Month: July 2019

by Brian de Lore
Published 26 July 2019

Under Section 14 of the old Racing Act of 2003, a Performance and Efficiency Audit on the old NZRB was required to be completed every five years by an independent accountancy firm.

The previous one was completed by KPMG in 2014, and now five years later, the third such review in NZRB’s history is expected to be in the hands of RITA by this time next week. It should be a very revealing document.

Grant Thornton is ‘the world’s seventh-largest professional services network of independent accounting and consulting member firms which provide assurance,’ according to Wikipedia, although they are more of a second-tier accountancy firm in terms of their New Zealand operation.

The invoice that will accompany the audit is likely to be substantial one (The Deloitte Report was $120,000), so it’s hoped this audit will pay for itself and highlight all the areas in which NZRB has wasted industry funds to correct future wastage.

Four weeks into RITA and Chairperson Dean McKenzie is now making contact with the media, having released a written statement to the stakeholders last week, answered the questioning of Peter Early on Radio Trackside midweek and more recently spoken to The Optimist.

“We met the Minister only on Tuesday this past week,” said McKenzie on Thursday. “RITA’s final report went in at the end of June when Parliament was going into a recess, and the Minister was overseas. He arrived back only this past weekend just before Parliament came back to sit this past week.

“We had a meeting scheduled with him on Tuesday – that’s why I could go on the radio this week and talk to you today.”

The Final Report has yet to be released, but McKenzie added, “The Interim Report was tabled at the end of February, and you could say it was probably more important than the final report.

“Similarly, the final report is only a set of recommendations.  There’s been nothing agreed at this point, so all that’s happened is we have discussed elements of the Final Report with the Minister. The process of getting to the second bill is no different to the first bill in that we have policy papers to contribute and then there’s Cabinet papers – the drafting and all that process – that’s underway now.”

One can’t help get the impression during the course of a long discussion with McKenzie is that everything is happening too slowly for this hemorrhaging business because progress is at a ‘parliamentary pace’ and RITA is locked into that process.  

“I think your comments on DIA have been unfair,” responded McKenzie to my previous week’s comments on the DIA’s lack of urgency. “I can’t say anything about what happened before our time, but the DIA has been crucial in aspects of this including doing the legislation and continuing to do it, and we are working closely with them to deliver the second bill and the regulations that are needed to kick in the IBUC and POC levies.

“There has already been a working group that’s been underway for some time, addressing the regulations and the voluntary agreements to ensure the timeframes for that are as short as possible.”

The problem for RITA is that they appear to be locked into that bureaucratic pace and a typical example of it is is in the setting of the rates for racefields or the Betting Information User Charges (BIUC) and Point of Consumption (POC) levy. The rates should have or could have been set at any time over the past few months with the knowledge that this legislation (Racing Reform Bill No.1) was coming up by the end of June.

The Minister sets the rates according to the legislation but only on the recommendation, presumably, of the Designated Authority which is officially the DIA but by McKenzie’s own admission, this week, is a working group consisting of both people from the DIA and RITA. Those rates are not close to finalisation, and that’s the first thing that has to happen before any agreements can be drawn up and negotiated with the overseas betting operators.

“One of the only advantages of being so tardy off the blocks as we have been,” said McKenzie, “is that you can go and look at what’s working in other jurisdictions – it’s not rocket science.  We have leaned heavily on what’s working across the ditch, and the expertise that’s there, and we are doing everything we can. We are not trying to do it ourselves; we are trying to use the existing formulas that are successful.”

McKenzie was no doubt referring to the Australian jurisdictions which have everything posted on their websites – inviting direct plagiarisation of the agreements and rates which was a possibility mentioned here last week. Despite that opportunity, no indication was forthcoming from McKenzie to suggest the rates decided upon are imminent.

On other matters currently before RITA, the Racing Integrity Unit Report compiled by Malcolm Burgess and now in the hands of RITA and is soon to be sent to the stakeholders, and they will be invited to make submissions.

“There has been a significant amount of interaction between Malcolm Burgess and his team and the codes and the wider industry, and this will be the third part where Malcolm’s Review has come in,” explained McKenzie.

“The MAC Final Report is going to be made public and will be posted on the DIA website but not sure what the timeframe is for that. The Minister makes that decision. We are in that short window now before release as we were in the Interim Report.

“The process to evaluate the 17 recommendations is still the same. You will see when it comes out  – all the individual work plans for each of those recommendations. There’s nine or ten individual work-streams that are going on now to continue to evaluate those recommendations.”

But the question of outsourcing the TAB which is a vital part of the Messara Report delivering the promise of doubling stakesmoney does not appear to be a fait accompli if you can read between the lines of the McKenzie response to that question.

McKenzie said: “If you work through the Interim Report wording, it says that we have to look at a whole variety of things including the status quo which is the current operating environment, and that was one of the purposes of getting the section 14 audit which is due at the end of July. We can’t fully assess the current situation until we get that audit.

“I think we were quite clear that this was a 12 to 18-month process because it’s just such a complex issue and it’s a very important one. I’ve said before that the formation of the TAB in 1951 was the single most important event in racing’s history and what we do with it over the next 25 years has to be the next most important decision.

It’s very clear in the submissions made by the codes is that they are all happy to look at it (outsourcing), but the process has to be robust, and the industry wants the right decision. We have to make sure that the process to evaluate it is the right one – John’s recommendation about the intellectual property and where that sits, is an important driver of it as well – we are working through that with the codes

“I understand everyone’s desire for the reform process to be done as efficiently and as quickly as possible, and no one wants that more than us, but the reality of the situation is that the industry has been in decline for 30 years and the problems are not going to be addressed in 30 days.

Once the final report comes out and the various work streams are clear, and the timeframes are clear, people will see the size of what we are doing while we are also managing the day to day operations of the TAB.”

by Brian de Lore
Published 26 July 2019

Under Section 14 of the old Racing Act of 2003, a Performance and Efficiency Audit on the old NZRB was required to be completed every five years by an independent accountancy firm.

The previous one was completed by KPMG in 2014, and now five years later, the third such review in NZRB’s history is expected to be in the hands of RITA by this time next week. It should be a very revealing document.

Grant Thornton is ‘the world’s seventh-largest professional services network of independent accounting and consulting member firms which provide assurance,’ according to Wikipedia, although they are more of a second-tier accountancy firm in terms of their New Zealand operation.

The invoice that will accompany the audit is likely to be substantial one (The Deloitte Report was $120,000), so it’s hoped this audit will pay for itself and highlight all the areas in which NZRB has wasted industry funds to correct future wastage.

Four weeks into RITA and Chairperson Dean McKenzie is now making contact with the media, having released a written statement to the stakeholders last week, answered the questioning of Peter Early on Radio Trackside midweek and more recently spoken to The Optimist.

“We met the Minister only on Tuesday this past week,” said McKenzie on Thursday. “RITA’s final report went in at the end of June when Parliament was going into a recess, and the Minister was overseas. He arrived back only this past weekend just before Parliament came back to sit this past week.

“We had a meeting scheduled with him on Tuesday – that’s why I could go on the radio this week and talk to you today.”

The Final Report has yet to be released, but McKenzie added, “The Interim Report was tabled at the end of February, and you could say it was probably more important than the final report.

“Similarly, the final report is only a set of recommendations.  There’s been nothing agreed at this point, so all that’s happened is we have discussed elements of the Final Report with the Minister. The process of getting to the second bill is no different to the first bill in that we have policy papers to contribute and then there’s Cabinet papers – the drafting and all that process – that’s underway now.”

One can’t help get the impression during the course of a long discussion with McKenzie is that everything is happening too slowly for this hemorrhaging business because progress is at a ‘parliamentary pace’ and RITA is locked into that process.  

“I think your comments on DIA have been unfair,” responded McKenzie to my previous week’s comments on the DIA’s lack of urgency. “I can’t say anything about what happened before our time, but the DIA has been crucial in aspects of this including doing the legislation and continuing to do it, and we are working closely with them to deliver the second bill and the regulations that are needed to kick in the IBUC and POC levies.

“There has already been a working group that been’s underway for some time, addressing the regulations and the voluntary agreements to ensure that the timeframes for that are as short as possible.”

The problem for RITA is that they appear to be locked into that bureaucratic pace and a typical example of it is is in the setting of the rates for racefields or the Betting Information User Charges (BIUC) and Point of Consumption (POC) levy. The rates should have or could have been set at any time over the past few months with the knowledge that this legislation (Racing Reform Bill No.1) was coming up by the end of June.

The Minister sets the rates according to the legislation but only on the recommendation, presumably, of the Designated Authority which is officially the DIA but by McKenzie’s own admission this week is a working group consisting of both people from the DIA and RITA. Those rates do not appear to be close to being set, and that’s the first thing that has to happen before any agreements can be drawn up and negotiated with the overseas betting operators.

“One of the only advantages of being so tardy off the blocks as we have been,” said McKenzie, “is that you can go and look at what’s working in other jurisdictions – it’s not rocket science.  We have leaned heavily on what’s working across the ditch, and the expertise that’s there, and we are doing everything we can. We are not trying to do it ourselves; we are trying to use the existing formulas that are successful.”

McKenzie was no doubt referring to the Australian jurisdictions which have everything posted on their websites – inviting direct plagiarisation of the agreements and rates which was mentioned here last week. Despite that facility, there is no indication from McKenzie the rates are imminent.

On other matters currently before RITA, the Racing Integrity Unit Report compiled by Malcolm Burgess and now in the hands of RITA and is soon to be sent to the stakeholders and they will be invited to make submissions.

“There has been a significant amount of interaction between Malcolm Burgess and his team and the codes and the wider industry, and this will be the third part where Malcolm’s Review has come in,” explained McKenzie.

“The MAC Final Report is going to be made public and will be posted on the DIA website but not sure what the timeframe is for that. The Minister makes that decision. We are in that short window now before release as we were in the Interim Report.

“The process to evaluate the 17 recommendations is still the same. You will see when it comes out  – all the individual work plans for each of those recommendations. There’s nine or ten individual work-streams that are going on now to continue to evaluate those recommendations.”

But the question of outsourcing the TAB which is a vital part of the Messara Report delivering the promise of doubling stakesmoney does not appear to be a fait accompli if you can read between the McKenzie response to that question.

McKenzie said: “If you work through the Interim Report wording, it says that we have to look at a whole variety of things including the status quo which is the current operating environment, and that was one of the purposes of getting the section 14 audit which is due at the end of July. We can’t fully assess the current situation until we get that audit.

“I think we were quite clear that this was a 12 to 18-month process because it’s just such a complex issue and it’s a very important one. I’ve said before that the formation of the TAB in 1951 was the single most important event in racing’s history and what we do with it over the next 25 year has to be the next most important decision.

It’s very clear in the submissions made by the codes is that they are all happy to look at it (outsourcing), but the process has to be robust, and the industry wants the right decision. We have to make sure that the process to evaluate it is the right one – John’s recommendation about the intellectual property and where that sits, is an important driver of it as well – we are working through that with the codes

“I understand everyone’s desire for the reform process to be done as efficiently and as quickly as possible, and no one wants that more than us, but the reality of the situation is that the industry has been in decline for 30 years and the problems are no going to be addressed in 30 days.

Once the final report comes out and the various work streams are clear, and the timeframes are clear, people will see the size of what we are doing while we are also managing the day to day operations of the TAB.”

by Brian de Lore
Published 19 July 2019

Economies around the world rise and fall on confidence, gold medals at Olympic games are won and lost on the same commodity, and the analogy more than ever before applies to New Zealand racing and breeding as we close in on the 2019-20 racing season.

The breeding business underpins every element of racing in New Zealand including our success in neighbouring Australia. The algorithm upon which our halcyon days were based was to retain our best female families, import the best bloodstock affordable from Europe and breed horses in much higher numbers.

That formula has contracted in every aspect to the extent that compared to forty years ago we are breeding half the numbers. We also have only one (Savabeel) compared to the 20 stallions in the top 50 we had in 1978 on the Australian Stallion Premiership. We have only four percent compared to 10 percent of the Australian thoroughbred population, and can no longer afford to keep our good mares and race fillies when alongside a comparatively buoyant Australian industry.

That history might bore some readers, but it’s regurgitated here only to highlight today’s level of industry confidence, or in this era, the lack of it. A breeder approached The Optimist last week to ask whether or not they should breed their mares this season – a crystal ball to provide accurate advice on such matters would be a welcome addition to every breeders mantlepiece.

A core group of breeders will always breed all their mares. Others will decrease the band such as Waikato Stud did this year, reducing the 220 to a band of 180. Some are now saying they are breeding only every second year and further anecdotal evidence says others are just giving up.

On the other hand, Ray Knight of Novara Park Stud in Cambridge is all positivity about the coming breeding season and says his bookings are ahead of this time last season. Novara Park stands the promising young stallion Sweynesse and newcomer Staphanos.

“I think breeders have become more price-conscious when doing their matings,” Knight said this week, “but a lot of breeders who are undecided or say they are not breeding their mares change their minds because it’s also counter-productive to leave the mare empty.”

The number of foals bred season by season is a direct reflection of confidence in the industry. It’s critical we don’t drop below current levels because a further decline will directly affect the average field size for domestic racing, and to fall below the threshold number of about 10.5 has the domino effect of reducing betting interest – the only thing that drives stakesmoney.

It’s racing’s Catch-22. The prospect of field-size reductions and fewer numbers reduces the overall quality of horses racing from season to season, and the Pattern Race Committee will again confront the dilemma of eliminating some listed races and reducing group races to a numeral of diminishing significance.

The Pattern Race Committee is due to meet again in early August and would it be a surprise if racing suffered a further bout of black-type erosion? The answer is no. Any such decisions will bring a further lessening of confidence.

Examining the history, it’s worth noting the decline in racing is a worldwide phenomenon and has been occurring for decades, but evidence exists which shows good governance can arrest this whirlpool drop into an unknown black hole. Both Australia and Ireland are examples to cite.

In the 1960s New Zealand racing commanded 96 percent of the betting dollar – the only competition for it being Golden Kiwi. Racing in 2019 is down to 16 percent of that same dollar. Couple that with a Racing Act of 2003 that hasn’t worked and governance of the poorest order, especially that seen from the NZRB in the past 10 years, and we are where we are today.

Confidence is what we need going forward and while RITA is the four-letter word on everyone’s lips, and one in which we have placed our faith going forward, other hurdles and hoops to jump through lie waiting on the path to revitalisation.

RITA has been in the job only three weeks, and we need to give that board time to tackle its mountain of problems, do due diligence on all of them, and bring the Messara Report into play over the next year. Not only will RITA have to deal with the dog’s breakfast they have inherited from NZRB, but they have also been involuntarily partnered with DIA, which is a fate no one would have wished upon them.

The DIA’s involvement in likelihood goes back to very soon after Messara delivered the report to the Minister nearly a year ago, or even before that. If you are wondering why the setting up and collection of both racefields and the POC (Point of Consumption) levy will take another six to 12 months, or even 18 months as one astute pundit suggested this week, then the DIA is your answer.

While racing looks for points of confidence upon which it can burst from the barrier stalls and leap into a bright, new future, the DIA (Department of Irregular Activity) is what Cutts’s Brush was to the Grand National Steeplechase in the 1960s and 1970s – enough to trip everything up.

Cutts’s was Riccarton steeplechase jump of five feet three inches high, constructed of stiff manuka, of a jumping length of five-foot, and known to support a Morris Minor car which it successfully held firm sometime in the sixties. The best of steeplechasers were found wanting at Cutts – no chance of brushing through it. Today it’s a shadow of its former self.

The DIA is the designated authority, appointed by the Minister, and it’s critical that the revenues from racefields or Betting Information Use Charges (BIUC) as RITA is calling it plus POC which became legislation through the Racing Reform Bill No.1, start accumulating to racing and sporting codes at the earliest date.

When fully operational, the potential is to bring new revenue to this struggling industry to the tune of $20 million to $25m per annum. And implementation shouldn’t be that hard as the blueprints for both can be found with user charges and application forms (the templates are done for them) on both the Racing.com and Racing NSW websites.

When we had to listen to all that carry-on from NZRB’s Glenda Hughes and John Allen about missing out on $1 million a month from not getting racefields, what a joke. NZRB would never have been getting it – nothing was in place in the form of agreements with overseas betting operators to collect it – and still isn’t.

Further confidence would be forthcoming if a replacement for the ill-fated The Informant could be launched in the near future. Plans are afoot, and since the advent of RITA, some progress is now being made to do something with the much-maligned and poorly managed Best Bets.

The industry badly needs a decent form guide and printed medium for weekly news and communication, and The Informant’s demise was an untimely setback. Further progress of a new publication should surface in the coming weeks.

by Brian de Lore
Published 12 July 2019

When it comes to being under the control of the DIA (Department of Internal Affairs), you can bet things will be moving very slowly. That’s the nature of the beast.

Racing in New Zealand is in that predicament despite its desperate state. The clutches of a government department and its bureaucratic lack of inertia is the thing that will sink racing before any well-conceived RITA plans hit the road running.

What’s it about? Well, think about the expert advice John Messara advocated in his Review delivered to Minister of Racing Peters on July 27 last year; yes, it’s only a couple of weeks short of a year ago. Messara in making his suite of 17 recommendations stressed full adoption and urgency of implementation for a successful outcome.

On page 10, he stated, “…it is critical that the implementation of the recommendations be pursued urgently and in their entirety, as this is the step at which previous reform efforts have failed.”

Wasn’t it Albert Einstein who said, “The definition of insanity is doing the same thing over and over again and expecting a different result.”

The industry has done exactly that, and racing is now lurching from Messara’s expression of being in ‘a serious state of malaise’ a year ago to today’s predicament of ‘a perilous domain of demise.’

Last week’s revelation that nothing has yet been put in place to collect racefields or (BIUC) (betting information user charges) or POC (point of consumption) levies is the problematic outcome of being DIA controlled. Information received from the NZ-First office said it would take six to 12 months to get the necessary agreements.

Last year the Minister wisely decided to adopt the Messara Report, but after consultation with governmental bureaucrats, the urgency factor was deleted from the formula. It is now apparent the recommendations in the report have been somewhat remolded to suit that bureaucratic process – at the expense of the owners who the Minister has previously identified as the most critical people in racing.  

Racehorse owners today are markedly worse off compared to 12 months ago. Stakes have remained constant on borrowed money, but everything else is rising in costs around them, which impacts every owner.

Veterinary services, feed costs, transport costs, and the impending 15 percent rise in ACC levies for stable staff and trackwork riders have all gone up or going up. And the buck stops with the owner. Trainers, too, are worse off with a diminishing pool of owners, rising rentals with some subsidising the cost of the horsebox in the cause of staying actively involved.

What’s the state of the racing nation, you may well ask? The revenue streams that racing has talked about as being urgent are apparently not urgent if you judge it on DIA’s mode of operandi. DIA is the designated authority to collect the levies – that was a ministerial mistake.

NZRB had taken its overdraft facility up to the maximum of $25 million this season with nine to $10 million due for repayment at the end of this season – a challenging situation for RITA to inherit, perhaps. With only eight to $10 million cash-in-hand, the chance of repaying that money is virtually nil – RITA will have to renegotiate a roll-over of that overdraft facility.

Where does that leave stakesmoney for the coming season or how long can the current level of stakes continue without those new revenue streams in place?  That would be a good question for RITA to answer to the industry ASAP.

But the answer may not be forthcoming because presently RITA is not talking while it weighs up its options. For this and last season, the NZRB borrowed a total of $22 million to make the minimum stake $10,000. Would it be logical to assume that to keep stakesmoney at its current level RITA would need $11 million from somewhere or just run out of cash by about November?

Is this racing industry broke? The answer is yes. Do most people involved have a touch of the ‘denials’ and a hint of Ostridge about them? The answer is again, yes. Is there any significant evidence of urgency to fix things coming from this bureaucratic ensemble of revenue collectors? This time the answer is no.

RITA will be urgent about fixing things but the fact that John Allen and his salubrious bunch of overpaid executives have thrown the RITA team a hospital pass is likely to have provoked a lot of head-scratching.

The FOB platform has been operational for six months, and it’s clearly evident it hasn’t fulfilled any of the John Allen promises. The NZRB budget will be shy by something like $20 million, and although TAB turnover on sports betting has risen in recent weeks, it is not delivering a good enough margin of profit.

Information supplied to The Optimist says the margin on sports betting has been only five percent in recent times. By CEO Allen’s own admission, it was only three percent for the first three months of its operation (January to March).

It cost $50 million plus to build when you correct the NZRB creative accounting, but an even bigger worry is the total $17 million in annual running costs that they signed up for with Paddy Power and Openbet. One of those contracts runs for 10 years and the other for five years – a substantial ongoing commitment, and a headache for RITA.

The new website is a ‘dog’ as many of the TAB’s long-standing customers have judged it before defecting to one of the Australian corporates. A lot of the issues with it are unfixable, and when you add to that the poor customer relations record of the TAB and its 2018-19 performance, the long term prognosis for increased returns to the codes is merely fake news.

The bottom line is that the doubling of stakes for New Zealand racing isn’t happening anytime soon. The way this saga is panning out, it will be a superlative effort by RITA if they can hold stakes to the current level for the entire season.

The first thing that should happen is for the Minister to relieve DIA from its role as ‘Designated Authority.’ Put a body of people in charge of that critical responsibility that know what they are doing – take some of the insanity out of the equation and replace it with common sense.

Even holding stakes to the same level is losing ground. Not only do the costs rise, but every time an Australian jurisdiction announces stakes increases, New Zealand loses ground. NSW’s third tier of racing is ‘Country’ which last week announced the total prizemoney allocation would rise to A$81 million, which is an increase of A$48 million commencing in August 2019.

The NSW Racing Media Release is reproduced below:

MEDIA RELEASE

Tuesday, 2 July 2019

Major prizemoney increases for feature country meetings.

Racing NSW today announced major prizemoney increases to country racing carnivals right across NSW as a further boost to country racing which will commence from 1 August 2019.

With this announcement today, total annual prizemoney to be paid for country racing in NSW will now be more than $81 million which is an increase of $48million or 145% since 2012. Country racing has received the largest increase ofany sector during this time.

There will now be eight feature Country Cup races with prizemoney of $200,000 at the following racecourses: Port Macquarie, Goulburn, Albury, Wellington,Tamworth, Wagga Wagga, Scone and Grafton.

In addition, prizemoney for Grafton’s Ramornie Handicap, the Wagga Wagga Town Plate and Scone’s Dark Jewel Quality will also be increased to $200,000.

The Coffs Harbour and Muswellbrook Cups will receive an increase in prizemoney to $150,000 each and the Taree Cup, Dubbo Cup and Snake Gully Cup at Gundagai will receive an increase in prizemoney to $100,000.

Also, the feature meetings at Lismore, Coonamble, Coonabarabran, Mudgee, Moruya, Bega and Orange have received significant increases for their Cups and support races at these meetings.

At each of these feature country meetings, there will now also be a $50,000‘Country Magic’ race which is restricted to country-trained horses only. These ‘Country Magic’ races will ensure country participants have an extra opportunity to compete at these feature meetings.

These latest announcements follow on from recent increases to minimum prizemoney levels to $22,000 per race and 40 Country Showcase meetings per annum with each race being at least $30,000 and the introduction of races restricted to country-trained horses only such as:

– $1.3 million The Kosciuszko-
– $500,000 Country Championships Final
– 7 x $150,000 Country Championships qualifiers throughout NSW for total $1,050,000
– $75,000 weekly Highway races
– $40,000 maidens for country-trained horses only

Racing NSW will also provide marketing and promotional support to these country race clubs. These events are also supported by Destination NSW to ensure tourism is brought into the local region. The event will get the local community to get together to celebrate everything great about their town.

Racing NSW Chairman, Mr Russell Balding AO, said: “A key strategic priority of Racing NSW is for country racing to continue to stage great carnivals and Cup Race meetings and to ensure that thoroughbred racing is widely celebrated and enjoyed throughout all of NSW, not just Sydney and the Provincials.

“Thoroughbred racing, dressing up, heading to the races and having a bet is part of what we do.

“The prizemoney increases for these meetings, along with the marketing and promotion of the Carnivals themselves, particularly to the younger demographic, will lift NSW Country Racing to a whole new level.

“In addition, the promotion, through Destination NSW of the particular regional attractions and experiences leading up to and during the actual Country Racing Carnival, will be another reason for people to visit regional NSW and make Country Racing part of their short stay or holiday whilst in the region,” Mr Balding said.

Minister for Better Regulation and Innovation, Mr Kevin Anderson MP, said: “The increase in prizemoney is not only good for racing, but has great flow on effects for regional communities.

“It’s no secret that our regional communities are doing it tough, especially given this unprecedented drought, so investing in racedays can help drive tourism and increase bed nights which is crucial to our local economies,”

Mr Anderson said. “Racing is more than just an event in regional communities, it’s part of the culture, which is why we want to continue to make racing as enjoyable and accessible as possible.”

by Brian de Lore
Published 5 July 2019

Five days into RITA (Racing Industry Transition Agency) and all’s quiet on the proverbial Western Front. No statements, no appearances, no initiations, and no action of any aesthetic nature.

If RITA were expected to fly into Petone on a magic carpet last Monday morning and wave a magic wand and fix a plethora of industry ailments, then a lot of enthusiastic, hopeful, voyeuristic industry stakeholders would have departed disappointed.

Not quite as big as the let-down from New Zealand’s Cricket World Cup effort against England in the early hours of Thursday morning. That was an appalling performance that lacked intensity and commitment.

We don’t expect the Blacks Caps to win the World Cup because it’s now blatantly obvious they are not good enough. But we do expect RITA to front up to the racing industry – now that they have taken the reins from NZRB – and tell us what they are doing and when they are doing it. They owe that to the industry at the very least.

Why? Because they don’t own the industry; it belongs to the participants. RITA is a representative committee that has been seconded to play a part in fixing it, and while doing that why wouldn’t they take the opportunity of making a deserved gesture to racing people and give a running commentary on how and when?

The MAC in its own words in the Executive Summary of its Interim Report stated: “The Committee has engaged with the racing industry openly and transparently. As change progresses, dealings with the industry and communities must continue to be transparent, inclusive and robust.”

The industry advocates transparency and accountability from all administrators and with history in mind should be casting suspicion upon newbies from outside racing – 16 years of being fed on a mushroom diet of darkness and unpalatable decision-making. RITA needs to fix that by showing the way forward as its statement suggests.

First board meeting for RITA next week

RITA has its first board meeting next week (July 10^th), and one can only assume that in the interim the NZRB accounts have been uplifted and a team of auditors is working flat-out as you read this to discover what NZRB has been cooking up in the creative kitchen at Petone – Their Kitchen Rules!

When known, RITA should be open about it and reveal all the irregularities and years of misuse of racing industry funds. It seems that deception and glossing over reality is a way of life at Petone because it has also continued into RITA’s first week.

By Monday morning NZRB had deleted its website masthead and replaced it with a RITA equivalent, and in this new format the CEO John Allen bio claimed he has been working for RITA since March 2015. Fantasy – just make it up as you go, John.

It’s a reminder of another laughable occurrence at one of Allen’s Racing Industry Conservation meetings (the travelling circus) at Matamata last year when he claimed NZRB hadn’t gone and borrowed money to prop up the minimum stakes to $10,000 – the $22 million over two years. But when questioned further by one of the seven attendees it turned out that NZRB already had a substantial overdraft facility and they were merely using that – sleight of hand or chicanery as it’s sometimes called.

Then, just to top it off, outgoing NZRB chair Glenda Hughes last week sent a departing email to the NZRB staff which stated: “I am immensely proud that the Board is leaving the NZRB in a much stronger position than we inherited. I’d like to acknowledge that the investment in the FOB was not only the right decision but will prove critical in the long-term sustainability of the industry.”

On reading that fiction, a wry smile must have come to the face of even the most ardent gravy-trainers at NZRB.

A stumbling block for RITA

In last week’s blog, I concluded by saying, ‘…from Monday racing can commence a journey down the path of greater prosperity.’ Upon further investigation, it appears that statement is subject to a significant caveat which could be a stumbling block for RITA.

We are in the first week of the new legislation coming into effect, and theoretically the new revenue streams of racefields (betting information use charge) and POC (Point of Consumption levy) should be returning to the codes somewhere between $250,000 and $500,000 per week – but it isn’t.

Nothing is coming in except one voluntary payment because the designated authority, DIA (Department of Internal Affairs) has not negotiated the agreements with the overseas betting operators – yes, we are in the hands of an inefficient bureaucratic process that lacks expertise in this area and moves at a snail’s pace.

Every week that goes by without those agreements is collectively costing the three codes up to a half million. The exact amount isn’t known because the POC levy is the income derived from New Zealanders betting with overseas operators and without collecting it, no-one knows how big the pot will be. We can only assume it will be massive given the anecdotal evidence of Kiwi punters deserting our TAB for a better deal with Australian-based corporates.

In the 123-page Interim Report by the MAC (Ministerial Advisory Committee), the recommendation to the Minister was to appoint the codes as the designated authority to negotiate and collect the Betting Information Use Charge, but that advice was ignored and DIA was appointed.

The MAC also advised that DIA collect the POC levy which is more understandable because the overseas betting operators would be revealing commercially sensitive information which they wouldn’t want to divulge to a body such as NZTR. But to make DIA the authority for both is silly.

The Racing Reform Bill No.1 went through under urgency to get the new revenue streams active ASAP, but when the barrier gates slammed open on Monday morning the industry failed to jump. It’s Friday and we are still cast in the gates having missed the start by five days and counting.

Australia started collecting racefields in 2008, albeit contested in the courts for a period, and here we are 11 years hence with the legislation passed but still floundering in the familiar pool of indecision. Lack of preparation, lack of consultation, lack of readiness, and the result is revenue down the drain.

The July 1^st date for the new legislation was mooted way back at the beginning of the year so what excuse can there be for not having the rates agreed upon and the agreements in place for day one. It’s pathetic, to say the least, and overseas betting operators must be laughing their heads off at this show of mismanagement.

Codes should be the Designated Authority

All desperate for cash and racefields being their property, the codes would react with the enthusiasm of a dog with a meaty bone if they were the authority. NZTR could have acted as the aggregator for all three plus sport and had these agreements in place. CEO Bernard Saundry is vastly experienced in racefields in Australia and was the obvious choice as opposed to some non-racing bureaucrat in DIA.

Under Clause 65 AE of the Racing Reform Bill No.1, the Minister has the power to influence a change on this point. It states: “The Department may delegate in writing any of its functions or powers as the designated authority to another entity.”

The absurdity of the situation is highlighted in the Messara Report, which states: “We do not believe it is appropriate for government or a government department to assume the role of designated authority for the issue of a betting information use agreement and it is more a role for an industry body…codes and sport in the best interests of their respective industries and stakeholders.”

When The Optimist recently posed the question of collection of BIUC levies to the Minister’s office, the reply came back: “Offshore betting operators wanting new agreements for betting use information agreements will need to wait until the offshore charges regime is brought into being through regulations.

“The offshore betting operators raised the need for consultation at the select committee, and this will be addressed as part of the regulation setting process.”

The interpretation of that response is ‘the DIA is a government department and the delay will be at our leisure.’