STATUTES AMENDMENT (GAMBLING REFORM) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 14 May 2013.)

The Hon. I.F. EVANS (Davenport) (11:59): I will continue my remarks from last night. I was talking about the lack of consultation by this government with the industry groups. By way of example, I will go through the attempts that Clubs SA made to consult with the government about this matter. They wrote to the government on 31 May 2011 to Treasurer Snelling seeking a meeting for discussion before finalising the approved licence agreement with the Casino. They wrote again on 16 September 2011 to Treasurer Snelling seeking a meeting for discussion before finalising the approved licence agreement with the Casino.

They received a letter from the Treasurer on 17 November 2011 saying that he had referred the request for discussion to the chair of the Casino task force. On 5 January 2012, Clubs SA wrote to Treasurer Snelling seeking a meeting for discussions on proposals by Clubs SA. On 18 April 2012, they received a letter from Treasurer Snelling which repeated the advice that he had referred the request for discussion to the chair of the Casino task force. On 6 June 2012, Clubs SA wrote to Treasurer Snelling seeking a meeting to discuss the proposal. On 6 September 2012, Clubs SA wrote to Treasurer Snelling seeking a meeting to discuss the proposal.

On 16 November 2012, Clubs SA wrote to Treasurer Snelling seeking a working group to discuss proposals for changes to the club industry. On 16 November 2012, they also wrote to Premier Weatherill, the Deputy Premier and ministers Kenyon, Hill, Hunter and Wortley—I do not know their portfolios at that time; I apologise—with a copy of the letter that Clubs SA had sent to the Treasurer seeking support for a working group to discuss proposals for changes to the club industry. On 5 December 2012, they put a phone call in to the Department of Treasury and Finance and asked if the government was preparing a white paper, as indicated by the Premier, and a meeting was arranged for 20 December.

On 20 December, in the meeting with the Department of Treasury and Finance, it was acknowledged that the government was working on a white paper but no details were to be released until early 2013. On 25 January 2013, they wrote to Premier Weatherill seeking an urgent dialogue with the government on changes to the club industry. On 4 February 2013, there was correspondence from the Department of Treasury and Finance, with the draft bill and explanatory paper provided, but it was embargoed until further notice.

On 12 February, they wrote to the Deputy Premier re the draft bill expressing concern over the absence of consultation between Clubs SA and the AHA; that is, both Clubs SA and the AHA wrote to the minister expressing concern over the absence of consultation. On 26 February 2013, they wrote to the Deputy Premier re the draft bill expressing concern over the absence of consultation. On 27 February 2013, there was a letter from the Deputy Premier to Clubs SA acknowledging receipt of the letter of 26 February. On 2 March 2013, there was a letter received by Clubs SA from the Deputy Premier acknowledging receipt of the letter of 12 February giving more time frames for submissions.

On 27 March 2013, there was a letter from Clubs SA to the Deputy Premier re the draft bill, the submission of Clubs SA outlining other changes sought for the club industry. On 2 April, there was a letter from the Deputy Premier acknowledging receipt of the letter dated 27 February. On 5 April, there was a letter to the Deputy Premier re the draft bill, noting changes and outlining other changes sought for the club industry. On 9 April, there was a letter from the Deputy Premier committing to work with Clubs SA and Sport SA to address industry change.

That is the process since 31 May 2011 until today that Clubs SA has made in its attempts to consult with the government about the bill. So, it is basically two years. It started in May 2011, and it is May 2013 now, so it is near enough to two years since Clubs SA approached the government saying, 'Why won't you sit down and talk to us?' The government eventually gave them the bill. It was embargoed; they could not consult with their club members until a couple of days before the bill was introduced, so I think it is fair to say that this whole process has been a bit of a shambles.

Part of the deal the government has announced in this legislation is to do with the Adelaide Casino. The Liberal Party supports the Casino development, but it is unfortunate that the government has embroiled it in a whole range of other issues by putting it in this legislation, but they have. They could have easily introduced a separate bill regarding the Casino but, for whatever reason, the government has chosen not to do that.

The Casino has for years been lobbying and consulting with the government about an opportunity to expand and provide more of an entertainment complex, rather than a majority gambling complex. They think there is an opportunity to adopt what has been adopted in many world-class facilities around the globe, that is, a whole range of entertainment venues within the Casino complex proper, backed up by a world-class range of restaurants that can offer local South Australians, and indeed international visitors, an improved experience of tourism in South Australia.

The Liberal Party supports the Casino expansion. We note that, as part of this particular deal, the government is going to gift the Casino individual entitlements on 995 existing machines within the Casino. These machines were bought by the Casino when it was originally sold to SkyCity back in the early 1990s, if my memory serves me right, when they paid I think from memory around $185 million for the Casino, and that included a level of poker machines that is now around the 995 number.

The government intends to gift the Casino 995 individual entitlements. Currently, the Casino does not have an individual entitlement for those 995 machines. What the government is proposing under this deal is that the Casino gets individual entitlements for those 995 machines and that they be available for trading in the market. If you multiply the market value of, say, $50,000 or $60,000 to each one of those entitlements, that is a substantial capital gift the government will making to the Casino for machines they have had in place for many years.

The Liberal Party cannot see why the government is doing that, and the Casino's advice to us is that they did not seek it, that it was offered by the government, and naturally the Casino said, 'Well, if you are going to offer us 995 entitlements for nothing,' and because they have a market value and that will impact their balance sheet, 'naturally, we will take them'.

The Casino's advice to the opposition is that they did not seek them, that they were offered by the government and that, on the basis they were offered by the government, the Casino is taking them. The opposition in another place—

The Hon. J.R. Rau interjecting:

The Hon. I.F. EVANS: Well, that might be right. I will not put that on the record in fairness to the Attorney. The opposition will be moving an amendment in another place to oppose that particular provision.

The Hon. J.R. Rau interjecting:

The Hon. I.F. EVANS: Do you want me to put that on the record?

We intend to move that the 995 entitlements not be gifted to the Casino and therefore it will remain as it is under the current licence arrangement which means they will not be available to trade. We think that the Casino purchased the entity when it did back in the early 1990s knowing that those machines were not able to be traded and we cannot see the justification for that decision. If the government wants to put on the record why it made that decision then we are happy to listen to the argument, but in all the briefings that we have had we have not been able to work out what is the purpose of gifting 995 entitlements to the Casino if the Casino did not ask for them, so we will be moving amendments in another place to deal with that particular issue. Our advice from the Casino is that that is not a deal-breaker as far as the development going ahead, so that decision will not impact whether the Casino's development goes ahead or not.

As part of the Casino deal the government is increasing taxation in some areas, that is in what I would call the non-VIP areas of the Casino. The gambling tax is increasing from the low 30s to the low 40 per cent (I think from memory 34 per cent is the current tax rate which is being increased to the new tax rate of 41 per cent) and the taxation on table games in the non-VIP areas is also being increased. This is offset by a substantial decrease in the tax rate in what is going to be known as the VIP area, where the tax rate on gaming machines is going to be around 10.91 per cent, so a significant reduction on taxation in that particular area and there is a different charge, as I understand it, on the table games.

If you add up that formula and look at the Casino as a trading entity, the average tax rate across their new business model will be less, and even though it is a lesser tax rate for the whole entity, the Casino's modelling—and I can only assume the government's modelling because the government signed off on it—shows that the state will collect more tax because the Casino will grow its business. By lowering the tax rate, the Casino is going to grow its business and that will bring more revenue into the state government coffers.

My understanding is that the advice from the government is that $60 million extra will be brought in by the new Casino redevelopment over the forward estimate periods. I think that $60 million includes the $20 million upfront payment, but I will ask the Attorney a question about that in due course during the committee stage. My understanding of the Casino's modelling and, indeed, the government's modelling through Treasury, is that there is a $60 million increase in revenue to the state out of the proposed Casino development once the Casino is up and running.

This is an interesting example of what happens when you cut taxes on business. The Casino has been running around saying to the government for some years that they were paying the highest tax rate of any casino in Australia; I think it might have been the highest tax rate of any casino in the Southern Hemisphere. What the Casino argued was if the government reduced its tax rate they would be able to reinvest in their business and they are going to reinvest about $300 million to $350 million into the Casino complex, making it a world-class entertainment centre. They will be able to increase tourists to the state, principally out of the Asian market—primarily I suspect China—and really give the people of Adelaide and the visitors to Adelaide another tourism experience.

By growing those numbers, even though the tax rate is less, the turnover through their entity will be such that they will be able to deliver $60 million extra over the forward estimates period into the state budget. This is a good example of what the Liberal Party have been talking about for 11 years, and that is that you can actually cut taxation and increase revenue into the state budget. That is one of the reasons we are supporting this particular announcement about the Casino, and some of this legislation that we are debating relates to that very redevelopment.

As part of that redevelopment the Casino seeks to increase the number of poker machines from 995 machines to 1,500 machines, so there will be an increase of 505 gaming machines within the Casino complex. The government's legislation demands that they go to the market and buy those machines. That means that more than 505 machines will have to come out of pubs and clubs, because we all know in the trading rounds, when gaming machines are sold by hotels, if they sell four machines then three machines go to the new owner and one machine is taken to the scrap heap as a way of reducing the number of gaming machines in the state. So, to get 505 machines there will have to be more than 505 trades in the future for the Casino to get their 505 extra gaming machine entitlements.

Obviously that is going to be difficult, because the gaming machine trading rounds do not produce 505 sales in any one round, so the Casino is going to be locked in to possibly trying to buy those machines over a number of trading rounds. The Casino obviously cannot wait forever for that number of machines to become available, because the development is being undertaken based on a certain business model that delivers a certain amount of revenue by a certain time.

So, to offset any unfair risk to the Casino the bill states that if the Casino has not reached its extra 505 gaming machines by a certain date, which is known to the government and the Casino—and the opposition do not need to know it because it is commercially confidential—then the Casino will buy up to 300 machines from the government at a price that has been established within an agreement between the government and the Casino, as we understand it. Obviously that price is not going to be made public because that would impact on the trading rounds proper and influence the market.

At some point in the future, if the Casino has not been able to get its 505 machines through the trading rounds, the government will intervene and say, 'You can buy the balance of new entitlements off the government,' and they will be issuing new entitlements to make up that balance. I know both the government and the opposition are aware that that means we could actually end up with more gaming machines in the state than less because, if there are not enough trading rounds to get the 505 machines to the Casino and there are up to 300 machines issued to the Casino, that could increase the number of gaming machines within the state. That is the nature of the agreement the government has with the Casino, and that matter is outside of this act. That is in a written agreement that we are not seeking to override by way of amendment; we just note the agreement.

If the government does sell to the Casino up to 300 machines as a result of the Casino not being able to obtain them in the trading rounds then it is the opposition's understanding that those machines must go into the VIP area, will not be issued an individual entitlement and will not be available for trading back into the market. So, although there will be more machines, they will be locked away in the VIP area and will not be available to be traded back out to pubs and clubs.

There is no doubt that some people have some contention about the VIP area. It has always amazed me, but there are some people in life with a lot of money who want to go and put it into poker machines at a faster rate than you or I might care to. The VIP area will be established under strict rules about who can enter that particular area. That way the clientele of the VIP area will be properly managed through rules established, from memory, by the Independent Gaming Authority. There will be rules around who can go into the VIP area. That is all well known to the Casino. If we look at the way these models operate around the world, they could generate enough revenue to provide the state with extra money, provide for the expansion of the Casino and provide what will be 1,000 extra jobs ongoing for South Australia. I think that covers reasonably well the Casino agreement. As I say, the South Australian opposition supports the Casino's expansion.

In relation to the issue of the trading rounds and my comment that the Casino may not be able to source its 505 machine entitlements out of the trading rounds, I just want to go through the summary of the trading rounds of gaming machines since the trading system was established. The first trading day was on 11 May 2005. This is when the legislation had a fixed price trading round of $50,000 per gaming entitlement. That was in the legislation, so it was not a market-based mechanism. Venues could voluntarily sell their gaming entitlements for that amount if they wished to get out of gaming or reduce their gaming options.

On 11 May 2005, there were 169 offers to sell and 127 entitlements were purchased. Out of that, 27 were cancelled and 15 were transferred to an entity known as Club One. On 21 September 2005, the second trading round, there were 75 offers to sell, 56 entitlements were purchased, seven were cancelled and 12 were transferred to Club One. On 16 April 2007, there were 64 offers to sell, 48 were purchased, 16 were cancelled and none were transferred to Club One. Then the system changed and the trading rounds then went away from a set fee of $50,000 to a market-based mechanism. So whatever the purchaser wanted to pay, if the seller was wanting to sell, they could reach agreement and the entitlements sold.

On 14 June, there were 472 offers to sell, 61 were purchased, 13 were cancelled and seven were transferred to Club One, and they were actually transferred out of a community hotel out of the Riverland; not actually out of a club as we know it but a not-for-profit community hotel. On 31 January 2013, there were 429 offers to sell, 87 were purchased, 26 were cancelled and three were transferred to Club One.

What is interesting about that is that when we went from a $50,000 cap on the price to a market price, the level of interest in selling went from around 60 to 75, which was happening under the fixed-price mechanism, to 472 and 409. So there are venues out there that wish to sell their gaming entitlements for whatever reason. So when we say that the Casino needs to get 505 entitlements out of the market, in the last two trading rounds, there were 472 and 429 up for sale.

The Hon. J.R. Rau: The problem was buyers, not sellers.

The Hon. I.F. EVANS: The Attorney says that the problem might be the buyers, not the sellers. The Casino is entering the market and now the market knows that the Casino has to buy 505 to reach its number. I think some people in the market will think that this is going to be a bonanza for those who wish to sell. I beg to differ. The Casino is not that stupid. In its agreement with the government, which already has a set price, I suspect that the Casino is aware of the sales price of previous market rounds. I am not sure it is going to be the bonanza for sellers that some people who are selling may well think.

The reality is that, since the parliament introduced this trading mechanism, there have been 1,209 offers to sell and 379 have actually been purchased (only 25 per cent, or roughly a third in round numbers), so two-thirds have not been purchased. That has resulted in 89 gaming machine entitlements being cancelled out of hotels and 37 gambling entitlements being transferred to Club One. I think there is probably enough flexibility in the system for the Casino to have a reasonable chance of securing a large proportion of their requirement of 505 entitlements.

The other aspect of the bill is that it seeks to allow venues outside the Casino to increase the number of poker machines from a maximum of 40 to a maximum of 60. This is because the government has the view that having fewer venues with a larger number of poker machines ends up getting a better problem gambling control mechanism.

In other words, what they are saying is: currently, the limit is 40 machines per venue and they are going to lift the maximum number of machines to 60. That will allow clubs and pubs to sell—and, as we know, there were well over 400 entitlements up for sale for the last two rounds. They will then either go to the Casino or they will go into venues that want to go from 40 to 60.

I have a different view on this particular measure; in fact, the Liberal Party has a different view, and we will be moving amendments not to allow venues to go from 40 to 60. We think 40 is about the right number. There are many venues now that do not have 40 machines but have the capacity to go up to 40.

In 2004, the parliament had a very long debate about whether we should force venues to reduce the number of machines from 40 down to 32, and the parliament decided that would happen. A lot of venues offloaded eight machines—not the entitlements, the machines—from 40 down to 32, and they could then trade back up if they wanted to. What has actually happened is that a lot of the clubs have put their machines, through Club One, back into hotels. So, hotels that had 32 machines now have 40.

If you look back at the trading rounds, there were 472 entitlements in the second to last trading round and 429 entitlements in the last trading round, and they did not sell. So, all those venues that are currently under 40 and have the capacity to go up to 40 chose not to do so. If you lift it to 60, if they do not want to go from 32 to 40, who then will want to go from 32 to 60?

The opposition's view is that there are only three groups that will want to go from 40 up to 60: Coles, Woolworths, and the big end of town hotels (the 'pokie barons', as the former treasurer used to call them). They are the three groups that will ultimately control more and more of the poker machines and more and more of the pokie venues.

The other point I make to the government is: look at gaming machine net gambling revenue since the parliament introduced the reform to reduce the number of poker machines. In 2004-05 the net gaming revenue was $749.25 million; that was the year the parliament introduced reforms to reduce poker machines. The following year net gaming revenue was $751 million; in other words, net gaming revenue went up even though there were fewer machines. The next year, 2006-07, it went up to $792.62 million; so it went up another $40 million that next year. The only time it reduced after that was the next year, 2007-08, when the smoking ban was brought in, and it went back to $758 million.

My point is simply this: when the parliament decided to make venues go from 40 down to 32 machines it did not affect net gaming revenues and it did not affect gambling. As I think the honourable member for MacKillop said in his contribution back in 2004, I have never walked into a venue where every single poker machine was being used, so all it means is that you have herded people into a denser environment; there is always a poker machine to use. The market now realises that you do not need to have 40 machines and all the administration costs of that when you can get exactly the same gambling turnover with 32 machines; in fact, you have an increase in gambling turnover with 32 machines.

Since the smoking ban net gaming revenue has plateaued, and it has plateaued in line with the retail spend. In other words, net gaming revenue has plateaued not because of gambling reform but because of the tough economic times that happen to be out there for people with their discretionary dollar. The venues will not have the cash; the clubs and the small pubs will not have the cash available to trade up to 60 machines. The people who will have the cash available will be Coles, Woolworths and some of the big end of town in the hotel industry.

The opposition does not think it is in South Australia's best interests to herd the revenue and the machines into fewer and fewer owners. As the clubs say, we think that will be a club killer. Those are the exact words they used in our briefing, that this would be 'a club killer'. I know that small hoteliers have some major concerns in that regard as well.

The government argues, and the welfare lobby argues as well, that having a larger number of machines in a smaller number of venues gives a better problem-gambling outcome. I just want to have a look at that debate, because I remain to be convinced on that. I asked the government to provide me with a per capita spread of poker machines per state, the per capita rate of poker machines by state. In New South Wales, including the casino, it is 0.0136; in Victoria it is 0.0053; in Queensland 0.0104; South Australia 0.0084; and Tasmania 0.0073. Western Australia is a bit of an odd example; they do not have pokies, it is only the casino, so theirs is a very low figure indeed.

Then you go to the problem gambling index that the government provided. I asked what was the measure of problem gambling rates, and the government sent through the latest measures of problem gambling from the Independent Gambling Authority. There is an index called the Problem Gambling Severity Index, which is a Canadian problem gambling index.

What that shows is that in New South Wales, with a per capita rate of 0.0136 poker machines, per head of population, the problem gambling index in 2006 was 0.8. In 2009 it was 0.4, and in 2012 it was back to 0.8, even though nothing changed. In Victoria, with a per capita rate of 0.0053 of poker machines to head of population, the problem gambling index was 0.7, and that was the latest measure in 2008.

In Queensland, the per capita rate of machines to population was 0.0104 and the problem gambling rate in 2007 was 0.47 and in 2008 was 0.48. In Tasmania, with a per capita rate of 0.0073 of poker machines per head of population, the problem gambling index is 0.54.

South Australia, with a per capita rate of 0.0084 had a problem gambling rate of 0.4. So South Australia has the lowest problem gambling index, according to the government's own figures, and even though New South Wales has more machines per head of population, it has reached the same level of problem gambling as South Australia back in 2009, but then it has increased since.

Then you have other venues such as Victoria which has a lower level of poker machines per head of population but a problem gambling rate of nearly twice that of South Australia—0.4 to 0.7. Tasmania has a lower rate of poker machines per head of population and the problem gambling index is 0.54.

What these figures show is the number of poker machines per head of population. There is no correlation, no consistent correlation between the problem gambling rate. To my mind, whilst I understand what the welfare group is saying (and I think everyone is concerned about problem gamblers), my argument is that there has been no case made out yet that somehow South Australia's management system of poker machines is somehow not, indeed, one of the better ones around Australia, given that we have the lowest rate of problem gambling in Australia.

What we are talking about here is 0.4, and it is not 0.4 per cent of problem gamblers. That is, 0.4 per cent of the South Australian adult population are problem gamblers. In other words, 99.6 per cent of South Australians operate within the current framework of poker machines without that problem. So the government is going from a 40-venue model to a 60-venue model on the basis it may be able to help the 0.4 per cent and they are going to penalise clubs and small hotels in trying to achieve that aim. So the opposition are not convinced that going from 40-machine venues to 60-machine venues actually delivers that outcome, and let me explain why.

As part of this arrangement in this particular bill, the government are asking for venues to mandatory adopt a voluntary precommitment system. What I mean by that is that, under this legislation, the government is saying to venues above 20 that they must have a precommitment system within their venue by a certain date, and therefore they have to upgrade their machines to allow this precommitment system to be made available. So it is mandatory through the venues, but it is voluntary for the gambler. It is called a voluntary precommitment system, and I will explain it to the Attorney if he is not clear what I mean by that. I can see him frowning.

What I mean by that is this: the way it has been explained to me through the briefings from the various groups, the voluntary precommitment system works like this. The legislation requires that those venues covered by it have to upgrade their machines so that there is a precommitment technology in the machine and therefore in the venue.

What the pre-commitment technology will do is it will alert the user (the gambler) when they are reaching the maximum amount of bets they have set themselves for that day (the dollar value; the maximum betting limit). So, when Iain Evans goes into a venue, under this arrangement (the model the government has adopted) every gambler who goes in to play the poker machines has to go to the cashier and say, 'I'm gambling' and the cashier has to ask, 'Do you want to set yourself a maximum limit?' At that point you can say no or yes; that is the voluntary nature of it. So, you can volunteer to set a maximum limit or you can tell them, 'Thanks but no thanks, I'll live my own life', and having asked the question the venue has met its obligation.

If you decide to set a voluntary maximum limit, then the venue gives you a card, which is tied to their loyalty card system, and you set your limit. Let us say I set my limit at $200 for that day. I then go to the machine and I play the machine. If I win money, say $300, that goes on top of my $200, so I can lose $500 for the day. So, it is a net loss limit that I am setting myself, not gross. It is what I am going to lose on the day. Then what happens is, as I play the machine and as I get closer to my $200, electronic messages will come up on the machine (this is the new technology) saying, 'Mr Evans, you're now at $150. Mr Evans, you're now at $170. Mr Evans, you're at $190', and when you get to $200 it is all over.

At that point a little light goes off—this is me speaking colloquially here—in the office and a staff member comes out and says, 'Mr Evans, the system has advised you've reached your limit. Would you like to stop gambling?' At that point, I can say, 'Thank you for coming to chat to me but I actually want to keep gambling so can I go back and set another limit, please?', which I am entitled to do, and that process is going to repeat itself ad infinitum. So, even though you set a voluntary pre-commitment limit you can re-establish it. Indeed, you can set the pre-commitment limit to whatever level you want: $10,000, $50,000, and I think in the briefing I used the ridiculous example of $1 million. The simple fact is that you can set the limit to whatever you want.

The government and the welfare groups believe—and I am not critical of this, I just have a different view—that that single intervention of someone coming up and saying, 'Excuse me, but you've reached your limit. Do you want to go on?' will have an impact and will stop some people gambling. If that is true then an intervention by a staff member at a small venue where a staff member comes up and says, 'Mr Evans, you've been here for two hours. Do you want to keep gambling?' will have exactly the same effect and you do not need the pre-commitment system to do that. If it is the staff intervention that causes the gambler to stop then that staff intervention can happen at any time without the pre-commitment system.

I am not convinced that going from 40 to 60 is going to benefit anyone other than Coles, Woolworths and the big end of the hotels. What club in South Australia could possibly afford to go to the market and buy another 20 machines at $50,000, $60,000 or $70,000 a machine? I cannot think of one. Maybe the SAJC, on the back of their Cheltenham sale, possibly. I do not know, but generally I do not think clubs can do it. What did stagger me, and I will declare an interest here: I am a member of the Sturt Football Club by dint of my son's involvement. I obviously joined them to support him, but I am not in a decision-making capacity at that club. The reality is that the SANFL has put out an email saying that they were never consulted by the government.

If there are nine clubs in the state that rely on poker machines more than the SANFL let us hear their names, because the main revenue stream of every club in the SANFL is its poker machine revenue. What the SANFL says is that this will kill their clubs. I cannot see the benefit of that. I cannot see the benefit to the community of going down that path, so the opposition will be moving amendments to maintain the 40 machine cap.

Another issue in relation to this matter is the timing of the precommitment technology between the federal government and the state government. This is another issue where I just cannot work out why the government have done this. What the government have done is they had a Responsible Gambling Working Party, which was set up to look at and report into a number of matters. The terms of reference are set out in this report, which is called, 'Supporting customer commitment: implementation of pre-commitment (June 2012)—the fifth progress report to the Minister for Business Services and Consumers by the Responsible Gambling Working Party'. It is on the Treasury SA website for those who have nothing to do tonight.

Page 66 of that particular report sets out the Responsible Gambling Working Party's terms of reference in regard to looking at precommitment. Then the government decided it needed a bit more work to do, and in June 2012 there were other terms of reference specifically about the implementation of the terms of reference about the precommitment. So, the government actually said, 'How should we implement this precommitment?'

The Responsible Gambling Working Party is a mixture of the hotels, the clubs, the welfare lobby and the government—it is essentially a working group of the industry players. What did the Responsible Gambling Working Party say about the implementation of pre-commitment? It said, 'Adopt the federal dates.' We all know that the Greens, with their unique relationship with the federal government, pushed through poker machine law changes nationally and that there was a huge brawl with the New South Wales, Victorian and Queensland club industries.

As a result of that, the supposed deal with Adam Bandt was totally watered down and they adopted some legislation at the federal level. Like all federal legislation, it knocks off the state legislation if there is a conflict, so what has the federal government done? The federal government already has in place a whole range of dates for the introduction of the precommitment technology. This government has said, 'Even though the federal government has debated this, even though the federal government has intervened, what we are going to do is set our own dates.' So, what happens in South Australia is our hotels, clubs and pubs have to introduce the legislation more quickly.

We had the Responsible Gambling Working Party report on behalf of the government, and that said that the government should introduce precommitment technology but at the same time as the feds. This was not our committee: this was the government's committee. It was unanimously supported, as I understand, by every member of that Responsible Gambling Working Party, but that did not suit the government. I am not sure why. No reason really has been given as to why the government would then say, 'Even though we've had this Responsible Gambling Working Party report that says to match the feds, what we'll do is adopt our own dates.' So, the government brings forward the dates for precommitment introduction by about two years.

What the Responsible Gambling Working Party said is this: 'Consistency, the Responsible Gambling Working Party advice and the commonwealth government—all new electronic gaming machines manufactured in 2013 be capable of supporting precommitment', and they go through all of this, and in every single one of them they talk about being consistent with the commonwealth—that is the advice to the government. The opposition thinks it is a nonsense that our industry should be forced to undergo the extra cost of meeting this particular measure before the rest of Australia.

My understanding of the government's bill is that we introduce these clauses that bring in the precommitment technology earlier than the rest of Australia and then when the federal legislation clicks into gear—whether it is 2018, 2019, 2020 or 2022—at that point the state legislation drops off. All we are doing is making the businesses in South Australia deal with two pieces of legislation. I cannot see any reason why we would want to do that and have businesses deal with two sets of legislation.

Not surprisingly, the government clearly did not like the Responsible Gambling Working Party's advice. They have simply decided to disband; wind up and thank the Responsible Gambling Working Party for its work. Having set it up, asked it to deal with the question and specifically give it a term of reference to deal with the matter of consistency between state and federal legislation, they then say, 'We want to be consistent with the federal legislation.' The government says, 'Well, you know what, we don't like that. Thanks for your advice. Even though we asked you to comment, even though it is unanimous from the committee, even the welfare groups, now we are just not going to do it.'

We are going to move some amendments to try to make the changes in South Australia consistent with the timing of the federal government. The way we intend to do that is to simply delete the clauses from the bill, knowing that the federal government's legislation kicks in at whatever date that may be.

The other concern about this is the point made by Clubs SA in their particular submission. I understand Clubs SA is writing to all its members concerned about that. It really comes down to a structural issue within the poker machines in South Australia. In New South Wales, when the poker machines were originally introduced in 1956, they were introduced for clubs only, and then about 42 years later they allowed them to go into hotels, as I understand it. What we have now in New South Wales is about 75 per cent of machines in clubs and 25 per cent of machines in hotels. In Queensland, clubs have 55 per cent of machines and hotels have 45 per cent of machines. In Victoria, the law says there must be even numbers of machines per club and pub, so it is actually legislated that they must be even in the industry; it is exactly a fifty-fifty split there.

In South Australia, even though some passionate speeches were made about the introduction of poker machines by the then Labor treasurer, Frank Blevins, and even though some people talked about having an equal number of machines for the equal benefit of both clubs and hotels, what we have actually ended up with in South Australia, outside of the Casino, is 88 per cent of gaming machines in hotels and 12 per cent in clubs. This comes back to the point about who in the clubs will be able to grow from 40 to 60. The answer is no-one. If that is true, then all it can mean is that the 88 per cent that are currently under hotels will grow closer to 100 and the 12 per cent currently with the clubs will decline. So Clubs SA believe that clubs will be forced out and they think that will be a problem.

Clubs SA say that since 2003 something like 28 per cent of clubs with gaming machines have left gaming, but only 2.7 per cent of hotels have left gaming. The clubs' message is pretty clear: keep piling the costs onto the clubs sector, keep making it harder for them to compete and they will exit. I think that is the SANFL's point in relation to this particular legislation. In New South Wales, a club with 40 machines and a million-dollar revenue pays no gaming tax at all. So, the first million dollars has no tax. In Victoria, it is no tax for the first million. In Queensland, it is $161,000. In South Australia, it is $240,000. So, the clubs pay the highest rate of gaming tax in South Australia.

I will come back to this issue of timing, and let me explain the difference between the two and the issues it presents for clubs. The bill establishes a precommitment two years ahead of the National Gambling Reform Act 2012 (commonwealth legislation) for major venues. A major venue under the state's bill is any venue with 21 machines or more, and if you have 20 machines or less then you are a minor venue. The state's bill does this by requiring major venues to install precommitment systems through the creation of an offence to operate gaming machines not connected with an approved precommitment system. That is in proposed section 53A(3), which is clause 96 of the bill.

An approved precommitment system is approved under or in accordance with the process prescribed by regulations, which is proposed section 53A(12). The proposed timing for commencement of this section is 1 July 2013. It is proposed that the regulations will modify the commencement to allow major venues that have not installed approved precommitment systems as at 1 January 2016 to have a further 12 months to install the systems. The effective date for all major venues is to have precommitment installed and operated by 1 January 2017. The commonwealth legislation is scheduled to commence on 31 December 2018. From that date, all major venues—that is, venues with 21 or more gaming machines—must comply with the requirements of the commonwealth legislation.

The Statutes Amendment (Gambling Reform) Bill 2013 in clause 96 deals with this overlap between the legislation by introducing proposed section 53A(4), which will result in proposed subsection 53A(3) expiring on the date of commencement of the commonwealth legislation. The commonwealth legislation does not separate venues into minor and major venues but uses three categories. There are smaller venues with under 10 gaming machines. These venues have no obligation to install precommitment systems at any time. Venues with between 11 and 20 gaming machines have until 31 December 2022 to install precommitment, and venues with 21 or more gaming machines must install precommitment systems by 31 December 2018.

There are no assurances that the precommitment system mandated by the proposed amendments will be the same as those under the commonwealth requirements. South Australian major venues may well be in a position of having to install a state-compliant precommitment system for the period of 1 January 2017 to 31 December 2018 and then be required to change the machines or equipment to the commonwealth standards. South Australian venues with 11 to 20 gaming machines will not be required to install precommitment systems until 31 December 2022, but these venues will not receive the benefits of being a major venue, including later trading hours and retention of loyalty schemes. I seek leave to continue my remarks.

Leave granted; debate adjourned.

[Sitting suspended from 13:00 to 14:00]