POKER MACHINE HARM REDUCTION TAX (ADMINISTRATION) BILL 2008
POKER MACHINE HARM MINIMISATION BILL 2008
ATMs AND CASH FACILITIES IN LICENSED VENUES BILL
2008
THE INQUIRY
1.1
The Poker Machine Harm Reduction Tax (Administration) Bill 2008 (the HRT
Bill) was introduced into the Senate on 14 February 2008 by Senator Fielding. On
12 March 2008 the Senate, on the recommendation of the Selection of Bills
Committee, referred the Bill to the Community Affairs Committee (the Committee)
for inquiry and report by 12 August 2008.
1.2
The Poker Machine Harm Minimisation Bill 2008 (the HM Bill) was
introduced into the Senate on 19 June 2008 by Senator Fielding. On 25 June 2008 the Senate, on the recommendation of the Selection of Bills Committee,
referred the Bill to the Committee for inquiry and report by 10 November 2008.
1.3
The ATMs and Cash Facilities in Licensed Venues Bill 2008 (the ATM Bill)
was introduced into the Senate on 4 September 2008 by Senator Xenophon.
On 4 September 2008 the Senate, on the recommendation of the Selection of
Bills Committee, referred the Bill to the Committee for inquiry and report by 10 November 2008.
1.4
The Committee subsequently agreed that due to the overlapping subject
matter of the three Bills, they would be combined into a single inquiry with a
reporting date of 10 November 2008.
1.5
The Committee received 75 submissions overall relating to the three Bills
and these are listed at Appendix 1. The Committee considered the Bills at
public hearings in Melbourne on 11 September 2008, Sydney on 12 September 2008 and Canberra on 25 September 2008 and 16 October 2008. The Committee also
conducted a site visit to the offices of IGT Australia at Rosebery in Sydney on
12 September 2008. Details of the public hearings are referred to in
Appendix 2. The submissions and Hansard transcript of evidence may be
accessed through the Committee's website at https://www.aph.gov.au/senate_ca.
THE BILLS
Poker Machine Harm Reduction Tax (Administration) Bill 2008
1.6
The purpose of the HRT Bill is to provide for the administration of a
poker machine harm reduction tax on gross revenue derived from poker machines payable
by licensed operators. The Bill also establishes the Poker Machine Harm
Reduction Transition Fund, to provide funding to help local community and
sporting groups and for research and community education for the prevention of
compulsive gambling, and counselling, treatment and rehabilitation of
compulsive gamblers.
1.7
The Bill is intended to administer a future Poker Machine Harm Reduction
Act 2008 which would impose a gradually increasing tax rate on the revenues
which licensed operators obtain from poker machines. Under the Bill the funds
generated from this tax must be credited to the Poker Machine Harm Reduction
Transition Fund. The purpose of the Fund is to make grants to: (a) provide
funding to local community and sporting groups to continue community
activities, in cases where such groups no longer receive funding from licensed
operators of poker machines; (b) support evidence-based compulsive gambling
treatment, rehabilitation, research and prevention programs; and (c) promote
community education encouraging responsible gambling practices and highlighting
the risks of compulsive gambling.
1.8
The Bill also establishes a Supervisory Board for the Fund consisting of
a chair and six members. A person is not eligible to be appointed to the
Supervisory Board unless they have: substantial experience or expertise; and professional
credibility and standing in respect of local community and sporting groups or
in the provision of compulsive gambling treatment and support services and
programs.
Poker Machine Harm Minimisation Bill 2008
1.9
The purpose of the HM Bill is to provide for the manufacture of gaming
machines and poker machines and the installation of automatic teller machines
and cash-back terminals that do not encourage problem and compulsive gambling.
1.10
In relation to gaming machines and poker machines the Bill provides that
a corporation must not manufacture, sell, or offer for sale or supply:
- a gaming machine or poker machine which accepts banknotes with a
denomination greater than $20;
- a gaming machine or poker machine which allows a player, by means
of entering banknotes to have more than $100 accumulated credit;
- a gaming machine or poker machine which allows a player, by means
of entering a gaming machine ticket, to have more than $100 of accumulated
credit;
- a gaming machine or poker machine which has more than one payline;
- a gaming machine or poker machine which enables a maximum bet
greater than $1;
- a smart card gaming machine or a smart card poker machine which
enables a maximum bet greater than $5 per spin;
- a gaming machine or poker machine that has a jackpot or a
linked-jackpot arrangement greater than $1000;
- a smart card gaming machine or a smart card poker machine that
has a jackpot or linked-jackpot arrangement greater than $2000;
- a gaming machine or poker machine that provides for free spins or
free games to be triggered during a game; or
- a gaming machine or poker machine that has a spin rate of less
than 5 seconds.
1.11
In relation to technical requirements for cash facilities in licensed
venues the Bill provides that a bank, credit union or other financial
institution must not operate (or allow to be operated on their behalf) a cash
facility that allows a cardholder to obtain, in any one transaction, or in
total transactions on any one day, on any one debit card or credit card an
amount of cash greater than $100.
1.12
The Bill also provides that a corporation must not manufacture, sell,
offer or expose for sale or supply a cash-back terminal that allows a player,
by means of entering a gaming machine ticket into the cash-back terminal, to
redeem more than $100 in a single transaction.
ATMs and Cash Facilities in Licensed Venues Bill 2008
1.13
The purpose of the ATM Bill is to limit and reduce the installation of
automatic teller machines and cash facilities in licensed venues.
1.14
In summary, the Bill restricts financial institutions, corporations and
persons from installing, owning or operating (or allowing to be installed,
owned or operated on their behalf) an automatic teller machine or other cash
facility at a licensed venue that allows a cardholder to obtain an amount of
cash. EFTPOS, credit card terminal or other cash facilities are allowed at
licensed venues provided they do not allow cash withdrawals. Where there are no
other cash facilities within a five kilometre radius of a licensed venue, the
Minister may exempt (conditionally or unconditionally) a financial institution,
corporation or person from this restriction.
BACKGROUND
1.15
On 26 August 1998 the then Commonwealth Treasurer, the Hon Peter
Costello MP referred an inquiry into Australia's gambling industries to the
Productivity Commission for report within twelve months. The Productivity Commission
was asked to report on:
- the economic impacts of the gambling industries, including
interrelationships with other industries such as tourism, leisure, other
entertainment and retailing; and
- the social impacts of gambling industries, including the
incidence of gambling abuse, the cost and nature of welfare support services,
the redistributional effects of gambling and the effects of gambling on
community development and the provision of other services.
1.16
On 26 November 1999 the Productivity Commission released the report Australia's
gambling industries. The report estimated around 130,000 Australians had
severe problems with their gambling and a further 160,000 were estimated to
have moderate problems, which may not require ‘treatment’ but were a policy
concern (in total about 2.1% of the adult population).[1]
1.17
Following the release of the report, the Commonwealth Government
established a Ministerial Council on Gambling aimed at achieving a national
approach to problem gambling. The Council consists of the Ministers with
responsibility for gambling in each jurisdiction and reports to the Council of
Australian Governments (COAG). The Ministerial Council on Gambling agreed to a
framework to minimise the negative consequences of problem gambling to the
individual, their family and the community through a national approach, known
as the National Framework on Problem Gambling 2004-2008. The Council
also established a national gambling research program, known as Gambling
Research Australia.
1.18
In a communiqué on 3 July 2008, COAG asked the Commonwealth Treasurer to
arrange for the Productivity Commission to update the 1999 inquiry into problem
gambling.[2]
On 25 July 2008 the Ministerial Council on Gambling met and agreed on priority
areas for new work to reduce harm from gambling which would occur alongside the
new Productivity Commission inquiry. The priority areas for new work were:
- helping individuals set their limits, including access to cash
and pre-commitment technologies;
- responsible gambling environments, through staff training and
problem gambler identification; and
- gaming machine standards, developing
mechanisms for better consumer protection.[3]
1.19
The Ministerial Council on Gambling also discussed the terms of
reference of the new inquiry and agreed to co-operate with the Productivity
Commission's important work. The terms of reference for the new inquiry will be
the original inquiry's terms of reference plus two additional terms of
reference to assess the effect of harm minimisation measures on the prevalence
of problem gambling and the effectiveness of broader strategies used by state
and territory governments.[4]
GENERAL ISSUES
1.20
A number of common issues were raised by witnesses and submitters which
related to all three Bills or more generally to poker machines and problem
gambling.
Problem gambling and poker machines
1.21
There are approximately 200,000 poker machines (also known as electronic
gaming machines or EGMs) licensed in Australia with the majority located in
clubs and pubs (187,000) and the remainder in casinos (12,000). The major
source of net gambling takings for 2004-05 was from poker machines in clubs,
pubs, taverns and bars reaching $8.7 billion or 56.3% of total net takings from
gambling.[5]
1.22
Research into gambling has consistently linked poker machines with rates
of problem gambling. The original Productivity Commission report in 1999 found
that the prevalence of problem gambling is related to the degree of
accessibility of gambling, particularly to gaming machines. It also noted that
'there has been a sharp rise in the involvement of women in gambling, which is
correlated with the increased access to poker machines'.[6]
A study in Victoria in 2003 found that a large majority of problem gamblers
spent most of their money on poker machines (85.1 per cent). This finding was
confirmed by several submissions and witnesses to the Committee's inquiry. For
example, Anglicare Victoria noted that anecdotal evidence indicated that
approximately 80% of people presenting to their services with 'chronic gambling
related behaviours use EGMs as their preferred method of gambling'.[7]
1.23
However some industry submitters suggested that a reduction in poker
machine problem gambling would not work to reduce problem gambling overall. For
example Mr Costello of Clubs Australia stated:
Australians like to gamble. If it is not on poker machines it
will be on other forms of gambling, including wagering, casino table games such
as roulette and blackjack, sports betting or at home unsupervised on the
internet...Making poker machines financially unviable for clubs or removing the
entertainment value from them will lead to an increase in less regulated forms
of gambling, and that has to be considered.[8]
1.24
Others argued that the evidence showed that people do not substitute one
form of gambling for another. Dr Zirnsak of the InterChurch Gambling Taskforce
argued that 'as a new product emerges, it tends to attract a new
population...[t]he level of swapping between different forms of gambling as the
favourite form of gambling does not appear to be that strong'.[9]
Research on problem gambling
1.25
The Committee received conflicting evidence regarding trends in the
prevalence of problem gambling in Australia. In part, this resulted from
different measurement tools being used. The two dominant tools used were the South
Oaks Gambling Screen (SOGS) and the Canadian Problem Gambling Index (CPGI).
1.26
A number of industry submitters and witnesses suggested that recent
evidence indicated problem gambling was trending down. For example the
Australian Gaming Council argued that while caution must be used in comparing
the Productivity Commission's results with more recent prevalence surveys,
findings suggest that problem gambling 'may be either stabilising or decreasing'.[10]
Similarly Tabcorp highlighted that the Chairman of the Productivity Commission
stated in 2007 that problem gambling prevalence was more likely to be down than
up.[11]
Clubs Australia argued that work done by state governments and industry had
reduced problem gambling by 50 per cent in the last decade.[12]
1.27
The Australian Hotels Association also stated that it thought that the
level of problem gambling has substantially declined since the Productivity
Commission report. Mr Healey stated:
...while any level of problem gambling is a concern, the level of
problem gambling in our community is not that great and the overwhelming number
of people who come into our venues and use gaming machines do so responsibly...[13]
1.28
However care providers and community groups such as the Central Coast
Problem Gambling Services noted their data indicated that 'those requiring our
services are increasing in number'.[14]
Professor McMillen, a gambling researcher, also stated that:
At a general level, evidence clearly shows that the prevalence
of problem gambling in Australia continues to be unacceptably high. Despite the
numerous harm minimisation strategies that have been introduced in various
States/Territories since the Productivity Commission’s 1999 inquiry, there is
no indication that problem gambling prevalence has declined.[15]
1.29
Tatts Group noted their view was that the prevalence rate in respect of
problem gambling will 'almost always be sitting somewhere in the vicinity of
2%' irrespective of the regulatory regime or the prevailing forms of gambling.[16]
1.30
The need for new national research into problem gambling was highlighted
by a number of submitters. Gambling Research Australia noted that while the
Productivity Commission report on gambling is 'nearly ten years old, it remains
the most recent national study of gambling'.[17]
Professor McMillen stated that since the Productivity Commission inquiry
there has been little policy evaluation and few comparative or national studies.
While some jurisdictions had commissioned studies in problem gambling, the
evidence used to guide policy development was usually restricted to each
particular state. She noted:
This fragmented approach has perpetuated policy inconsistencies
and knowledge gaps across the nation...it has become increasingly difficult to
distinguish between evidence-based research and advocacy, with both sides of
the political debate resorting to extreme claims and counter-claims.[18]
1.31
Other witnesses emphasised the difficulties in obtaining quality
research and data on problem gambling. Rev Reynolds of the Anglican Diocese of
Melbourne indicated that in Victoria it was 'very hard to get funding for good,
broad, quality research into problem gambling and those sorts of issues because
the state government does not want to put too much funding into that'.[19]
Associate Professor Hancock and Dr Livingstone spoke of an asymmetry of
knowledge between the gambling industry and the public, despite close
government scrutiny and regulation of poker machines. Similarly Dr Zirnsak of
the InterChurch Gambling Taskforce stated that the 'industry has a wealth of information
by which to market and target their product, whereas the regulator is highly
restricted in the information they take and in terms of that then flowing into
policy development'.[20]
1.32
Industry submissions argued that since the Productivity Commission inquiry
a number of harm minimisation strategies have been implemented and the industry
has developed and changed. As such, they argued that the most reliable evidence
available was outdated and that the any changes to policy approach to poker
machines should be postponed until the new Productivity Commission inquiry
reported its findings. Mr Ferrar of the Gaming Technologies Association
stated:
Real evidence is timely. It is only provided by independent,
objective, peer reviewed, published research...We believe that this evidence
based approach is the appropriate way to assess the current environment and
what measures might be worthy of consideration.[21]
1.33
Professor McMillen also argued that the 'need for evidence-based policy development
dictates that any national policy proposal should be deferred until the Productivity
Commission has completed its current investigations and more reliable
up-to-date evidence is available'.[22]
Costs vs. benefits
1.34
Submissions and witnesses from the gambling industry and the hotel and club
sectors emphasised the positive aspects of poker machine revenues for society.
These included increased employment, contributions to GDP and exports,
charitable donations and the provision of community facilities as well as tax
revenue to governments. For example the Gaming Technologies Association noted
that its 'members collectively employ around 2,200 Australians (at salary levels
significantly above the average) and generate export income for Australia of
around $1 billion annually'.[23]
Clubs Australia noted that:
Clubs are not-for-profit entities...Because clubs respond to
community needs rather than corporate return, they often are the source of key
investment in local capital expenditure in the community interest such as golf
courses, football fields and bowling greens. In addition, many clubs are
long-time sponsors of local charities and community groups. In NSW alone, clubs
in the last ten years have given over $1 billion to charities and community
groups.
1.35
Mr Costello of Clubs Australia noted that:
The clubs borrow against revenue to buy new land, build new
facilities and maintain those existing sporting facilities. By legislating to
ban poker machines and reducing the revenue that clubs earn from them, clubs
will be unable to meet their liabilities, and these invaluable assets will be
lost from the community forever.[24]
1.36
Others such as Ms Rees submitted that poker machines should be removed
from hotels but not 'clubs that raise revenue for community activities' as the
income generated by poker machines is 'a vital revenue opportunity for clubs
struggling to survive and must be linked to local community projects' .[25]
The Cardiff RSL outlined the important social role their club played in the
community 'including the sponsorship of sporting teams to the club facilities
provided to benefit patrons and members'. They noted that these community links
are maintained by club revenue, 65% of which is provided by poker machines.[26]
1.37
The Gaming Technologies Association noted that the aggregate taxation
yield from EGMs in Australia was reported as $2.8 billion in 2005-06. They
suggested that the funds gained from gambling taxation and levies 'have been
utilised for a myriad of projects, including problem gambling helplines,
treatment, counselling and community education services'.[27]
1.38
However Dr Livingstone argued that there had not been a national
assessment of the costs and benefits of poker machines since the 1999
Productivity Commission inquiry. He suggested that 'the net benefits to Australia
from gambling industries collectively could be as much as zero... perhaps
negative'.[28]
Associate Professor Hancock stated that governments were not committed to
counting the costs of problem gambling in ways similar to other areas of social
harm such as alcohol, tobacco or illegal drugs. She noted:
...if we counted for gambling what we count for drugs we would
know a lot more about the downside and the costs...we do
not really know the actual extent of the harm because it is not counted. I
would argue that it is not counted because state governments have a real
problem in counting the costs as they are so reliant on the revenue.[29]
1.39
Anglicare submitted that it must be understood that the tax revenues
that governments receive from gambling. '...comes at a cost, both to the
individual and to the community'.[30]
Similarly Dr Zirnsak of the InterChurch Gambling Taskforce stated:
...the costs tend to be borne by the individual, their family or
their immediate community and are often hidden. To some degree the state
governments escape having to pick up the costs—the costs are actually
transferred back to the individual, their family and the community, and are not
borne by the state.[31]
1.40
The Australian Gambling Review commissioned by the Independent
Gambling Authority of South Australia noted there were a number of costs from
the gambling industry. These included that gambling diverts expenditure and
consumption away from other sectors of the economy and that gambling also gives
rise to significant social costs (or negative externalities) because of the
significant numbers of people who develop problems as a result of gambling. It
noted:
The financial losses, psychological distress, breakdown in
relationships, loss of productivity and employment, and the legal consequences
of gambling-related crime are all significant costs that are borne by the
Australian community, the Government, and the economy.[32]
1.41
There were concerns raised that poker machines were being concentrated
in lower socio-economic areas where the population base was inherently more
vulnerable.[33]
Associate Professor Hancock noted that some of the most disadvantaged areas in
Australia are those with the highest per capita gambling losses.[34]
However Mr Gibson representing the Gaming Technologies Association disagreed.
He stated that:
Our experience is that machines are placed where the demand
occurs—where the population in that local area seeks to use those machines. To
me, there is an element of elitism in this whole debate about machines, where
they are placed, the people who play them and the choices that they make. I
think it tends to ignore, in the vast majority of cases, the lifestyle choices
that people make and that people in certain locations choose to entertain
themselves on gaming machines and expend their disposable incomes in that way
rather than in other ways.[35]
Federal intervention
1.42
A number of witnesses and submitters argued that federal leadership in
relation to poker machine problem gambling was needed as state and territory
governments had become reliant on the tax revenue generated by poker machines.[36]
For example Associate Professor Hancock noted that a large proportion of poker
machine revenues are derived from problem gamblers and described the reliance
of state governments on this revenue stream as an 'unethical dependence'.[37]
1.43
Professor McMillen suggested that state governments were wary of federal
intervention and that there was little consistency in the approaches of state
governments to the regulation of poker machines and harm minimisation.[38]
While she considered that the Bills being considered had fundamental weaknesses
she did support a more comprehensive approach to problem gambling. She stated:
Although each bill addresses important aspects of gambling
policy, all these elements are interrelated and should not be considered as
separate issues. Gambling reforms should be considered in the broader context
of how they might impact on all existing policies and practices and on the
public interest in all states/territories.[39]
1.44
In contrast the Australian Casino Association argued that, in relation
to the HM Bill, a one size fits all approach was not preferable in relation to
problem gambling. They stated that the most appropriate regulatory control was
one which was state and territory based.[40]
SPECIFIC ISSUES
The Poker Machine Harm Reduction Tax
(Administration) Bill 2008
Destination gambling
1.45
The HRT Bill proposes to impose a progressively increasing tax rate on
licensed operators of poker machines, however the tax is not payable by casino
or horse racecourse operators. This measure was seen as promoting a destination
model of gambling, where poker machines were concentrated in a more limited
number of locations rather than being widely distributed amongst clubs and
hotels.
1.46
Some submitters and witnesses highlighted the differences between Western
Australia and other states and territories in terms of destination gambling.
In Western Australia, poker machines are only licensed in a large casino rather
than distributed in clubs and hotels.[41]
The Western Australian Department of Racing, Gaming and Liquor noted that by
restricting EGMs to a single location in that jurisdiction, fewer people have
access to poker machine gambling and that this '...has contributed to Western
Australia having the lowest prevalence of problem gambling...'.[42]
1.47
The InterChurch Gambling Taskforce was supportive of the concept of
destination gambling, noting that accessibility was a key factor in problem
gambling. They argued 'a smaller number of venues with higher numbers of EGMs
is likely to reduce problem gambling compared to a larger number of
geographically dispersed venues with a fewer number of EGMs each'.[43]
Similarly Associate Professor Hancock consider there was 'lot of evidence to
support destination gambling as opposed to suburbanised and localised gambling'
noting that 'opportunistic gambling is what puts people at risk'. However she
also considered that a destination gambling approach could be improved by
player tracking and more protections in 'racinos and casinos'.[44]
1.48
However other submissions did not support a destination gambling
approach. Ms Borrell, a gambling researcher, argued it was not appropriate for
poker machines to even be at destination venues. She noted that:
...there is evidence that larger gaming venues have features that
are enticing for EGM gamblers such as large linked jackpots, the ‘buzz’ of a
large crowd for excitement and company and greater chances of remaining
anonymous.[45]
1.49
Professor McMillen argued that while convenient access is known to be a
factor in gambling expenditure the direct links between venue location and
problem gambling are less certain. She noted:
Evidence suggests that people will travel long distances to
gamble; and that venues in central urban locations (at transport hubs where
many people work, shop and seek entertainment) attract patronage from wide
areas - i.e. the catchment areas for city venues such as casinos are relatively
large.[46]
1.50
Mr Ryan of Responsible Gaming Networks highlighted that destination gambling
had been the subject of review by the Victorian Department of Justice which had
concluded that given 'the uncertainty of the potential benefits in reduced
problem gambling and the probability of associated economic and community costs
from a reduction in existing gaming opportunities, it is not possible to form a
view that destination gaming would result in a net community benefit for
Victoria'.[47]
1.51
While supporting the removal of poker machines from pubs and clubs the
Gambling Impact Society (NSW) considered that racetracks should not be excluded
from the HRT Bill as most racetracks are located in country areas where few
other provided entertainment venues exist.[48]
Taxation
1.52
The efficacy of increased taxation on problem gambling was another issue
raised in relation to the HRT Bill. The InterChurch Gambling Taskforce
supported higher taxes on poker machines as the taxes would 'maximise the
benefits to the community' and considered it was better for poker machines
profits to go into tax revenue rather than to industry.[49]
However Unitingcare Wesley Adelaide noted their concerns that demand for poker
machines is highly price inelastic for problem gamblers, meaning the level of expenditure
would remain the same despite the higher price. They stated:
Specifically our concern is that people with gambling problems
would end up spending even more than they do now on poker machines, further
exacerbating the gambling problems.[50]
1.53
Similarly Professor McMillen argued that 'there is no evidence that
higher tax rates are a disincentive to gambling participation or expenditure'
and taxes on gambling are regressive in that they tend to affect people on
lower incomes more than other groups, 'as gambling takes a greater share of
their disposable income'. She also noted that the original Productivity
Commission inquiry had found that 'taxes are not an effective instrument for
managing problem gambling'.[51]
1.54
But Professor McMillen also indicated that overall growth in gambling tax
revenues had slowed from the period when the Productivity Commission reported.
She stated:
Gambling taxes vary from State to State as well as between (and
within) different forms of gambling. The general trend in all jurisdictions,
however, has been for governments to agree to tax concessions under pressure
from the gambling sector. In many jurisdictions, tax rates for gaming machines,
casinos and wagering have been progressively lowered since the 1990s as market
competition increased.[52]
1.55
Duty of Care supported the HRT Bill but recommended that the initial
rate of tax of 1 per cent be increased to 5 per cent of poker machines profits
and that increments of 5 per cent per annum replace the 1 and 2 per cent. They
argued that to be effective in making poker machines unsustainable in hotels
and clubs the imposed tax must exceed the annual profits that the industry
receives.[53]
Financial viability of hotels and
clubs
1.56
Industry witnesses and submissions highlighted the potential impacts of
the HRT Bill on the viability of their businesses and organisations. The
Australian Hotels Association emphasised the importance of their sector, noting
that in 2005-06 there were 2,362 pub, tavern and bar businesses operating in Australia
with gambling facilities who employed around 65,000 people. While main source
of income for these businesses was sales of liquor and other beverages (57.6%),
gambling revenue represented 28.3% of their income which was almost entirely
sourced from poker/gaming machines. [54]
They noted that:
...the removal of EGMs from hotels as proposed under the current Bill
would... have devastating consequences for the financial viability of hotels,
particularly those in regional communities and flow to employment, suppliers
and State revenues.[55]
1.57
Similarly Clubs Australia stated that the introduction of the tax
proposed in the HRT Bill 'would be the end of the Australia Club Movement'.
They noted that clubs operated approximately 60 per cent of the poker machines
in Australia and rely on gaming for around 65 per of their revenue. In 2005-06
there are approximately 4000 clubs employing 65,000 people, with around 1800
clubs offering gambling services. Without the revenue provided by poker
machines, they stated, 'clubs would close and jobs would be lost'. [56]
1.58
The Australian Hotels Association argued that substantial investments
had been made by businesses based on the assumption that the revenue stream
provided by poker machines would be available long term.[57]
Mr Healey stated:
...we have an industry...that has a large amount of capital
investment, whether it is in hotels, casinos or clubs; and that has been built
in an environment where the products we sell are seen as legally available to
the public. It is an industry that is highly regulated. Any change to that—...revenue
and the operating environment of our businesses—needs to be looked at in the
context of what it will do to our industry.[58]
1.59
Other witnesses noted that poker machines are a relatively recent
addition to pubs and clubs and that these businesses and organisations continue
to exist in Western Australia where poker machines are not licensed.[59]
However Mr Healey of the Australian Hotels Association argued that, in part,
this was because of the particular liquor licensing laws in that jurisdiction.
1.60
In relation to the Transition Fund proposed by the HRT Bill the Gaming
Technologies Association submitted that 'there is no utility in imposing an additional
tax on a licensed poker machine operator that is also a sporting club or hotel,
only to then make a grant to potentially the same club or hotel'.[60]
Dependence on further legislation
1.61
Section 53 of the Constitution provides that 'Proposed laws
appropriating revenue or moneys, or imposing taxation, shall not originate in
the Senate'. The HRT Bill is intended to administer a tax imposed by the Poker
Machine Harm Reduction Tax Act 2008, a piece of legislation which has not yet
been introduced in the House of Representatives, and which cannot be introduced
in the Senate. While the practice of separating tax administration and tax
imposition bills is a long established one in the Commonwealth, the HRT Bill
would not be able to meet its objective of providing for the administration of
a poker machine harm reduction tax until such time as a future a Poker Machine
Harm Reduction Tax Bill was enacted.
The Poker Machine Harm Minimisation
Bill 2008
Pre-commitment
1.62
The HM Bill contemplates the introduction of a pre-commitment system for
poker machine players, for example, through the definition of smarts cards
registered with 'a maximum fortnightly monetary credit of $1,000,
pre-registered at least one week in advance'. A number of submitters and
witnesses supported the introduction of a pre-commitment system for poker
machines to assist problem gamblers to play responsibly. The Committee also
received submissions from two companies involved with pre-commitment
technological solutions for poker machines, including USB and smartcards, Regis
Controls and Responsible Gaming Networks.[61]
1.63
The $1,000 per fortnight player pre-commitment limit in the HM Bill was
seen as too high by Mr Ryan of Responsible Gaming Networks. He stated:
We would argue that the government should not mandate a spend limit;
players should be provided with a mechanism to establish their own loss limits,
which they will hold in greater regard and respect than those mandated by third
parties. The current spend limit in the current bill encourages players to
spend twice as much as problem gamblers identified in the Productivity
Commission report.[62]
1.64
However the InterChurch Gambling Taskforce noted that research
commissioned by Gambling Research Australia on gamblers pre-commitment
behaviour had indicated that half (51%) of regular Australian gamblers admitted
to not always calculating the affordability of their gambling. They argued:
The GRA research on pre-commitment demonstrates that it would be
flawed strategy for governments in Australia to rely on people making informed
choices, including setting themselves limits that they stick to, as the only
measure to curb the risk and prevalence of problem gambling.[63]
1.65
Submitters and witnesses highlighted a number of issues involved the
rollout of a pre-commitment system including the problems of multiple systems operating
simultaneously, accurate identification of players and privacy concerns. Gaming
Technologies Association argued that the pre-commitment system in the HM Bill
was 'ill-conceived' as players who had set limits using a smart card could
still continue playing on conventional poker machines.[64]
This view was shared by Duty of Care which noted:
Nothing in this bill prevents poker machine addicts, who have
spent most of their money on machines without technologies, then moving to
machines with them, or vice versa. It is our committed position that all poker
machines be fitted with smart technologies and a precommit system...[65]
1.66
The Gaming Technologies Association also expressed their concerns
regarding potential upgrades to poker machines to impose a pre-commitment
system. Mr Ferrar noted:
Gaming machine manufacturers regard the integrity of the
equipment as paramount. They are, after all, devices that are dealing with cash
transactions frequently. The idea of bolting on a device is somewhat going in
the wrong direction as far as gaming machine manufacturers are concerned.[66]
1.67
The Australian Hotels Association expected the cost of implementing a
pre-commitment system to be prohibitive.[67]
Mr Costello of Clubs Australia estimated the costs of upgrading poker
machines to use a smart card or USB technology pre-commitment system was $2,500
per machine for the approximately 200,000 machines in Australia.[68]
$100 withdrawal limits
1.68
The Australian Bankers' Association argued that the $100 withdrawal limits
outlined in the HM Bill should be implemented at the ‘ATM level’, and therefore
involve 'ATM deployers', rather than banks and other financial institutions who
are 'card issuers'. They stated:
A ‘card issuer level’ option would impose significant costs on
all card issuers and all customers and have significant ramifications and
complexities for the payments system (undermining the cost-effectiveness and
efficiency of the network).[69]
1.69
They argued any further restrictions on ATM access to cash at licensed
venues should acknowledge the 'limitations (cost, timing and technical
capabilities) with technology, functionality and interoperability of bank and
non-bank branded ATMs and EFTPOS facilities'.[70]
1.70
The ATM Industry Reference Group represented the businesses which deploy
almost all the ATMs located in licensed venues. They argued that while their
members had the available technology to limit withdrawals from ATMs at licensed
venues the limit of $100 proposed in the HM Bill was 'unreasonably low'. They
noted Victorian Government legislation with a maximum withdrawal limit within a
24 hour period of $400.[71]
They highlighted that reducing access to cash would 'unintentionally catch many
parts of a pub or club business that have nothing to do with gaming or problem
gamblers'.[72]
1.71
The InterChurch Gambling Taskforce broadly supported the measures in the
HM Bill but did not support ATMs within EGM venues being limited to $100 per
day as they would prefer ATMs being removed from EGM venues.[73]
1.72
The Western Australian Department of Racing, Gaming and Liquor noted
that it was supportive of a new code or standard relating to cash withdrawals
from ATMs and EFTPOS facilities in and around gambling venues in 2006. However
the Ministerial Council on Gambling had agreed that the financial transaction
sector would not voluntarily introduce changes and it was consequently accepted
that without Commonwealth legislation, it was not possible to implement daily
cash restrictions on ATMs.[74]
Other harm minimisation issues
1.73
The Australian Casino Association argued that many of the harm
minimisation measures in the HM Bill had already been considered and rejected
by state and territory regulators as being not effective in dealing with
problem gambling. They also stated the measures would make all existing
machines in Australia illegal to operate.[75]
Similarly Gaming Technologies Australia also noted that the scope of the HM Bill
may affect Australian manufacturers making poker machines for export.[76]
They also stated:
Most of the measures outlined in the Bill have been extensively
canvassed in the past and the research that has been undertaken has
demonstrated that they will not result in any improvement in rates of problem
gambling. Rather, the consequences will be that venues will suffer significant
declines in revenue, recreational gamblers will have their enjoyment curtailed
and no social benefit will occur.[77]
1.74
Professor McMillen indicated that where assessments have been undertaken
on some harm minimisation measures (including some in the HM Bill) 'research
has indicated that the measures in place have had little positive effect,
sometimes because venues and patrons take advantage of fundamental flaws and
deficiencies in policy design'.[78]
She stated:
Although community groups have strongly supported the new
policies, there is little evidence to indicate whether responsible gambling
policies have achieved their main objectives (reduction in the level of problem
gambling prevalence and community harm), or which harm minimisation strategies
are effective in reducing gambling problems and which are not.[79]
1.75
However the Festival of Light highlighted a NSW study of problem gambling
in 2006 which indicated that:
‘At risk’ gamblers (moderate/problem) show a clear preference
for linked jackpot gaming machines, higher denomination machines, note
acceptors, and gamble more lines per bet and more credits per line. Problem
gamblers are also significantly more likely to use venue ATMs for cash
withdrawals to be spent on gambling.[80]
1.76
The InterChurch Gambling Taskforce argued note acceptors should be
completely removed from poker machines rather than limited. They suggested that
removing note acceptors would help slow down the intensity of play for people
with gambling problems and would force people to take breaks to change money
into coins to continue to play.[81]
However the Gaming Technologies Association argued that restriction in relation
to note acceptors on poker machines were unlikely to reduce problem gambling.
They stated:
The proposed measures on note acceptors and ticket readers to
limit the size of notes accepted to $20 and the total accumulated credit to
$100 have been trialled in some jurisdictions and have not resulted in any
discernible difference in the amount of money expended nor the amount of time
spent playing machines.[82]
1.77
In relation to the $1 bet limit proposed in the HM Bill, Duty of Care
suggested this limit was too high noting that even a maximum bet limit of 50c
allows gamblers to potentially spend $360 per hour.[83]
In contrast the Australian Hotels Association noted that each Australian
jurisdiction has established a maximum bet limit for their jurisdiction and
highlighted the impact of inflation on these maximum bet limits, many of which
have not been adjusted for a number of years.[84]
1.78
The $1000 jackpot limit in the HM Bill received mixed support from
community groups. Mr Fitzgerald of the InterChurch Gambling Taskforce noted
that large prizes can encourage an increase in gambling expenditure, as
gamblers chase the possibility of a large win or look to recover their losses.
He stated:
...setting an upper limit of $1,000 would remove the incentive
for gamblers to gamble more than they otherwise would in pursuit of that large
payout or the recuperation of losses.[85]
1.79
However Ms Pinkerton of Duty of Care suggested that the jackpot limit
should be $500, noting that 'for pensioners, the unemployed and the working
poor, a $1,000 payout represents around five weeks income, making it a very
attractive proposition that is worth taking the risk for'.[86]
The ATMs and Cash Facilities Bill
2008
Accessibility to ATMs
1.80
Many witnesses and submitters saw accessibility to ATMs as a key issue
for problem gamblers using poker machines. For example the InterChurch Gambling
Taskforce noted that research indicated that moderate-risk and problem gamblers
make significantly more withdrawals from ATMs than non-problem or low-risk
gamblers.[87]
Mr Poole of the Central Coast Problem Gambling Service noted most problem
gamblers which he dealt with 'report regularly going back and forth to the ATM
machine in the gaming venue'. He stated:
For a lot of them the symptoms whilst they are gambling are very
similar to those of alcoholism: they go into blackouts, they lose time and they
cannot remember their actions, but then when they go and check their ATM
withdrawals or their bank account the next day they can see numerous
withdrawals from ATM machines that were at the venue...It would be a fantastic
first step to get ATMs out of the gaming venues.[88]
1.81
Similarly the Gambling Impact Society (NSW) argued that forcing players
to take breaks by locating ATMs away from venues would assist problem gamblers.
They stated:
ATMs within the player's venue, and only a few steps away from
the EGM, will not interrupt this state of mind when approached and so will not
prevent him from withdrawing more and more cash.[89]
1.82
Mr Chappell of the Independent Gambling Authority in South Australia
told the Committee in his view access to cash was a critical factor in people
controlling their behaviour. He stated:
It is quite clear that access to cash it
is a clear and burning issue and, in the absence of any other way of giving
people the means of controlling their behaviour in-venue, access to cash is an
excellent proxy for giving people the ability to commit to expenditure.[90]
1.83
However Professor McMillen outlined her own research on problem gambling
and access to ATMs. Her research on clubs in the Australian Capital Territory
found that 'the removal of ATMs is likely to be a relatively minor and
temporary barrier for many people with gambling problems', 'would inconvenience
a significant proportion of ACT club patrons, recreational gamblers and
nongamblers' and that 'a daily limit on the amount that can be withdrawn from
ATMs and EFTPOS would be a more effective and acceptable harm minimisation
strategy'.[91]
1.84
Dr Livingstone, another gambling researcher, disagreed stating:
Studies in Australia, in particular into the relationship
between ATM accessibility and problem gambling, generally have been quite
inadequate. But there is certainly enough evidence to indicate that access to
ATMs fuels excess expenditure on the part of problem gamblers in particular.[92]
1.85
Industry submissions and witnesses focussed on the impact of removing
ATMs from licensed venues on their customers, the majority of whom did not use
poker machines. For example, the Australian Hotels Association estimated that
60 to 70 percent of sales in their venues are not related to gambling. The ATM
Industry Reference Group argued that the complete removal of ATMs from licensed
venues, as proposed in the ATM Bill, would 'do severe damage to Australian
communities' by removing approximately 25 per cent of all ATMs across the
country and disadvantaging the majority of ATM users who are not problem
gamblers and 'who simply want safe and convenient access to their funds'.[93]
Mr Glen of the ATM Industry Reference Group told the Committee:
There is one reason and one reason alone why ATMs are located in
Australian pubs and clubs: they are cash based businesses. This is because
almost every transaction performed at these venues is relatively small and the
most efficient method to settle small payments is cash, whether it is to buy a
round of drinks or something to eat or to have a flutter on the TAB. [94]
1.86
The Australian Bankers' Association argued that the other harm
minimisation measures should be used to reduce the harm caused by problem
gambling and noted that the removal of ATMs from licensed venues would 'have a
substantial impact on the ability of all customers to access their money'.[95]
Clubs Australia noted that ATMs are already restricted from being located in
gaming areas under law in all Australian jurisdictions. They argued:
To further prohibit access to cash facilities in clubs is
unreasonable for cash businesses in the 21st Century. Cash is used by club
patrons for purchasing a wide range of non-gambling goods and services
including food and beverage, live entertainment and sporting facilities.[96]
1.87
However some submitters did not see the removal of ATMs from licensed
venues as a significant inconvenience to patrons as EFTPOS facilities would
still allow people to pay for goods and services.[97]
For example Dr Livingstone acknowledged that the removal of ATMs was not a
complete solution to problem gambling and that some non-gamblers would be
inconvenienced by the removal of ATMs from licensed venues. However because of
access to other payment methods such as EFTPOS and credit cards, Dr Livingstone
argued the impact of the removal of ATMs would be 'quite negligible'.[98]
1.88
Industry submitters did not see increased use of EFTPOS as a viable
alternative to cash. The ATM Industry Reference Group noted that EFTPOS
terminals cannot provide account balances which represented 10 to 12 per cent
of all ATM transactions. Mr Glen stated:
EFTPOS is not an effective alternate payment channel or cash
source in pubs and clubs. It is slow, labour intensive and requires exposing
staff to larger volumes of cash, which adds to the risks in an industry which
is already a key target of armed robbery.[99]
1.89
The ATM Industry Reference Group highlighted the other harm minimisation
measures relating to ATMs which were already operating in most Australian
licensed venues. These included: no cash withdrawals accessed from credit
cards; maximum amounts per transaction in various states; placement of ATMs
away from gaming machines and messages on ATMs about the risks of gaming.[100]
1.90
In contrast the InterChurch Gambling Taskforce argued that removing ATMs
from licensed venues was the most effective harm minimisation strategy. In part
this was because people with a gambling problem are likely to have multiple ATM
cards, which will defeat any measures that limit the daily withdrawals from
ATMs. They also noted that the Victorian government had already committed to
removal of ATMs from licensed venues by 2012. [101]
1.91
Clubs Australia considered that the exemption in the ATM Bill, providing
for cash withdrawal facilities in licensed venues where no other withdrawal
facility exists within five kilometres would be unavailable to the great
majority of venues. The InterChurch Gambling Taskforce supported the removal of
ATMs from licensed venues but also supported an amendment to the proposed
exemption. The Taskforce argued the criteria for allowing an exemption should
be specified in the legislation rather than being left entirely to the
discretion of the Minister.[102]
CONCLUSION
1.92
The three Bills considered by the Committee have been useful in focusing
attention on the relationship between poker machines, the availability of ATMs in
licensed venues and problem gambling. For policy makers, poker machines are a controversial
form of popular entertainment. While many Australians can responsibly enjoy playing
poker machines there are a small number of problem gamblers who cannot. For
those problem gamblers, their families and their communities the consequences
of poker machine problem gambling can be profoundly negative. The Committee was
particularly concerned regarding the increase in women problem gamblers over
the last decade and the link to poker machine gambling.
1.93
The Committee shares the concerns expressed by many submitters that
conflicts of interest may exist in relation to poker machines because of the
revenues which problem gamblers generate, either directly or indirectly, for
poker machine manufacturers, for organisations and businesses which offer poker
machines to the public and for governments through taxation. The Committee is
also concerned regarding the apparent lack of advocacy for the victims of
problem gambling and their families. As the members of the Central Coast
Problem Gambling Service noted, the people most adversely affected by gambling do
not have significant resources to support organisations to advocate on their
behalf.[103]
1.94
The Committee acknowledges that Australian governments, businesses and
community organisations have supported a variety of harm minimisation measures
directed at problem gambling. In particular, the Committee notes the ongoing
work by the Ministerial Council on Gambling in developing a national approach
to tackling problem gambling and the recent agreement on priority areas for new
work to reduce harm from gambling.[104]
The Committee also notes the significant research funded by governments through
Gambling Research Australia. However the Committee is concerned that a comprehensive
national assessment of the prevalence of problem gambling and the most
effective harm minimisation strategies has not been undertaken since the
Productivity Commission inquiry in 1999.
1.95
The poker machine sector has significantly changed over the past decade.
Developments in technology potentially offer new solutions to poker machine
problem gambling, including through pre-commitment systems and player tracking
to identify problem gamblers. The three Bills considered by the Committee
demonstrate that there are a range of different views as to the most effective
legislative approach to poker machine problem gambling. An evidence based policy
approach is the best strategy to addressing the harms caused through problem
gambling on poker machines. The anticipated Productivity Commission inquiry is
well-placed to provide all stakeholders with reliable national research and
data on this important issue.
Recommendation 1
1.96
In view of the anticipated Productivity Commission inquiry into
Australia's gambling industries, the Committee recommends that the Poker
Machine Harm Reduction Tax (Administration) Bill 2008, the Poker Machine Harm
Minimisation Bill 2008 and the ATMs and Cash Facilities Bill 2008 not be passed
at this time.
Senator Claire
Moore
Chair
November 2008
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