A BET on a greyhound race should be taxed more heavily than one on a horse race. That is what the NSW Racing Minister has decided in respect to the upcoming benefits from new tax formulas over the period from 2016 to 2020. Here is how the commission spoils are or will be passed on to the greyhound industry – in practice or in theory:
10% – legislated greyhound share of the future reduction in tax rates.
13% – what a (misguided) greyhound administration agreed to 15 years ago.
18.6% – actual greyhound wagering share at time of IER study in 2012/13.
22% – current actual greyhound share of all NSW betting.
This means greyhounds will cross-subsidise thoroughbred and harness codes at an even greater rate in the future – to the tune of $7m to $10m or more a year.
Even more shocking is that “GRNSW shares the view held by the NSW Government that given the detailed analysis contained within the IER report it is an appropriate and consistent basis from which to determine industry apportionment rates for tax relief funding for each of the racing codes”, in the words of its interim chief, Paul Newson.
This is codswallop and a disgrace to the office he is holding. Newson is a NSW public servant temporarily assigned to looking after GRNSW following the sacking of the board and CEO last February. However, no matter where he came from, Newson has a specific responsibility to further the cause of the greyhound code under the relevant Act. His media release fails to reflect that.
The IER report, based on 2012/13 data, was “a generalised measure of the industry’s contribution to the State’s economy”, in its own words. It was not an evaluation of tax regimes, or an investigation into wagering. It simply added up the ins and outs of the industry in cash terms. It made no comment about whether a number was good or bad, right or wrong.
What Newson and the Minister have done is to pluck figures out of a generalised report and insert them willy nilly into a specific and limited exercise. That is poor practice.
For a start, the IER data is heavily biased towards the relatively high costs of buying and training horses. That’s understandable if you are considering how private and public investment is spread around the state, or how allocations to infrastructure, roads, schools and police on the beat should best be made. But what has it got to do with betting? The answer is little or none.
Racing is a commercial activity so what is of major interest is whether the government has created the best climate in which it can work. The answer there is that it has done the opposite. Higher taxes – arbitrary at that – serve only to discourage progress and investment.
Further, the Minister has now added further discrimination against the greyhound code to that which already existed, but for no valid reason. To say that an already harmful 13% commission share should be reduced to 10% amounts to an attempt to drive another nail into the coffin.
Probably the most important point of the IER report is that it did not, and was not asked to, look into the efficiency of the various codes and the wagering framework which keeps them afloat. The pattern of the last 20 years is that the fortunes of the thoroughbred and harness codes have been in decline and those of greyhounds on the rise. Admittedly, we know that NSW greyhound administration is a sandwich short of a picnic, but what does that say about the way the other two codes are run? Clearly, they have failed to move with the times. So why give them yet another free kick?
If you have just arrived from Mars, consider these facts (as recorded by IER for 2012/13).
Greyhound share of NSW meetings – 50.3%
Greyhound share of NSW races – 58.2%
Greyhound share of starters – 53.0%
Greyhound share of wagering – 18.6%.
Those sorts of figures would have a massive influence on the operation of clubs, pubs, Tabcorp and bookmakers, as well as government taxes. Obviously, greyhounds provide the continuity of product that keeps staff and facilities used productively.
In passing, it is worthwhile to look back to the government’s own report – “Review of wagering arrangements and the future growth and sustainability of the NSW Racing Industry” by Alan Cameron in 2008.
Amongst many other recommendations Cameron called on government to …
“Provide the right incentives to encourage the individual codes to operate efficiently, which they are most likely to do if they receive a fair proportion of the available monies that reflects their relative contribution to the wagering activity”, and
“The three racing codes should agree to amend the Inter-code Agreement to provide that returns to each code from TAB distributions are in proportion to the percentage of wagering generated by each code; in the absence of such an agreement, the Government should over-ride the Inter-code Agreement and the RDA such that the distributions from the TAB are made directly to each code and in proportion to the percentage of wagering generated by each code”.
Current actions from the Minister, as well as the cheers from the code’s temporary chief, are diametrically opposed to these principles. Indeed, despite veiled promises, the Minister has not only failed to use the tax device to restore some balance to commission sharing but has done the exact opposite. And he has wrongly used an economic study for a purpose for which it was never intended.
Indeed, why would anyone want to place barriers in front of a potentially more efficient and more profitable activity? It isn’t that now but it could well be.
The entire saga serves to point up two things – the frequently amateurish nature of the management of the greyhound industry, and the government’s poorly advised meddling with the workings of that industry. It reinforces the need to radically alter the structure and governance of racing. Continuing with 1950s habits will never work.