Image for Will the ALP Dance to Lennon and Old’s Pokies Play List?

*Pic: Image of Paul Lennon from HERE

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Pic: of Steve Old

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*Pic: From ‘Team Mulawa’ here: “Greg Farrell Jr, “Mr. Mulawa”: Greg is by nature very hands-on – activity done translates into learning and understanding – and he still applies this essential quality to the horses with ambitious zeal and earnest dedication. Greg is a natural horseman – his innate affection for and confident ease with horses is readily apparent in his daily interaction with the horses at every level. Although Greg’s primary vocational responsibility has always been Managing Director of Federal Group (the highly successful and widely respected Australian owned family business and the world’s second oldest hotel group), he always finds quality time for the horses. He remains integrally involved with all the handling and training of the Mulawa Arabians, from early breaking through the professional turn out of top level show ring performers in hand. (Pictured with ADVENT) “

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Greg Farrell, Federal Group MD

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*Pic: The skilful punter ... David Walsh

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The book by James Boyce ...

First published August 16

Next month the parliamentary select committee on gaming will make its recommendations. The ALP will then decide the poker machine policy it will take to the next election.

Because the Treasurer, Peter Gutwein, has reiterated the Government’s commitment that all existing venues can keep their pokies whatever the Committee recommends, it is the Labor Party that will decide the future of poker machines in Tasmania.

If they break their fifty-year alliance with Federal Hotels and make an electorally popular decision to put the interests of small business and disadvantaged people before the profits of the party’s patrons, the current contract could be the last. All that needs to happen is for a ministerial letter to be sent to Greg Farrell of the Federal Group in 2018 giving notice that the company’s contract won’t be renewed, and all poker machines will have to be out of pubs and clubs by 2023.

There is no certainty what the Select Committee will recommend, not least because two of the so-called independents sitting on it, Robert Armstrong and Tania Rattray, are the only two members of the Committee who have refused to disclose the donations they have received from the Federal Group. However, the Chair, Mike Gaffney, has integrity, and with the ALP and the Greens could yet deliver a report recommending a rollback of the pokies to the casinos.

It is not surprising given the current state of play that the pokies industry is focussing its lobbying efforts on the ALP. It is perhaps a sign of how out of touch they are with the genuine changes that have occurred in Tasmania over the last decade, that the two men they have chosen to represent them, Paul Lennon and Steve Old, embody Labor’s discredited past.

I first experienced the depth of Paul Lennon’s support for Federal Hotels during the Bacon Government when, as Manager of Social Action Research Centre at Anglicare, I tried to arrange meetings with the Gaming Minister to discuss his decision to remove all bet limits on Tasmanian poker machines six months after coming to office; correct his public statements that this was required under the poker machine contract; question his refusal to release research funds from the community support levy set aside under legislation for just this purpose, and push the need to conduct the promised evaluation of the unmonitored code of industry practice that the Minister regularly declared to be the best in the nation.

Both the Minister (Lennon) and the Premier (Bacon) consistently proved to be too busy for a meeting, and one of the ministerial minders informing me of this was Steve Old who took it on himself to dismiss the importance of the issues we were raising.

Paul Lennon had already proved to be a good friend of the Farrell family (who fully own Federal Hotels) by this time. During the Bacon government, many people in the Labor Party used to complain that Lennon had been inconsistent on pokies – he had opposed them in opposition and supported them in government. In fact, he has been remarkably consistent on this issue for nearly three decades. Lennon has always supported the position of Federal Hotels.  As the Opposition Gaming Spokesman in 1992-3, he opposed the rollout of the pokies into hotels but supported the introduction of high intensity, high-addiction machines into the casinos (the only pokies then allowed in the casino had to simulate casino games – that is they required player choice and have to be actually played. Such machines are less addictive and thus less profitable). What is often forgotten is that Lennon’s position was also the position of Federal Hotels, who did not want pub pokies to disrupt their gambling monopoly.

So widespread was the opposition (including from within the Liberal Party itself) to the Groom Government’s pokies legislation that they seemed to have little chance of getting their Bill through parliament in the late winter of 1993. But then the Government suddenly abandoned its policy of an open tender process (the whole point of single licence model was that it could be out to tender and maximise the government return) and just handed over the single licence to Federal for free. The tax rate set was almost the same as that recommended by Federal Hotels in their submission to the Legislative Council earlier that year.

So rapid was the capitulation to Federal Hotels that Paul Lennon was caught flat-footed and his parliamentary comments focussed on the impact of the local football competition should one club get pokies and another not.

Despite taunts and jibes from the government benches, the man who had pushed how much harm would be caused by pokies coming into pubs, now refused to condemn the deal.

The ALP might not have formally abandoned its former opposition to pokies but in practice it did so. The Legislative Council also caved in with disturbing ease once Federal Hotels changed sides, and the strangely named Gaming ‘Control’ Act that had been facing defeat now passed relatively easily through parliament. Questions about the conflicts of interest of MPs who proved so ready to abandon the central recommendations of their own Select Committee Report were raised in parliament and remain unanswered to this day.

Lennon remained the staunch ally of Federal Hotels throughout his premiership. In May 2004, he even crossed a union picket line at the Farrell-owned Country Club to show where his loyalties lay. As the Liquor, Hospitality and Miscellaneous Workers Union state secretary, David O’Byrne, observed to BRW, ‘it was hard to explain to … members why a Labor premier was staying there.’

Lennon dismissed those who pointed out that the new 2003 poker machine contract (that had been negotiated in secret and again handed to the Farrells for free), meant that hundreds of millions of dollars of public funds had been transferred from the government to one of Australia’s richest families.

This was money that could have been spent in under-funded and overstretched health, education and community services. Lennon pointed to the company’s supposed $80 million dollar investment in Tasmanian tourism as a community return, but in reality the company’s investment amounted to purchasing 12 of the top 23 poker machine hotels in the state, the 9/11 bottleshop chain and some already established and successful tourism businesses. 

One of his last acts as premier before being forced to resign in 2008 was to defend the company from criticism that it had not delivered on the 180 jobs Mr Farrell had promised to parliament would be provided by the one new development he had promised should the new 2003 pokies contract be passed unamended. The revised employment figure for the Coles Bay hotel with convention facilities required to be built by the terms of the poker machine contract was 38.

Meanwhile, Steve Old had by this time gone to work for the Australian Hotels Association. This body already had a solid record selling out its members in the interests of its single biggest donor. 

In December 1993, the independent MLC, Peter Schulze, was mystified as to why the Australian Hotels Association was not seeking to lobby Legislative Councillors given the reduced returns available to hotels set out in the legislation compared with what had been recommended by the Council’s Select Committee earlier that year: “I cannot understand why the clubs and hotels have not sought to have a session with the Legislative Council. I cannot understand why they have not sought to brief us on this matter, to put their points of view, because … their share in this affair is much lower than our Committee recommended.”

There seems no rational reason why the peak body representing hotels supported having a ‘middle man’ that took the lion’s share of profits. Even the right of Federal Hotels to decide which venues would receive poker machines and which would be denied them was never a matter of public concern to the AHA. The peak body never publicly questioned the right of Federal Hotels to buy hotels despite the unfair competitive advantage this conferred to the company. All this is in was in stark contrast to Victoria where in 2003 lobbying from the AHA led to the two licence holders being banned from owning pokie venues and losing their right to decide which would receive machines. The AHA in Victoria were also strong supporters of the move by the Victorian Government to remove the ‘middle men’ from the industry altogether from 2012 in favour of licencing venues directly.

There is no doubt that many hotel owners were unhappy with the power and the profits afforded to Federal Hotels by the monopoly licence. The former Labor Minister, Steve Kons admitted that he discussed with ‘hoteliers around the place’ the fact that Federal Hotels had ‘the ability to exclude people from the market by buying hotels in certain areas. Wynyard was one in my electorate where they buy the hotel and other venues completely miss out and they can do that throughout the state.’

The Chair of the Tasmanian Gaming Commission, Don Challen, testified to a parliamentary committee that during the 2003 negotiations he had tried ‘to improve the deal for the venues. Remember I was the Chairman of the Gaming Commission at the time and I had been getting lots of complaints from the venues about the bad deal in the 1993 deed, so we wanted to improve that.’ The complaints were frequent enough for Challen to describe them as ‘aggravation’.

The only concession Challen was able to achieve was the removal of the relatively small fee charged to the hotels to administer the central poker machine network. There was no increase in the high percentage of losses going to the venue; no reduction in the rent charged to the hotels to recoup the purchase and maintenance cost of the machines; and no qualification to the freedom of Federal Hotels to allocate and remove poker machines without reason or redress.

Challen achieved so little not because he did not understand the issues but because he had so little negotiating power. If the AHA had been representing the interests of its members during the previous decade by publicly advocating for them, the plight of the pubs would have been a political and PR problem that both the Government and Federal Hotels would have found it difficult to ignore.

The interests of hotels without poker machines, that formed the large majority of the AHA membership, also lacked public representation. As Peter Gutwein noted in parliament on 29 May 2003, ‘anecdotal evidence from the industry is that the hotels without poker machines are suffering a major loss of business, a profound loss of business. Many of them are going to the wall and this is actually crucifying not only their businesses but also the social activities and the community that was built around them.’

At the very least, a peak body purporting to represent its members would have asserted its right to be part of poker machine contract negotiations. The AHA was locked out of the secret deal-making in 2003 as comprehensively as community groups. However, unlike community organisations, the AHA never publicly complained about this. What did the AHA think about Greg Farrell’s assertion that ‘There are many stakeholders involved in this and our view is that negotiations of a commercially sensitive nature should be conducted entirely privately’ as consulting ‘prior to having a signed agreement … is tantamount to causing anxiety to … other parties, which would be entirely unacceptable’?  Did the AHA agree that its members should be protected from ‘anxiety’ by having everything decided before they got a say?

The AHA seemed to actually support its exclusion from the contract negotiations. Its submission to the subsequent parliamentary inquiry expressed no concerns with the process or the outcome, and argued that it would be a ‘dangerous precedent’ if ‘any Government deal had to be subjected to scrutiny and possible amendment by Parliament’.

The AHA was even opposing amendments that its own members would directly benefit from! 

Greg Farrell testified to the Public Accounts Committee in July 2003 that he believed that the hotels were satisfied with the status quo because the AHA would have made ‘substantial representations’ to the company if they were not. He observed that ‘In all reality, over all the years I have been involved in this business, I would have to say this is not the case.’ The Premier also understood the peak body’s position, assuring Parliament that he believed that the AHA ‘are not greatly concerned about the agreement that has been entered into’.

The general manager of the AHA at this time was Daniel Hanna who went on to work for the Tourism Industry Council before taking his current position as the Corporate Affairs Manager at Federal Hotels. This career path, from running the AHA to becoming a senior manager within Federal Hotels, was first followed by Paul Crossin, the man in charge of the peak body when the 1993 pokies contract was pushed through parliament.

The man who replaced Hanna as the CEO of the AHA, Steve Old, defended the poker machine contract with even more extravagant vigour after he commenced work in 2007.

Old suggested that employment across the whole hospitality industry was threatened by pokies reform. In response to the Green’s election policy to gradually phase out poker machines, Old asserted during the 2010 campaign that ‘More than 23000 Tasmanians are employed in the hospitality sector and understandably they are extremely concerned for their livelihoods with such harmful policies being touted by the Greens.’ 

After Premier Giddings showed signs that she might support a national reform agenda he proclaimed that ‘If she wants to have a war as the new Premier, she’s got one… Does she want 300 pubs and clubs in the state having signs up slamming her?’ At the time about 90 hotels and 10 clubs had poker machines.

The AHA is now the Tasmanian Hospitality Association and purports to represent the interest of 2000 restaurants, pubs and clubs. Nevertheless, the THA still shows no signs of being interested in the findings of the Social Economic and Impact Study concerning the harm being done to the hospitality sector by current poker machine policy. Nor did it express any public concern about its exclusion from the negotiations for a pokies contract extension that were conducted directly with Federal Hotels during the winter of 2015.

It was only in the wake of the public controversy that followed the intervention by David Walsh in September 2015 that the organisation finally acknowledged that some hotels want ‘to get rid of the middle man’ and Old publicly committed the THA to seeking ‘a better deal’ for its members even though he also remains ‘more than comfortable’ with Federals monopoly.

The revised THA policy was not made in the interests of members but was a necessary concession to the few large chains, like the Dixon Group, who dominate the hotel poker machine market. The vast majority of hotels and all other hospitality businesses continue to lack any representation on this issue.

The 2008 Social and Economic Impact Study found that average Employment in Tasmanian hotels fell by 14% in each of the three years after pokies came in, compared to the three years before (despite an economic recovery at this time).

The researchers found that the reason for this was that self-service poker machines do not employ many people and take expenditure from businesses that do. For every million dollars lost on a poker machine, three people were employed. For every million dollars spent on food services, twenty people got a job. The 200 million dollars of diverted expenditure cost jobs and hit hospitality businesses hard. For every dollar spent on a poker machine, the study found that sixty five cents was lost to businesses in tourism, hospitality and culture.

The abject failure of the AHA/THA to represent the interests of its members since 1993 means it has no credibility in public debate on poker machines.

The fact is that nearly three quarters of hotels will directly and substantially benefit from a pokies rollback to the casinos. I believe that many of these hoteliers, and other businesses in the wider hospitality sector, will have their say as soon as there is a realistic political chance of change. Many people in the hospitality industry are aware that Steve Old is no more independent on this issue than the registered lobbyist who is now being paid by Federal Hotels to represent its interests to MPs - Paul Lennon.

The premier, Will Hodgman, has said he has not met with Lennon. This is not surprising as the main job of this old friend of the Farrells is to keep his own party in line.

Lennon and Old are pushing for Labor to return to its past and continue to provide special deals for corporate mates without regard to the public good. After two Productivity Commission Inquiries, three Social and Economic Studies, and countless research reports, the evidence is in – pokies do more social and economic harm than good.

The polls are clear that most Tasmanians also know that this is true. If democracy is functioning as it should, there can be only one outcome. The responsibility of party members, candidates and supporters is clear – the once in a generation opportunity to end this state’s disastrous twenty-year experiment in pokie proliferation must be seized.
Should the ALP choose to dance to the sad play list of Lennon and Old, the party will demonstrate that despite the change in personnel, when it comes to dealing with the vested interests of corporate mates, nothing of substance has changed. By contrast, no policy would more powerfully symbolise a return to true Labor values then to decide to send an ‘it’s over’ letter to Mr Farrell, and go to the election with a message of transforming hope to the people of Tasmania.

*James Boyce’s latest book is Losing Streak: How Tasmania was Gamed by the Gambling Industry. Parts of this article are sourced from Losing Streak and references for quotes can be found in the book.

EARLIER on Tasmanian Times ...

James Boyce: The massive public subsidy of a private family-owned firm ...

• Stephen Menadue in Comments: … As an ex addict of nearly 3 and a half decades of addiction to the pokies, I can with all authority state that these machines eroded all the bedrocks in my life and helped me do many terms in jail because I stole to feed the machines placed there by someone who knew that there was someone like me who would do whatever I could to keep feeding the machines.The Licencees will say that they definitely don’t want to encourage criminal activities by the placement of their machines but will look the other way as a shitload of money is laundered via their gaming ‘lounges’ …

• Cataraqui in Comments: … Stephen has the courage to anecdote his failures and his remedies and his regrets. Well done Stephen, give this man a medal for his public courage … and take the medals off the monsters who get them for their community servitude all wrapped up in crackling PR. Multiply the Stephens and the subject of this anecdote by the thousands. See them in the night-lights and bright hours of the day emerging from the mouth of the monster, in wheel-chairs and walking frames, young mums in momentary escape from domestic drudgery, the suddenly-single from partner-loss and on and on we can anecdote the victims of Hells’ singing angels …

Mercury: State Government pooh-poohs pre-poll pokies deal with Federal and Tasmanian Hospitality Association … “Can you confirm that Federal Hotels and the Tasmanian Hospitality Association have struck a deal to try to subvert proper parliamentary process?” Ms Dawkins said. “Will you now rule out locking in an arrangement with Federal Hotels and the THA before the next state election?” Mr Hodgman rejected suggestions of a deal. “I do understand a submission will be made with respect to the future of gaming activity, and it’s part of the process,” Mr Hodgman said. “It is a matter for the THA and Federal Hotels as to what they do but I reject any suggestion…that implies a motive or anything inappropriate by this government” …

Andrew Wilkie: Government must not accept Federal Hotels grubby deal

Mercury, Pat Caplice: Talking Point: Cheap pokies deal won’t cut the mustard

• James Boyce in Comments: … And may the ALP stare down the bullies and reject Lennon and Old’s deal which only redistributes some of the super pokie profits of the Federal Group to the few large hotel chains that own almost all the rest of the pokie hotels.  In the first drafts of my book, I included Steve Old’s reply to stories of suffering made at a parliamentary hearing:  ‘Don’t play the heartstrings with me mate’,  but decided to leave the comment out because it might be too upsetting. But I think now, with today’s concerted push to lock in misery, that his words should be read and remembered by MPs next time the THA boss knocks at their door. His comments got national media attention but were never retracted or apologised for …