Northern Territory Second Reading Speeches

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TOTALISATOR LICENSING AND REGULATION BILL 1999

Mr Speaker, I move that the bill be now read a second time. These Bills provide for the licensing and regulation of persons seeking to offer totaliser betting facilities to Territorians, whether through operating a totaliser in the Territory or through links to a totaliser operated elsewhere.

The Bills are complementary and consequential to the Bill for the sale of the NT TAB and I’ll come to that Bill later.

The Racing Commission currently operates the NT TAB under the Totaliser Administration and Betting Act. The commission itself was established under the Racing and Betting Act. As members are aware, the government proposes to sell the NT TAB. However the existing legislation does not permit private operation of a Territory TAB. These Bills introduce a regime for private TAB operation.

Other jurisdictions have privatised their TABs. The draft legislation has drawn on the experience of those jurisdictions although it differs, where appropriate, in line with the Territory’s own circumstances.

I turn first to the Bill introducing the Totaliser Licensing and Regulation Act. As I’ve already indicated, the existing Totaliser Administration and Betting Act has no provision for private operation of a Territory totaliser or for private provision of paramutual betting facilities.

The existing Act does have provisions for the regulation and administration of the government owned and operated NT TAB. However, while it would be possible to amend the Act and indeed some of its provisions will be replicated in the new Act, it is considered that a fresh approach is more appropriate.

This allows for the creation of a suitable regime for the future and makes it easier to remove anomalies in the existing legislation. The new legislation will also mean that the Territory’s legislation is up to date with current thinking on legislation appropriate for licensing and regulation of paramutual betting facilities.

Part II of the Bill provides for the establishment, powers and functions of the authority that will licence and regulate totalisers in the Territory. In this connection I not that the term totaliser is defined in the Bill to cover paramutual wagering generally and not just the computer device commonly known as a totaliser, which is the machine that adjusts odds as further bets are placed. The authority will have the necessary power to do all things reasonable and appropriate to administer the Act. In doing so it will be able to receive submissions from the public as well as hear complaints.

It’s important to note that under clause 7 the authority itself will not have the power to operate a TAB except in a situation where there is no licensee that is capable of operation. This is of course not expected ever to occur. It is for short term expediency only to allow for the continuation of the TAB’s service to punters whilst the new operator is found. This is appropriate. It will assure potential private operators of totaliser facilities in the Territory that the authority regulating and licensing such activities is not a competitor and at the same time it will serve to assist us to meet the Territory’s national competition policy commitments in terms of the separation of regulation from ownership.

As members will be aware, the government recently introduced legislation to establish a licensing commission. The new totaliser licensing authority will operate within the parameters of the licensing commission. It will not be a separate commission. Clause 5(2) of this Bill explains this.

However, it will operate with different and appropriate powers and functions as set out in clause 6 for this specific purpose. This will avoid duplication of resources and ensure that members of the general licensing commission will be available for this purpose. The Territory has agreed that legislation introduced will conform to national competition policy.

Legislation may still restrict competition in certain situations, particularly on the grounds of public interest. I will give you some examples of restrictions considered as being in the public interest.

Firstly, Territory residents are entitled to be assured that the Territory Totalisator will be operated in a secure environment that is free from criminal influences. The mechanisms that the commission will use to licence totalisator activities are set out in Part 3 of the bill. Licensees will be required to meet appropriate standards of probity. They will be required to demonstrate that they have the necessary knowledge of totalisator operations as well as the business skills and the financial capacity to manage such facilities effectively and efficiently. These are important protections for the public including punters. Again, this is something that the public would reasonably expect. In addition, the act allows for exclusivity to be granted to an operator in the initial years of private operation. However, the act also provides for the issue of more than 1 licence. The number of licences issued will depend on the degree of interest and the potential for growth in the market. In a small jurisdiction such as the Territory, restrictions on the number of licences may be in the public interest as the Territory market may be considered too small to allow too many operators. Too much fragmentation could leave Territorians will no local access to stable totalisator operations.

The act will also have provision in Part 5 for rules for betting. Rules will be made covering the types of wagers, minimum amounts to be accepted, payment of winnings, commissions and similar matters. Again, these rules will ensure that the public interest is served. It is the intention to make regulations under Part 10 covering such matters as the rates of wagering tax, events on which the TAB may accept bets including of course horse racing and dogs and totalisator betting on sporting and other events. Also, licensing fees, licence conditions, arbitration procedures and matters similar to those covered in existing act’s regulations.

In addition, Part 4, Division 1 of the proposed act will appoint the Commissioner of Taxes as the person to whom licensees would pay wagering tax. Again, this is considered an effective use of expertise and resources, as the commissioner’s office is appropriately set up to perform tasks. At the same time Mr Speaker, it would separate the roles of Licensing Authority and Regulator from the role of tax collection, which is considered appropriate in terms of national competition policy. Further, Part 4 Division 2 provides for audit of licensee’s operations. Under Clause 34(2), the Commission could appoint the Auditor-General as auditor, but under Clause 34(3) any audit by the Auditor-General would be in effect a special purpose one appropriate in the circumstances where the party being audited is a private sector licensee. The proposed scope of such an audit is set out in Clause 35 and the auditor’s powers in Clause 36.

Mr Speaker, Part 6 sets out the regime for inspectors who will be appointed to assist the commission to discharge its functions under the act and this regime is similar to those applying in other jurisdictions and indeed to that applying to other gaming and gambling activities such as casino and poker machines in the Territory. In practice, it is expected that inspectors under the proposed act will be persons appointed as inspectors under other similar Territory acts. Again this would ensure that expertise and resources are best utilised so as to reduce the cost of regulation.

Part 7 deals with the commission’s requirements in relation to conduct of licensees. Clause 65 provides for complaints against a licensee and Clause 66 for how the commission is to handle them. Division 3 of Part 7 will allow the commission to give directions to a licensee and Division 4 to suspend, vary or cancel a licence. These provisions link back to Part 3 which deals with the issuance of licences. There is a mechanism in Division 5 to deal with situations where a licensee disputes a direction or decision of the commission. In brief, the licensee may ask the minister to resolve the dispute, or submit the matter to the Law Society to appoint an arbitrator.

Part 8 of the bill provides generally for hearings and appeals. The provisions are similar to those in other jurisdictions and in similar Territory acts. Where a person has made a complaint under Clause 65 and is not satisfied with the decision of the commission, that person may ask for a hearing. Also, a licensee may request a hearing. The part sets out how hearings are to be held and also provides for an appeal mechanism to the local court. Part 9 provides for offences, and for penalties for such offences. Of course, where a licensee, a person working for the licensee or an agent has committed an offence, the licensee or the agent’s right to operate could be cancelled or suspended.

In some situations, these penalties may be appropriate. However, for lesser offences, suspension or cancellation might be considered too draconian. Moreover, they may mean that there is no service to Territory punters unless a way can be found for other parties to step in. In dire circumstances this may briefly be the licensing commission itself as temporary licensee. The proposed act therefore allows for appropriate monetary penalties that would deter inappropriate activities while still allowing a TAB service to continue. There is also provision for offences committed by third parties such as punters and for penalties for such offences. Part 10 deals with the usual miscellaneous matters including provision for making of regulations.

Turning to the amendments of the Racing and Betting Act, these are consequential to the introduction of the new act and the decision to sell the NT TAB. This bill relaces references in the existing Totalizator Administration and Betting Act with similar references to the proposed Totalisator Licensing and Regulation Act. To avoid any conflict between the operation of the Totalisator Licensing and Regulation Act and the Racing and Betting Act, clause 5 provides for a new section 4A of the Racing and Betting Act. This makes it clear that the Racing Commission has no responsibility for totalisators licensed under the Totalisator Licensing and Regulation Act. Past actions of the Racing Commission are preserved and validated by the bill.

Mr Speaker, clause 11 will give the power to a principal club to make local rules of racing but not interfere with national rules of racing. At present, the Darwin Turf Club is the principal club and racing in the Territory follows the Australian Rules of Racing. Clause 12 provides for a new section 48A of the Principal Act to accommodate the fact that a private entity is expected to be the licensee in the future. It will allow a race club to enter into an agreement to conduct TAB operations, for example a TAB outlet at a racecourse. Clause 21 puts beyond doubt that the new funding arrangement between government and the NT Racing Industry from 1 July 1999 for five years supersedes the former assistance under the Industry Assistance Fund and the Racecourse Development Fund. These arrangements were largely funded from the TAB and this would of course not be appropriate when the TAB is privately operated.

Mr Speaker, turning now to the Sale of the NT TAB Bill. The purpose of this bill is to provide a legislative basis for the sale of the NT TAB. It is the central bill of the three being introduced to facilitate the sale of the NT TAB and to provide a framework for the future conduct and regulation of totalisator wagering in the Northern Territory. As members will be aware the government made the decision to offer the NT TAB for sale after a review of the NT TAB by Macquarie Bank. That review followed an earlier study by ABN-AMRO with Pannell Kerr Forster Consulting in early 1998 which favoured privatisation. Macquarie strongly recommended that selling the TAB would provide maximum value for government. Furthermore operation of a TAB is not necessarily a function of government and efficiencies may be gained for all concerned - the punters, the operators, the racing industry and through government, for the community, if the TAB was privately operated.

A private operator most probably one with other business interests that were complementary to the business of a TAB operating in the Territory could buy the NT TAB and operate the business to the benefit of the owner and Territory punters.

In light of that advice, government decided to offer the TAB for sale, to ensure the longer term viability of the NT TAB, to maximise the returns to government and to taxpayers. The NT TAB is a government business currently operated by the Racing Commission under the Totalizator Administration and Betting Act. That act only provides for the operation of the NT TAB by the Racing Commission. It does not contemplate private operation of a totalisator nor does it provide an appropriate regulatory regime for the future.

As a consequence, a number of legislative changes need to be made. They include matters covered by this bill which includes the repeal of the Totalizator Administration and Betting Act and other bills which introduce a Totalisator Licensing and Regulation Act and amend the Racing and Betting Act.

Clause 5 of the bill provides the minister and the commission with the necessary power to negotiate and enter into agreements and do all things reasonable and appropriate to facilitate the sale of the NT TAB. It enables the minister and the commission to provide potential purchasers with the information about the operation of the NT TAB. Clause 6 provides that information received and provided during the sale process will be treated confidentially.

Clause 9 provides for the authority created under the Totalisator Licensing and Regulation Act to issue a licence to a purchaser. This is a key requirement, as it will increase the level of certainty to prospective buyers of the NT TAB’s business that they will be able to get a totalisator licence at the end of the sale process. However, this does not mean that prospective buyers will be able to circumvent the government’s requirements for licensees. That is because, as part of the process required under the Totalisator Licensing and Regulation Act, the authority is required to make every effort to ensure the totalisator is operated in a secure environment free from criminal or unlawful influences. The authority must be sure that the buyer is suitable and has the financial acuity and resources to effectively operate the totalisator business.

In the event that there is any delay in the issue of the licence or the purchaser taking up the licence, the bill provides for the Racing Commission to continue to operate the NT TAB under the repealed Totalizator Administration and Betting Act until the sale is complete and a licence is issued.

The government has always had a policy of promoting reasonable gaming and under the regime established by the legislation that commitment continues.

The Territory has long been at the forefront of the gaming industry. Australia’s first mainland casinos were licensed here, the first licensed Internet casino was established in the Territory. Our poker machine regime is considered to provide an appropriate balance between availability of gambling opportunities and restrictions to address social concerns with problem gamblers.

Against this background, it is important that we place the Territory in a position to take advantage of developments which will come in the area of totaliser wagering. The sale of the NT TAB and the creation of an appropriate regulatory environment will ensure that we maintain a competitive position.

Turning to another aspect of the sale under National Competition Policy the Territory has, as have the states, entered into agreements with the Commonwealth which require analysis and justification of the legislation which may contain anti-competitive provisions. The bill has some characteristics that may come within the ambit of national competition policy. However, I consider the benefit for the public in having a system that provides a secure, in so far as it is possible, criminal free wagering environment justifies the provision in the legislation which may be considered to have anti-competitive implications. Additionally, it would be irresponsible not to provide a mechanism for proper administration of totaliser wagering activities in the Territory.

The issues raised are similar to those addressed by a number of other jurisdictions that have privatised their TABs by way of public float. This sale process has been undertaken by way of a trade sale in view of the nature of NT TAB. The NT racing industry will benefit from the sale. The government has agreed to provide the industry with an assistance package that is independent of the operation of the NT TAB in the future. So to the extent that a privately owned and operated TAB in the Territory is more successful than one retained by government, the industry will benefit.

The Darwin and Alice Springs race clubs and the Darwin Greyhound Association have arrangements with the NT TAB that a new licensee will be required to retain in a form agreed between the licensee and the clubs. These arrangements currently provide that the clubs receive a percentage of the turnover from betting through the on-course totalisator facilities. Moreover it is thought likely that a private owner will offer new and more interesting betting products. Again, this is likely to add to the attraction of local races and make betting through the Territory facilities more attractive. I commend the Bills to honourable members.

Debate adjourned.

 

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