Speech to Clubs New Zealand Conference: Upper Hutt Cosmopolitan Club

Good morning.

I am very pleased that you invited me here today – it is a welcome opportunity to catch up with the Clubs movement once more, and to hear what you have been up to.

I would like to begin by acknowledging Clubs New Zealand delegates from all over the country, and especially your national President, Tom Fisher.

I would also like to acknowledge your Chief Executive, Larry Graham, and host Cosmopolitan Club President, Wayne Henshaw.

Let me say at the outset that I am not just here to talk about gambling reforms – I would also like to engage in a wider discussion of gambling and the issues affecting clubs that I see in your annual report.

I also get an indication of some issues in the Ministerial correspondence that comes to me.

I am in the fortunate position of being able to view gambling in the round, as it were, because in addition to my role as the regulator as Minister of Internal Affairs, I am also Associate Minister of Health, with particular responsibility for gambling as a public health issue.

I have held both of these roles at various stages over the last twenty years or so, though not, until now, at the same time.

I see holding both of these roles as very positive, because it enables me to keep a broad overview of the wider gambling environment and harm minimisation issues, and hopefully for the policy response to be more consistent and better co-ordinated.

About 80 per cent of the population participates in gambling at least once a year, spending around $2 billion on the four main forms of gambling – TAB betting; Lotto; casinos; and gaming machines located mainly in pubs and clubs.

The Department of Internal Affairs administers the Gambling Act, a large and complex piece of legislation that was passed in 2003.

I think most of you are quite familiar with the issues surrounding the use of Class 4 gaming machines, or dare I use the more technical term that I saw Gus Rieper use in your annual report, “bloody pokies”? 

Whether we like it or not, gambling is a highly emotive issue to many people for a whole raft of reasons.

These range from principled positions at both ends of the spectrum that either approve of gambling or object to gambling, and from the benefits of gambling proceeds through to concern about the potential for addiction to gambling with the self-destructive behaviour that accompanies it.

Broadly speaking, it is in this context that gambling regulation in New Zealand aims to enhance the positive effects of gambling while reducing the negative effects. 

We recognise that pokies create risks and require a regulatory system.

And that costs!

No-one knows better than you that the Department of Internal Affairs undertakes gambling licensing, compliance, and enforcement functions under the Gambling Act 2003.

These regulatory functions (and those of the Gambling Commission) are funded through fees paid by gambling operators.

In that regard, I well understand that the recent increases in compliance fees the sector pays have added to cost pressures for clubs with more than seven gaming machines, at the same time as reducing cost pressures for smaller clubs.

As you will know, the Gambling Act requires that the costs of regulating Class 4 gambling are met by Class 4 gambling, and the fees had to be raised to achieve this.

I want to put discussion about the cost of regulation into the context of the review of the regulatory regime agreed to by Cabinet in September 2015.

In October last year I announced my intention to conduct a broad review of the regulatory regime for class 4 gambling to determine if it remains fit-for-purpose.

This arose from the fees review process, and many comments that I was hearing within the sector about its viability in the longer term, as the combination of regulatory requirements, and newer electronic forms of gambling started to have their impact.

While as Minister, I do not have a particular preference for one form of gambling over the other, I am well aware of the significant community benefits that derive from the proceeds of Class 4 gambling, and the pressures there would be on the Government for funding if that source was to dry up.

So I need to be assured that the objectives of the Gambling Act 2003 are being met, and that the maximum benefits are being delivered to communities from class 4 gambling funding.

The recent increase to gambling fees has also highlighted the importance of ensuring an efficient and fit-for-purpose regulatory regime.

Class 4 gambling provides important funding to a range of community purposes, including sport and the many clubs you represent.

Over a number of years a combination of pressures has impacted on the class 4 sector’s ability to maintain revenue and maximise benefits to the community.

I hear from your members that these factors include a complex and expensive regulatory framework with multiple objectives.

A major driver of the review was a fear that the class 4 sector was in severe decline and therefore community funding was under threat.

Initial advice from my officials confirms that expenditure on class 4 gambling declined significantly in the first few years after the Gambling Act was passed in 2003.

However, this decline was arrested from 2010-11 and expenditure has experienced a marginal increase in 2014-15.

Class 4 community funding returns stabilised around the same time and appear also to be increasing.

However, the future of the sector and sustainability of class 4 funding remain uncertain, at least in part due to the complexity and costs associated with the regulatory model, including recent regulatory changes and increased fees.

Other factors include changes to consumer preferences in the gambling and hospitality sectors, including developments in online gambling within New Zealand – which is currently limited to Lotto and some TAB offerings – and by New Zealanders gambling with offshore providers.

Even though expenditure has stabilised in recent years, we also should examine whether there are opportunities to maximise the amount and value of funding to communities.

This includes exploring options to remove the transaction costs and other inefficiencies associated with the current gambling sector model.

It makes sense for the Government to explore options to ensure communities benefit as much as possible from the investments from gambling revenue.

I intend to discuss these issues with my Cabinet colleagues in the near future.

I would like to work with community representatives on how to more cost-effectively regulate the sector and ensure the long term sustainability and effective allocation of funding to communities, while also ensuring gambling-related harm is minimised.

I am keen to ensure the legislation is fit-for-purpose and that current pressures on the sector do not lead to a later ‘tipping point’ that requires urgent remedial action to sustain funding to communities.

I will keep you informed about progress on this initiative.

I have been pleased to observe that positive changes in the Department’s approach to its regulatory relationship with clubs and pubs have been met equally positively by the sector.

I am also very happy to see that the review of game rules has more than halved the number of rules and been a win-win experience for both the sector and Department officials.

In addition, the Department and sector representatives are working on a set of best practice guidelines which will likely reflect that several requirements have been removed from the 2016 rules.

Another positive change is a move by officials to see their regulatory role as being to work with the sector to generally negotiate outcomes and take a problem-solving approach to becoming compliant.

I am encouraged to see this conscious move into positive relationship-building as part of the process of ensuring the system works as it should, which could ultimately result in reduced compliance costs.

I would like to turn to your 2016 Annual Report, which I read with a great deal of interest.

I see that your President, Tom, Chief Executive, Larry, and Operations Manager, Gus, have been very frank and informative in raising the issues that are positive and the issues that are of concern to clubs.

I congratulate you on your proactive approach to preparing and assisting member clubs to make submissions on forthcoming changes to the legislative and regulatory environment they operate within.

You take a commendably positive approach to looking after the interests of your members and their club communities.

I note that this proactive approach includes focusing clubs on establishing relationships with territorial authorities to ensure that you take the opportunity to have your say in their consultation processes over gaming and alcohol policies.

It is good to see you as a group consciously and systematically extending your reach to ensure you take up every opportunity to fully inform your local councils of your views as they make or review their policies.

As your President, Tom, notes in the annual report, your local councils are the key to many parts of your operation.

And, as clubs, of course you understand relationships, which are at the core of your business.

As a long-time electorate MP and experienced Government Minister, I continue to appreciate the crucial role clubs play in communities across New Zealand.

I particularly value the fact that clubs exist because communities have established them for particular community purposes.

I also value the vital volunteer component of keeping clubs going, from running committees to the many and various activities available to club members, that keeps clubs connected to their communities.

While clubs have changed and developed over time, and some – as we can see here at the Upper Hutt Cosmopolitan Club – have become very successful businesses, the constant is that the community remains involved and at the heart of clubs’ activities.

I was impressed to read in your annual report about the forward-thinking you are facilitating with your member clubs.

The world has changed a lot over the last hundred years and there is little doubt that for clubs set up more than a century ago, the founding purpose may not meet the needs of current members.

Even organisations established more recently are not necessarily set up to cater to a new, tech-savvy younger generation of potential club members, people who are used to having everything in the palm of their hand.

They, as well as the wider percentage of New Zealanders who own a smartphone, increasingly want to interact both in business and leisure activities in a digital environment, be it on an app or social media, and often at the same time!

You have a great resource in your national organisation to help you consider the issues around updating and adapting your clubs to keep them relevant to your members and attractive to potential members.

Before I conclude, I want to say a few words about your retiring President, Tom Fisher.

I would like to recognise Tom’s extraordinary and dedicated service over more than forty years to his original club and the national clubs organisations he has worked tirelessly for until today.

Tom, I was very interested to read your summary of the past year and the farewell your colleagues gave you in the annual report.

Your own words, and those of your colleagues, reveal the incisive thinking, clear direction and skilful relationship management that has been the hallmark of your time as president and instrumental in providing leadership for Clubs NZ and your member clubs all over the country.

I wish you all the best.

Finally, I would like to say again how good it is to get out and meet an important and distinctive part of not only the gambling sector, but of New Zealand society and community as a whole.

I have been reminded, in preparing for my visit today, of the hard work you all put in for the clubs that are not only your living but also something you care deeply about.

I am about to invite your questions, but before I do, I hope your conference enables you to build your connections, share your ideas and come away refreshed and clear about your direction for the coming year.

Thank you again for inviting me here today and I wish you a very productive conference.