GAMING MACHINES (MISCELLANEOUS) AMENDMENT BILL

Committee Stage

In committee (resumed on motion).

Clause 36.

Mr VAN HOLST PELLEKAAN: Thank you for the chance to ask one more question about clause 36. Minister, just before we broke before lunch, we were talking about inducements, and the member for Goyder asked why inducements associated with purchasing gaming machines are not allowed, and we were all talking about certainly aboveboard legitimate-type inducements in many other industries.

I want to ask a couple of questions and delve a bit deeper. The last thing you said, minister, if I got it right, is that inducements are not good for this industry. The first question is: why is this industry different from other licensed industries, such as building or car dealerships, liquor licensees, GPs, surgeons, all that sort of thing, where these types of inducements, all aboveboard, are very often in place with regard to purchasing? Why is this industry different from those?

Secondly, I share a view and ask your thoughts on it: if the act is right, if the operators are right, if the purchasers of gaming machines are all aboveboard and doing what they are meant to do, and if the sellers of the gaming machines are all aboveboard and doing what they are meant to do, what is the problem with inducements? If inducements are not allowed, does that mean that there is room for error, that there is a problem with this industry?

Mr Griffiths interjecting:

The Hon. A. KOUTSANTONIS: I wonder if it is, but I accept the sincerity of the member for Stuart. I will just give him a bit of history and take a step back. When gaming machines were introduced in South Australia, I think in 1991 or 1989, I cannot remember the exact dates—

The Hon. I.F. Evans: It was 1992-93 the federal legislation was passed.

The Hon. A. KOUTSANTONIS: '92, '93

The Hon. I.F. Evans interjecting:

The Hon. A. KOUTSANTONIS: Yes.

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: If we want to have a 'deputy leader off', I am happy to have one, no problem. I can count seven of yours straightaway, and you struggle with three. When they were first introduced, there were strict government controls in place. The parliament decided there would be strict government controls, that is, to make the State Procurement Board the middleman between manufacturers and purchasers of gaming machines. Parliament believed back then that preventing direct communication between manufacturers and purchasers would lessen the opportunity for kickbacks and corruption.

We believe that the industry is now mature and that the State Procurement Board is no longer considered necessary as a middleman for the sale of gaming machines, and measures that would lessen the opportunity for kickbacks and corruption have been included in this bill. They are aimed at balancing the negotiations between gaming machine venues and gaming machine suppliers, and I will give an example.

One of the concerns I have is profit sharing. Let us say, for example, you have 10 machines in a small rural community and you want to upgrade your machines, and a supplier says to you, 'You can have my machines free of charge. In return, I wish to have 25 per cent of all profits.'

Mr van Holst Pellekaan: That is illegal.

The Hon. A. KOUTSANTONIS: That is why we are trying to make sure these types of inducements are not in place.

Mr van Holst Pellekaan: It's got nothing to do with the purchase price. That is clearly illegal. You are not allowed to share the money.

The Hon. A. KOUTSANTONIS: Yes, exactly, so we do not want those types of inducements being able to be offered at all. So, profit sharing and inducements are something we do not want to see in this industry. If the member for Stuart and the opposition have different views on this, by all means do not support this amendment. You are well within your rights. The government does not believe that there should be any inducements available between the sellers of poker machines and the people who buy them. If the opposition has a different view, that is fine.

Mr VAN HOLST PELLEKAAN: For clarification, the minister's example is 100 per cent right. That is illegal inducement. I am just talking about legal inducements. If someone goes and buys 10 poker machines from whoever they choose to buy them from—Aristocrat, or whoever else—and if they are given an overseas trip to go along with it, they can make up their mind about what that net price means to them, just as all those other industries that I mentioned do. I am only talking about 100 per cent aboveboard purchasing inducements that have an impact on the net price. I have been offered those things and chosen not to do it. You just want the best price. At the end of the day, in this issue, it is just a piece of machinery that you are buying. On the other side is all the operational things that go with it.

The Hon. A. KOUTSANTONIS: Do not confuse being able to negotiate a cheaper price with an inducement. They are two separate issues. If you wish to buy your machines from a hypothetical seller, as opposed to seller A and seller B, and you choose B because they are cheaper, the government has no concerns about that. The concern I have is if seller B is offering you two first-class airfares to Los Angeles plus accommodation. I think that is a very different scenario. I am not quite sure why the member for Stuart, or anyone, may consider this to be the same as discounts. If you wish to negotiate with someone to sell you the machines and you want to buy 10 machines and there are four sellers and you are at a convention, obviously, you will buy the machines that suit your business plan. You will make a decision based on the best service they can offer you, price, etc. What we do not want these decisions based on is inducements.

Mr VAN HOLST PELLEKAAN: I do not want to labour the point. The example is very good. The issue is if it was a surgeon purchasing prostheses for his patients and choosing which brand to use, they could accept the overseas trip, and I suggest that is very important as well. They can actually choose, as I understand it, all the things that wrap up in their buying decision, and that is no reflection at all on the quality of their surgery or what happens in the hospital, the same as this would not be anything to do with the quality of the gaming venue or their operation.

The Hon. A. KOUTSANTONIS: I am not sure if the member wants to start comparing drug companies offering overseas trips.

Ms CHAPMAN: It is not a drug company.

The Hon. A. KOUTSANTONIS: Okay—medical companies that sell prostheses, or whatever the member was talking about, offering inducements to use their products rather than the medically best products. In fact, I believe that the AMA has also spoken out against that type of practice. I do not have all the facts and information in front of me about that, so I do not want to make any authoritative remarks about it, but I do not think, as the member for Stuart says, that because that practice is okay with medical practitioners it should be okay with the gambling industry. I do not accept that link and nor does the government.

Mr GRIFFITHS: I can provide a practical example. I do have some knowledge which I just think highlights the philosophical differences between what the minister is saying and what a few members on this side are saying. I know that when farmers purchase chemicals they negotiate the absolute best price for themselves, but they do recognise that, say, at Christmas time, and depending on the value of their purchases, some chemical dealers provide some level of other products—if a certain number of points are achieved, you get products.

The Hon. A. Koutsantonis interjecting:

Mr GRIFFITHS: Yes. Those people take the fullness of that issue into account in determining who they will write out their cheque to. We see those sorts of examples occurring in our community, and we question the specific nature of the need to include something completely opposite to what is in this legislation. As the minister says, at the end of the day, if we do not like it, we can vote against it. I think that we have probably questioned this area enough, but it is just a philosophical point of view.

The Hon. A. KOUTSANTONIS: I accept that. I am not trying to labour the point either, but I just say this: the government's intention here is not to stifle free enterprise. The government's intention here is to make sure that there is not inappropriate artificial stacking of machines of a certain brand and type within our marketplace in South Australia. I would like there to be a diverse range of machines.

I think the more we can do that, the better off a lot of the carriers who use different machines—maybe smaller facilities, such as clubs or other venues—will be. They may have a better choice, variety and range available to them. That is all I am trying to do. I am trying to stop monopolies; I am not trying to end any sort of free enterprise agreements.

Clause passed.

Clauses 37 to 43 passed.

Clause 44.

Ms CHAPMAN: I speak in opposition to this clause. I am advised by a parliamentary draftsman that, as I have no objection to the continuation of the same maximum penalty provisions which exist in the current section 64, simply opposing this bill rather than introducing an amendment will have the effect of continuing the requirement of authorised officers to be the only people permitted to seal or break a seal on any part of a gaming machine.

As would be noted from the previous debates on the principal bill, I have indicated my concern that this was being removed when it is one of the important precautions to assist with, amongst other things, preventing cheating and, in particular, changing the percentage returns by, essentially, the fiddling of machines.

I raised these concerns in the general debate. The minister has responded by indicating that the commissioner takes the view that he prefers a risk-based approach and that—again to quote the minister—if there has been any tampering then the commissioner would intervene. That is all well and good, but in light of the previous contributions, in particular the most recent, if the government says that it wants to maintain a high level of intervention and supervision, which is evidenced by no procurement benefits being allowed with the transaction, I find quite inconsistent that it would say, 'We will just listen to what the commissioner says in respect of this.'

As I said in the principal debates, the commissioner is to do what this parliament directs him to do and, in some circumstances, what the minister directs or asks him to do. That is what his job is—to carry that out. He may from time to time come forward with valuable and useful advice to the minister, which could be brought to the house and which may result in some legislative change. However, at this stage he is simply saying to the parliament, via you, minister, that he just prefers a risk averse process. That is, I suggest, totally inconsistent with what is being maintained here as a very high level of scrutiny over an industry which has some history.

The minister tells us, from events in history, that there had been a need to have a procurement board as an intermediary in this process, in this high level structure and secure licensing system, in the 1990s under premier Arnold and treasurer Blevins. This course of action, simply leaving this as a risk averse process, I suggest, is inconsistent with that.

Incidentally, I have since met with former premier Arnold in his new role, where he serves South Australians as the Chief Executive Officer of Anglicare and does an admirable job. In fact, I recall one occasion when he said, not long after he had undertaken his new role, that South Australians were facing a high level of need for public and affordable housing and that they were facing levels of poverty which he could now at a first-hand level appreciate and understand. I think I said words to the effect, 'That's good coming from a former premier who introduced poker machines to this state', to which his response was, 'Touché.'

Nevertheless, I recount that on the basis that it has been introduced, it is with us, and even the people who were responsible for introducing it recognise that there are some aspects of it that are unsavoury, unsatisfactory and unacceptable. Therefore, there needs to be intervention by this legislature to protect and support them and guide them out of the abyss of financial poverty which results from, on their part, an unacceptable and unaffordable level of participating in gaming.

There has been a history of a high level of supervision on its introduction for good reason. I also point out for the record that, when this legislation was first introduced, it came after an earlier commitment made by the former premier Bannon to this parliament that he would never introduce poker machine licensing in this state; perhaps we had to wait until his demise and another premier and a new treasurer took possession of the reins.

Nevertheless, everything that the minister has indicated is necessary to continue to supervise an industry in which there is some financial fragility for some South Australians is contra to this exclusion. I thank the minister for his response at least in indicating honestly what the commissioner has said he would rather set his priorities to, but I hope that this contribution reminds the commissioner that his role is to undertake the objectives and priorities of this parliament. Consistent with the rest of the precautions that the minister has outlined in this bill, I indicate that I will be opposing this section.

The Hon. A. KOUTSANTONIS: I would agree with what the member for Bragg is saying if there were not a central monitoring system. The analogy I can make here is your water meter at home.

Ms Chapman: That has already been tampered with. That has been exposed.

The Hon. A. KOUTSANTONIS: Let us say an individual attempts to tamper with their water meter at home to show no water use, but they are actually using water, so they do not pay any money. That can only be detected at the end. You would have to attend the resident's house, have a look at the bill, have a look at the meter, realise that it has not turned over over a period of time, that something is going on and an investigation be launched.

With this system there is a central monitoring system that monitors every machine daily. So, quite frankly, whether the machine is sealed at one end by a technician with the commissioner standing by, or not, is irrelevant, because at the other end, electronically, people can see exactly turnovers in machines and what they are doing.

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: It is the problem, because if someone tampered with one of those machines or someone opened one of those machines we would know, whether the commissioner is there or not. It is a very old-fashioned way of thinking about the monitoring of a system. I understand why some people would think this. People like my father want to see things stamped, and when they are stamped it must be official so everything is okay. He likes his receipts on his power bills, because when he goes home he can see it. 'See, I've paid it. I've got the stamp from Australia Post. It's all done.' Whereas my wife and I pay it online and we do not care about the receipt because it is all stored electronically. It is a difference in thinking, I imagine.

Venues will still be inspected. There will still be a risk-based approach. The fines are relatively harsh, so I am not sure why anyone would even attempt to do this, because we would find out about it instantly, I am advised. People would be dispatched if someone attempted to alter a machine and what it was paying or how it was operating, regardless of whether the seal at the front was broken or not, because we would know electronically back at base.

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: I have misunderstood you, have I? I am sorry if I have. The government stands by this amendment, and the advice that I have been given is that it will not in any way lower the safety standards and the regulation of poker machines in South Australia. At commissioning, there is a signature check and if that is not accurate the machine will not work. So a technician putting a seal on one end and the signature check, I know which one I think is more important. It is the signature check at the other end, not the seal.

Ms CHAPMAN: In response, I think the minister and I are at cross-purposes.

The Hon. A. Koutsantonis: Probably.

Ms CHAPMAN: There is no question that it would be absurd to have an authorised officer or inspector standing next to every machine for the entire time that it was operating when there is a signal process that can alert in the event that there has been a seal broken. The only thing that is required under this section as it currently stands is that the authorised officer needs to be there at the time of installation. That is my understanding. In fact, you specifically said it in your second reading explanation.

I think that there is an important aspect here to protect the poker machine owner as well, that that is identified, because it is true that when the machine is built and leaves with its certificate from the manufacturer, and it is sealed, then the only thing that is missing is an observation and recording—certification, if you like; recording, I think, is what is done—at the time it is received at the place of installation and operated. Once it is done it is online to set off alarm bells if someone tampers with it. What I am asking is that the government—and particularly the minister—consider continuing that obligation. Otherwise, there is a potential interruption to that chain of events.

The operator may be sufficiently knowledgeable at the time that the machine arrives to actually be able to identify if the seal has been interrupted, or if there has been some change to the mechanism—that is what is necessary at that point. I suggest that should be continued and, if the minister were consistent, he would insist that it continue and not just accede to what appears to be the request of the commissioner not to have his or her officers go out to do this job.

May I say that I think there is an important element of having these authorised officers not just to sit in their office, provide reports to the minister and watch the machines to see whether anything has lit up on the wall, but to actually observe these premises and make some assessment when they go out to install these machines, because, apart from being a licence to print money for the person who owns them—there is nothing wrong with that—they need to be secure, even at the time of installation, to ensure that the people who use that facility are not ripped off. There is a whole section of this act on cheating, and I suggest to the minister that, as has been clearly identified by previous ministers, he leave open the opportunity to close a loophole.

The Hon. A. KOUTSANTONIS: I am not sure how to explain this. At installation, when the technician is doing his work and the authorised officer is there for the sealing of the machine, a signature check is done electronically of that machine at a remote place where all machines are checked at installation. If those signatures do not match, the machine will not operate. If anyone attempts at any stage to tamper with that machine and if those signatures do not match, the machine will cease to operate. We would know if someone had tampered with it.

Now, you say that having an OLGC officer present at the commissioning would add a level of security to the owner of the premises. I do not see that link. I would much rather those authorised officers were out there doing their jobs, inspecting venues for not having the appropriate signage or harm minimisation measures in place.

Something that can be done remotely and electronically does not need to have someone standing there watching it being done, because, ultimately, the commissioned officer who is standing there watching a new machine being installed cannot tell if the signatures match. It is done remotely at another end where we monitor it. So, it does not really matter. It is an improvement in technology and I do not know how else to explain it to the member for Bragg. We will move on.

Clause passed.

Clauses 45 to 50 passed.

Clause 51.

The Hon. A. KOUTSANTONIS: I move:

Page 21, line 16 [inserted section 76A(1)(a)]—

Section 76A(1)(a)—after 'gaming machine licence' insert ', the special club licence'.

This is more of an oversight, and I apologise to the committee for this oversight. It has always been the policy and intention that Club One have access to this provision to use gaming machine entitlements as collateral. This is an important amendment for Club One.

Mr GRIFFITHS: Without having spoken to the shadow minister, this is an obvious correction for which the opposition indicates its support.

Amendment carried; clause as amended passed.

Clauses 52 to 55 passed.

Clause 56.

Mr GRIFFITHS: In relation to the amendment to be moved by the member for Davenport, I presume that, as his amendment No. 1 at clause 19 was unsuccessful, this is a consequential amendment and therefore he will not be proceeding with it.

Clause passed.

Schedule 1 and title passed.

Bill reported with amendment.

Third Reading

Bill read a third time and passed.