by Brian de Lore
Published 8th April 2021
History and logic tells us that as long we have a Department of Internal Affairs with its blood-drawing claws firmly gripped on the flesh of the racing industry, and an unschooled Minister of Racing having to sign off on so many vital issues, racing can’t revive itself.
Unlike Australia, racing in New Zealand has firmly fallen into the shackles of the Government. They have dragged racing along the road of slow death by suffocation, and this leftist Government, influenced by the ‘absolutist Greenies movement,’ is seeing the evaporation of any remaining sympathy for racing within the Beehive.
There was more than a hint of resentment when Minister Robertson referred to last May’s Winston Peters Racing Industry support package on $72.5 million in the 17th March quote in Racing News.
And my reference to Robertson as ‘unschooled’ is blatantly evident in his quote in the same article where he said: “Candidates (for the new TAB board) need not come from within the industry, as has happened in the past.”
Well, that was only the case in the distant past when we were in better shape. In the recent past, say the last dozen years, the most prominent decision-maker names have been Hughes, Allen, Bayliss, Stiassny, and Brown – none of whom knew which end bit and which end kicked when they arrived to govern racing.
Non-racing boards employed non-racing executives
Non-racing boards employed non-racing executives, and that whole sorry episode has been well-documented in these pages over several years.
Politics and nepotism brought all these people into racing during the John Key reign as PM (2008-2016). So the lefties can’t be blamed for the dark years after Minister Peters handed the baton to John Carter, who gave it to Craig Foss, who passed it to the great pretender Nathan Guy who stayed on as Minister of Racing for 6½ years – the disaster years.
The appointment process that brought all these bloodsuckers into the game hasn’t changed much. Having people with governance experience is one thing, but without a feel for the business, a profound knowledge of the industry’s mechanics, and a passion for making it work, racing will only continue its journey down the same slow road of death by suffocation.
The DIA’s Homer Simpson is stangling the life out of racing fan, Bart!
What would fix racing? Breaking free from the Government’s shackles with an amendment to the legislation that would change the TAB from a body corporate to a private company. Partnering the TAB with an overseas betting operator and getting $50 million upfront in the deal, and thereby eliminating the current $35 million debt and reducing future overheads substantially.
Wake up and partner the TAB!
The word in Aussie is several corporates, and one in particular, is still very interested in brokering a partnership with TAB NZ. The former RITA and now current TAB board clearly have never had an appetite to partner the TAB, but the right personnel on a new board has the potential to see the light and join the big boys in the global betting arena.
The TAB is now boasting on the website about how brilliantly it’s done in this financial year’s first half, and will have even less appetite for partnering. The trouble is, the result is COVID-19 driven, and they are building equity with the profits rather than sending them immediately down to the grassroots where most needed.
If the TAB is getting a profit margin of 20 percent, as stated, then the odds are too skinny for Kiwi punters to bet and win. It’s a game of margins, and anecdotally we know the winning punters are increasingly having their bets reduced or refused.
…the TAB will never catch up due to lack of scale
Partnering would bring massive savings, including plugging into the partner’s state-of-the-art betting platform developed with an IT budget in the vicinity of $120 million annually. Not to partner means New Zealand in the future is left further behind in the IT race, and the TAB will never catch up due to a lack of scale.
Partnering also immediately elevates New Zealand racing to be internationally competitive to punters by offering a better product. The result would open the opportunity to utilise its unique time slot to attract higher off-shore turnover to plow greater profits back into stakes money.
It’s becoming a pipedream to get something of this nature done – probably 100/1 and drifting as we endure the wait for the new TAB board announcement (August) that will determine the decision on partnering. That’s why the make-up of the board is so important. It’s also urgent but not in the DIA’s mind.
The summary in simple terms is this: As long as the TAB is controlled by a Government Department known as Internal Affairs, racing is paralysed and going nowhere. Everyone in racing should move to Aussie, and we now know that Air Zealand is putting on the flights for a mass exodus. Let’s go!
Alan Jackson endorsed by Breeders and Trainers
Of all the 41 applicants for the TAB board, only former NZTR Chair Alan Jackson, whose nomination was endorsed by both the NZ Breeders’ Association and Trainers’ Association, has experienced the wagering business’s workings at the high end. He worked with RWWA in the far west and Peter V’landys at Racing NSW.
It’s hard to imagine a workable board comprising 100 percent New Zealanders that also considers gender and ethnicity. Why can’t we forget this PCBS and just appoint the best people available? And perhaps include a couple of Australians with that all-important experience in wagering/gaming who possess the skills – a knowledge scarce in New Zealand but abundant in Aussie.
On that note, the last blog published here that named Liz Dawson as a possible candidate for the board, as well as Chair of the selection panel, has an explanation. She is not standing for the board, but as Chair was copied-in on the email amongst the 41 applicants.
Minister Robertson has expanded his search, and he will have the final say – a say that hopefully won’t be politically influenced. He has one chance at getting this right, and history is against him.
Fifty-nine clauses of Ministerial control – ridiculous!
When the new legislation’s first reading went to parliament in December 2019, it contained the Minister of Racing approval requirements in a massive 65 clauses. Following the Select Committee recommendations after the hearings, the final legislation had reduced the number from 65 to 59 – barely a token reduction.
That’s the level of ministerial intervention available to Robertson, which is the antithesis of what Winston Peters canvassed on in 2017. He lauded a racing industry at arms-length from the Government and one that has self-determination with autonomy set in stone. Those words disappeared into thin air.
It was a disappointing u-turn from Peters, who did get the gaming reduced in his first term as Minister with the stroke of his pen and then wholly eliminated the remaining two percent in his second term.
For the first 40 years after the thoroughbred and harness racing clubs of New Zealand made a collective agreement and formed the TAB, the Government participation in racing was minimal, and racing ran smoothly on a very low stakes money to cost ratio. In 1960/70s, one to 1½ wins would pay for your horse for the year. Today it’s four or five wins if you’re lucky.
Clipping the ticket on Lotto would have sent profitability through the roof
But in 1987, the TAB was dealt a setback when denied the opportunity to run Lotto through its retail outlets. Clipping the ticket on the Lotto turnover would have sent profitability through the roof.
The introduction of GST in 1986 handed racehorse owners instant inflation of ten percent, and the October 1987 sharemarket crash were consecutive blows from which racing in New Zealand has never recovered. The crash’s full impact didn’t hit the thoroughbred industry until the start of 1989, but it sent many investors broke and was felt for many years after.
The loophole in the thoroughbred industry’s tax laws allowing special partnerships was exploited to the full by both the needy and the greedy. Corporate non-racing people invested $2 to save $1 in tax, but post-crash discovered the investment was worth only ten cents. Paper fortunes were lost.
The tax loopholes were closed and the write-offs reduced, and simultaneously an Australian industry led by John Messara, that had lobbied their Government for tax parity with New Zealand, won the day and were awarded all the incentives needed for revitalisation to attract new investment money. The perennial incoming tide for New Zealand then went out and has never come back.
Falloon, King and Peters the best Ministers of Racing
Racing was still reeling from the double-whammy of GST and the crash when John Falloon stepped in as Minister. Falloon may have been one of the better ones, but after his contribution, and aside from Annette King and Winston Peters, a plethora of Ministers have come and gone and have been relatively useless in terms of effort and contribution.
The Minister of Internal Affairs presided over racing pre-1991 but was rarely required. The Minister of Internal Affairs was also in charge of Lotto from 1987. Racing administrators jealously took the view the DIA was conflicted and lobbied Jim Bolger’s National Party after its election success in 1990 for an independent minister. As a consequence, John Falloon became the first Racing Minister in 1991.
Falloon tried to revamp the industry in 1991, but when submissions were sought the industry fought against change, and nothing was achieved. In 2001 the then Racing Minister Annette King publically stated that racing was unfairly treated tax-wise because it was paying a higher level than casinos and gaming machines. She agreed that racing was disadvantaged as an industry in its own right.
Fair Tax brought in $33 million in year one
The Fair Tax Movement gained momentum leading up to 2005, but it wasn’t until Winston became Minister in 2005 that ‘Fair Tax’ became a reality, and the duty was reduced to two percent for racing. The first year produced an increased return to racing of $33 million, which today is worth about double that amount per annum.
The problem was the money didn’t all come back to racing as intended. NZRB expanded the administrative gravy train from a wage bill in 2005 of $27.7 million to $66.8 million in 2016 – an increase of 141 percent in 12 years.
Betting turnover on horses and dogs in that same 12-year-period rose by only 69 percent – $1.17 billion in 2005 to $1.98 billion in 2016. So that’s where these governmental controllers directed racing’s profits. A huge amount went into the salaries of racing employees than knew SFA about the business while the racing participants remained starved of prizemoney increases.
NZRB thievery by stealth was akin to armed hold-up
It was thievery by stealth rather than a Bonny and Clyde armed hold-up, but the end result was just the same, and the criminals seem to have exited scot-free. Worst still, the victims stood by passively and allowed it to happen.
The codes weren’t that dumb that they couldn’t see what was happening – blind Freddie saw it. But their passive response in not taking any action to stop the injustice only added to the mess.
The codes have said they were powerless under the Racing Act of 2003 while NZRB ignored the Act. But when you control the product, you have all the power you need. But the grit necessary to use it was absent.
Does anyone believe this chain of events would have been allowed to happen in NSW? – not likely!