THE ANNUAL MEETING OF HARNESS RACING CLUBS

PLYMOUTH INTERNATIONAL HOTEL, NEW PLYMOUTH

my thanks to the president of harness racing new zealand, max bowden, members of the executive committee and delegates for inviting me to address the annual conference of harness racing clubs.

please accept my apologies for disrupting the annual conference at this stage of proceedings.

due to long standing commitments, i was unavailable to open the conference yesterday morning. however, i am grateful for this opportunity to say a few words.

it gives me much pleasure to address this particular conference. many of you will know that the harness code has been my personal favourite for a number of years.

indeed, robin corcoran has promised me a drive on new zealand cup day; an event that i am looking forward to with varying degrees of excitement and trepidation.

i sincerely hope that government business will not prevent me from driving around addington raceway. since my appointment to the portfolio, i have had the pleasure of meeting with many racing industry leaders; not only in the beehive, but also at occasions such as this, and, of course, at race meetings.

there have been many interesting recent developments in new zealand racing.

to date, the most significant developments have been the introduction of the racing industry board's new funding policy and the publication of ernst & young's performance and efficiency audits of the racing industry board and the t.a.b.

it is with regret that i have witnessed the division that the new funding policy has created within the harness code.

the recent elections to the code's executive were a clear indication that the majority of clubs were opposed to the new policy.

i hasten to add that i do not want to enter into the debate about the relative merits of the electoral systems of the three racing codes. such matters are the business of the industry, not the government.

for me, the funding debate has highlighted the tension between racing, the pastime, and racing, the billion dollar industry.

this particular tension was highlighted by ernst & young in their recently published performance and efficiency audits of the two racing boards.

i will return to the audits later.

recent amendments to the racing act have devolved the management of the new zealand racing industry from the crown to the industry itself. today, the responsibility for the future of racing lies with the industry.

i have it on good advice that not so long ago, it was the responsibility of the governor-general, by order in council on the recommendation of the minister in consultation with the racing authority, to decide how many totalisator licences there would be in any year.

at that time, the minister had to give written consent before a totalisator agency could be closed or moved.

and, it was only in 1995 that the r.i.b. was allowed to set the levy deductions from the betting dollar itself, instead of parliament having to change the law each time the rates of the levies changed. these are just a few examples of decisions that should be made by the industry itself, not the crown. the industry is now permitted to make these decisions.

it is the responsibility of government to provide an economic climate that will enable the racing industry to thrive and prosper. it is the responsibility of the industry to ensure that it does so.

government also has a clear role in ensuring that the industry acts in a socially responsible manner and in providing the overall policy and legislative framework for all forms of gaming in new zealand.

the racing industry board has been empowered to develop policies that will ensure the economic development and financial welfare of racing in this country and the financial security of those new zealanders whose livelihoods are derived from racing.

it is ironic that, after all the legislative amendments, ernst & young find that the racing act is actually restrictive rather than enabling.

like many people here today, i have concerns about the impact of the new funding policy on some of the smaller clubs. i am anxious that the smaller clubs that bring so much to the racing industry and to their local communities do not become lost under the new policy.

i support racing in the smaller communities. however, as minister for racing, i also support a vibrant, healthy and confident new zealand racing industry.

the ultimate responsibility for the welfare of racing now lies with the industry, not with the government.

as with other entertainment and gaming industries, racing must get on the right track of providing an attractive alternative for the leisure dollar, and must act responsibly in doing so.

like it or not, racing has to compete for the discretionary dollar. racing must ensure that it is the uppermost activity in the mind of the average punter when she makes choices about her entertainment spending.

will she go to the casino, will she go out for a meal, will she go to the movies, or will she go to the races or to the t.a.b.?

there are strong indications that, presently, all is not well with the racing industry. earlier this month, ernst & young released their independent performance and efficiency audits of the racing industry board and the t.a.b.

i understand that the auditors presented their findings to this audience yesterday.

delegates would have heard of multi-million dollar losses across the whole racing industry.

such losses are clearly unsustainable.

ernst & young find that the structures and policies of the racing industry are neither efficient nor effective and are not appropriate for the desired performance of the industry.

the racing industry board was established to develop policies that would be conducive to the economic development and financial welfare of racing.

in their audit of the r.i.b., ernst & young identify barriers that prevent the board from achieving that function.

for me, it is a critical finding of the audit that the racing industry board faces such barriers.

as minister for racing, it is my responsibility to support a healthy and confident racing industry.

earlier this month i spoke at the galloping conference. once again, i would like to take the opportunity to highlight several of the key areas for action identified in the audit of the r.i.b.:

the introduction of simplified enabling legislation
the removal of all subsidies so that the industry can know the real profitability of its product
the merger of the two racing boards to better effect the delivery of policy
a review of administrative structures to drive out costs
racing clubs to provide high quality off-course betting product at the best venues at the best time
a club led rationalisation of venues to provide the minimum number of racing surfaces to competitively deliver the product
the r.i.b. to contract with the t.a.b. to deliver a certain pay-out to the industry
the t.a.b. to negotiate with the clubs to deliver the off-course product, and
the resolution of the t.a.b. ownership issue
i welcome constructive debate and discussion on these issues, particularly on the t.ab. ownership issue and the proposal to merge the two racing boards.

however, the biggest challenges arising from the audits clearly lie with the racing industry. if change is to occur, that change must be driven by the industry itself.

i look forward to receiving the considered views of the industry in due course. indeed, this matter is to receive full consideration at the highest levels in government.

in conclusion, i would like to convey my thanks to the outgoing president of the racing conference, max bowden, and to edward rennell, your chief executive, for the assistance that they have afforded both me and my office.

i look forward to establishing a similarly productive working relationship with the new president, ralph kermode, and the new executive of harness racing new zealand.

it is important that i am kept fully briefed on industry matters.

thank you