I rise to give this speech on behalf of Denise Roche, who handles the gambling portfolio for the Green Party. This bill deals with class 4 gambling—pokies in pubs and clubs—and it is the result of changes that were suggested during the submission process on Te Ururoa Flavell's bill, the Gambling (Harm Reduction) Bill. Sadly, that bill was essentially gutted before it passed last year. The bill generated around 30,000 submissions because the pokie industry had mobilised and it would be fair to say that the industry achieved what it wanted—an Act that does essentially nothing. Actually, the speech notes that Denise has given me do not say "essentially nothing"; they use a different phrase. I will spare the House from that today.
This bill tries to address some of issues raised during that process. In this bill, the distribution of community funds is a key issue, as is trying to ensure that are fewer dodgy people and practices involved in the distribution of funds. There is still real concern that the industry is full of rorts. Any Google search will result in numerous examples of the corrupt distribution of money. Class 4 gambling is still raking in the money. Department of Internal Affairs' results show that $808 million was lost in pokies in the year to September. That is equivalent to the cost of running six or seven district health boards the size of the one that I used to run. That is a very, very large amount of money indeed. Although it is good to see that in that year there was a 1.4 percent reduction, that still equates to a very, very large amount of money—almost $1 billion. Those statistics do not include losses to pokie machines in casinos; that nearly $1 billion in losses just pertains to the pokie machines in pubs and clubs. That is, of course, what this legislation deals with.
Public health workers and problem-gambling service providers estimate that around 40 percent of the money lost on pokie machines comes from gamblers with little control over their gambling behaviour. I would endorse that from my own experience. I was a consultant hired to scope out the health services that would be required to deal with the issues associated with problem gambling if the responsibility for dealing with problem gambling were to be transferred from the Department of Internal Affairs to the health authorities. Certainly, what I found is that most of the losses were concentrated amongst people who essentially had no control over their gambling behaviour. Interestingly, when I recommended what health services would be required to deal with the problem, I reported back to the committee that controlled problem gambling for the industry at that time, and my recommendations were found to be far too excessive. That is the problem, is it not, with the fox controlling the hen house .
We never seem to factor in the costs that come with the proceeds generated from pokies, as well as the costs to the victims of crimes, the legal bills, and the potential prison costs that are also associated with gambling harm. It would be good to see those figures stacked up alongside that $808 million. We do not have to create so much misery from gambling. Pokie machines can be made safer to use with the introduction of real-time player tracking and pre-commit cards. I am sure a lot of people would feel much better about the proceeds from pokies going to good community organisations if there was more of an effort made to curb the social harm from them.
Most of the changes in this bill are reasonable or benign except for one, and that is the provision that will remove the prohibition on paying venues on a commission basis. We oppose this change for two reasons. Firstly, commission-based payments for venues would act as a disincentive for venue operators to monitor problem gambling. Yes, they have host responsibility programmes, but currently they are paid the actual and reasonable costs associated with hosting the machines on their premises. If they get paid a commission it will be in their interests to ensure that there is a high spend on each machine in order to maximise their percentage payments.
Secondly, the only reason we have class 4 gambling in the first place is to fund community activities—"for authorised purposes"; that is the only reason in law. Once we move to a commission-based payment system for venues, we start to further eat away at the funds available for those community activities. The new commission structure proposed in this legislation for pubs with pokie machines is actually a giant leap backwards. The move to a commission system, announced earlier this year by the internal affairs Minister Peter Dunne, overturns a section of the Gambling Act 2003 that prohibited commission payments for pokie operators because of the reasons I have given—because they give publicans an incentive to promote gambling, particularly problem gambling. Instead, publicans and other venue operators have only been allowed to claim actual, reasonable, and necessary costs up to a maximum of 16 percent of their proceeds. Before we had the current law, some venues were receiving commissions that were wildly outside costs. According to those who work in problem-gambling areas, there was a pub in South Auckland that was getting $500,000 a year in commissions from its pokies. The move to return to commissions is a kick in the teeth for those who battled to get rid of them back in 2003. It is actually a huge bonus for those in the gambling industry. Interestingly, the bill repeals the prohibition on commissions but does not specify a commission structure. It is simply not good enough that the details of this will be negotiated with the industry.
Last September, a consultation document proposed paying venues on a sliding scale, ranging from 40 percent of the first $1,750 of pokie proceeds a week, down to 8 percent on proceeds above $15,500 a week, and nothing at all above $30,000 a week. It is unsurprising that those who stand to make the most out of this retrograde move are fully supportive. According to news reports, Community Gaming Association director—I always smile when I hear those words—Brian Corbett has those in the industry welcoming a commission-based system. The reason given for this is that evidently the current system is "clumsy, unwieldy, and very difficult to process". Despite the current system apparently being so clumsy, unwieldy, and difficult to process, we still have hundreds and hundreds of pokie machines scattered throughout New Zealand, pulling hundreds of millions of dollars from communities. This move will give those with pokie machines even more incentive to maximise those profits. It is simply living in cloud-cuckoo-land to believe the Minister Peter Dunne when he states that this move is unlikely to see any increase in the level of reimbursement to venues. Those who stand to gain will do so for the simple reason that their profits will be maximised by commissions.
Given this legislation does a number of positive things, the Greens will support this bill to the Government Administration Committee , but we do so with grave reservations regarding the potential weakening of the controls on gambling. This clause about commissions that I have spoken about the most will be the deal-breaker for us.