Messara makes impressive oral submission to complete four weeks of hearings

by Brian de Lore
Published March 6th 2020

After 900 written submissions and around 90 oral submissions, the Transport and Infrastructure Select Committee will now deliberate and adjudicate the changes required to panel beat the proposed Racing Bill legislation into a more acceptable shape.

Some hefty blows with a sledgehammer in this instance will be more appropriate than a few taps with the rubber mallet. An impeccable source of information tells me the alterations will be substantial and far more acceptable to the codes than the diatribe put to parliament in that first reading in December.

Collectively, the weight of all the submissions presented by the industry sent a strong statement to the Select Committee, which to its credit, listened intently to most arguments at the hearings. They also asked many searching questions, and will now complete the process by penning new wording the racing industry can not only live with but can take with them into a sustainable, future-proofed period of recovery.

The relationship between codes has a history of disagreement, but in the past month they have displayed more unity, especially in their almost unanimous rejection of the first reading of the legislation which was serving only to keep racing on the path to poverty. Even blind Freddy could see that.

“…if that was presented as a paper by a law student in an exam, I would say try again.” – Judge Clapham

Former racing administrator and owner-breeder, Judge John Clapham, projected a similar theme in his oral submission. He said, “It takes courage to make decisions. I think you have been poorly served by the legislation put in front of you. It is not fit for purpose. I bluntly said (in my submission) that if that was presented as a paper by a law student in an exam, I would say try again, or do you want to take up another industry.

“It’s very, very poor,” Clapham continued. “You need to ask yourselves why it is presented to you in such form, and I suggest there are people in the background who are endeavouring to take over in a bureaucratic way the functions of what is known as the TAB.”

Shadow Minister of Racing Ian McKelvie responded by asking Clapham: “Why do you think the RITA submission has basically supported the propensity of this Bill and no one else has done the same, and the RITA board was officially appointed to design the Bill?”

Clapham responded: “I don’t know the personalities, but my dream was this – this Bill would have provided you with clarity and incisiveness about where you are going with the legislation – and I ask myself, why doesn’t it do that? And I would suggest that they have misunderstood their role. They should have presented you with a Bill that certainly may have needed fine-tuning, but you shouldn’t have had to be asked to start from square one, surely to God, assuming people have been paid to carry out that function. If it were a lawyer doing it, I suggest I wouldn’t pay the Bill.”

McKelvie’s question pigeonholed  RITA as a committee dressed in the emperor’s new clothes

McKelvie’s question pigeonholed  RITA as a committee dressed in the emperor’s new clothes as it contradicted the overall industry view by supporting 80 to 90 percent of the original legislation. It also demonstrated that had RITA consulted racing’s stakeholders and grassroots participants for the first writing, then this whole process of angst could have been avoided.

RITA and the DIA between them concocted the content in the first instance. This latest process, however, was between the industry people and a representative committee of parliamentarians who will eventually pass this whole thing into law – passionate people in racing dealing with the lawmakers – a far more sensible system.

The hearings provided a good insight into the potential for racing to run its own business without government interference – that message was made loud and clear to the Select Committee, and they appeared to take it on board. Poor industry governance in the past dozen year or so has included some racing people, but 90 percent of the personnel disasters have resulted from political appointments, nepotism, non-racing Directors’ Institute graduates, and others even less qualified.

Racing Industry Bill hearing of evidence – part 2 (5 March 2020)

Racing Industry Bill hearing of evidence – part 2 (5 March 2020)This bill finalises the post-transition governance structure of the racing industry, creates a legislative framework to enable property to better benefit the racing industry, and enables new ways of seeking approval for betting products. Read more: 👉 https://bit.ly/38L8zHk

Posted by Transport and Infrastructure Committee on Wednesday, March 4, 2020

Racing should steadfastly refuse to put up with that nonsense in the future. And in the legislation rewriting, an arbitrator should be installed to ensure all appointments are within the strict guidelines of qualification. NZRB appointments in latter years, including a Chair, were outside those guidelines, but the codes displayed a lack of strength by allowing them to proceed. Also, why should someone who has never stepped inside a TAB or ever placed a bet in his life, and is mainly interested in playing Mozart on a Saturday instead of watching Trackside, take charge of wagering – that’s the 21^st-Century’s new definition of insanity.

Getting rid of the ex-civil servants on massive salaries from racing is just one tiny part of the problem alongside the panel beating of this legislation. The real issue today is our current financial state, which is one of insolvency – the TAB cash flow keeps tiding things over, but recent information coming to The Optimist also says the facility of a floating-line above the $35 million debt is in place for reason of no interruption to paying the bills.

The three codes annually cost $40 million and NZRB/RITA $211 million. Total $251 million annually for a business that returns the three codes only $100 million for prizemoney. Salaries at RITA amounts to more than NZTR dishes out in prizemoney. If it were a public company, the shareholders would be baying for blood and demanding resignations.

The simple business principle of maximising income and reducing costs is still on the backburner.

It doesn’t matter what excuse is given to stakeholders for that lack of incisiveness in dealing with the issue of costs; no genuine excuse really exists; it’s unacceptable.

John Messara has always said that the fix for New Zealand racing is a relatively simple one

John Messara has always said that the fix for New Zealand racing is a relatively simple one, but it requires someone strong who will roll-up their sleeves and do a hatchet job for the greater good. RITA has already advertised for a new CEO of the TAB, but it’s unknown if they used the word ‘testosterone’ in the advert – probably not.

Both racing and breeding’s immediate problem is to keep its current level of clientele. The anecdotal evidence suggests owners and breeders as a group is in a state of shrinkage. Any good news coming from the Select Committee cannot come fast enough because confidence in racing badly needs a repair job.

As of today, the Select Committee expects the rewriting of the legislation to be completed by March 19th with the second reading taking place in early May, and the third in June. By July 1^st, the entire process should be complete with legislation passed into law.

As John Messara said in his oral submission, printed below, this is the last opportunity New Zealand racing will get to put the vital changes in place that will resurrect the industry, and New Zealand can ill-afford to pass up on that opportunity.

John Messara’s impressive presentation may also be viewed in the second half of the video link shown above:

JOHN MESSARA
PRESENTATION TO THE NZ SELECT COMMITTEE ON THE RACING INDUSTRY BILL

THURSDAY 5^TH MARCH 2020

May I thank the Members of the Select Committee for the invitation to appear before you, on this, the last day of submissions.

I am mindful that I am not a stakeholder in the New Zealand Thoroughbred Industry and that submissions are a privilege of industry participants. However, with the Select Committee’s indulgence, I will make some observations and explain the underlying objectives of my 2018 Review of the New Zealand Racing Industry.

Let me firstly confirm that after all of this time, I still stand firmly behind my 2018 Review and all of its recommendations.

NZ Racing was a jurisdiction that was batting “way above its average” for a long-time last century, enjoying great respect from its Australian counterparts and beyond. The renowned expertise of its participants and its famous grazing pastures made the NZ Racing and Breeding Industry an icon of the 20^th-century horseracing world. As a young lad, I clearly remember how my family and racing friends would speak with trepidation, year after year, of NZ invaders, plundering Australia’s major races. The NZ Yearling Sales, in those days held at Trentham, was nothing less than a rite of passage for any aspiring investor in thoroughbreds in our region….. of which I was one. Trentham was a veritable pilgrimage of owners and trainers from around the globe, with Aussie breeders looking on in awe as their NZ competitors dominated the Australasian bloodstock market.

So much so that in 1985 Australian breeders, led by the late Colin Hayes, lobbied the Hawke Government to amend the breeding stock provisions in the Tax Act specifically “to enable Australia to compete with NZ.”  The 1985 Federal Budget did bring in the changes sought, and this heralded the beginning of a long period of sustained reform in the Australian industry, with the obvious benefits being enjoyed today.

Ironically, I was the person who authored that submission to Treasury in 1985, on behalf of the industry.

And yet today, the boot is on the other foot, with NZ breeders and trainers thinking of abandoning the industry here in order to survive and you can imagine the consequences of this on direct and indirect employment. 

The 2018 Review resulted from an approach from Minister Winston Peters, who like the late Bob Hawke, has a real interest in racing. I was commissioned to undertake the Review by the Minister because of the poor state of Thoroughbred Racing in NZ which is the result of a 30-year gradual slide. The Minister made it clear that he wanted a full review, warts and all, of the problems of your industry and the solutions to turn it around. It was also clear to me that the Minister sought recommendations that would make the industry sustainable into the future and independent of government. 

At first blush, it appeared to me that your industry was suffering from a paucity of revenue, shortage of capital and a sub-optimal governance structure, but I also felt that this situation could be righted with a reform program aimed at modernising the industry, introducing new revenue measures and maximising the use of existing assets.

I then sought the assistance of three experienced racing & wagering administrators: John Rouse, a previous CEO of the Australian Jockey Club and currently a Trustee of Randwick Racecourse working on racetrack consolidations; Darrell Loewenthal, a retired senior public servant in NSW, who was responsible for a number of legislative changes and is a consultant to Racing NSW to assist on governance and structure; and Craig Nugent, the recently retired CEO of Tabcorp to assist on wagering. I am very grateful for their input.

We live at a time when the racing and wagering worlds are globalising when horses travel around the world to compete in feature events, and when wagering operators are consolidating to form international corporate wagering giants. It is also a time when Asia is emerging as a big player in our region. These factors represent opportunities for NZ.

Also, racing here, like everywhere else, is facing growing competition from other forms of leisure and gambling, as well as continuous attacks from the animal welfare lobby. These are challenges for NZ and for every other jurisdiction. 

The Review recommendations seek to arm the NZ industry to deal with these factors but this will necessarily mean change, and in some cases that change will be profound. It will be the willingness of stakeholders to focus unselfishly on the wellbeing of NZ Racing as a whole that will determine the success of the reforms.

All the 17 Review Recommendations can be categorised under three major headings:

• Industry Modernisation
• Revenue Enhancement
• Better Utilisation of Industry Assets
  

I note that some of the revenue recommendations requiring legislation have already been passed and that the Bill now under consideration contains a number of clauses related to other recommendations in the Review. Given that prizemoney is the single most effective lever available to reinvigorate the NZ Thoroughbred Industry, I would encourage the government to expedite arrangements for Racefields Fees and Point of Consumption Tax, and I urge the industry to make a serious commitment to negotiate an advantageous TAB NZ outsourcing deal. These are all new sources of much-needed industry revenue. 

I do not wish to take issue with the current Bill on a clause by clause basis; however, I should advise that this is not a time for compromise on matters that go to the thoroughbred industry’s sustainability and its independence from government. A number of the Review’s modernisation recommendations relate to the devolution of power to the Codes, and I still hold firmly to the belief that this notion is fundamental to the success of the reform package.

I do want to comment on the recommendations made in Part 3 of my Report because I believe that racecourse consolidation is critically important to the reform package. Various independent reports on the NZ Thoroughbred Racing Industry dating back to the Reid Commission on Racing in 1965 and the McCarthy Royal Commission on Racing in 1969 have all recommended the importance of a significant rationalisation of NZ Thoroughbred Racing venues, but little has been done. In relation to this, the work we did as part of the Review in 2018 showed that many clubs, if looked at on a stand-alone basis, would not be able to afford current prizemoney levels without the subsidies provided by NZTR. That said, most venues and tracks are also in a state of disrepair. Against this, we estimated that total capital expenditure required to bring all 48 operating venues up to an acceptable standard in terms of tracks and facilities was $294m, and for the 28 tracks we recommended to be retained plus new synthetic tracks our estimate was $190m. 

I would like to assure the Select Committee that this rationalisation is not proposed as a cosmetic exercise. Better tracks and facilities will better showcase NZ Thoroughbred Racing to domestic and international audiences, provide for more consistent form lines and ultimately give a boost to wagering turnover. Currently, much of NZ Racing on TV and on smart devices looks somewhat shabby by international standards. Thus, a consolidation of tracks, including the sale or closure of surplus tracks and the investment of any proceeds into the remaining tracks, is a priority.

I also note that mention was made in submissions to the Select Committee that a rationalisation of venues had not occurred in my home state of NSW. It is definitely arguable that there should be rationalisation in NSW. However, the extraordinarily strong financial position of racing in NSW has not made that an imperative. This is not the case in New Zealand.

In the light of all this, I commend the submission of NZTR to the Select Committee [and similar submissions from the other Codes], as it summarises the final amendments that need to be made to the Racing Reform Act to reach the goals of the Reform Program I have recommended.

I have two final comments: 

1. The 17 recommendations in the Review were designed to work as a matrix to reverse the fortunes of your industry, and any significant departure from them will affect the ultimate outcome. Simply put, cherry-picking the reform program will compromise the future success and prosperity of the entire industry, and such is the pace of progress & competition in global racing & wagering that New Zealand will be permanently left behind. This is, quite literally, your industry’s last chance to secure a vibrant & successful role in 21^st-century racing. 
2. These recommendations are based not on theory or ideological conviction, but on the real, practical experience of what works, based on my time as Chairman of Racing NSW, and then as Chairman of Racing Australia, leading the Australian thoroughbred industry through a period of deep reform. I know exactly how much effort, passion, and courage is required to enact the recommendations in the Review, but the rewards are immense. Australian racing now has the kind of prizemoney, facilities, events, integrity & leadership that makes people from across Australia & around the world want to be part of it as owners, punters, breeders, trainers & jockeys, and all the many other roles our industry can offer the next generation. 

I have no doubt that the NZ Industry, with its illustrious history, its expertise, its natural assets and its favorable time slot in the Asia Pacific region is well poised to regain its mantle as a leader in the region, if it can be transformed into a viable, independent, modern industry with its racing capable of being marketed competitively outside of NZ.

I believe this process is underway, and a beneficial resolution of this Racing Reform Bill will quickly create an atmosphere of confidence in the industry from within New Zealand and beyond, with all the attached economic, social & community benefits. 

Thank you.