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.”
