Pokie reflections

By all accounts Labor’s policy to remove pokies from communities after 2023 was unexpected.

However the risks involved when the gaming monopoly expires has previously been discussed by both parties to the arrangement, the government and Federal Group.

Treasury head Don Challen  told a hearing of the Public Accounts Committee on 16^th July 2003 which was looking at a premature extension of the original deal due to expire in 2009:

“I did say to Mr Farrell across the negotiating table a number of times that 'Come 1 January 2009 you don't have a business'.  I put a reasonableness test on the outcomes we get from the negotiations and if I didn't think they were reasonable in the interests of the Tasmanian community I would have kept pushing Mr Farrell until I got him to the point where I thought we had a reasonable outcome.  In the back of his head he knows that legal possibility of the licence coming to an end is there and that is a discipline on him to come to the negotiations with a realistic attitude.”

Quite clearly both parties negotiated the 2003 deed extension with a sunset clause in full knowledge the punch bowl may be removed in 2023. If Federal Group have a risk management strategy there’s little doubt what should be number one on the list.

Will the sky fall in if pokies are removed?

The sky will fall in if pokies are removed from regional Tasmania???

The impending devastation will be obvious from the figures. A close look at say the Braddon electorate, will reveal all, surely? It’s the most regional of the Tasmanian electorate, the most distant from the State’s two casinos and currently home to 730 or 30% of EGMs outside casinos.

Alas the figures fail to give any support for Federal Group’s doomsday predictions.

Treasury modelled the effects of EGM removal for the recent parliamentary inquiry. Unbundling the model and introducing the latest figures for player losses from the Tasmanian Liquor and Gaming Commission for venues gives a detailed look at Braddon.

Poker machine apocalypse?

There seems little doubt the fate of poker machines post 2023 will be an issue that will get plenty of coverage during the upcoming State election campaign.

Depite the government assuring the Joint Select Committee into Future Gaming Markets it would be open to recommendations based on evidence, Premier Stansfield and Chief Strategist McQuestin had their minds made up well before the Committee reported.  The government arranged for a Dorothy Dixer on the 11^th of September to allow the Treasurer to set out the government’s policy on gaming. If pokies are banned from communities it would have a “devastating effect on pubs and clubs” he told parliament.

Rather than blithely following the dictates of his political overlords the Treasurer should have read a paper prepared by his own department for the Committee.

A close analysis of Treasury’s modelling reveals in the case of regional areas beyond the 50 km reach of casinos where 40% ($42.9 million) of player losses occur, player losses will reduce by 75% ($31.4 million). There will be some migration to casinos and substitution with Keno, in total about 25%. Pubs and clubs will be worse off by $6.4 million, but the $25 million that previously flowed out of towns to Federal Hotels’ Network Gaming will be free to circulate within regional towns.

Currently on average, only 20% of player losses remain with pubs and clubs via net commissions from Network Gaming. The rest flows out of town to Network Gaming. It is well beyond the wit of this writer to figure why the government is so willing to accept the dumb proposition that stopping the haemorrhaging of regional towns will have a devastating effect on those communities. It’s going to be very difficult to convince an electorate growing weary of political lies. 

Regional pubs and clubs will be worse off by only $6.4 million. This is before any changes to their business models to attract some of the extra $25 million circulating in the community rather than being hijacked by Network Gaming.

Removing pokies

All’s quiet on the western front as Labor ponders its position on poker machines ahead of the March election.

What if and when pokies are reduced or removed from communities, players gamble at casinos instead? Will the community be better off? The consensus view seems to be confining pokies to a couple of enclaves will solve all problems. Will it?

The parliamentary select committee into Future Gaming Markets reported at the end of September. The written submissions were already on the public record, as were the transcripts of the public hearings. The minutes of the Committee’s meetings published at the time of the Report’s release revealed additional written evidence mainly from correspondence with interested parties.

One additional piece of evidence not mentioned in the Report was an eight page note from Treasury on the estimated economic impact to State tax receipts if EGMs were removed from hotels and clubs and a $1 bet limit was imposed on casino EGMs. It was a study worthy of more attention than it received.

Forestry Tasmania's demise in detail

Forestry Tasmania’s slide from its peak in 2004 has seen it lose $1 billion. Almost half have been cash losses. The rest have resulted from the loss in value of the trees entrusted to it. FT entered commercial arrangements with customers, particularly major customer Gunns, which effectively forfeited its commercial advantages as a monopoly supplier. As a consequence it fortunes closely tracked those of the industry particularly Gunns, and since the latter’s demise has only survived courtesy of government patronage.

After numerous inquiries, reports and years of procrastination, the government appointed Treasury Secretary to the Board in May 2015 to act as de facto Voluntary Administrator to see if FT could be resuscitated. An interim report was presented to government on 29^th September 2016.His tenure lasted until February 2017, FT was restructured as much as its political masters would allow before being handed back for directors to run under the new name of Sustainable Timbers Tasmania (STT).

The following is a more detailed report on FT’s demise following the period of administration. It covers the events leading to insolvency, the actions taken and the prospects for the future.

CONTENTS

The 2016/17 year

The plantation sale

The superannuation transfer

Overview since 2004

Other assistance to the forest industry

The Ta Ann deception

Insolvency signs

Problems with the current model

The future

Forestry Tasmania's final report

A survey of the wreckage left behind by Forestry Tasmania (FT) reveals since its peak in 2004 it has lost over $1 billion from forestry activities.

 During that time cash outlays were $440 million more than trading revenue and the value of the forest estate fell by over $600 million. Add the two figures together give the aggregate loss over the past 13 years of $1 billion. Equal to $40 for each tonne harvested.

Spending on plantations ($106 million), property and plant ($33 million) and roads ($105 million) added nothing to FT’s asset base. Together with the continual losses from forest harvesting meant FT’s cash losses totalled $440 million over the last 13 years.

Then there are non-cash losses, often called book losses, principally the fall in the value of the forest estate. This has occurred because a lot of trees have been chopped down and sold and because as maintenance and harvest costs rise faster than prices for forest products then the value of remaining forests consequently falls. Over the past 13 years the value of FT’s forests has fallen by over $600 million. Trees entrusted to FT are now worth a fraction of their former value.

So how did FT cover its cash losses?

Pokies: A time to be brave

Everyone is trying to pressure Opposition Leader Rebecca White to make up her mind what to do about poker machines post 2023, the government even bringing on a motion in Parliament a few weeks ago to try to embarrass her. A few weeks even a month or two isn’t going to make an ounce of difference.

All too often the overwhelming social arguments against poker machines are trumped by the gambling industry’s mantra of jobs jobs jobs. It’s important the bogus economic arguments are fully understood by Ms White.

Dear Ms White

You were right to delay framing a new position on EGMs until the Joint Committee presented its findings based on the latest evidence. That was the aim of the inquiry.

From a policy viewpoint an inquiry becomes pointless if trying to confirm predetermined policies drives the process.  Fortunately the Chair managed to keep focussed.

Confirmation bias however dominated the approach of both the Liberals and the Greens, culminating in Ms Courtney’s dissenting report arguing  that the significant reduction in EGMs in pubs and clubs recommended by four of the other five committee members would have “devastating economic and employment impacts on many businesses and communities..”.

Recommendations are supposed to be based on evidence presented. No evidence was offered by non EGM businesses stating withdrawal of some or all EGMs from communities would have adverse effects let alone devastating ones. Communities clamouring to retain EGMs to prevent devastation were also conspicuously absent.