Wednesday, 17 May 2023
Bills
Gambling Taxation Bill 2023
Gambling Taxation Bill 2023
Second reading
Debate resumed on motion of Tim Pallas:
That this bill be now read a second time.
Brad ROWSWELL (Sandringham) (11:31): I rise as the opposition’s lead speaker to address the Gambling Taxation Bill 2023, and in doing so I would like to acknowledge the contribution in the Council of my colleagues Shadow Minister for Casino, Gaming and Liquor Regulation D O’Brien and Shadow Minister for Racing T Bull, who assisted me in preparing the legislation report that has been considered by not only our shadow cabinet but our joint party room as well. I am also grateful from the outset for the engagement with industry stakeholders, of which there have been many. I am grateful to each and every one of them for the way in which they have engaged quite helpfully in assisting the opposition in formulating a view on the bill before the house and the position which this side of the house has come to as well.
I might say that this bill is being considered separately to a bill that was considered in the chamber yesterday, being the Gambling Regulation Amendment Bill 2023. But both bills, the Gambling Regulation Amendment Bill 2023 and the Gambling Taxation Bill 2023, that we address today should not in my view be seen as two separate bills. They are very much intertwined, they are very much interlinked, as demonstrated by the government via their bill briefing for the opposition, which I am also grateful for. The government extended the invitation to the opposition to receive a bill briefing not on simply two separate bills, but we covered off both bills together because there is a great link between them.
Of course the topic du jour, the key matter here, is an ongoing viable racing industry in Victoria. From the outset I just want to note some of the very significant facts relating to Victoria’s racing industry. I am told that the value-added contribution of Victoria’s racing industry totals something like $4.7 billion and taxes generated by the industry, which go into the coffers of the government, total just over half a billion dollars. There are something like more than 15,000 Victorians directly employed by the Victorian racing industry, and there are just over 19,000 indirect jobs as well. So that is the context. We on this side of the house do want an ongoing viable racing industry in this state. We also understand that the racing industry wants to contribute back to our Victorian community, and I will go into that in some detail during the course of this contribution.
The purpose of this bill is to introduce new and strengthened casino tax arrangements from 1 July this year, which will be administered by the commissioner of state revenue as a taxation law under the Taxation Administration Act 1997. This bill also proposes to extend the application of the Taxation Administration Act 1997 to cover casino taxes payable by the casino operator, which addresses a recommendation of the Royal Commission into the Casino Operator and Licence, and to consolidate provisions for and amend various gambling taxes by repealing the existing provisions for keno tax and wagering and betting tax imposed under the Gambling Regulation Act 2003 and re-enacting them to provide a single legislative vehicle to address gambling taxes administered by the commissioner. It proposes to make consequential amendments to the Casino Control Act 1991, the Casino (Management Agreement) Act 1993, the Gambling Regulation Act 2003 and the Taxation Administration Act 1997 to transfer the responsibility for collecting and administering casino taxes from the Victorian Gambling and Casino Control Commission to the commissioner and to enable the relocation of the keno tax and wagering and betting provision from the Gambling Regulation Act 2003 to this legislation. Finally, the bill proposes to increase the existing point-of-consumption tax (POCT) from 10 per cent to 15 per cent, in line with New South Wales.
For those playing along at home, let me break that down into some simpler language. This bill, I think, can be seen in two parts. The first relates to changes to Crown Casino’s taxation rate. Currently electronic gaming machines – otherwise referred to or known as poker machines – operated by Crown Casino are taxed at different rates to those operated by club venues. Crown Casino’s pokies are taxed at a flat rate plus a community benefit levy of 1 per cent. This bill proposes that from 1 July 2023 Crown Casino’s pokies be subjected to the same tax rate as pokies operated by club venues. The decision to tax Crown Casino at a higher rate follows the government’s response to the royal commission into the casino operator. This change is expected to raise an additional $30 million a year in revenue for the government.
The second part of this bill relates to the point-of-consumption tax. It is currently at 10 per cent in Victoria and this bill will increase that to 15 per cent. In relation to the point-of-consumption tax, this will align Victoria’s point-of-consumption tax with that of New South Wales. Should this bill pass not only this chamber but the other place, it will bring this tax into line with that in New South Wales but it will be 5 per cent less than the point-of-consumption tax in Queensland.
The point-of-consumption tax will, with this bill, be raised from 10 per cent to 15 per cent. Through consultation with stakeholders I am advised that 4 per cent of that additional 5 per cent will go back to the racing industry, helping to provide the certainty that the racing industry requires going forward. In the mix is the consideration of the Gambling Regulation Amendment Bill 2023, which effectively brings an end to the existing joint venture arrangements and puts in place the ability for a new licence agreement. The 1 per cent that does not go back to the racing industry will go into consolidated revenue.
I will be frank. I have been in conversations with industry and with my colleagues for quite some time on this potential increase in the point-of-consumption tax, and my gut response initially was to say that any cent raised by this additional tax should be going back to the industry. My views and the views of the opposition have been slightly swayed by the fact that the racing industry itself supports the arrangements that are proposed. I guess through a social licence perspective Racing Victoria and the racing industry see that, yes, they need certainty for their industry, and we get that. They have got 4 per cent of the additional 5 per cent going back to their industry guaranteed. But from a racing industry perspective, that additional 1 per cent that goes into consolidated revenue – which, frankly, in the context of things, is not really big bickies; it is between something like $20 million and $25 million of an additional annual tax take going into consolidated revenue – is the racing industry’s opportunity to contribute to the broader Victorian picture. Whether that be to schools, hospitals, transport, police or emergency services, it is part of the racing industry’s ability to acknowledge their place as part of the broader Victorian community, and we do not begrudge them wanting to do that. In fact we celebrate and encourage it.
Now, the point-of-consumption tax was of course first introduced on 1 January 2019. The majority of revenue from the tax is paid into the Hospitals and Charities Fund, with 3.5 per cent of net wagering revenue per month paid to the Victorian racing industry. This bill will allow the government to increase its payment to the racing industry from 3.5 per cent to 7.5 per cent. So it is a 15 per cent total tax take, but 7.5 per cent of that is going back to the racing industry, which we think is a good thing. This is a point which I want to be absolutely clear on. I want to be absolutely clear on this point. It is clear to me and it is clear to the opposition that the racing industry together with the government have come to an agreement. The racing industry itself, certainly Racing Victoria – and I will be addressing some of the feedback I have received from stakeholders later in this contribution – and a number of others have agreed to this arrangement. In fact we are aware of a memorandum of understanding between Racing Victoria and the government which ensures certainty for the racing industry and is agreed to by Racing Victoria and by the government. But this is the point that I want to make absolutely clear: the agreement that has been reached between Racing Victoria and the government is not an agreement that has been reached for the remaining life of this Parliament and this government, whether that be 3½ years or beyond; this is a 10-year deal. It is through that lens that the racing industry, certainly Racing Victoria, has supported the arrangement, has signed the memorandum of understanding, has put out supportive statements in favour of this point-of-consumption tax increase and is not opposed to the legislation that is before this place today.
This is not a deal for 3½ years. This is not a deal for five years or six years or seven years – no. This is a deal for a decade. So whatever the circumstances in the future, whether they be economic circumstances or whether they be socio-cultural circumstances, the racing industry, in my view, must not – cannot – come cap in hand to a future government, whether it be the colour of the current government or the colour of a future government, to say ‘We want more’, because they will not get it. I cannot be any clearer: they will not get it. This is a deal which they have done, which they are supportive of, which they have put out supportive statements on and which they have negotiated with the government. It is the deal for a decade. I want to be really clear on that, and I suspect that government speakers will be equally clear on that arrangement as well.
I wish to address some of the matters raised by stakeholders. If you will just bear with me, I will first refer to the submission received by the opposition from Racing Victoria, who have written to me saying:
Thank you for the opportunity to present the Racing Victoria (RV) position on the Gambling Taxation Bill 2023 …
RV supports the Victorian Government’s proposal to increase the POCT rate from 10% to 15% with the majority of the increase … directed to the VRI. This proposal reflects the evolving wagering market and provides the industry with ongoing autonomous funding generated by the industry and linked to broader Victorian wagering and betting activity.
RV welcomes the Government’s Second Reading Speech commitment to return 7.5% of the 15% POCT to the VRI and supports the existing consultation and gazettal process to give effect to this commitment.
…
RV is aware of concerns expressed by corporate bookmakers –
I will later address some of the concerns raised by the Victorian Bookmakers Association –
that the changes proposed may cause a decline in turnover. While it is not possible to provide extensive detail on the contents of the confidential MOU, suffice to note that it contains terms relating to supplementary funding linked to anticipated outcomes which will provide long-term structural certainty for the industry.
Just on that confidential MOU, it is quite clear that the MOU that has been struck between the Victorian racing industry and the government, as my colleague the member for Gippsland East raised in his contribution on the Gambling Regulation Amendment Bill 2023 yesterday – the confidential MOU that has been agreed to by the racing industry and the government – has broader implications, frankly, than just the point-of-consumption tax, because it goes to the outcome of a process which has not run its course and which we do not know the outcome of as yet. That relates to what is currently referred to as the joint venture and in future will be referred to as the new licence agreement.
The government does not know – no-one knows in fact – how much that 10-year deal will be worth for the state of Victoria. We do know, however, that there is great uncertainty about the new licence process because of an issue which I am not convinced the government necessarily wants to land on. But if only they did, I think that the industry stakeholders pitching for this new licence would have greater certainty and would bid for this decade-long deal with more certainty and perhaps with more dough behind their bids. The issue of course is the question of intellectual property rights to the dataset currently held by TAB and how that relates to future licence arrangements. I think if there was greater certainty and greater leadership from government on that particular point, the people of Victoria could be better off because of it.
It is through that lens and the commitment by the government that the industry will be no worse off as a result of any drop in value from the new licence agreement – the fact that the government have committed to the racing industry that they will top up any drop in value coming out of that new licence agreement – and the fact that all of that is covered in this confidential MOU between Racing Victoria and the government that when the decade-long deal in relation to the new licence agreement is done and it is signed off by Racing Victoria and the government I think it is in Victoria’s best interest and the Victorian people’s best interest for that deal, that currently confidential MOU, to be made available and made public, because we are talking about the use of taxpayer dollars. We are talking about hard-earned Victorian taxpayer dollars being used by the government to support the racing industry, which of course we all support. But because of the nature of this agreement I join with my colleague the member for Gippsland East in his contribution yesterday and suggest to this place that the currently confidential MOU should be made public and available for Victorians to see.
I will continue by conveying some feedback from other stakeholders in relation to feedback on this bill. The newly appointed chief executive officer of Responsible Wagering Australia wrote to me, and I am grateful to Kai Cantwell for doing so. RWA said the following:
RWA supports a viable system of taxation that balances the financial viability of Wagering Service Providers (WSPs) and ensures Victorian racing is supported and adequately funded. RWA believes that the move to a 15% POCT, but no more, strikes the right balance. Furthermore, RWA supports the commencement date of the increase being as close to the conclusion of the State Wagering and Betting License renewal process as possible …
which I understand is the case. It went on to say:
RWA thanks you for your ongoing engagement and consultation with the Australian-licensed wagering industry on this and a range of other matters.
That was nice of them to mention, don’t you think? It was very nice of them to mention that. The Melbourne Racing Club (MRC) also wrote to me in relation to this bill. They said:
Our feedback is specific to the wagering elements of the legislation.
…
The guaranteed share of the Point of Consumption Tax (POCT) that racing is to receive provides –
in the Melbourne Racing Club’s view –
long-term certainty on industry funding beyond the expiry of the current wagering licence.
Funding derived from the change in POCT allows the racing industry to support the 25,000 FTE thoroughbred industry jobs across the state, protect investment welfare initiatives and enable racing clubs across Victoria to invest in their major race days which drive tourism and visitation to the State.
Of course the Melbourne Racing Club has Caulfield and other regional race settings as well – Mornington, Sandown. The MRC said:
Before the announcement of these Bills, the industry held concerns that the absence of funding certainty would impact the investment into racing in Victoria which would have a flow on impact to employment and our ability to grow the sport.
We do raise concerns that further increases of taxes on wagering will impact racing’s major customers – the punters –
let us not forget the punters in this –
which is likely to negatively impact overall engagement with our sport. We simply raise this as a matter for consideration.
I am grateful that Jared Newton, the general manager of corporate affairs at the Melbourne Racing Club, has done so. It is a point of interest and a point of interest only.
The RWA said that they do not want the point-of-consumption tax increased any further, and the MRC said that any further increase to the point-of-consumption tax would likely negatively impact engagement with the sport, so that is a message for government quite clearly.
Now, there were two other stakeholders which I just want to address very briefly. The Alliance for Gambling Reform have written to me, saying:
The Alliance supports the increase of Crown Casino’s EGM tax; however, we believe it should be in line with Hotel tax, rather than Club taxes as the casino is not a not-for-profit organisation like Clubs.
I will raise that as a point for future government consideration.
Further, the Alliance believes that unrestricted machines at the casino should be taxed more as they are more harmful due to an unrestricted maximum bet.
And further:
The Alliance also supports the increase of POCT to ensure it is in line with other states. However, a portion from the increases in tax both for the casino and bookmakers should be going directly to gambling harm prevention activities.
I should have put a little asterisk at the start of this contribution, a bit like our Twitter accounts that say ‘Retweets do not necessarily mean endorsements’. I am simply reading these contributions for the benefit of the house.
Finally, the Victorian Bookmakers Association have written to me expressing great disappointment that they have not had any meaningful engagement with Racing Victoria or the government on this matter. Aha – why would that be the case? They go on and say:
We strongly believe that industry needs to be funded appropriately and we understand that the revenue model has come under pressure with a shift away from betting with oncourse bookmakers and TAB to online bookmakers.
However, our small Australian owned bookmakers appear to be the collateral damage in the exuberance to tax the large off-shore bookmakers.
The Victorian Bookmakers Association goes on to say that:
The POCT in the current construct fails to take into account a number of items for small Victorian bookmakers.
They make three points. Victorian bookmakers, in their view:
… pay a non-VTR levy (a levy on any … events which are not Victorian Thoroughbred Races) which our counterparts in other states do not pay, and do no have an equivalent fee, other than those large bookmakers licenced in Northern Territory
Point 2, according to the Victorian Bookmakers Association:
The tax fails to take into account that small bookmakers need to provide a higher level of free bets in order to attract customers away from the large corporates and as a result the effective tax rate is significantly higher for small bookmakers.
And their final point is that:
The tax is calculated and paid monthly, for large bookmakers they don’t have losing months, but for small bookmakers they are more likely to be impacted by a small group of clients and have months when they lose. This can result in a bookmaker paying POCT after a few winning months and then if they are losing in the last couple of months of the year, have no way to reclaim the tax which was paid. As a result the effective tax paid is significantly higher than the advertised rate.
I just raise that as a point of interest in this contribution because, although it is quite clear that the government has aligned some of the bigger players in the racing space to their way of thinking, it is quite clear that not everyone within the racing industry is of that opinion, which is why my recommendation on this particular bill to my colleagues, which they agree to, is that the coalition does not oppose this bill in the Assembly. We, however, reserve our right – and I have conveyed this to stakeholders; this will not be a surprise – in the Council, because later this week the member for Gippsland East and I will be speaking with the Victorian Bookmakers Association and a couple of other stakeholders in relation to this bill. We just want to hear what they have to say. I mean, we are prepared to do the work, which according to the Victorian Bookmakers Association the government has not done, and we will be doing that later this week to get an understanding of their concerns firsthand in a conversation. We will not be opposing this legislation in this place, but we reserve our right in the Council for when this bill is considered in the Council.
In the final moments of my contribution I wish to just thank a number of stakeholders who have quite vigorously and actively engaged with the opposition – excuse me for turning my back to you, Acting Speaker – in our consultation with stakeholders. I genuinely mean that. I do not mean to have a crib. I do not mean to have a cry. I simply mean to state facts. The resources in opposition are pretty slim pickings, and so you do rely on those people who live and breathe a particular area of policy to be generous with their time, with their expertise and with their knowledge of a particular policy area to help formulate your own understanding and your own view on a particular bill before the chamber.
I wish to acknowledge and thank some of those racing and gaming industry stakeholders – the peak bodies as well. We have engaged with Entain; we have engaged with the Melbourne Racing Club; we have engaged with Racing Victoria, with Sportsbet and with Tabcorp; and we have engaged with the Alliance for Gambling Reform, Responsible Wagering Australia, the Victorian Bookmakers Association and the Australian Hotels Association. Once again, I am grateful to the government for providing a fairly lengthy bill briefing on not only this bill but the bill considered by the house yesterday. Finally, I am grateful to my colleagues for their engagement in this bill process, certainly shadow ministers Bull and Danny O’Brien for their engagement. But there were a number of colleagues who were present for the government’s bill briefing, probably more than would ordinarily attend a bill briefing, which means that there is great interest in an ongoing and viable racing industry in Victoria, certainly in regional areas. The member for Mildura was present, the member for Euroa was present and the member for Nepean was present at the bill briefing, and a couple of regional members –
Jade Benham: All regional members.
Brad ROWSWELL: All regional members by one definition, member for Mildura, but all with a pretty significant racing presence in their own communities and all driven by a desire to have an ongoing viable racing industry in this state, and – I finish where I started – that is our intention in addressing this bill. Our intention in addressing this bill is to have an ongoing viable racing industry in Victoria, and that is why we will not be opposing this legislation.
That the debate be now adjourned.
Motion agreed to and debate adjourned.
Ordered that debate be adjourned until later this day.