Greyhound industry paying a high price

THE key question, as always, is how governments attack embarrassing problems. Well, maybe “attack” is too strong a word. This time, “address” might be better and more attuned to what has happened in the industry.

As we forecast earlier, a string of investigations and inquiries has been set up, half of which have already reported. That half has achieved very little. They confirmed existing truths and skipped over the need for real reform, instead plumping for the safe ground in calling for more independence on the same old boards (some of which was already present in Victoria and NSW).

Investigators decided the people at the coalface (ie stewards) should have done better even though no hard evidence of their failure has been produced. Yes, there might have been knowledge and hearsay but that’s a long way from proof. It’s also useful to note that some of the evidence that was displayed on the ABC TV program was apparently obtained illegally.

Dumping the bosses may be justifiable but also tends to avoid the point, which is that the real culprits are the culture of the industry and its general lack of accountability. In turn, those faults are almost mandatory when you have a committee in charge. As the saying goes, “I wanted you in, mate, but they outvoted me”.

But back to the inquiries.

The two Victorian ones cost relatively little as they were performed by existing officials. However, ongoing increases in personnel numbers at GRV will come out of the budget.

The other two states are a different story. The NSW Commission of Inquiry will cost a bomb as it is staffed by a QC and other lawyers and looks like taking a long time to do the job. Added to that cost will be whatever they pay KPMG consultants to advise on future board structures. Running GRNSW in the meantime will attract only modest costs as that job is being done by a serving public servant on secondment.

Queensland has gone much deeper. The first inquiry offered very little but it did take another QC and more lawyers to tell that, yes, there had been terrible abuses. I think the videos said that, too.

But, to run the industry in the meantime, and after sacking everyone else, the Queensland government hired a bloke from KPMG (again) to act as the interim boss. He will not come cheap but has already determined that the books were not straight and that racing will actually be losing millions over the next two or three years. That belies all the hoo-hah about the huge commission increases negotiated with Tatts Group just recently, which quickly led to wonderful increases in . Unfortunately, they have now been watered down to pay for higher costs of new measures.

More importantly, another group from KPMG (yet again) is looking into the entire structure of Racing Queensland and will prepare a report for the government in due course.

Remember that Queensland has also been forced to endure several judicial and other inquiries in recent years, mostly paid for by the taxpayers. Some of those cost over one million dollars, but it is hard to see any conclusive outcomes.

This now warrants a bit of perspective. To help with that, I will borrow some from a respondent to the letsgohorseracing.com website who checked out what these guys at KPMG get paid. His example came from an existing brief the firm had to look into the failure of a prominent stockbroker, and quoted rates advised to creditors. (In these cases the liquidator gets first crack at whatever funds are left in the system).

The fees being charged there varied from $650 per hour for a partner or similar down to $140 per hour for someone performing basic “administration”, whatever that is. I emphasise “per hour”. Note also that legal or accounting firms normally charge in six minute batches, so the bill will mount up if you phone them up and ask a question, or if you write to them and someone has to read the letter.

That means a daily rate could be as high as $5,000, which is the minimum any QC would expect to stand up for you in a court case (plus more for assistants and solicitors, of course). Some would charge considerably more. The person answering the phone will earn the firm $1,000 per day.

Now the government may well be able to negotiate better rates but we don’t know. What we can say is that the entire exercise will cost many millions and that cost will affect the racing industry, whether directly or indirectly. And we still don’t know what the results will be, or whether the government will accept the advice.

History does not encourage any optimism about that advice. For example, take the case of the debate over the two options about the payment of field fees by online bookmakers. Racing Victoria, its advisors Price Waterhouse, the ACT Independent Competition and Regulatory Commission, the Productivity Commission and several consultancy firms advising the bookmakers all favoured paying a fee based on a share of bookmaker profits. Racing NSW alone said a percentage of turnover was better way to go and went to the High Court to defend its case.

Racing NSW was right, all the others were wrong. RV and RNSW each said they ended up $100 million better off. A lot of supposedly expert people did not do their sums very well. But they still cost a lot.

All of which boils down to the fact that expensive advice is a doubtful quantity. So, was there some other way that governments could have obtained less costly and possibly more appropriate suggestions about how to organise the racing industry? No doubt there was, and is, but governments have a habit of going to “name” firms as a matter of routine, thereby giving them someone to blame if things do not work out. It also makes you wonder what all the Racing Departments have been doing, given they are there to supervise the industry and advise the Minister.

What both governments and consultants are missing is that the system is broken, not just because of live baiting, but because of the inability of the management structure to cope with the reality of the modern world. Fundamentally, the governments created those structures and so must take the blame.

We are only part way through the current exercise and few substantial decisions have been made so far. We live in hope.

No way!

I did say I would stop relaying crook comments but this one was so blatant that I could not sit back and do nothing.

Stewards Report, Ballarat, Race 6, 650m, 1 July.

Sisco Fiasco (7) crossed to the rail soon after the start, checking Black Velcro (6), It’s A Blast (5) and Molly Michelle (4).

Sisco Fiasco never touched those other dogs. It jumped clear and stayed that way around the corner. Any checking was all their own work. The underlying cause of any interference is the habit of siting the start on a bend, particularly in middle distance races one.

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reformisneeded
reformisneeded
5 years ago

Bruce, great article , while I feel an important role for external advisors , some of your comments really hit home for NSW:- “It also makes you wonder what all the Racing Departments have been doing..”.  “..but because of the inability of the management structure to cope with the reality of the modern world” In NSW, we have not until now, seen a genuine attempt to develop the industry to meet the current market (in your words, ‘modern world needs’), and to ensure that by genuine education (and reward, not stick hitting) that societal expectations (the ‘social license’) are understood.… Read more »

reformisneeded
reformisneeded
5 years ago

Bruce, great article , while I feel an important role for external advisors , some of your comments really hit home for NSW:- “It also makes you wonder what all the Racing Departments have been doing..”.  “..but because of the inability of the management structure to cope with the reality of the modern world” In NSW, we have not until now, seen a genuine attempt to develop the industry to meet the current market (in your words, ‘modern world needs’), and to ensure that by genuine education (and reward, not stick hitting) that societal expectations (the ‘social license’) are understood.… Read more »