Thursday, 30 June 2011

The Real Problem with the Entitlement Auction

The Victorian Auditor General issued a report this week about the incompetence of the process of legislating and then implementing the pokie entitlement auction that likely cost the State of Victoria hundreds of million of dollars. I agree that incompetence in legislating and implementing could have been factors. I agree with Prof Livingstone comments that the auction was an opportunity missed to truly address the issue of harm minimisation. I blame the Greens for caving in when they held the balance of power.

Click here to read some literal hand wringing in today's The Age.

The true core problem in not getting more $$$ is that Victoria has an effective monopoly with Woolies / Mathieson joint venture. No one could realistically bid against them so probably no one did. Firstly, Woolworths would always have more money. Secondly, because of the takeover of the Fosters and Taverners pubs with Woolworths $$$$ there was no pub real estate left.

And it is the metro pub pokies where the significant deficiencies between earnings and the cost of the entitlements occurred.
Here's an article I initiated when the matter was being debated.

I emailed and called Michael O'Brien's and Greg Barber's office. They both ignored my advocacy. That advocacy was to lower the maximum percentage owned, at the very least, by reference to clubs managed. With 20/20 hindsight, what I was suggesting was not radical enough but it would have helped a little to promote competition.

Here's a copy of the media release I sent out in March 2009.

Let's cut to 2011 and see if mistakes are not being made again. They are.

Minister O'Brien seems equally intent as he was in March 2009 in ignoring not just moderate advocacy on pokie reform but also the deficiencies in enforcing even existing legislation as to harmful machines, responsible codes and encouraging children to gamble.

Pre-commitment on high loss pokies can be implemented from a central control if Victoria adopts the QCOM system now operating in Queensland, Tasmania and the Northern Territory. New Zealand is QCOM compliant. Here's what the Productivity Commission found at page 10.38:

"In discussion with regulators, experts and the gaming machine industry, the Commission understands that some existing central monitoring systems — such as the Qcom system in Tasmania, Northern Territory and Queensland — could be used to provide ‘full’ pre-commitment across nearly all community venues and machines.21 The Victorian Government has announced a monitoring system that would have a similar functionality as part of its legislated intention to implement pre-commitment."

If this extract is correct then consumers will be protected by quickly indicating what they are prepared to spend for their pokie entertainment and be bound by whatever limit they set. And it can all happen rather quickly and inexpensively.

But Minster O'Brien is resisting even this considered advice.

In addition to the matters raised in the notice to the Victorian gambling commission and Minister O'Brien, Victorians can add the Lucky Envelope pokies nastiness. No matter what the technicalities say, these are low loss pokies are parading as something somehow OK and they're not.

Paraphrasing the Minister from his brazen statements on Four Corners, where was the "holistic" evidence based approach before these low loss pokies were allowed to spread? And are they low loss at all?

The burden is on the Minister to prove that these new style of pokies have spread on the basis of considered research. My guess is that there isn't any. My guess is that this is yet another instance of this Minister's terrifying contempt for the interests of affected Victorians.


Anonymous said...

Given that pokies are an optional tax extraction system that one is not required to participate in, I would like to see more pokies and greater tax revenue generated from these devices.

This seems to be the most rational, self-interested stance.

We need to campaign for more pokies and less restrictions.

Libby Mitchell said...

There is nothing rational about this comment. Every pokie creates 0.8 of a new problem gambler...who in turn harms 7-10 others. The harms caused by pokies increase our social costs to triple the original amount taken in your expectation to increase pokies and revenues will cost you and us all more...silly!