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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2011-07-29 Daily Xml
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LOTTERIES COMMISSION OF SOUTH AUSTRALIA

The Hon. R.I. LUCAS (14:49): I seek leave to make a brief explanation before asking a question of the Leader of the Government about the Lotteries Commission privatisation.

Leave granted.

The Hon. R.I. LUCAS: On 23 February this year I put a series of questions to the minister about the sale or privatisation of the Lotteries Commission. In her response the minister denied any knowledge of members of her staff being involved in any discussions about the sale or privatisation of the Lotteries Commission since the election. The minister promised to bring back an answer as to whether any officer of the Lotteries Commission had been engaged in any discussions about the possible sale or privatisation of the Lotteries Commission. At the end of July, we still have no answer from the minister to that promised response. Members would be aware that, in the May budget, the government announced the privatisation of the Lotteries Commission.

Industry sources have provided information to the Liberal Party indicating that, in the period culminating in 2008-09, the Lotteries Commission had commissioned ABN AMRO, which is now known as RBS Morgans, to undertake a scoping study of the national gambling market and options to respond to the increasing market risk.

The ABN AMRO report included a valuation of the Lotteries Commission. I am told that that valuation which was included in that report was just over $200 million, which is significantly below the levels being currently speculated in the national financial media. The real intent and substance of the ABN AMRO report was referred to briefly in deceptive terms in the Lotteries Commission annual reports for 2007-08 and 2008-09. I am told that the total costs were spread or hidden over two financial years and were referred to under the title of 'Independent strategic assessment'. Nowhere in the two annual report is there a reference to the total cost or to the fact that a valuation of the commission had been included in the work of ABN AMRO.

When this issue was raised a few days ago, the minister denied that this report had considered in any way the issue of the sale or privatisation of the Lotteries Commission, even though, as I said, it has been confirmed that a valuation of the commission was included in the report. My questions to the minister are as follows—

Members interjecting:

The PRESIDENT: Order!

The Hon. G.E. Gago: He makes it up as he goes along.

The PRESIDENT: Order! The Hon. Mr Lucas.

The Hon. R.I. LUCAS: Just waiting for the interjections to stop, Mr President.

The PRESIDENT: So am I.

The Hon. R.I. LUCAS: My questions are:

1. Is it correct that the ABN AMRO report included a valuation of the Lotteries Commission of just over $200 million and, if privatisation or sale options were not being considered, why did the ABN AMRO report include a valuation of the Lotteries Commission?

2. Has the minister read the ABN AMRO report and, if not, when was she first briefed on the ABN AMRO report?

3. What was the total cost of the ABN AMRO report?

4. Given that the government announced the Lotteries Commission privatisation in May of this year, does the minister still maintain that she knew nothing about the government's impending decision when I asked her the question on 23 February of this year?

5. Does the minister now have an answer to the question I asked of her on 23 February?

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for Gambling) (14:53): Indeed, this is just so typical of the muckraking and snide innuendo that we regularly experience in this place from the Hon. Rob Lucas.

At a time when there was very significant change in the Australian gambling industry, the SA Lotteries Board commissioned a report to help identify opportunities for more satisfactory financial returns to the government from our lotteries. People might recall the time when the Golden Casket in Queensland was in the marketplace. Those moves had significant implications right across all of Australia in terms of lotteries, because lotteries operate on block arrangements: corporations and partnerships between the states.

That sort of move had significant implications. ABN AMRO was commissioned by SA Lotteries to review its position in the gambling market and to consider future directions. I am advised that SA Lotteries revenue growth in 2006-07 was below 1 per cent, and the real growth in SA Lotteries sales and return to government was projected to remain flat over the forward estimate period. So you could see that it was a most prudent time for SA Lotteries to be doing commissioning work, some analysis and evaluation of their position, and looking at strategic options.

Generating ongoing revenue growth was challenging as products continued to mature and alternative gambling products took market share. ABN AMRO provided several strategic options for SA Lotteries' consideration. It looked at things like the status quo, business reform strategy, defensive strategy, a broader geographic market with some products, new products and new markets. It also looked at alliances and acquisitions. It would be prudent for any organisation operating in a competitive market to seek advice about its options for future growth. As I have put on the record before, the ABN AMRO report did not address the sale of SA Lotteries.

The Hon. R.I. Lucas: Did it include evaluations?

The Hon. G.E. GAGO: The report did include evaluations.

The PRESIDENT: I wouldn't respond to interjections, minister.

The Hon. G.E. GAGO: Mr President, I am not prepared to talk and discuss most of the material in that report.

The Hon. R.I. Lucas: Why would you value it if you are not looking for a sale?

The Hon. G.E. GAGO: That is just ridiculous. I have just gone through that. Considering the honourable member is a former treasurer, I fail to grasp that he does not understand why that might be relevant for the sorts of considerations that I have already outlined. I can go through it again. They looked at several strategic options: they looked at status quo, business reform strategies, defensive strategies, some geographical marketing of new products, broader geographical markets with products, new markets, alliances and acquisitions.

Part of their formulating strategic pathways forward was understanding where they stood at a particular time. Of course, an evaluation would be part of that analysis. No wonder he is a former, failed treasurer—a former, failed treasurer—he clearly does not understand the importance of these things. A former, failed treasurer who never delivered a budget that was in surplus, he only ever delivered deficit budgets so, clearly, he does not understand the significance of these things.

The Hon. R.I. Lucas: That's a lie.

The Hon. G.E. GAGO: Well that's what I'm advised, anyway. As most of the material in this report was an internal working document to provide for strategic analysis and assistance in terms of where opportunities might be, and options to move forward, obviously, I am not prepared to discuss evaluations. I have already discussed the context of SA Lotteries at that time, which was low, and I can absolutely assure members that the position of SA Lotteries has shifted significantly since then, and one only has to look at its annual reports to see that.

Obviously, I am not prepared to discuss anything in this place that clearly might prejudice our negotiations in relation to new lease arrangements. The honourable member should know that. If he really had any business acumen he would not be asking that question in this place, because he knows it could prejudice the government's position, and we could end up costing the state—costing taxpayers—millions of dollars.

Obviously, we are going to promote SA Lotteries in its very best light, as the honourable member should be doing. If he was really a responsible member in this place he would be doing exactly the same thing and making sure that we get the biggest return possible for the people of South Australia.

In terms of the cost, I had the cost figures, but I just cannot put my hand on them, so I will take it on notice.

The Hon. R.I. Lucas interjecting:

The Hon. G.E. GAGO: There is no secret, none at all. The accountability, the fact that the report was conducted, was included in our annual report. It is no secret. I am happy to take that on notice and bring back a response. As I said, it is no secret. In terms of the question the Hon. Rob Lucas asked some months ago, whether either my office or the SA Lotteries officers had entered into any discussions or negotiations with any organisations prior to the election in relation to the sale of lotteries—

The Hon. R.I. Lucas interjecting:

The Hon. G.E. GAGO: That is the question you asked. It's in Hansard.

The Hon. R.I. Lucas interjecting:

The Hon. G.E. GAGO: Well, go check Hansard. That was the question. I can absolutely with confidence say that neither my office nor SA Lotteries have initiated or encouraged discussions with any company about the sale of SA Lotteries. That was the question asked and that is the answer that I have given.

Members interjecting:

The Hon. R.I. LUCAS: A supplementary question—

The PRESIDENT: It's not your turn.

The Hon. G.E. GAGO: I haven't finished yet.

The PRESIDENT: The minister hasn't finished yet. We are just waiting for your behaviour to improve, the Hon. Mr Lucas. The honourable minister.

The Hon. G.E. GAGO: Yes, my understanding is that that was the question the honourable member asked in Hansard some time ago. I will double-check that, but I am pretty confident that he did ask that question of lotteries and my officers. Nevertheless, in relation to my reading the report, yes, I have read the AMRO report. I think I have answered all the questions on the matter of costs. In relation to costs, it is no big secret. It would be around the cost of any consultancy to do a business analysis, but I am more than happy to bring back that figure to the place in an expeditious way.

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