Harness Racing Annual Conference

Harness Racing Annual Conference Speech
12.30pm 28 September 2018

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Introduction

Good afternoon ladies and gentlemen.

Thank you for your invitation to be part of your annual conference and to deliver the opening address.

This is an opportunity to reflect on an eventful 12 months and engage with both new and familiar faces from throughout the industry. 

You have a very interesting and full programme over the next two days.

It comes as no surprise to see this afternoon’s panel discussion about Mr John Messara’s report. You’ve got a strong panel of experts and we hope you enjoy the session. In the meantime, here are some of the details and next steps.

State of the racing industry

It has long been apparent to most people within the New Zealand racing industry, that the industry has been steadily declining, and is now in an extremely dire state.

Issues facing the industry include:

  • the continued decline in foal crop;
  • pressures from breeders, owners and trainers to increase prizemoney;
  • a lack of funding sources;
  • the profitability and sustainability of race clubs; and
  • deteriorating facility infrastructure and investment.

The following two facts sum up a bleak story for harness racing:

  • the foal crop fell from 2,142 in 2012/13 to just 1,781 in 2016/17 – a decline of 361 foals in just three years; and
  • total domestic turnover has fallen from nearly $300 million in 2007/08 down to $218.9m in 2016/17.

The status quo is clearly not an option if the industry is to be not only sustainable, but successful in 10 years’ time.

Comprehensive action at a structural, first-principles level is required.

That’s why, as Racing Minister, the scope for Mr John Messara to conduct a high level review of the racing industry was called for.

Mr Messara, who as you all know is a top Australian administrator and stud owner, was given a broad canvass to look at the health and future of the industy.

The Messara report and its recommendations

Mr Messara has delivered. His report is of the highest quality and addresses the relevant issues.

Although Mr Messara’s review has a strong thoroughbred focus, his recommendations are relevant to the whole industry and aim to deliver positive impacts for all three codes.

It’s very much the first-principles blue print to address the significant problems facing New Zealand racing.

The report’s findings and recommendations for industry-wide change are of vital importance to harness racing, especially with regards to proposed legislative, administrative and structural changes.

That’s why discussion about the report forms part of your programme this afternoon.

Mr Messara has confirmed our worst fears – that the New Zealand racing industry, is vulnerable and in a distressed state, with far-reaching reforms needed to arrest its decline.

Harness Racing Chairman, Mr Ken Spicer, came to meet me following the report’s release and he delivered sobering news – that harness racing is indeed facing threats and challenges – we are all in the same boat.

What we have in this report is a clear view of what needs to be done. 

In summary, the report’s key recommendations include:

  • changes to the current governance structure;
  • outsourcing of TAB commercial activities to an international operator to help increase prize money;
  • amending the distribution formula to the codes;
  • repeal of the betting levy paid by the New Zealand Racing Board to the Government;
  • a serious increase in prize money each year; and
  • a reduction in the number of race tracks.

It’s been pleasing to find that, overall, the report has been positively received by the industry. The initial view of industry insiders, including Harness Racing New Zealand, is that the majority of the recommendations are sound and have merit.

We also acknowledge that some recommendations would have a greater impact on harness racing than others. 

Proposed venue consolidation

Venue consolidation is one such issue.

It is important to first highlight that Mr Messara’s recommendations around race course consolidation do not require the closure of any clubs.

The recommendations do, however, highlight the fact that New Zealand has too many race venues for the scale of our industry.

For example, in the Canterbury area alone harness racing takes place at Addington, Motukarara, Ashburton, Timaru, Methven, Kaikoura and Orari.

The abandonment or postponement of races due to poor track conditions, particularly for the thoroughbreds, is an all-too-frequent occurrence. It’s costing the industry millions in lost revenue every year.

Mr Messara’s recommendations, if implemented, would close 20 tracks in the galloping industry over the next eight years, including 11 from next season.

Of those 11, four are also used by the harness racing industry – Reefton, Omakau, Waimate and Winton.

There are a number of other galloping tracks, also used by harness racing, which are recommended for closure.

Mr Messara also mentioned that there are nine thoroughbred racecourses recommended for closure that he believed the harness code might wish to retain.

It is pleasing to see that a conversation between the three codes about racetrack consolidation is well underway.  

This includes consultation undertaken by the Future Venue Plan Joint Working Group, which has been established between the New Zealand Racing Board and the three codes to develop a future infrastructure plan for the industry.

Mr Messara referred to the ongoing work of the Working Group in developing his recommendations. 

We accept racecourse closure may be difficult and confronting, but some concessions will need to be made for the good of the industry as a whole.

As noted by Mr Messara, the sale of surplus tracks would generate funds to upgrade the facilities and tracks of the remaining racecourses.

Like any successful business, this is consolidating to remain competitive.

The remaining facilities would be first-class, providing a foundation for a streamlined, modern and competitive racing sector capable of marketing itself globally.

Proposed amendment to the distribution formula

Tax and levies play a big part in the recommendations, and it’s acknowledged that proposed changes to the distribution formula in the Racing Act will be of great interest to the harness racing industry.

The distribution of TAB profits between the codes has always been a highly contentious issue.

As noted by Mr Messara, there is no right or wrong answer to the arguments advanced by those for and against the inclusion of betting on overseas racing in the formula for distributing TAB profits. It therefore comes down to what is considered equitable.

We accept that many will find this recommendation, and others, contentious and of significant interest to both the racing sector and local communities.

Next steps

Some may think the recommendations are too radical. Others may just plain disagree.

That’s why it’s vital that those most vested in the industry have the opportunity to provide feedback on the recommendations.

That’s why we are committed to an open and frank discussion with all stakeholders on the report’s findings.

You‘re probably aware that an official call for public feedback on the review was announced on 13 September. Consultation will run for five weeks, closing on 19 October.

Your views and comments are very important, and we strongly encourage you to provide feedback on the recommendations. Further information about how to make a submission is available on the Department of Internal Affairs’ website.

We can assure you that we are committed to working through the report’s recommendations, and feedback from stakeholders, before taking swift and decisive action to carry out the reforms necessary to move the industry forward.

As outlined on 30 August to the industry in Hamilton, officials will draft a Cabinet paper with a set of recommendations for decision.

That Cabinet decision will set the direction for what is required to reset the industry.

We expect these decisions to happen quickly – in time for next year’s Budget.

Industry integrity and race-fixing investigations

There is a subject that cuts to the heart of the public’s confidence in all codes of the sport – that is integrity.

We’re all aware of the Police’s ongoing investigations into alleged race-fixing in harness racing, and the recent arrests.

One can’t comment specifically on matters that are before the Courts.

However, these investigations demonstrate that the public can have confidence in the integrity of all racing codes. This can only be positive for ongoing interest and punter investment in the sport. 

It shows that the Racing Integrity Unit takes its role seriously, alongside other relevant agencies, to independently uphold the integrity of New Zealand’s racing industry.

The importance of harness racing

Let us take this opportunity to acknowledge the harness racing industry’s importance to New Zealand and the economy:

  • Harness racing contributed 28% of New Zealand’s total domestic racing turnover in 2016/17.
  • In 2016/17 average harness racing stakes per race were up 8%, and total net stakes were up 3.57%.
  • There are 265 race meetings held by the 47 harness clubs throughout New Zealand in a season.
  • There are over 3,000 standardbred horses in New Zealand.
  • These horses raced for in excess of $28 million in prize money, with average stakes per race about $10,000.

New Zealand harness racing has a proud history of producing champion horses. Some of which, including Young Quinn and Cardigan Bay, attained legendary status both at home and abroad. 

And then, of course, there are the current champions such as Lazarus.

Although he was a loss to the sport in New Zealand when he was sold overseas earlier this year, he is flying the flag for our harness racing industry on the global stage. This is a good example of the industry increasing its export turnover and fostering international markets for sales. 

Let us also acknowledge the work being done by Harness Racing New Zealand to improve the financial viability of the industry for all participants in this challenging environment.

It is discernible that your focus is on a strategic and collaborative approach, with stakeholder buy-in across the system. This approach will stand you in good stead while we consider these necessary reforms.

Challenge for the industry

We can all see that the conditions are there to make this the thriving industry it once was.

But meaningful outcomes will only occur if the review is accepted and enforced on a large scale.

And as noted by Mr Messara, a few concessions would need to be made to keep all codes happy.

We can turn this around very rapidly and the benefits will start flowing equally quickly.

The goals are lofty, including:

  • a substantial increase in the collective returns to New Zealand owners; and
  • a substantial increase in the industry’s overall economic contribution – some believe that the industry is capable of doubling its GDP.

For this is achievable, an immediate and collective effort will be needed for the industry to turn itself around. And it won’t be easy.

As was said on 30 August – “reform or die, there’s no off-course substitute”.

The New Zealand racing industry can have the brighter future it deserves, but real change and brave leadership will be required.

We have the chance to turn the industry’s bleak future around together.

All the best for your conference.

ENDS