Page 1049 - Week 03 - Wednesday, 17 March 2010
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persisted. States and territories were able to implement this TAB funding model due to what is known in the industry as the gentlemen’s agreement. This agreement is an informal one between state and territory governments, TABs and racing industries in each jurisdiction. The agreement allows state and territory TABs to bet on racing events in other jurisdictions without the payment of a fee.
Technology now allows wagering in Australia to operate on a national basis. Attempts to require non-TAB bookmakers to contribute towards the cost of providing racing product were circumvented when the High Court brought down its decision with respect to Betfair. This has resulted in many jurisdictions introducing race fields product fees to obtain funding from interstate wagering on their racing. So, effectively, the gentlemen’s agreement has broken down.
In the ACT, ACTTAB will face increasing competitive pressures on its products, potentially including new entrance into the ACT’s retail market. As a result, unless alternative funding models are found, ACTTAB’s situation will threaten the local racing industry’s funding into the future. In light of the challenges facing the racing industry, the government has been working with the industry for some time to find the solution. As a result, we have sought to make the future of the ACT racing industry more secure through two mechanisms: the first we have discussed in this chamber in recent times—that is, the introduction of race fields legislation. The second is bringing the industry funding into the ACT budget.
The race fields law which took effect on 1 March allows ACT racing clubs to charge wagering operators throughout Australia a fee to place bets on ACT races. We believe this will help the ACT racing industry generate around $1.5 million in additional funding from their activities each year. I make it absolutely clear that every cent generated under this legislation will go straight to the industry, except for the small administration fee to which the industry has agreed.
Now we need to look at the other half of the equation—that is, how the government proposes to support the industry from the budget in 2010-11. I think it is worth looking at the historical funding context when we look at what will happen from 2010-11 onwards. In 2008-09 the industry received $7.6 million based on ACTTAB turnover. Under the new funding model, in 2010-11, the industry can expect to receive an increase from $7.6 million to $8.27 million—that is, $6.77 million funded directly from the budget and about $1.5 million under the race fields legislation. It is important to note that the government proposes that budget funding would then be indexed to CPI.
So what is the position of the industry into the future? Previously, under the old arrangements the industry expected to receive $8.27 million in 2010-11. Over time, the level of funding available to the industry was expected to diminish as ACTTAB’s turnover was also expected to diminish in real terms. Under the new arrangements as proposed by the government, the industry would receive that $8.27 million in 2010-11. In short, the industry would be getting exactly what was expected under the previous funding model, guaranteed now by the new funding model. Instead of facing a diminishing revenue stream into the future, budget funding would grow in line with CPI. So under the old arrangements, the industry faced uncertainty and a guaranteed
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