Speech: proposal for online wagering reform
Tuesday, 1 December 2015
Pic source: dss.gov.au
Senator McKENZIE (Victoria) (22:26): The digital age was supposed to make our lives easier and, to a large extent, it has. But, as we can plainly see, changing landscapes require new rules because our old rules do not fit the current scene any longer. Wagering is a perfect example of where laws have not kept up with our society's changing economic and technological landscape. And it is our regions that will suffer as a result. The Victorian racing industry brought $2.8 billion to the Victorian economy in 2013, directly employing 26½ thousand full-time Victorians and providing 12½ thousand part-time jobs in support industries; and 60.9 per cent of employees reside in regional Victoria. However, due to the expansion of online, live sports betting, the racing industry in Victoria is looking at a significant revenue loss of many millions, despite over 800,000 Victorians participating in race wagering every year.
Gambling associated with the vibrant racing industry of my home state of Victoria sees a proportion of punters' losses being put into problem gambling services and, indeed, sporting infrastructure from which that wagering take is garnered. With illegal offshore wagering taking a lot of the traffic overseas, and untaxable money with it, Victorians are losing out on funds that could have been invested into our communities.
Travelling across regional Victoria, I am consistently told of the need for more investment in community infrastructure and services. It does not necessarily mean grand, multimillion dollar projects. Often, it is a simple need like wheelchair access at the local memorial hall or new lights at the local footy or netball club, or indeed, as a former netballer in a football/netball club, just a change room would be nice in many of our country football/netball clubs. These are important infrastructure needs right across regional communities.
Regional communities, therefore, welcomed the Liberal National coalition government's commitment to investing in infrastructure, especially the $1 billion National Stronger Regions Fund, the $2.5 billion Roads to Recovery Program, the $564 million Black Spot Program, the $300 million Bridges Renewal Program and the $9.3 million local government financial assistance grants, to name others. They are making a very real and significant difference to local communities in my home state in regional Victoria. However, the poor fiscal management and political agenda of the former Labor government meant that we could not fund all that we hoped to on coming to government with particular respect to regional infrastructure.
An example was the difficult decision to cut back projects under the Regional Development Australia Fund. While necessary at the time, the impact of unfunded projects compounded the infrastructure deficit and the socioeconomic effects on regional communities. According to a Regional Australia Institute policy briefing in 2012, Australia's estimated infrastructure deficit was at the time between $12 billion and $15 billion. As well as constraining local and regional development, the deficit represents an ever-growing liability that future generations and governments will have to bear.
Another less obvious but still significant challenge is keeping economic activity on our shores so as to benefit our own citizens. The Australian Wagering Council believes that if the existing regulatory regime with respect to wagering continues in its current form then by 2020 60 per cent of wagering by Australians will be of the offshore kind. People from my generation typically wager on course, if we are going to talk about racing, in cash with the bookie or the TAB. If I look at the younger generation, they are betting not on who is going to win the Cox Plate or not on who is going to win the Melbourne Cup but who Manchester United is going to beat next weekend and what the Celtics are doing in the American NBA. That is the changing face of wagering that we are dealing with.
It will be a dire state of affairs if our tax laws cannot catch the millions being taken overseas and if, in turn, our own problem gambling services or infrastructure funds miss out. My proposal that I have submitted both to the government's tax review process and indeed now to the online wagering process will help to address this infrastructure deficit and strengthen regional communities that are impacted by gambling.
An estimated 2.5 per cent of Australians experience moderate to severe problems caused by gambling, and it is estimated that for every person with a gambling problem an additional five to 10 people are adversely affected. Problem gambling has devastating effects through reduced household income, physical and psychological illness, family breakdown, domestic violence, loss of employment, social isolation and depression. It is a minefield that is, sadly, impacting on many families in our regions. It is typically experienced by those lower socioeconomic communities. And of the top 10 in Australia, the majority are National Party electorates—out in the regions.
Given the social impact of gambling, I believe that those who contribute to the problem must also contribute to the solution through funding support structures. It has been done at the state level with revenue from licence fees, mandatory contributions or direct taxes, depending on the jurisdiction, invested in community infrastructure and services. However, at the same time states compete to attract foreign gambling companies by lowering the tax rate, resulting in less revenue that could further benefit our communities.
For example, the Northern Territory is selling itself short by collecting only $11.5 million this financial year from Tabcorp in wagering, turnover taxes and GST, while Tabcorp pays $135 million to Victoria in such taxes for the same privilege of operating. In real dollar terms, taxation revenue from Australian gambling and wagering has not grown consistently with the growth of the industry. The Joint Select Committee on Gambling Reform report into the Interactive Gambling and Broadcasting Amendment (Online Transactions and Other Measures) Bill 2011 reported that underlying growth in all online gambling is strong at around 12 per cent per annum. Yet in 2013-14 alone analysis by the Parliamentary Library economics branch found, based on the 12 per cent growth rate, that there was a $221 million loss in revenue, increasing to around $348 million by 2017-18.
The nature of the internet is making enforcement of the laws difficult and inadequate, such as the ban on offering an interactive gaming service to Australian residents. Because this service is illegal, no tax is aimed at this sector and proceeds therefore go abroad. Imagine the millions of dollars in lost tax revenue that could be collected and invested back into our communities?
It was reported recently that there are an estimated 2½ thousand unlicensed wagering operators taking bets from Australian punters. To put it into perspective, the 2010 Productivity Commission report into gambling reported that in 2008 expenditure in online casinos and poker alone was worth an estimated $790 million. The other problem is that offshore wagering exposes our system to a greater risk of corruption, and it is not possible to regulate offshore operators according to Australian standards. And when I say that, I mean those that are not licensed here in Australia. We have many offshore operators that are licenced.
We are also seeing a trend of foreign owned companies taking advantage of Australia's gambling market. We have had the 100 per cent acquisition of TomWaterhouse.com, Sportingbet and Centrebet by the English bookmaker William Hill, and Irish bookmaker Paddy Power has also gained IASbet. These operators look at our relatively unregulated environment and see it as fair game. That is the reality. When you compare the Australian wagering regulation to that of international standards, the rest of the world has realised that the internet occurs. It has realised that people are betting online, that they are not heading down to the monopoly retail outlet of their local TAB. We have not, and our regulatory framework is not adequate at the moment.
Australia is also a good place to base operations targeting the massive Asian market, as there is currently no national approach to the taxing of international wagering. So offshore operators are able to play state off against state. We see that that is how the Northern Territory bid down to the lowest common denominator, and they have most of the licences.
Australia's current system of gaming licences is inefficient, and there is a distinct lack of consistency with revenue collection between the states. I propose a system that simplifies the bookmaking licensing and taxation processes, such as applying a tax or levy uniformly across all operators providing service to Australia. Revenue from the levy would be directed to regional Australia to meet community infrastructure needs and services. It would also remove some unfair advantages enjoyed by foreign bookmakers and benefit both state racing authorities and governments by increasing overall revenue at a lower cost.
Importantly, foreign operators will be targeted by the levy— (Time expired)