Saturday Forum: Our nation's capital is also the nation's poker machine capital

Welcome to Canberra, delegates.

We in the Australian Capital Territory have long prided ourselves on our support of progressive causes.

The only state of territory to vote for a republic at the referendum (and overwhelmingly so), more than 60 per cent of us regularly vote Labor after preferences are distributed.

We introduced Australia’s first Human Rights Act, we were the first to recognise same-sex unions (until the Commonwealth overruled us) and our Chief Minister Jon Stanhope is only one to have stood up to the former Prime Minister John Howard over his Anti-Terrorism Bill.

Our households are keen on green power, recycled water and banning plastic bags.

But suddenly, on the issues that matter to the new Prime Minister, we are getting left behind.

The new wave of causes being pushed by Kevin Rudd seem less than attractive to the man who is by now Australia’s longest-serving state or territory leader...

Jon Stanhope is vocal in his support of the ACT’s poker machine operators.

He has told our Legislative Assembly that when most people play the poker machines “there is no harm done to anyone”. “Imagine Canberra without our clubs,” he has said.

He won’t cut the number of machines and he won’t ban automatic tellers from the venues that house them.

Kevin Rudd wants to do both. He is having success with other states.

Queensland’s Premier this week cut the cap on poker machines and stopped them operating before 10.00am. Victoria said it would remove ATMs from pokies venues in 2012 when it ends the billion-dollar pokies duopoly enjoyed by Tattersall’s and Tabcorp.

But our leader offered nothing.

And he hasn’t been to the forefront on electoral reform.

Kevin Rudd has proposed capping the size of political donations. The NSW Premier Morris Iemma this week said he wanted to ban them altogether.

The ACT was in the uncomfortable position of being upstaged by NSW – the state whose electoral sleaze was laid bare on Four Corners this week in a program entitled “Dirty Sexy Money”.

In the ACT the money to run the local Labor Party’s election campaigns comes predominantly from the operators of poker machines. In no other state is the ruling party so funded.

Tim Costello, who will be chairing a forum that will discuss gambling at this weekend’s 2020 Summit says our Chief Minister is “brought to you by the gaming industry, he's an extension of the gaming industry”.

The latest Electoral Commission returns show why.

According to their figures, in the last financial year $238,552 of the ACT Labor Party’s $587,123 of income came from just one donor – the Canberra Labor Club, a money-making machine that operates more than 400 poker machines at its venues in Civic, Belconnen, Charnwood and Weston Creek.

The Canberra Labor Club is the seventh-biggest political donor in the entire nation, and by far the biggest in the ACT.

The Electoral CommissionA says the ACT ALP’s next biggest donor is the Woden Tradesmen's Club, which happens also to be an operator of poker machines.

ClubsACT says there is nothing surprising about these donations to the ALP. Its President David Lalor wrote in The Canberra Times last year that the Labor Club was “set up to support the ALP”, just as the Hellenic Club supports the Greek community, the Ainslie Football Club supports the AFL, and the Vikings Group the rugby union.

But the electoral commission records suggest that the Canberra Labor Club hasn’t supported the ALP by fund raising in the traditional sense. Neither in the last financial year when the threshold for reporting donations to organisations such as the Labor Club was $10,300 nor in the previous two years when the threshold was $1,500 did it report receiving any donations to advance the Labor cause.

Instead it has operated as a business, operating poker machines.

The purveyors of businesses such as the Canberra Labor Club are treated more gently here than they are anywhere else in Australia.

This graph, sourced from the industry-funded Australasian Gaming Council tells the story. The ACT has more poker machines per head than does any other state in the nation, even the supposed poker machine capital of NSW.

At 20.7 machines per 1,000 adults, we have more than NSW at 19.5 and almost half as much again as does Australia as a whole at 13.

On average each ACT resident pumps $746 into the machines each year, the second-highest spending rate in the nation, behind NSW.

And yet oddly, the ACT has taxed the purveyors of poker machines much less than has the typical Australian state.

Taxation figures released this week show that the ACT Treasury made $31 million from gambling machine tax last financial year – around $90 per resident.

But Australia-wide the total was $140 per resident. In NSW it was $160 per resident.

Our government has been prepared to both tolerate more poker machines per head than any other state and to raise much less revenue from them (although it did announce a tax increase in its last budget).

And it has been also extraordinarily protective of the special position of clubs such as the Canberra Labor Club when it comes to deciding where the poker machines should be housed.

Every other state of territory has allowed poker machines in its casino. Not the ACT.

Every other state or territory that does allow poker machines in clubs, also allows a fair few in its hotels. Not the ACT.

Whereas in Victoria the poker machines are evenly split between the clubs and hotels, and in NSW the clubs have three times as many as do the hotels, in the ACT the clubs have 5,000 poker machines to the hotels 100-odd, according to the Gaming Council.

The ACT Labor Party - predominantly funded by the purveyors of poker machines - allows more of them to operate more than would be allowed anywhere else, taxes them more lightly, and appears to protect the operators from competition.

The Chief Minister maintains that for most of us of us his support for poker machines is harmless. He has told The Canberra Times that he sees them as “an outlet” and has asked: “Who am I to deny people their pleasure?”

There is much that is good about the clubs that operate poker machines. They keep ACT residents from going across the border to Queanbeyan to play the pokies as used to happen before the pokes were allowed in almost 30 years ago.

Around 500,000 of us are members of the clubs, although many of us have joined for the food rather than pokies and would probably be happier if their spinning wheels fell silent.

The ACT’s clubs are required to spend 7 per cent of their poker machine revenue on sporting and other community activities, even if they are required to pay less tax than they would have to elsewhere.

And we should be able to cope with a high concentration of machines better than the residents of other states. We earn more.

For that reason the amount we spent on pokies is low as a proportion of income compared to other states, although it is creeping up.

No more of our gamblers are “problem gamblers” than is typical in the rest of Australia, according to the Productivity Commission.

But nevertheless, perhaps because of our high incomes, we’ve proven ourselves to be particularly bad at handling the money we gamble with.

The Gaming Council says the ACT has the highest gambling and speculation related bankruptcy rate in the country.

While our population is a mere 1.6 per cent of Australia’s total, we account for 4.8 per cent of Australia’s gambling-related business bankruptcies and 5.8 per cent of gambling related personal bankruptcies.

Our government could act to reduce this toll, as Kevin Rudd wants. It could eliminate the use of $10 and $5 notes in the machines and limit them to coins. It could ban ATMs, which in many Act clubs are sited just metres away from the machines.

It could wind back the number of licences, and push up the tax rate to the Australian standard.

Refusing to accept political donations from the gambling industry might be a big ask, given that it provides half the ACT Labor Party’s income, but outlawing political donations of any kind, as NSW says it wants to, might not be.

An end to political donations (or at least a limit on their size – perhaps to $2,000 per donor) would ensure that the Labor Party’s local business-funded opponents were never able to outspend it, and should be electorally popular.

Jon Stanhope hasn’t left it too late to show leadership on both issues, but the doors are closing.

In seven weeks time South Australia’s extraordinarily popular “No Pokies” politician Nick Xenophon will join the Senate. He will be keen to forge alliances to wind back the pokies industry nationwide. The Prime Minister has already indicated that he is on side, and the 2006 WorkChoices High Court case established that the Commonwealth had the power to override the states when it comes to regulating corporations.

Should there be any lingering doubt about the Commonwealth’s power in this area, it could start by imposing tougher controls on poker machines in the ACT, where it has undisputed ultimate authority.

The ACT Chief Minister could avert this possibility by showing that he is as serious about winding back the influence of poker machines as are the Premiers of Queensland and Victoria.

And in the ACT’s May Budget he could push the tax take from poker machines up to the Australian standard.

Without action, the ACT and the ACT Labor Party are at risk of being punished financially.

With less tax taken from poker machines than the Australian standard, the ACT is setting itself up for less compensation than other states when the Commonwealth or the Commonwealth and the states in combination take action.

And with more than $200,000 of the ACT Labor Party’s funds sourced from one donor in the poker machine industry it is setting itself up for a collapse in revenue should donations be limited.

It is a good time to wean both the ACT and ACT Labor off their poker machine addictions.


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Saturday Forum: Labor - whose party is it?

Prepare to adjust your view of Australian politics. Much of what we’ve been told is no longer true, and the eye-opening list of donations released by the Australian Electoral Commission on Friday explains why.

During 2006/07 businesses provided more funds to the Labor Party than did unions, roughly twice as much.

The Labor Party may or may not be run by “union fanatics” as the Coalition’s election ads repeatedly told us, but it is not bankrolled by them.

It does however have considerable financial resources of its own. It’s biggest donors were its own investment corporations - Labor Holdings Pty Ltd, Labor Resources Pty Ltd, and John Curtin House Limited, between them stumping up $9 million.

The Labor Party comes across as something of a business machine, quite at home in the world of capital.

Its seventh-biggest donor nationwide was the ACT’s own Canberra Labor Club, a commercial venture that turned over $31 million last financial year - mainly generated from poker machines, its TAB commissions and rents...

It earned $24,000 from cigarette vending machines.

The Canberra Labor Club appears not to concern itself with raising money from Labor supporters in the conventional sense. Neither in the last financial year when the threshold for reporting donations was $10,300 nor in the previous two years when the threshold was $1,500 did it report receiving any donations to advance the Labor cause.

The Liberal Party has been less enthusiastic about running business enterprises. Its Cormack Foundation, set up to invest the proceeds of the sale of the Melbourne radio station 3XY, is the chief exception. It handed $2.2 million to the Liberal party during 2006/07, much less than the $4.9 million Labor Resources handed over to the ALP.

The Liberal Party receives donations from individual businesses, but not that many more than does Labor.

The ANZ Bank was among its biggest donorsin 2006/07, handing over $150,000. But it gave the ALP $75,000.

Similarly while the ethanol producer Manildra gave the Liberals $173,900 and the Nationals $59,450, it handed Labor $150,000.

Westfield handed Labor and the Liberals each $150,000 - even-handed treatment practiced also by Meriton, Coles, the Walker Corporation, Tabcorp, Grocon, Mirvac, and Leighton Holdings.

At times the evenhandedness must have hurt. Westpac was run at time by David Morgan, husband of the former Labor Minister and member for Canberra Ros Kelly. It made sure that its combined donations to the Liberals and the Nationals roughly matched its donations to Labor.

Evenhandedness would also seem to have hurt for Employers Mutual, on the face of it an organisation with the interests of employers, not labour at heart. But it donated $61,000 to the Labor in addition to its $80,000 for Liberal, perhaps in the knowledge that its workers compensation business could do with support from state labor governments.

Other firms made only a show of even-handedness. Village Roadshow showered Labor with $203,700 while keeping the Liberals and the Nationals happy with much smaller amounts of $30,000 and $20,000.

The common thread linking most of these big donors is their vulnerability to government decisions. Many are retailers or developers subject to planning decisions. Tabcorp is vulnerable to decisions made about gambling.

Playing both sides of the street may be a way of attempting to ensure that they still get listened to should there be a change of government.

But taken together with Labor’s business acumen and its support from trade unions, this evenhanded approach on the part of business has ensured that the Liberal Party - once thought of as the party of capital - had less of it during 2006/07 than did Labor.

Some of the Liberal donors are rusted on. Gerard Corporation is run by the South Australian manufacturer Robert Gerard who was forced to resign from the Reserve Bank board in 2005 when it was revealed he was in dispute with the Tax Office. His corporation still gives to the Liberal party, andonly to the Liberal Party, but last financial year it gave just $50,200, compared with $150,000 in 2004/05 when Robert Gerard was flying high and on the Reserve Bank board.

Adelaide Brighton Cement is another company that is keen on the Liberal Party only, giving it $150,000 in 2006/07. Ramsay Health Care is similarly keen, if bashful, pumping $125,000 into the Liberal party through a conduit called the Free Enterprise Foundation. Inghams, the chicken company gave to only the National Party, handing it $100,000.

The new rules about what has to be reported introduced at the start of 2005 mean that there is now a lot that is not now reported.

Before 2005 only donations worth less than $1,500 escaped the net. Now it’s donations worth less than $10,300.

Back then more than 1,200 donors owned up. In the financial year just finished it was only 218.

Donating just a bit less than the maximum may be common. The 500 Club, which raises money for the Liberal Party, reported giving it $246,000 but reported none of the individual donations made to it.

And some of the really big donors are hardly household names.

Ferrara Holdings Pty Ltd and Mulpha Australia each gave the Labor Party $200,000. Hong Kong Kinson Investment Limited and Marbal Pty Ltd each gave it $100,000.

Ferrara Holdings is run by Western Australian businessman Allan Blood who was hoping to establish a power plant in the Latrobe Valley. It sent its donation to the Victorian branch of the Labor Party.

Mulpha is the Australian subsidiary of a Mayaysian property developer. Hong Kong Kinson Investment Limited and Marbal Pty Ltd are more obscure.

Other donors are politicians.

Evan Thornley founded the technology company LookSmart. He gave the Labor’s Victorian branch $232,700 at about the time was elected to the state’s upper house and became Parliamentary Secretary to the Premier.

Senator Julian McGauran gave the Liberal Party $20,000 at about the time he defected to it from the National Party.

Taken together the electoral returns paint a picture of a Labor Party that courts and gets very big donations from business, often from businesses that it has the power to hurt or help at the state level.

Labor is also good at running businesses - much more lucratively than the Coalition.

In government in every jurisdiction in the country, Labor is not only the traditional party of the workers, it is now - to a greater extent than its opponents - the party of capital.

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Tuesday Column: The city the poker machines ate

There’s something very odd about poker machines in the ACT.

And I don’t just mean the Chief Minister’s absurd-sounding statement that they are okay because some people enjoy using them. He told this paper last month that he saw them as “an outlet” and asked: “Who am I to deny people their pleasure?"

Part of what’s odd about poker machines in the ACT is the sheer number of them.

There are 5,200 poker machines within the ACT’s borders. That’s right – 5,200, which according to the Australian Gaming Council is more per person than any other state or territory.

The ACT is better served with gaming machines than is Australia’s supposed poker machine Mecca, NSW...

A few weeks back the ABC’s Four Corners broadcast some harrowing stories of the lives wrecked and lives ended by poker machines in NSW.

One woman was living on the rent from a half-a-million dollar house she owned. As her habit took hold she sold it and used all of the proceeds to feed the machines.

A Woolworths’ pay clerk stole $2.6 million to keep feeding them. Her club knew she was pushing in an obscene amount of money but never tried to stop her. She was jailed for seven years and her husband committed suicide.

In the wake of the program Labor’s leader Kevin Rudd said that he hated poker machines. Tim Costello, the head of World Vision Australia said he wanted the numbers cut, the machines slowed and automatic teller machines removed from the clubs and hotels that house them. His brother, the Treasurer Peter Costello applauded the owners of the South Sydney Leagues Club Russell Crowe and Peter Holmes a Court for announcing their plan to remove all of the club’s 160 poker machines.

Four Corners only ventured into the ACT in order to interview an ANU academic. But I suspect that if it had lingered it could have made an equally shocking program about what is happening here.

At the Canberra Tradesmen's Union Club in Dickson the ATM is placed just metres away from the machines. The Gaming Council says the ACT has the highest proportion of gambling-related bankruptcies in the country. While our population is a mere 1.6 per cent of Australia’s total, we account for 4.8 per cent of Australia’s gambling-related business bankruptcies and 5.8 per cent of gambling related personal bankruptcies.

Disturbingly, the Council says gambling-related bankruptcies are climbing in the ACT while they are falling in Victoria, Tasmania, Western Australia and the Northern Territory.

Our special status in hosting the highest number of poker machines per head in the country probably makes us special internationally. Australia is said to have the highest concentration in the world. Tim Costello says that when he recently outlined Australia’s poker machine saturation to the British House of Lords its members were so staggered they thought they had misheard him.

The ACT might just be the world’s poker machine capital.

(As it happens we are not a world leader when it comes to the amount poured into the machines per head of population. NSW beats us there, using its machines more intensively. Even if our bankruptcy statistics suggest we do so less wisely.)

So why won’t the Chief Minister cut the number of machines, remove ATMs from the venues that house them (not just from the rooms) and slow them down?

You would imagine that it’s because our Budget is dependent on poker machines. That’s Tim Costello’s guess. He says Australia’s states and territories rake in more than $4 billion a year in poker machine taxes.

But the thing that’s really odd about the ACT and poker machines is that, notwithstanding the number we have and the amount of money they rake in, in the ACT government gets little of it.

Each year the industry-funded Australian Gaming Council produces a comprehensive database on gambling spending and taxation. Its latest figures, for 2004-05, show that the ACT’s per capita tax take from poker machines is not the highest or second-highest in Australia as would be expected, but the fourth-highest - behind NSW, Victoria, Queensland and South Australia. Only Tasmania, the Northern Territory and Western Australia rake in less tax per person from poker machines than does the ACT - and Western Australia doesn’t have poker machines outside its casino.

The figures aren’t a fluke. The Grants Commission has been reporting for years that the ACT collects less gambling tax than would be expected.

The actual tax rates are hard to compare. NSW bases its rates on “annual revenue”; Victoria on “player loss”; Queensland on the “monthly metered win” and the ACT on “gross monthly gaming machine revenue”.

But the result is that we take in less than each of those states per person, and a good deal less per dollar gambled.

The Chief Minister is completely correct when he says that the ACT’s Budget is not dependent on poker machine revenue. $31 million out of $3 billion would be noticed, but its loss would hardly be fatal.

Which raises two intriguing questions. Why won’t the Stanhope government increase its taxation of poker machines to the Australian standard (it could run more busses and keep open more schools) and why is the Chief Minister so insistent that he won’t legislate to cut the number of poker machines to something less than our current Australian record high (after all, he isn’t dependent on them).

I don’t know the answers, but I have a suspicion. The Canberra Labor Club runs more than 400 poker machines at its venues in Civic, Belconnen, Charnwood and Weston Creek. The Tradesmen’s Club (owned by the Construction Forestry Mining and Energy Union) runs many more.

The Canberra Labor Club stands out as being an enormous donor to the ACT ALP. Its contributions, reported each year to the Australian Electoral Commission, dwarf those of every other donor. Lesser donors include the Tradesmen’s Club and the Canberra Southern Cross Club.

The Electoral Commission figures suggest that without the hundreds of thousands of dollars donated to it by the Canberra Labor Club, much of which would come from its 400+ poker machines, the ACT ALP would be in financial trouble.

I’m hoping this isn’t why the Chief Minister is reluctant to seriously restrict the operation of poker machines in the ACT. (He has limited the machines to taking $20 notes but he hasn’t stopped them taking notes; he has taken the ATMs out of the gaming rooms but not of the venues).

I am hoping there’s another reason. I would like him to explain what it is.

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