This is the story of gamblers’ anonymous. That means the sources are anonymous and of varying reliability. And it is a story about gamblers _ namely the ACT TAB, its clients and the ACT Government.
But it is more than a story about horse racing, it is about bureaucracy, politics and public money.
It has been an interesting seven months. Around the middle of last year, someone who had the interests of ACT racing and the ACT TAB dear to his heart (for altruistic and sentimental reasons as much as anything) thought that the ACT TAB faced a very big challenge. In these days of modern telecommunications, people can put bets on interstate TABs very easily. Interstate TABs, with their higher turnover, could over a much wider range of “”services”. One could bet on flies going up the wall in Gulargambone as well as the horses going around a track in Randwick, not to mention extraordinary combinations of football outcomes.
Once attracted to the interstate TAB, especially with a phone account, the punter was lost to the ACT TAB.
The ACT TAB was very vulnerable. No longer was the friendly TAB opposite the automatic teller and next to a pub the main source of revenue: telephone betting was the go. With its small through-the-door base, it could get wiped out in the age of telephone betting, unless, of course, it attracted interstate punters. To do that it had to offer something that interstate TABs did not have. More importantly, this person with racing and the TAB dear to his heart thought that the ACT TAB needed to build further on some of the imaginative changes made by its management earlier that year.
First some background. At the end of 1990, the Alliance Government as part of the Liberal Party’s privatisation/corporatisation philosophy, abolished the ACT Gaming and Liquor Authority and its TAB functions were transferred to a new corporation under the Territory-Owned Corporations Act called ACT TAB Ltd. ACT TAB Ltd has two shareholders (the Chief Minister and the Minister for Sport) and is incorporated under Australian company law. It became more independent from Government. Its staff were not employed under Public Service rules and it could make decisions with the risk of a corporation rather than from the safety of Public Service procedures.
It prospered in its new form. At the beginning of last year Philip Neck from Adelaide was appointed chief executive on a three-year contract. The TAB continued to prosper, especially considering the grim circumstances of the recession and the opening of the new casino.
None the less, our man was still worried. He thought perhaps that corporatisation was not enough to free the TAB off its public-service shackles and to get it to broaden its base and become more competitive.
He had lunch.
This resulted in another lunch. And perhaps another.
These in turn resulted in a follow-up of all the ideas thrown about during the lunches in the form of a letter in late September from a Sydney sharebroker to a senior official in the ACT Treasury. The letter posed the ACT TABs problem.
ACT TAB was the second-smallest of the eight state-owned TABs, with only 3 per cent of the revenue of the NSW TAB.
“”However, the franchise provided by the state-issued licence, is, in theory, equal amongst each of the TABs,” the letter continued. “”The presently imposed restraint to turnover growth is the number of suitable people available in each state “market’, ie the gambling population of the home state.
“”But there is not practical reason why a smaller state should not win market share by offering enhanced products, or by making greater use of available telecommunication technologies.”
In other words, the ACT TAB could aggressively market itself to people in other states.
However, as the letter pointed out: “”This presents both an opportunity and a threat to ACT TAB.”
To make the best of the opportunities, more capital was needed. The letter then floated the idea of a half-privatisation, offering shares preferentially to ACT TAB telephone account holders and ACT residents.
The letter provided details of how Grants Commission and Taxation Office principles would enable it to recoup about $18 million as the new shareholders would be paying federal tax.
Imagine, the fear and loathing this proposal would engender in people on the far left of the Labor Party. Corporatisation was bad enough. It took away rigid work structures and union power, but selling off government assets and creating hundreds of Thatcherite share-holders was ideologically a greater sin.
Remember the letter went to Treasury, one of Rosemary Follett’s portfolios, not Sport, Mr Berry’s portfolio. Ms Follett’s people, however, have no knowledge of it. They assume that the official who got it was just doing his job receiving letters and ideas and filing them away. Not every whacky proposal has to go to the Minister, but every letter has to be filed. In the process of filing it, of course, several people get to see it. One of those, I figure, alerted someone who alerted someone else and finally someone gave it to Mr Berry’s people, probably around late October or mid-November.
There are two theories as to why. One is that some ideologically sound person thought the proposal should be quashed as quickly as possible. The other is that some very astute person thought that Mr Berry could be relied upon to react very quickly and strongly and in doing so he would somehow end up with egg on his face.
Whichever is true, Mr Berry moved, and moved quickly. By mid-December he was able to get to his feet in the Legislative Assembly with proposed legislation to uncorporatise the TAB, that is to bring it back to being a statutory authority, under the thumb of the Minister, shackled by Public Service rules, with a more highly unionised workforce. It would certainly not have the managerial flair required to effect the expansionary plan proposed in the letter to the treasury official.
That letter spoke of offering to South-East Asia Australia’s reputation of having a “”clean” racing environment (Fine Cottons aside), but certainly a “”clean” TAB industry. Australia also has cheap and reliable telecommunications.
However, the Opposition and racing industry people were ready. They marshalled their arguments against Mr Berry’s move. These mainly consisted of “”if it ain’t broke don’t fix it”.
The ACT TAB’s turnover has indeed done well with corporatisation, in the face of a recession and the opening of a casino. The racing people like it to do well because they get a cut of 3.5 per cent of its turnover. It goes to the racing, trotting a greyhound clubs. Another 0.75 per cent goes to the racecourse development fund.
Underlying this is an ideological argument. On one side is the pursuit of market share and higher turnover. On the other, is a leftist, historical perspective that the down-trodden workers should not be cheated out of their hard-earned money by unscrupulous bookies. This is why the state created TABs in the first place: to give the workers a fair place to bet. And thus it would be appalling if the state-run and state-owned TAB fell again into the clutches of the big end of town would rip off the Labor-voting mug punter in his blue singlet.
The sort of thing tolerated by a corporatised TAB and encouraged by a privatised one is to provide special services and treatment to the vary large gamblers to keep market share.
Commission punters (professionals who gamble large amounts with other people’s money for a percentage of the winnings) are thus attracted to the ACT TAB with special services. One way is to ensure that, at least mid-week, they come to the Canberra racecourse, rather than go to Gosford or Kembla: limousines from the airport, special rooms at the racecourse for their computers, tea, biscuits, beer and runners.
Why do they come to a racecourse at all? And why to they bet on a TAB rather than bookies? A TAB offers a wider range of exotic bets: trifectas, next doubles and so on. These offer better returns for big punters. Also the racecourse, like all TAB agencies, provides TAB computer monitors which show pre-race betting pools and likely odds. And at the course, an eye can be kept over the bookies.
These guys bet with a nearly bottomless pit of money and seek returns at the margins: when the returns are greater than the odds they work out with their expert statistical and racing knowledge: the more so in winter when track conditions are more variable.
Providing services to them is an anathema to the left. Also, with all their computers and expertise they are winning at the expense of the Aussie battler. The big boys winnings are the battler’s losings, the theory goes.
That’s all very well in theory, but in practice, things are slightly different. As a simple fact, the ACT Government gets 6.5 per cent of turnover. The more money bet by big boys (especially interstate ones), the more money the Government gets to redistribute to worthy ACT causes. So the big boys should be attracted here. Further ACT racing gets its 4.25 per cut, too. And the big boys don’t always win, whereas the Government’s percentage is certain.
Further, if the turnover falls and the betting pools fall correspondingly, you get erratic odds. Sometimes the pool is too low to support a decent dividend and conversely sometimes there are so few winners even in the modest pool that the dividend is bizarrely high. People will always remember the times when the ACT dividend is lower than NSW, but not when it is higher. If the ACT TAB begins to lose market share, the resulting erratic odds could undermine its credibility. The mug punters, too, will go to NSW.
The very announcement of turning the TAB into a statutory authority has caused fears among some big commission punters. One of the ACT TAB’s biggest clients has muttered about going to NSW if the ACT TAB becomes a statutory authority.
The ACT TAB stands to lose their very considerable turnover, and the Government will lose the revenue that flows from it. The Government will always get 6.5 per cent; the question is 6.5 per cent of what.
The ideology that says government-owned-and-run-is-best and supports the small mug worker’s right to bet fairly will thus ironically fail on both counts: the mug punter will cop erratic odds and the revenue base of the Government will be threatened. The ratepayers more than anyone stands to lose.
It may well be that the egg-on-face theory turns out to be right. Mr Berry’s change requires legislation. The three independents will no doubt see some heavy lobbying from the racing, trotting and greyhound clubs and quite possibly some unofficial chats will some people in the TAB. Incidentally, Mr Berry’s announcement puts the board of directors and executive of the ACT TAB in an impossible position. They have appear to have conflicting duties. On one hand, they must do the best for the long-term future of the corporation. As Mr Berry’s proposal is fatal to that cause because the ACT TAB will cease to exist as a corporation and become a statutory authority, their duty is to oppose it. On the other hand their should do as their shareholders command. If the two shareholders (Mr Berry and Ms Follett) call for the winding up of the corporation, their duty might be to support it.
There’s a good argument to suggest it would not be improper for ACT TAB board members and executive to lobby MLAs for the continued existence of their corporation. In any event it is likely that the three independents will vote against Mr Berry’s proposal. That will hurt him, somewhat, politically. It will certainly help those who would like to see Mr Berry dumped as Deputy Chief Minister.
The Right would like to see Terry Connolly in that position, but neither the ideological left nor the sensible left would tolerate that. The sensible left would like to see a fifth ministry occupied by David Lamont who would become Deputy Chief Minister.
However strained relations are between the ideological left and the sensible left, the sensible left will never join with the right to oust Mr Berry, so he sits pretty, at least for now.
The egg-on-face argument carries more significance in the new electoral environment. Under d’Hondt, the Senate or single-member systems in other states, it does not matter much if a minister does not perform well, provided the party gives him a place high or the ticket or a safe seat. A poor-performing time-server will still get elected if the party does the right thing. However, under the new Hare-Clark Robson rotation system, it is not for the party to determine places on the ticket. There is no ticket. Some ballot papers are printed with Follett in the No 1 position, some with her No 2 some No 3 and so on. Similarly with Berry, Connolly and so on.
Thus voters will not be presented with a neat Labor list which they can tick. They will have to think about the order they want to place individuals. Donkey votes are shared equally among the candidates. Thus, the public perception, as distinct from the party’s perception is what ultimately counts.
In this environment, delivering up the TAB on the altar of the ideological left might not be such a smart move. In bygone days it might have earned points among important party members which in turn would have resulted in a safe seat or a place high on the ticket. Now there is no such prize. All Labor candidates will be equal. The only question the party decides is whether a person is a candidate, not their position on the ballot paper.
Presumably, Mr Berry will have no problem getting nominated as a Labor candidate by the party. A bigger problem for him will be whether he gets elected by the voters. The voters might look at the way he has allowed ideology to affect his performance in the health, and now the sport, portfolio and vote for other Labor candidates. If Labor-voting punters see their TAB or racing industry adversely affected, the new voting system will make it easier for them to punish a Minister who did that while still voting Labor. Mr Berry will not have the security he had last election of being in the No 2 position on the Labor ticket, such a thing will not exist.
It makes an interesting contrast with Terry Connolly, the Attorney-General and Minister for Urban Services. Mr Connolly has tried to fight ideology and to create an efficient bus service by taking on poor work practices. For his trouble the Transport Workers Union is busily enrolling in Labor Party branches in an attempt to prevent his pre-selection.
Mr Connolly is in the opposite position from Mr Berry. Mr Connolly might have a problem getting nominated as a candidate by the party, but if nominated he will have no problem getting elected by the voters.
The counter-point with Mr Connolly is quite illustrative. The ACT is under a lot of competitive pressure. The Grants Commission which determines the size of a huge proportion of ACT revenue, for example, penalises us if our bus service does not match up to interstate ones. The market penalises us if our TAB falls behind the services provided by NSW. As these pressures feed through the political process, the politicians have to get more adept, especially if the political process itself is changing, as the ACT’s has done with the new Hare-Clark system.
Indeed, Mr Berry’s time would have been better spent studying the form of Tasmanian politics under Hare-Clark than the form of a well-performing TAB. In Tasmania, Ministers and front-benchers often lose their seats to other candidates of the same party.
Perhaps the TAB saga can be seen as a barrier trial for Mr Berry. What a delicious irony it is that in the real race there is no barrier draw.