Northern Territory Second Reading Speeches

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SOCCER FOOTBALL POOLS AMENDMENT BILL 2004


Bills presented and read a first time.

Mr STIRLING (Racing, Gaming and Licensing): Madam Speaker, I move that the bills be now read a second time.

The purpose of the bills is to amend the Gaming Control Act, Gaming Machine Act, and Soccer Football Pools Act following the National Competition Policy, or NCP, review of the Territory’s gaming legislation. Given the legislation was examined as a package and the amendments are all in the context of that NCP review, it is my intention to introduce the amending legislation together as cognate bills.

The amendments presented today address key recommendations requiring legislative change. Some of the review’s recommendations propose further legislative change, but those have been deferred because they form part of a broader change to gambling legislation as a whole. Specifically, the deferred aspects relate to recommendations dealing with a new, integrated legislative framework that incorporates licensing and operations of the industry on the one hand, and gambling control on the other. Also deferred are recommendations to make the term of all future gaming licences indefinite and to prescribe operational licence conditions that are currently contained in agreements. All these deferred matters require detailed consideration of associated issues before further effective legislation amendment can be contemplated.

As you would be aware from the introduction of earlier legislative amendments following similar reviews, the NCP review of gaming was undertaken in accordance with government commitments contained in the competition principles agreement to examine and remove anti-competitive requirements or restrictions that cannot be justified on a public benefit basis. The overall purpose of the review was to identify anti-competitive restrictions and undertake reforms that would enable the gaming industry to operate in an environment as free from unnecessary restrictions as possible, while ensuring the integrity of industry participants and ensuring industry regulation upholds the aims of harm minimisation and the amenity of community life.

An extensive public consultation program which directly canvassed the views of all identified stakeholders was conducted. An issues paper covering relevant legislative provisions was circulated. The paper gave a detailed overview of the legislation, as well as a preliminary assessment of potential restrictions that had been identified. The issues paper sought responses on a number of suggested amendments and invited comment on the full spectrum of legislative provisions involved, including objectives of the legislation; the regulatory framework; licensing structures; community benefit or amenity; responsible gambling and problem gambling; costs on business; key employee licensing; minor lotteries; and advertising and promotion.

The submissions contained a variety of views from which the following recommendations, based on competition principles, were developed. The review found that the strong and prescriptive regulatory approach taken toward the gaming industry is justified, and restrictions are generally in the public interest. Strong and prescriptive regulation is justified because it addresses concerns about the ability of gaming operators to control the operation of activities, and the ability of gaming operators to control information which could result in biased outcomes in favour of operators. The approach also addresses concerns about the potentially addictive nature of gaming activity. A firm regulatory regime is considered the most effective way to achieve and maintain the required standards of probity, consumer protection, business viability and consumer access.

I thank the following organisations which made submissions to the review: Australian Hotels Association, Lasseter’s Hotel Casino, MGM Grand Casino, NT TAB Pty Ltd, St Mary’s Football Club and Tattersall’s.

I turn now to the proposed amendments dealing first with the common amendments being introduced to the Gaming Control Act, the Gaming Machine Act and, where applicable, the Soccer Football Pools Act.

Objectives of the act: the bills propose inclusion of a common objects section. The reason for this is to make clear the purpose of each act, namely to ensure probity and integrity in gaming and to reduce the adverse social impact of gaming in the Territory. As the NCP Review noted, an important contemporary social objective of gambling regulation is to promote problem gambling remedies and responsible gaming practises.

The Productivity Commission, in the 1990 report into Australia’s gambling industries, found that the two objectives providing the strongest rationale for special gaming policies are to ensure the probity of gambling and to reduce its adverse social impacts. Accordingly, in proposing to insert an object section into the Gaming Control Act, the Gaming Machine Act and the Soccer Football Pools Act, prominence is given to the probity and integrity of the industry and persons engaged in the industry, and to reduce the impact of problem gaming activities. The proposed objects are: to promote probity and integrity in gaming; to maintain the probity and integrity of persons engaged in gaming in the Territory; to promote fairness, integrity and efficiency in the operations of persons engaged in gaming in the Territory; to reduce the adverse social impact of gaming; and to promote a balanced contribution by the gaming industry to general community benefit and amenity.

Regulatory directions: the NCP Review noted that the nature of the industry has an inherent risk of criminal exploitation of gaming activity. An effective regulatory framework is an essential element to protect against such infiltration. It is important that regulation against such infiltration is not overly protective against new initiatives. Thus, a new section is introduced into the Gaming Control Act and the Gaming Machine Act stipulating the following principles as the basis for regulating the industry: minimum regulatory intervention by government; maximum cooperation between industry and government; performance-based risk management controls; proactive and competitive industry positioning; long-term viability of the industry; and a balanced approach to problem gambling.

These regulatory principles will serve as a guide and point of reference for the Director of Licensing and the Licensing Commission when making decisions relating to the legislation. As situations arise, the basic elements will be considered as part of the decision-making process where appropriate. The principles are intended to be applied in an appropriate manner and provide the flexibility required to address changes that will occur in this rapidly developing industry.

Standard probity requirements: currently there are some inconsistencies in probity requirements and checking procedures that apply to the different gaming activities covered within the Gaming Control Act. The probity requirements for gaming machines and soccer football pools application also differ. The NCP Review recommended the adoption of uniform probity requirements and checking procedures for all types of gaming operations. To achieve this, the bill has introduced a set of uniform probity criteria to be applied across all gaming activities. The probity criteria are similar to the high level investigation applied to applicants for casino licensees under the Gaming Control Act.

The Gaming Control Act, the Gaming Machine Act and the Soccer Football Pools Act are amended to ensure that when determining a gaming licence application, regardless of whether it is to upgrade a casino or to operate a couple of gaming machines, there must be regard as to whether the applicant is of good repute; is of sound and stable financial background; has or has arranged satisfactory ownership, trust or company structure; is able to obtain financial resources that are adequate to ensure the financial viability of the proposed business; and has sufficient business ability. Further, consideration is to be given to whether any associate director, partner, trustee, executive officer, secretary and any another officer or person determined to be connected with the ownership, administration or management of the business is of good repute.

In addition, provisions enabling the minister to undertake investigations, negotiate an operating agreement, or for amending an existing agreement, are to be applied consistently to all the major licenses issued under the Gaming Control Act.

Refund of application fees: an application fee was introduced for gaming licences to recover the cost of processing the application, including the cost of undertaking the necessary probity checks, and assessing the applicant’s proposed activity. As it currently stands, once an application for a gaming licence is lodged the accompanying fee for the application can only be refunded if the minister refuses to consider the application, or the application is withdrawn before the minister considers it. The bills propose to give the minister absolute discretion in deciding whether or not to refund the application fee. This allows the minister to decide whether or not to refund the application fee in part or in full, taking into account the costs incurred to the point of refund.

Secrecy: neither the Gaming Control Act nor the Gaming Machine Act currently allow for full disclosure of some Territory industry activity to other states and territories, New Zealand, or other international agencies. This is a shortcoming in light of the international nature of gambling and particularly on-line gaming. The amendments seek to address this by expanding the secrecy sections and allowing information relating to a licensee to be disclosed to a person employed to regulate the operation of casinos or gaming in another country.

Codes of Practice: for many people, gambling is an enjoyable recreational activity. For some, gambling can have a negative impact on their lives and families. In April 2003, the government launched a responsible gambling code of practice, developed in partnership between government, the Licensing Commission, the gambling industry and gambling intervention services. The code aims to ensure responsible gambling in the community and ensure that gambling industry staff have the skills to identify and help problem gamblers. This example of co-regulation is being trialled on a voluntary basis during 2004. The bills propose to introduce provisions to enable the code of practice to be formalised and ensure that all licensed gaming operators adhere to the requirements of the code. The new provision enables the minister to approve a code of practice by gazettal notice. The new provisions also provide sanctions for non-compliance with the codes for a monetary penalties of up to $10 000.

Madam Speaker, I now turn to amendments specific to the Gaming Control Act:

Right of Entry to Casino: clause 8 of the bill amends the Gaming Control Act by removing the cumbersome provision that currently requires the Commissioner of Police to seek approval from the Director of Licensing to exclude an individual from a casino. The amendment only requires the Commission of Police to notify the Director of Licensing of any such direction given. The amendment is consistent with the national approach taken to casino exclusion.
Territory lotteries: clause 14 of the Gaming Control Amendment Bill proposes to delete Part 4 Division 3 of the Gaming Control Act which covers Territory-run and Territory-sponsored lotteries. Although this was not a recommendation arising from the NCP Review, the division was identified during the drafting process to be redundant. It should be deleted since government is no longer involved in sponsoring or operating lotteries.

Regulations - licensing of key employees: the NCP Review Report noted there a variety of legislative provisions covering different types of licensing for gaming industry employees across areas such as casinos, Internet gaming and community gaming. Currently, matters relating to the licensing of employees in casinos are prescribed in regulations. There is no provision for the licensing of employees of other operators licensed under the Gaming Control Act. Clause 19 of the bill proposes to amend section 80 of the Gaming Control Act to enable regulations applying to the licensing of casino employees to be prescribed for employees of other gaming operators licensed under the act.

That concludes the proposed amendments to the Gaming Control Act.

I turn now to amendments specific to the Gaming Machine Act.

Definitions: clause 5 of the Gaming Machine Amendment Bill proposes to amend the definition of ‘club liquor licence’ and ‘hotel liquor licence’ for the purpose of the Gaming Machine Act. The existing definition is no longer current as it refers to section 35(1) of the Liquor Act, which was recently repealed as part of an NCP-related amendment to the act.

Furthermore, amendment of the ‘hotel liquor licence’ definition is necessary to remove a restrictive condition in the Gaming Machine Act. It currently prevents hotels that are not licensed to sell takeaway liquor from applying for a gaming machine licence. The NCP review noted that this requirement presented a clear detriment to some other licensed liquor operators without any discernible public benefit to justify the practice. But for the measures outlined later, a removal of the takeaway condition could potentially enable everyone who holds a liquor licence to apply for a gaming machine. It is necessary to make clear the government does not want to see a proliferation of community gaming machines. Community gaming machines are a form of entertainment we associate with clubs and venues where the primary activity of the venue is the sale and consumption of liquor on the premises rather than outlets such as corner shops or restaurants.

Although the Licensing Commission has several working categories of liquor licence for administrative, analytical and reporting purposes, the Liquor Act does not currently provide any clear distinction between a pub, club, store or restaurant liquor licence. To protect against ‘machine creep’ into venues outside those that the Territory now accepts and considers appropriate, a club liquor licence and hotel liquor licence need to be specifically defined for the purposes of the Gaming Machine Act.

The bill proposes to define a hotel liquor licence as a liquor licence where the primary activity of the premises for which a liquor licence applies authorises the sale and consumption of liquor on those premises. The primary activity test provides scope for the Licensing Commission to apply judgment when determining whether or not an applicant is eligible to apply for a gaming machine licence. For example, it is clear from the definition that a store or a liquor merchant would not be eligible for a gaming machine licence, however, certain restaurants or an accommodation provider with a liquor licence might require further examination to determine their eligibility. A club liquor licence is to be defined as a liquor licence which authorises the sale of liquor by a body corporate for consumption on or at the licensed premises by a member of the body corporate or by a visitor in the presence of a member.

Consideration of application: in addition to stipulating the standard probity requirements that were discussed earlier, clause 8 of the Gaming Machine Amendment Bill seeks to address the issue of capping the number of gaming machines in the community and accounting for community interest when a licence application is being considered. The NCP Review recommended that a community gaming machine global cap be fully defined in regulatory provisions and that a public appeal mechanism for issuing gaming licences be introduced to augment the public scrutiny of industry participants and elevate transparency. There is currently no formal enforceable limit on the number of community gaming machines allowed. Consideration was given formalising a relative cap that is linked to a per capita base density rate with reference to the national population and national community gaming machine numbers. However, formalising this relative approach is problematic for two reasons: fundamentally, it sets a benchmark for the Territory based on some factors, such as national population and machine numbers, that are out of the Territory’s control; more critically, various jurisdictions are now reducing the numbers of machines, and a nationally based per capita density threshold could lead to the Territory being forced to remove machines, even if local circumstances give no cause for this to occur.

Furthermore, having an absolute number as the global cap is also impractical as changing circumstances are likely to demand continual revision so the limit remains relevant. It also tests the boundaries of competition principles as it can act as a barrier to prevent new operators entering the market. Without any benchmark or other mechanism to keep machine numbers in check, there could be an unfettered explosion in the number of gaming machines operating throughout the community.
Because of the real and potential costs such access can have on members of our community, this cannot be tolerated. Given the problems associated with prescribing a global limit, a more considered approach is proposed. It requires the Licensing Commission to have regard to the following factors when determining new licence applications:

· the suitability of the premises to which the application relates having regard to the nature of the primary activity of the premises;

· the suitability of the location, size and type of the premises to which the application relates with attention to the population of the local area, its proximity to other gaming venues and to other sensitive features such as schools, shopping centres, other community congregation facilities, welfare agencies, banks and pawn brokers;

· the appropriateness of the applicant’s problem gambling risk management and responsible gambling strategies; and

· the economic impact of the proposal including contribution to the community, employment creation and significance for tourism.

This approach is favoured as it is the most responsive to the local community circumstances, it is practical and is consistent with National Competition principles. As the interpretation of these criteria will be against the new objects of the act which clearly target adverse social impacts, this approach allows the merits of each application to be judged by the commission within a clear framework of minimising harm.

At present, the Licensing Commission may only reject applications on the basis of probity criteria. This amendment provides additional criteria for the Licensing Commission to assess the appropriateness of allowing additional machines into the community – an avenue that is based more on social dimensions of gaming and the potential for harm that exists for individuals, families and the broader community. An application may be rejected if it is deemed to be unsuitable in the primary nature of the business, or the size or location of the proposed premises. For example, if a proposal was within proximity of other licensed venues and the granting of the licence would lead to an unacceptable increase in the local machine density, that application would be refused. Accumulated research from interstate and elsewhere, and the Productivity Commission Report on Gambling, has found the density of gaming machines to be one of the strongest indicators of problem gambling. A greater geographical concentration or availability of gaming machines is associated with greater gambling losses and a higher prevalence of problem gambling.

Similarly, if the proposal does not outline advantages to the community, or has no clear strategies for minimising problem gambling, or ensuring responsible practices, then these too can be grounds for the Licensing Commission to reject an application. It would be expected that harm minimisation strategies would reflect agreed codes of practice and other compelling evidence about the best measures to apply.

The Licensing Commission is representative of the community and will have to reflect on the interests of the general community when assessing gaming machine licence applications against the prescribed criteria. Moreover, it will have to examine those criteria within the context of the objects of the Gaming Machine Act. The application will not be subject to any formal hearing process, which could be costly and time consuming for the small business operator.

Changes to the definition of who may apply for a gaming machine licence and not making a global cap explicit runs the risks of operators in non-traditional venues applying for licences and an expansion of applications that could result in a proliferation of machines in acceptable venues but in concentrations beyond what the community is willing to tolerate or accept. The introduction of these new criteria provides a filtering mechanism to protect against either of these eventualities.

Community contribution by clubs: clause 9 of the Gaming Machine Amendment Bill proposes to strengthen the current provision relating to the community benefit contributions made by club licensees. At present, hoteliers who operate gaming machines are required to pay 10% of gaming machine gross profits to the Community Benefit Fund. There is currently no specific requirement stating that a club licensee has to make any contribution and, to date, different clubs have made contributions of varying quality and amounts, both in monetary and non-monetary form.

The bill introduces provisions that clearly specify a club licensee is expected to make a community benefit contribution and that the minister can issue directions in relation to how the community benefit contribution is to be calculated; the type and nature of contributions that are of benefit to the community; the reporting, accountability and acquittal process that a licensee must use; the minimum rate of contribution and other relevant matters.

Cancellation, suspension, etcetera of gaming machine licences: up to now, the financial capacity of a licensee is assessed only at the application stage. Once a licence has been issued, there is no mechanism for the review of a licensee’s ongoing financial capacity to meet payouts and other financial obligations. As a player protection measure, clause 11 of the bill amends section 49 of the act by adding another criterion that the Licensing Commission can use to determine the ongoing suitability of a licensee and, if necessary, take action before players are affected.

Consideration of application: the NCP Review report noted that there are a variety of legislative provisions covering different types of licensing for certain gaming industry employees across areas such as casinos, Internet gaming and community gaming. Clause 12 of the bill proposes to amend section 64 of the Gaming Machine Act to adopt the same licensing approach for gaming machine managers as that of casino employees.

Audit of accounts: the bill proposes to amend section 146 of the Gaming Machine Act which requires the licensee to prepare and lodge with the Director of Licensing and Audit an account of gaming activity. Audited accounts from each licensee serve no useful purpose and represent a duplication of effort, as the information is readily available through the gaming machine monitoring service provider, currently performed by Unitab Gaming. This amendment was not a specific consequence of the NCP Review, but legitimises the current practise of the Director of Licensing to relieve each licensee from the requirement to submit an audited account of gaming activity.

The amendment also seeks to make the financial information available more useful by requiring licensees to maintain general financial reports that deal with the operation as a whole. This information need only be provided on request rather than annually submitted. This will help the licensing authority identify any change in the financial viability of the licensee and, if necessary, refer the matter to the Licensing Commission for deliberation.

That completes the proposed amendments to the Gambling Machine Act.

I have previously covered the amendments to the Soccer Football Pools Act when discussing the common amendments that apply to all three acts. There are no further or specific changes to the Soccer Football Pools Act. This concludes all the amendments.

Madam Speaker, the bills that I have today introduced address key recommendations contained within the National Competition Policy review into gaming in the Northern Territory that require legislative attention. This action reaffirms the government’s commitment to National Competition Policy principles and the reform process. I commend the bill to honourable members.

Debate adjourned.




 

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