Speech to the New Zealand Racing Board AGM
Good morning, it’s great to be here this morning with you, the people who are the powerhouse behind New Zealand racing.
I’d like to acknowledge your Chair, Glenda Hughes, and your acting Chief Executive, Stewart McRobie. Thank you Glenda for inviting me to address your annual general meeting today.
I’d also like to acknowledge the chairs of your constituent code bodies and their chief executives:
- Matthew Goodson and Greg Purcell from New Zealand Thoroughbred Racing;
- Gary Allen and Edward Rennell from Harness Racing New Zealand; and
- John McArthur and Jim Leach from Greyhound Racing New Zealand.
It’s a privilege to be here today with so many leaders from the industry.
I was very pleased to be allocated the racing portfolio again by the Prime Minister.
I see it as an opportunity to build on the conversations I’ve had with many of you over the past few years.
I have been pleased to be able to attend code conferences and events around the country over the year and meet many of you on your own turf.
Racing is a critical part of this country’s heritage. It is full of people who are passionate about the sport and their communities.
And supporting almost 17,000 full time jobs and contributing almost 1% of GDP makes racing a major player in our economy.
A key element of my role as Minister for Racing, and the Minister responsible for the Racing Act 2003, is to help racing prosper into the future, a goal shared with everyone in this room.
As you know, under the Act, the Minister has no direct jurisdiction over the thoroughbred, harness or greyhound codes. My direct role is with the New Zealand Racing Board, including appointing its chair and members, in accordance with the Act’s purpose of providing effective governance for racing and promoting the long-term viability of New Zealand racing.
The role of the New Zealand Racing Board
The New Zealand Racing Board now has a relatively new Chair and a fresh, highly skilled and unified Board.
The Racing Board has set some ambitious targets and put in train a number of initiatives and investments to ensure the business is better placed to compete.
These changes are important because the New Zealand Racing Board plays a vital role, given it accounts for almost three quarters of the revenues supporting racing.
I am pleased to see the Racing Board delivered a record turnover of $2 billion in the last year.
I also believe the start of the new financial year has been positive despite some stretching targets, with a record Melbourne Cup day and positive Cup and Show Week result.
Late last week I sent my letter of expectation to the Board setting out my priorities for the next three years.
One area I have highlighted is the issue of rising costs.
We know that the racing industry continues to face a number of challenges in ensuring ongoing sustainability, including declining profit margins, lower race meeting attendance, and modest returns to racing clubs and race horse owners.
The Government wants to see that the funds available for distribution to the racing sector are maximised.
I was pleased to read in the Statement of Intent this year the Board’s commitment to be “cost vigilant”.
The Chair of the Board and I had a very constructive conversation about this last month.
The Racing Board has a responsibility to plan and invest for the long-term. It operates in a fiercely competitive and mature market.
It cannot afford to stand still and must invest to remain relevant to its customers.
However, there is balance to be found. It is equally important that that investment is done as efficiently as possible.
To that end, I have asked the Board to undertake a thorough review of its internal costs in the coming year.
Government priorities for racing
I’ve also indicated a couple of other priority areas that I’d like to see addressed in the racing industry. These are:
- the work that’s underway to provide those in the industry with more certainty on tax rules;
- Animal Welfare, and
- the steps the Government is taking to address the issue of offshore betting.
Providing more certainty on tax rules
The Government appreciates that people involved in racing and breeding want certainty when it comes to their tax affairs, as do all New Zealanders. There is work currently underway to help people in the industry achieve greater certainty around their tax responsibilities.
Hon Todd McClay, Minister of Revenue, and I have asked Inland Revenue to consult with interested parties, including the New Zealand Thoroughbred Breeders’ Association, about key tax issues for the industry.
I’m advised that Inland Revenue has been carefully considering a list of the issues and will provide initial responses in the near future. Inland Revenue intends to follow this up with further consultation.
At this stage I am confident the majority of the issues can be worked through, providing a positive result and greater certainty.
We hope to be able to update the industry on any developments in the New Year.
Animal welfare is important to many people. Public awareness and concern regularly feature in letters I receive from the general public and animal welfare groups.
68% of New Zealand households have a pet. We know that most New Zealanders with an interest in racing are also passionate about animal welfare and care deeply about how animals are treated within the industry.
And I take animal welfare issues very seriously in my roles as the Minister for Racing and for Primary Industries.
Animal welfare continues to be an important issue in racing, particularly Greyhound racing. Greyhound leadership has been strong in providing direction and considerable work has been done in the past two years. Reports I have received show that good progress is being made in improving greyhound welfare. The project is ongoing.
I know that many of you here today own horses and dogs and care deeply about them. It is important that you continue to show the public that you take these issues seriously so we can maintain our social licence to race.
As everyone is aware, events like the tragic freak deaths of Admire Rakti and Araldo at the Melbourne Cup this year contribute to a heightened sense of public awareness of animal welfare, and reinforce the need to continue our vigilance in this area.
Steps to address offshore betting
Finally, I’d like to address the issue of offshore betting.
In August I was fortunate enough to address the Horse of the Year awards in Hamilton.
In that speech I made it clear I was prepared to take action to combat the effect of online offshore bookmakers.
That is my number one priority for the coming term.
I want to be clear: it is a problem, it is complex, but I believe we should be able to make changes, and I am committed to making the necessary changes.
I’ve seen a variety of estimates for how much is bet overseas every year. The New Zealand Racing Board estimate that it could be up to $300 million.
Whether you agree with that specific estimate or not, the growth of digital devices and higher internet speeds makes it easier to gamble online, and the problem is likely to grow.
That has been the experience overseas and there is no reason to doubt it would be any different here in New Zealand.
Offshore bookmakers are now a prominent and growing feature on the gambling landscape. It has significant implications for racing and sport in New Zealand.
Betting is central to racing and sport. It helps build public interest, generates excitement and keeps patrons coming back.
It is also critical in providing funding for sports and racing. Without it there would in all likelihood cease to be a racing industry in New Zealand.
Betting through overseas providers deprives our local industry and sports of the funding they deserve.
You’ll also be aware that in New Zealand, we have a very strict regulatory environment around gambling so we can take every possible step to ensure that every possible step is taken to mitigate gambling harm for New Zealanders.
When New Zealanders place bets offshore, they operate outside the safety net that our regulatory environment provides.
As I’ve already alluded to, we know there are different estimates of how many New Zealanders place bets offshore. This goes to show that we actually don’t have a firm grasp on how many of these New Zealanders are engaging in harmful gambling practices without the help of the local safety net.
As many of you will know, the topic of offshore betting came up at the Australasian Racing Ministers’ conference in Wellington I hosted earlier this year. Offshore betting is an industry concern on both sides of the Tasman, where maximising returns to racing is important to its performance.
We are keeping a close eye on Australia’s approach to see how it is progressing.
In the most recent development in Australia, the Federal Social Services Minister Kevin Andrews and the Victorian Premier Denis Napthine, recently announced moves to crack down on offshore bookies who pay no product fees and deny revenue streams to governments.
They are proposing to set up a national working group. It's expected to start work later this year and provide recommendations to the federal government through its Gambling Industry Advisory Council in 2015.
I’ve already asked my officials to start work on establishing an Offshore Betting Working Group to develop recommendations to combat the effect of offshore betting on local racing and sports.
It’s likely the group will be headed by an independent chair, along with representation from the Department of Internal Affairs and the industry.
Officials are currently preparing options for membership of the group and its terms of reference that will be announced in early 2015.
As this stage I envisage the Group will consult with the sector in Autumn, and report back later in 2015 with recommendations for change.
Once again, thank you for inviting me to speak to you today. We share a love of racing that motivates us all, and I look forward to continuing to support you as you work to build a strong and sustainable racing industry. I wish the racing industry well for the year ahead.