MANY Tasmanian Times Readers will recall the extraordinary response to the moderate questioning by Liberal Leader, Will Hodgman, in early 2008 on aspects of the state governments pokies contract. The beneficiary of the public contract, Federal Hotels, questioned whether the Liberals were “capable of governing Tasmania”, and the company proceeded to place advertisements in all three daily newspapers “to set the record straight” and counter the “blatant misrepresentations” that had been put forward “in an irresponsible and highly offensive manner”.
The bullying seems to have done its job. The Liberals, presumably to show that they are ready for government in Tasmania after all, have said nothing since. And the inquiry by the Tasmanian Parliament’s Public Accounts Committee, which was charged with taking another look at the contract, has entered a long hibernation which now looks like it might extend until after the next state election. This is despite the fact that submissions closed on 1 September last year (over 14 months ago), there were few submissions to review, and the information they need is readily on hand.
There is a lot of public money at stake here. If Parliament has been misled, the argument that the contract should, at the very least, be amended so that a proper market price for the pokies licence is achieved, will become overwhelming. Consistent and proper public policy has always demanded that the pokies tax rate be increased to achieve a full market return, and end the massive public subsidies now flowing to the Federal Group (estimated by gaming industry analysts at Citigroup and ABN Amro to amount to over $100 million). However both major parties, while never disputing that there is a large public subsidy involved, have refused to amend the contract, citing sovereign risk and broader damage to investor confidence. In relation to such a unique, risk-free recession-proof licence to print money, this has always been a faulty argument (it was used by the pokie licence holders in Victoria also, but when the Government went ahead and increased taxes anyway the rest of the business community applauded), but all its logic will collapse once it is shown that Federal directly misled Parliament before the current contract became law.
My concern is that the delay in the PAC report, and the Liberals strange silence about this, reflects the fact that there has actually never been any doubt that Federals’ owner (with his siblings) and boss, Greg Farrell, misled the Tasmanian Parliament in 2003. This is an easily verifiable matter which any MP or citizen can soon establish for themselves. Mr Farrell told the original PAC inquiry into the pokies contract on 16 July 2003 that if the Upper House passed the necessary legislation without amendment his company would proceed with a particular development at Coles Bay that would generate approximately 180 direct jobs. His evidence to the PAC can be viewed HERE:
Mr Farrell further informed the PAC that if the contract granting his company a monopoly pokies licence was amended or blocked a considerably smaller Coles Bay project would be developed. Yet, despite the legislation being passed in full, the promised project was subsequently abandoned and a smaller one replaced it.
If the employment-intensive investment promised by Mr Farrell to Parliament in return for passing the generous pokies deal was never to be fulfilled, even more concerning was his baseless threats. In a strategy that was to be played out again in the pulp mill bill debate, and which is all too familiar in Tasmanian history, MPs were warned of dire consequences unless the Bill was passed quickly and without amendment. Mr Farrell specifically told MPs that he would have no option but to flood the state with another 1500 poker machines if the Deed was not passed. This threat ignored the obvious point that he would soon have no legal right to operate any machines, and that his logic depended on the assumption that his licence would be automatically renewed once the previous one expired. Such assumptions were later ridiculed by the National Competition Council, the only outside body to examine the pokies contract, who in their 2004 Progress Report pointed out that “expansion of machine numbers would be a strategy of doubtful merit, as it would result in the company owning a large number of near new gaming machines without certainty about the right to operate them in future.”
Mr Hodgman’s mild questions did not go to most of these matters, let alone the even more serious ones raised by the secret process leading to the signing of the 2003 contract, but nevertheless they represented a first from either major party. However it now seems that he too has been brought into line, and that the only hope for public debate, or even the PAC finishing its report before the next state election, will be renewed public pressure.
The simple points raised in a publicly funded advertisement placed in the Mercury ( HERE ) in response to the incorrect claims by Federal Hotels are as true today as they were in March 2008:
The licence to operate poker machines in clubs and hotels is the most valuable public licence available in Tasmania.
The Federal Group paid nothing to receive this licence.
The financial aspects of the pokies deal have received virtually no Parliamentary scrutiny. The PAC concluded that it was “unable to determine from the submissions whether or not… the renegotiated Deed meets the test of quality.”
The reason for this was because the Government and Company submissions did not provide the necessary information.
The Secretary of Treasury, Mr Challen, informed the PAC that the Government had sought no modeling on the market value of the licence. Nor had the Government sought data on how the proposed taxation levels compared with other Australian states and territories.
Gaming analysts at Citigroup, ABN Amro and elsewhere have variously estimated the amount of public revenue foregone as a result of this policy decision at between $100 million and $200 million.
The foregone revenue amounts to a financial subsidy from the Tasmanian Government to the Federal Group and has caused a gross distortion in the tourism and hospitality markets.
The Federal group provides funding to all the bodies that have attacked Members of Parliament who have recently asked questions about the contract.
None of these bodies have ever asked their members what they think of the pokies contract or how it is impacting on their business.
On a per capita basis Tasmania has one of the highest concentrations of poker machines in Australia, and indeed the world. The only outside body to review the pokies contract, the National Competition Council, described the number of machines permitted as at “saturation point”.
I do, however, agree with Federal Hotels on one point. Mr Hodgman’s response to this issue raises serious questions about whether he and the Liberal Party are ready to govern Tasmania. A continuing and convenient silence on the pokies contract and the dormant PAC Inquiry until March 2010 will strongly suggest that Mr Hodgman is no more able or willing than Mr Bartlett to confront the powerful vested interests which currently so distort decent public policy formation in this state.
R Menzies
November 6, 2009 at 20:16
Without doubt, gaming is an example of the stupidity of picking ‘no nuthins’ like the Hapless Hidding, the fool who supported gaming because he didn’t have the business sense to work out that 20 years times 200million p.a is 4 billion, which is what the Casino earns, so lets give it away for free. Or the incredible Crean, a gormless git, a financial spiv, who sold the state down the drain for what, nothing.
Shame on you all.
john hayward
November 9, 2009 at 12:30
Whether you’re talking about stupidity, cowardice, or venality, it’s hard to beat the Tasmanian LibLabs. This is only a nibble, however, compared to the massive siphoning of public assets promised by the pulp mill.
Unfortunately, a kind of boiling frog principle seems to apply to Tassie misappropriations, and our civic brains seem to be thoroughly overcooked.
John Hayward
Jim
November 9, 2009 at 12:40
The first solution to this problem should be fixed by introducing legislation in the parliament that the pokies contract should only be awarded to a public company. The contract is currently held by Mulawa Holdings ( a private company). If Tasmanians are going to lose in excess of $200 million a year, let them at least have a share in those losses. Licences in Victoria are held by publicly listed companies (tattersalls). NSW the licenses go to sporting and leagues clubs and their members. Is it correct that the licence granted here, is the only one that has been issued to a private company? This massive drain on the local economy, and re-distribution of wealth from the poorest sections of our community should be shared amongst Tasmanians (shareholders), not siphoned-off to one family.
William Boeder
November 9, 2009 at 13:16
Why has this State allowed itself to be dominated by greed seeking corporates and others?
It is clearly illustrated to us why Tasmania is still considered a lush corporate playground by the very corporates that increasingly appear to run this State of ours.
A clear indictment upon both the struggling Libs and the Labs of the Tasmanian Lib/Lab coalition.
Kim Lawson
November 10, 2009 at 03:05
It beggers to think that such a valuable license as the pokies license can be given away for nothing. Every other state has entered the gaming market to raise revenue, but it seems not Tasmania. One wonders what the real story is, but the Tasmanian public will never know. Shame Shame Shame.
Alison Bleaney
November 10, 2009 at 11:23
Public Health continually state that poverty is one of the biggest problems causing the wide array of serious health issues – many at levels higher than in other States – in Tasmanians (born and bred and those who now live here).
The ‘pokies and gambling deal’ does not look to me the smartest strategy to decrease an individual’s/ communities/State’s poverty. And those with the most to loose are the loosers in this case.
It feels morally as well as strategically, very wrong.
Dr Alison Bleaney
pilko
November 11, 2009 at 01:35
Boyce is a brave man.
Tasmanias public sphere needs more of his ilk.
I would be interested to hear Denison Ind. candidate Andrew Wilkie on Boyce’s concerns and how Wilkie might deal with the matter of the Public Accounts Committee’s tardiness in reporting its findings.
James is right about the parallel approaches of Tasmania’s two most imperious & influential companies in dealing with the parliament.
What is equally concerning is how meek and acquiescent our upper house has been in both matters of the Gunns Mill and Federal pokies licence. The Lower House is one thing, however the upper house is meant to guard against ‘hasty and ill considered legislation and provide a check on the Government of the day”.
James is also correct in observing Liberal and Labors spineless aversion to uttering anything that could be remotely construed as criticism of Gunns and Federal.
I previously wrote of the Parliaments approach to the Gunns Pulp Mill….
“Apart from young Labor backbencher Lisa Singh, no Liberal or Labor politician would be seen criticising Gunns – in or outside the parliament.
Parliamentary Hansard shows the Greens and Independents willing to confront and question Gunns on the pulp mill issue but nothing resembling criticism can be found in statements made by Labor or Liberal politicians. This contradiction typified the serious breakdown in communication between the Tasmanian Government and the community and RPDC on the Gunns Pulp Mill”.
Take some time out search through Hansard and see if you can find Liberal or Labor holding either of these companies to account in anything like the way the Tasmanian public would expect.
Federal’s attack on Will Hodgman, Gray and the Liberals attack on Ben Quin, Lennon and Parkinson’s attack on Terry Martin, Gray’s attack on Van Zetten….you get the point.
James Boyce compelling examination of how a pokies contract was awarded to Federal Hotels highlights the ongoing need for ICAC style body in Tasmania.
Andrew Wilkie
November 13, 2009 at 17:27
Thank you pilko # 7 for your interest in what I think about this article. Sorry to have taken so long to respond.
I share James Boyce’s concerns. Some of the reasons I’ve not joined him so far in his speaking out about Federal in particular is that (1) I’ve thought it important in the lead-up to the election to keep the focus on the conduct of the Government (2) at the end of the day companies like Federal and Gunns are just doing what the Government allows them to do (3) getting embroiled in a complex debate about the legal status of the agreement between the Government and Federal would have confused some people and become a distraction from the main issue which, for me, is all to do with the straight forward aim of getting rid of poker machines in Tasmania and (4) delaying until 2018 the abolition of all poker machines in Tasmania, which is the policy I’m taking to the election, gets rid of any legal distractions and would give the industry plenty of time to prepare for the change.
James and I discussed the tardiness, incompetence or weakness of the Public Accounts Committee before he posted his article. For me to telegraph on TT any future involvement on my part would obviously be unwise.
Shirley Glen
November 14, 2009 at 12:40
Having read James’ article and the comments, I find I have two questions in my mind.
The first is about government – when I was at school in the 1960’s I learned that the Lower House governed the state and the Upper House was in place as a check on any policies introduced by the lower house which were not in the best interests of the Tasmanian people. These Upper House members were all independent of party influence, but that all important aspect seems to have disappeared.
I couldn’t believe it when I became interested in Gunns’ pulp mill fiasco and realised that the treasurer of the governing Labor party Michael Aird was actually a member of the Upper House. How could that be?? How could a member of the body that was supposed to be a check on any excesses in Government take part in those excesses?
This is a clear conflict of interest, but it seems to be commonplace now for political party members to be elected to the Upper House. Should there not be a ruling against this in the Tasmanian Constitution or in wherever it is that states how the Parliament is made up?
My other question is that I wonder if the free pokies licence that Federal has is for a set term, or is in perpetuity? Like turning Tasmanian land into forestry only in perpetuity.
How can a group of people governing for 4 years at a time inflict such things on the unsuspecting populace for years beyond their time in office? That is what the Upper House is there to prevent, and that is what needs fixing in my view.
pilko
November 14, 2009 at 17:51
Thanks Andrew. Good luck with the campaign.
Stephen Menadue
August 24, 2017 at 00:55
You there! Tasmania. The countries that have the best social conditions have had to do what is right and do it by belief in the vision.
How many issues have to show themselves before we realise the power is in the many? LEAD because you(we)ARE leaders in so many ways. Gather. Collect.