix – and
gambling is just one of the many that happen to be there.
9.58 A Productivity
Commission report into gambling estimated that there are over 290 000
people or 2.1 per cent of Australian adults that can be classified as 'problem
gamblers'. This number comprises 130 000 Australians (about one per cent
of the adult population) with 'severe' problems with their gambling and a
further 160 000 adults estimated to have 'moderate' gambling problems. Problem
gamblers comprise 15 per cent of regular (non-lottery) gamblers and account for
$3.5 billion in expenditure annually – about one-third of the gambling
industries' market. They lose on average $12000 each per year, compared with
just under $650 for other gamblers. The Productivity Commission report found
that the prevalence of problem gambling is related to the degree of
accessibility of gambling, especially gaming machines. It argued that policy
approaches to the gambling industries need to be directed at reducing the costs
of problem gambling – through harm minimisation and prevention measures – while
retaining as much of the benefit to recreational gamblers as possible.
9.59 Some evidence to
this inquiry also suggested that while gambling is a problem for some people,
the gaming venues such as clubs and hotels, provide a useful social outlet for
many people on low incomes who cannot afford other forms of entertainment.
pointed out the disturbing trend of the reliance of State Governments on gaming
revenues. The Productivity Commission noted that gambling taxation revenue
nearly doubled over the last 10 years and accounted for just under 12 per
cent of State and Territory governments' own-tax revenue in 1997-98, ranging
from 5.7 per cent in Western Australia to 15.2 per cent in Victoria.
In Tasmania alone, State Government revenue from gaming was $29 million in
1997-98, $46 million in 2000-01 and $40 million in 2001-02.
Submissions noted that gambling taxation is a regressive form of tax, with
lower income groups generally spending proportionately more on gambling – and
thus shouldering more of the burden of this tax impost.
Response to problem gambling by
increased State regulation
9.61 In response to
growing community concern about the social impact of gambling some States have
introduced increasing legislative controls in recent years. The notion of 'responsible
gambling' – the provision of gambling services in a way that seeks to minimise
harm to customers and the community associated with gambling – has been
imported into legislation and industry codes of practice.
In New South Wales, Victoria, Queensland and the ACT legislation has been
introduced to implement responsible gambling programs. However, responsible
gambling in South Australia, Western Australia, Tasmania and the Northern
Territory continues to be dealt with through self-regulatory codes of
9.62 The States have
adopted varying approaches to gambling regulation. NSW has adopted a 'whole of
industry' approach, with legislative amendments for all forms of gambling in
that State. The Gambling Legislation Amendment (Responsible Gambling) Act
1999 enables the Minister for Gaming and Racing to make regulations on
responsible gambling. These regulations can be made with respect to the
adoption of responsible practices in the conduct of gambling; the standards to
be observed for the purpose of preventing the misuse and abuse of gambling
activities; and prohibiting specified inducements that encourage the misuse and
abuse of gambling activities.
9.63 The gaming
machine regulations include detailed provisions on the provision of player
information, including the chances of winning prizes; the cashing of cheques;
the payment of winnings by cheque; cash dispensing facilities; advertising; gambling
promotions; and the display of information about problem gambling support
services. The Government also introduced a requirement for a social impact
assessment to be prepared where clubs or hotels apply to increase the number of
gaming machines they can operate.
In 2001, the NSW Government announced caps on the total number of gaming
machines in NSW and a cap on the number of machines in each club venue, while
maintaining the current limit on gaming machines in hotels. A number of harm
minimisation measures were also announced including a ban on 24 hour-a-day
gaming with gaming machine operations in clubs and hotels to be closed down for
6 hours each day; a ban on off-premises gaming machine-related advertising by
clubs, hotels and the Casino; a ban on the advertising, signage and other
material which may be seen from the outside of clubs and hotels and a
requirement that the Casino and all clubs operating gaming machines establish
formal links with one or more problem gambling counselling services.
9.64 In Victoria, the
Gambling Legislation (Responsible Gambling) Act 2000 restricts
the number of gaming machines at the Melbourne Casino to 2500 – while retaining
the State 'cap' of 30 000 machines; allows for the imposition of regional
limits on gaming machines in areas considered vulnerable to problem gambling;
prohibits 24-hour gaming venues in rural and regional areas (in metropolitan
areas, venues can apply for a 24-hour licence on certain conditions); provides
for a mechanism for local councils to have input into the placement of gaming
machines in their area; and gives the Government power to make regulations with
respect to the provision of relevant information about gaming to the players of
gaming machines; and the advertising of gaming.
9.65 The principal
harm minimisation measures that have been introduced are detailed below.
- smoking is banned in gaming machine areas in gaming venues;
- the provision of player information on the odds of winning is to
be provided; and a reduction in gaming machine spin rates below current levels
- gaming venues must be adequately lit and all gaming machines must
have the time of day displayed;
- limits apply on access to cash from ATMs and EFTPOS facilities;
cash withdrawals are prohibited from credit accounts from ATMs and EFTPOS
facilities; $100 note acceptors are banned on gaming machines; loyalty card
schemes are subject to tighter controls;
- all venues, except those approved for 24-hour trading, are
required to shut down for a minimum of four hours;
- restrictions on advertising apply – including a ban on
inappropriate advertising relating to the playing of gaming machines and a ban
on advertising that glamorises gambling; promotes gambling as a strategy to
improve a person's social status or financial position; or offers inducements
to start gambling on gaming machines.
commented favourably on recent Victorian Government initiatives, especially the
smoking ban which it was argued would have a significant positive effect.
Darebin City Council stated, however, that the issue of trading hours remains a
problem with local government unable to restrict trading hours for hotels and
clubs in Victoria. The Council noted that 'we have a venue directly opposite
the council that operates 24 hours a day, and we know a lot of people in our
area will end up there on a winter night for the free coffee, which is still
being provided, even though they have to smoke outside now'.
9.67 South Australia
recently introduced strict new Gambling Codes of Practice, to be implemented
early in 2004, to address problem gambling. The Codes will require gambling
venues to show the time of day in all gambling areas; display a warning message
in the form of a Helpline sticker on each machine, on gaming tables and on
ATMs; display responsible gambling information in English and five other
languages; prohibit the serving of alcohol to patrons at gaming machines;
ensure all staff receive training to help them identify problem gamblers and on
intervention techniques; and introduces advertising restrictions.
9.68 The deleterious
effect of the widespread availability of gaming machines in hotels and clubs
and the lack of effective regulatory controls in some States were commented on
during the inquiry. In the case of Tasmania, Mr Booth MHA commented that 'poverty
will not be overcome whilst the community is exposed to the current level of
readily accessible gaming machines'.
Anglicare Tasmania also commented that Tasmania:
...has all the worst practices that you see on the mainland, so we
have buses running from disadvantaged areas to the casino on payday, free tea
and coffee and child care provided, movies with children and those practices.
We have no betting limits on our machines and we have a monopoly by Federal
Hotels to provide all the machines...the community has consistently indicated in
surveys that they want no more gambling machines.
9.69 A number of
possible approaches were referred to during the inquiry to address the problem
of gambling, especially in relation to gaming machines. These included:
- the banning of gaming machines in hotels, clubs and other venues;
- a moratorium on further increases in gaming machines in hotels
and clubs and a moratorium on further licensed premises being granted gaming
- various harm minimisation measures, such as restrictions on
trading hours and improved information to gamblers, including the chances of
winning prizes, as outlined above;
- a ban on gambling advertising or limits placed on the promotion
and advertising of gambling;
- social and economic impact studies on the immediate and long-term
effects of any proposed expansion of gaming machines; and
- a review of the adequacy of current funding and services for
problem gamblers and their families.
9.70 The need for a
national approach to gambling with the Commonwealth taking a leadership role in
co-operation with the States, especially in light of the varied approaches
adopted by the States in relation to the regulation of gambling, was argued in
The Salvation Army noted that the Commonwealth had taken a positive leadership
role in relation to the Partnerships Against Domestic Violence initiative and
suggested that a similar approach would be useful in response to gambling and
its impact on individuals, families and the community.
9.71 The Committee is
concerned that gambling, and especially problem gambling, is having an adverse
impact on the lives of many Australians and is impacting on the incidence of
poverty and hardship in the community. The Committee recognises that gambling
provides a useful social outlet for many people unable to afford other forms of
entertainment and its concern is primarily focused on problem gamblers.
9.72 The Committee
considers that there needs to be a national approach to problem gambling that
addresses current deficiencies in the various State regulatory regimes without
interfering in the legitimate rights of recreational gamblers to participate in
this form of social activity. The Committee notes that at a recent meeting of
the Ministerial Council on Gambling the Commonwealth and the States supported
the development of a 'national framework' on problem gambling and requested
officials to develop a structure for the framework by April 2004, with a view
to it being endorsed by Ministers at the next meeting of the Council in 2004.
9.73 The Committee
acknowledges the positive role played by the Commonwealth in the Ministerial
Council and notes the future commitment stated by the Prime Minister in
correspondence to the President of the Senate that 'while state and territory
governments have primary responsibility for this issue, I remain committed to
the Australian Government providing strong national leadership in combating
9.74 That the
Commonwealth Government, in co-operation with State Governments through the
Ministerial Council on Gambling, continue the development of a national
approach to problem gambling, and that this approach examine:
- the adequacy of current regulatory mechanisms;
- the need for further harm minimisation and prevention measures;
- the adequacy of support services for problem gamblers and their
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