Brian Rudman: Pokie Bill needs Govt weight

Photo / NZ Herald.

The anguished squeals coming from the pokie industry over Maori Party MP Te Ururoa Flavell's private member's bill to clean up their industry means it's hitting them where it hurts. And not before time. The shame is that neither the last Labour Government nor the current National-led administration had the courage to take on the cowboys of the gaming industry themselves.

More than 18 months ago, the former chief executive of the Community Gaming Association, Francis Wevers, wrote to the Minister of Internal Affairs declaring that corrupt behaviour in his own industry was "all-pervasive and pernicious" with "endemic non-compliance" and that "the motivation to continue to operate unlawfully is more powerful than the motivation to comply". At the time, the then minister, Nathan Guy, blocked his ears, telling him there was no room in the parliamentary agenda for major reform in the gambling sector.

With all but a handful of MPs voting against the first reading of the bill, and public support strong, it's time the Government saw the light and adopted the bill, thus ensuring it doesn't get lost in the queue of government business.

As a Government bill, it would also get the bureaucratic drafting input it needs, though perhaps not from the Department of Internal Affairs which has so spectacularly failed to keep the industry under control.

Mr Flavell has homed in on the iniquity of electronic gambling machines being over-represented in lower income communities and town centres, and is proposing greater local authority control over the siting of pokie machines. He also wants the distribution of pokie profits to be taken away from the existing operating trusts and handed over to local authorities. Funds would be distributed within the areas generated.

This would help stamp out activities such as the Otago Rugby Union buying three South Auckland pubs then siphoning more than $5 million of pokie profits, mostly from Manurewa, back to help prop up its failing Dunedin-based organisation.

While Mr Flavell's wish to reduce the numbers of pokie machines and ensure the profits are distributed in the communities where they are generated is laudable, his legislation, as written, leaves many issues up in the air.

For example, if the gaming trusts currently controlling the $856-million-a-year industry lose the right to distribute the profits, what reason will they have to keep going? As an industry insider said to me, "If you disestablish a trust like the Lion Foundation and take away the grants side, why would they run the machines? I can't imagine they'd go on running them if they couldn't give away the money because that's the bit everyone likes."

It's the trusts that supply and maintain the pokie machines to the end-user bars and clubs. If they wither away, what then? For those opposed to gambling that may be no bad thing. The alternative might be to hand this function over to the Lotteries Commission and make it responsible for this form of public gambling. This is an option canvassed by Local Government New Zealand in its submission on the Bill.

Mr Flavell also proposes that the distribution of gambling profits be placed in the control of local authorities. Unfortunately for him, there's little indication local authorities are keen to have this function thrust upon them.

Local Government New Zealand, in its submission, supports the aim to reduce gambling-related harm and the proposal to reduce or prohibit the number of venues, however says the proposed legislation places "unreasonable and conflicting requirements on territorial authorities" and asks that local authorities be given "meaningful regulatory powers or have them removed altogether".

It also complains that it "creates a potential conflict for local government as it introduces the dual requirement of regulator and distributor of funds, from the same activity".

The worry is that with this sort of lukewarm reaction from local authorities, the Government will let the bill languish at the bottom of the legislative pile. Especially now that the the sports and racing fraternities, which in 2010/2011 raked in $139.31 million of the $274 million distributed in pokie profits, are screaming blue murder over the proposals.

Mr Wevers' revelations of "endemic non-compliance" and "all-pervasive and pernicious" corrupt behaviour within the system suggests wholesale reform is urgently needed. Sweeping the problems under the carpet with a so-called tightening of regulations as some are proposing as a compromise is unlikely to work. Which leads us back to the Lotteries Commission, which is an independent and trusted government agency engaged in this sort of work.

As for distributing the money, why set up a new network of grants agencies when parallel infrastructures are already in place. The New Zealand Lottery Grants Board is one obvious contender for the job. Alternatively there are the community trusts, such as the ASB Community Trust based in Auckland. They cover the whole country and are set up to process local requests for support for community projects.

Both the Lottery Grants Board and the community trusts have a reputation for professionalism and probity, qualities sadly lacking currently in this area of the gambling industry.