Submission. By the. To: the Commerce Select Committee. On the: Gambling (Gambling Harm Reduction) Amendment Bill 2010 (Member s Bill)

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Melvin Mason
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1 Submission By the To: the Commerce Select Committee On the: Gambling (Gambling Harm Reduction) Amendment Bill 2010 (Member s Bill) Submissions due: Thursday 21 st June 2012

2 1. This submission is from: James Austin CEO FINZ PO Box Manners Street Wellington 6142 Phone: Mobile: Willing to speak at the Commerce Select Committee James Austin is willing to speak at the Commerce Select Committee on his submission. 3. Introduction The Fundraising Institute of New Zealand (FINZ) is the professional body for charities and those employed in or involved with fundraising, sponsorship and events in the not for profit sector. Our aim is to promote and uphold professional and ethical fundraising and encourage the development of philanthropy in New Zealand. We have over 500 individual and 150 organisational members representing around 70% of the total gross income of the charitable sector. These members reflect the wider charitable sector in they range from regional charities to major national organisations such as World Vision, NZ Red Cross, Plunket and St Johns. We also have as associate members, organisations such as publication houses that serve these charities. The Fundraising Institute of New Zealand serves: Charities seeking representation and advocacy to government. Charities to send staff members to fundraising professional development courses. Organisations working to provide services and raise funds in the charitable and not forprofit sector. Fundraisers and volunteers employed to assist charitable organisations to achieve their mission. The public of New Zealand who donates funds and obtains services from charitable organisations. 4. Summary FINZ does not believe this bill will achieve its aim in reducing the harm gambling does on a sector of our society. The current system of gaming machines operating within controlled environments is a much better option than driving gamblers onto the internet or underground. FINZ is very supportive of the clauses banning racing from any gaming proceeds. Racing is a sunset industry that only survives through government controlled subsidy. Racing has the very profitable TAB with a near monopoly on proceeds to use without crowding charities out of an increasingly scarce market for funds.

3 5. Background 5.1 This proposed legislation seeks to address what are acknowledged to be problems with current rules around the operation of gaming machines in New Zealand. 5.2 The operation of gaming machines has been subject to legislative control since Gaming machines can only be operated (outside casinos) for the purpose of raising funds for community purposes. 5.4 Approximately 90% of all money invested in gaming machines (i.e. $8.3 billion of $9.2 billion in 2011) is returned to players as winnings. The remaining 10% ($856 million in 2011) is the proceeds of gaming which is split between gaming machine operators, gaming venues and the community. A minimum of 37.12% of the proceeds of gaming must be distributed to the community. This amounts to approximately $300 million (in 2011). 5.5 Gaming machine owners locate their machines in hotels and other licenced places for adult members of the public to play. 5.6 The current legislation, regulations and rules specify minimum rates of return to players, minimum percentages of proceeds which must be distributed to the community, and limits on the costs which can be claimed by gaming machine operators and licenced venues. 5.7 The fund raising entities (which own the machines) are also responsible for distributing the funds to community groups which apply for grants. Extensive rules have been created to seek to avoid corrupt behaviour and inappropriate influence over decisions about where grant funding will flow. 5.8 All grant making entities must be transparent in their grant making processes and distribute funds only to the authorised purposes set out in their statement of incorporation. The authorised purposes must be consistent with the requirements of the Charities Act.

4 5.9 Gaming machine operators have special tax privileges under income tax legislation Gaming machines are distributed widely throughout the country and tend to be concentrated in licensed premises because these are already age controlled. Therefore the distribution of gaming venues is a direct function of the distribution of liquor licences It is illegal to establish a gaming venue where gaming is the dominant purpose of the business. Problem gambling is an acknowledged addiction which requires treatment by qualified professional staff including psychologists. Problem gambling behaviour is relatively strongly associated with gaming machines. 6. Response to the Bill 6.1 FINZ (The Fundraising Institute of New Zealand) represents the interests of organisations which raise funds from the community. Therefore, amongst the diverse membership of FINZ, we have organisations which operate gaming machines to raise funds and also those which look to the gaming machine societies as a source of funds. Some members have made principled choices not to seek funds from gaming machine operations. 6.2 This submission reflects a relatively agnostic approach to the operation of gaming machines. 6.3 It is acknowledged that gambling can cause harm to some people but this is not true of all people who enjoy gambling as an entertainment. 6.4 Therefore the question becomes does the benefit to the community of having a simple way of raising substantial funds for investment back into community projects outweigh to cost to society of the harm created? In the New Zealand context all gambling operators pay a levy to fund the total cost of the provision of health services specifically aimed at problem gamblers. This does not reimburse families for the monetary and other costs of unwise

5 actions of a problem gambler but it does pay for nationwide prevention and treatment programmes. 6.5 The purpose of the Bill (according to the Digest) is to enable local authorities, in consultation with their communities, to reduce the number of, or even eliminate, pokies from those suburbs where they are particularly concentrated or doing particular harm. 6.6 In addition the Bill proposes to give gamblers more ability to limit and control their own gambling behaviour through player tracking and pre commit cards. 6.7 This submission will therefore concentrate its comments on the consequences of the first objective (as in 6.4 above). 6.8 FINZ endorses the proposed change to the authorised purposes provisions of the current legislation. 6.9 FINZ also endorses any steps which can be taken to help problem gamblers manage their gambling behaviour. Whether legislative change is required to enable this to happen is a moot point because FINZ understands there are no obstructions to the introduction of player tracking and pre commit cards on a voluntary basis It could be argued that the harm some gambling causes to individuals warrants mandating player tracking as a compulsory feature of the highly integrated system which exists now. That would require gamblers to have an electronic card which would permit gambling on any gaming machine only when swiped through a reader The technology exists to recognise dangerous gambling behaviour which could be used for warnings and even to shut down the gaming machine in serious cases While there is a risk of card swapping the disruption to a non problem gambler who swaps cards with a problem gambler would soon become unattractive.

6 6.13 Clause 5 of the Bill seeks to exclude the racing industry as an authorised purpose for the distribution of grant funding from gaming machines. FINZ endorses this proposed change because it is incomprehensible to members that the racing industry which is a for profit industry with its own highly lucrative gambling arm (the TAB) should also benefit from the proceeds of another form of gambling. It is impossible to contemplate the racing industry as needing community assistance to survive beyond that which it already gets from taxation incentives and public support. If it can t survive without money from pokies it is doubtful that it deserves to The greatest issues of concern however arise in the other clauses of the Bill which seek to eliminate gaming machines from communities Clause 6 seeks to mandate a requirement that 80% of funds raised in a territorial district be returned to that district by way of grants. FINZ understands that philanthropic agencies do distribute grants on that basis or something similar. This is in recognition that what comes out of a community should go back in The fundamental problem with this approach is that the Government would lose approximately $250m a year in taxes; the Problem Gambling Levy would probably have to go; and distribution problems would be exacerbated rather than relieved because funds would end up in the hands of low quality recipients In addition the inability to properly fund ownership and operation of gaming machines would result in wholesale exit from the sector creating redundancies and other negative outcomes It is likely that the medicine would kill the child. But worst of all, the impact would be to drive problem gambling underground and therefore make it much more difficult to treat.

7 6.19 The absence of pokies will not stop people gambling and will only drive problem gamblers into modes which are unregulated and therefore have even less community benefit At least pokie venues provide a place where gamblers (especially problem gamblers] can be identified and the process of treatment and behaviour change commenced. No pokie venues mean a significant disruption of effective treatment and intervention But communities are often wider than a narrow geographic interpretation and the ability for worthy national or regional organisations and causes to be supported may well be frustrated by such an iron clad requirement In addition the location of a recipient organisation is not always a reliable indicator of where it does its work and the administrative workload which is implied would prove frustrating for both donor and recipient Clause 7 provides for the expiry of all venue licences one year after the policy comes into force. It is unclear why this particular provision is being promoted Venue licences already need to be renewed annually and in the event there is evidence of a history of breaches of licence conditions the DIA has the power to either suspend or cancel the licence This provision would require every territorial authority to make a decision about whether to support or decline a licence for each venue in its territory. There is no indication in the supporting documentation about whether there are any objective criteria to be considered The inevitable conclusion is that the decisions will become highly subjective and vulnerable to intensive lobbying based not on facts but on emotional responses This, in the mind of FINZ, is the major underlying flaw which suffuses itself throughout this Bill. It is moving from a reasonably objective system which recognises the right of people in

8 the community to gamble if they wish, to one where emotion and hyperbole rather than fact will drive decision making at local government level This can t be good for local government or for community fund raising Likewise the proposal to transfer the power of grant distribution away from the existing operating entities is flawed because it places decision making about who will get money into an environment where local lobbying and pork barrel politics will become the imperfect means to achieve distribution There is nothing in the proposed legislation which provides certainty that it will result in a system to grant money to community, social service, iwi and sporting groups in their district on a fair, informed, transparent and accountable basis Neither is there anything in the supporting material which comprehensively makes a case that the current system is irreparably broken A better alternative would be to establish regional grant making bodies which would set their distribution policies at least triennially following a robust needs analysis in each district covered by the regional body There are changes which need to be made to improve the operation of gaming machines in New Zealand so that the negative impacts are minimised whilst retaining the ability of the sector to generate much needed funds for community projects but this Bill does not do that. 7 Conclusion As much as we sympathise and understand the honourable motives behind the Bill, it will not achieve its outcomes and has the danger in removing significant tax income from government

9 revenues; it will not address the concerns over problem gambling and does not guarantee the current level of income being distributed to the charitable sector. FINZ does not see local authorities with politically appointed representatives as being better able to distribute funds in a fairer and more effective manner than the current system although other regional grant making authorities similar to community and/or energy trusts are worth considering. Thank you for this opportunity James Austin CEO 20 June 2012

Submissions on The Gambling (Gambling Harm Reduction) Amendment Bill 2012

Submissions on The Gambling (Gambling Harm Reduction) Amendment Bill 2012 Arthritis New Zealand, National Office Tel 04 4721427, Fax: 04 4727066 PO Box 10020, Level 2, 166 Featherston St, Wellington New Zealand, Website: www.arthritis.org.nz 1 June 2012 The Secretariat Commerce