Keynote Address: NZ Licensing Trust Association Conference, Copthorne Hotel, Masterton

  • Peter Dunne
Internal Affairs

Good evening.

I am delighted to have this opportunity to catch up with you and what is happening in the world of licensing trusts.

I am also looking forward to sharing some thoughts with you on the class 4 gambling review, as well as some other regulatory matters that have an impact on your organisations.

First, I would like to acknowledge:

  • Horace McAuley, President of the New Zealand Licensing Trust Association;
  • Jock Kershaw, President of the Masterton Community Trust; and
  • All New Zealand licensing trust members and life members.

It is a pleasure to continue the dialogue I have with the New Zealand Licensing Trust Association, following our meeting in February this year.

This evening, I will give you an overview of:

  • my role as the Minister of Internal Affairs;
  • the  class 4 gambling review;
  • the Department of Internal Affairs class 4 project in relation to licensing trusts;
  • the concept of regulatory stewardship; and
  • the unique role of licensing trusts in New Zealand’s communities.

I know that our host, the Masterton Community Trust, plays an important role in the life of the Wairarapa.

The generous hospitality of your accommodation and food and beverage establishments, along with the return of funds to the local community, combine to make a very valuable community organisation.

The Masterton Community Trust is of course associated with Trust House.

I understand that the Trust and its associated Foundation returned over $3.8 million in the 2015-16 year to a wide range of activities, including health and welfare, education, community promotion, arts, recreation and sports, in Masterton, Porirua, Rimutaka and Flaxmere.

I was interested to note that Trust House describes its values as “respect, innovation, collaboration, commitment and humility”.

This says a lot about the trust movement overall, and it is on this basis that I would like to acknowledge the other licensing trusts from around the country represented here this evening.

We all agree that licensing trusts play an important role in our communities through the provision of alcohol and gaming machines, both high-risk products, in an environment that supports minimising harm, and distributes profits back to the respective communities.

You are, of course, accountable to these communities through your publicly elected boards.

These characteristics that make up your important work give you a unique role in New Zealand society, as you are responsible for enhancing the wellbeing of your communities.

This is a unique social mandate.

To this end, I am very supportive of the activities you and your organisations undertake.

As you will all know, licensing trusts are established and operated under the Sale and Supply of Alcohol Act 2012.

This Act is of course the responsibility of my colleague, the Minister of Justice, so I will not be discussing matters related to this piece of legislation this evening.

I am here in my capacity as the Minister of Internal Affairs.

It is a diverse portfolio, which touches the lives of all New Zealanders.

My department looks after a range of important services that help New Zealand to function as a country. The aim is to help make New Zealand better for New Zealanders.

I am sure that this ethos resonates with the work that you do for, and on behalf of, your communities.

One of the Department of Internal Affairs’ functions is to regulate gambling.

As Minister, I am responsible for the legislation that provides the regulatory framework for gambling activity.

The Gambling Act is a complex piece of legislation, with a broad range of objectives, including:

  • controlling the growth of gambling;
  • minimising problem gambling;
  • ensuring that gambling is fair;
  • minimising opportunities for crime; and
  • ensuring that money from gambling benefits communities.

Many of you will have a significant interest in gaming machines, or the “pokies”, that are run in pubs, taverns and clubs around the country, including many of your venues.

Pokies first appeared in New Zealand in the late 1980s and went through a period of rapid growth in expenditure in the late 1990s and early 2000s, particularly when compared with other forms of gambling.

Not surprisingly, this trend was accompanied by rapid growth in machine and venue numbers.

In part, the Gambling Act was introduced in 2003 to respond to this rapid expansion in the sector, as well as a public perception of “too many pokies” and potential for gambling-related harm in our communities.

We know that gambling is a divisive and emotive issue, and we often see this play out through scrutiny of pokies and the effects of problem gambling.

It is within this context that the Act seeks to redistribute gambling takings to community causes, as well as balance the entertainment value of gambling with the potential for gambling addiction, and the self-destructive behaviour that accompanies it.  

Minimising harm from gambling is a topic I take particular interest in.

This is because as well as my regulatory role as Minister of Internal Affairs, I am also Associate Minister of Health, with responsibility for gambling harm as a public health issue.

I consider this a fortunate and positive position to be in, as it enables me to keep a broad overview of the wider gambling environment and harm minimisation issues.

This hopefully leads to more consistent and better coordinated policy responses.

The risks associated with gambling demand a regulatory system, and the necessary licensing, compliance and enforcement functions are undertaken by the Department under the Act.

Class 4 gambling review

While the Act is generally considered to be working well, we are looking in more depth at how class 4 gambling operates.

As you are well aware, the net proceeds from class 4 gambling help to fund a wide variety of community activities and facilities.

But we know that spending on gaming machines has generally been in decline since the Act was introduced.

While the decline appears to have been arrested in the past three years, the future of this class of gambling, and therefore the community funding associated with it, remains uncertain.

I say “generally decreasing” as spending on gaming machines has increased again for about the last three years.

The Department is looking into this trend, but in the meantime I am keen to ensure the picture overall is one of achieving sustainability.

Other factors affecting class 4 gambling  include changes to consumer preferences in the gambling and hospitality sectors, including developments in online gambling within New Zealand – which is currently limited to Lotto and some TAB offerings – and by New Zealanders gambling with offshore providers.

The class 4 gambling review is looking at how the level of community funding can be sustained.

The review is considering whether we should concentrate our efforts on changes within class 4 gambling, or whether there is potential to increase community funding through other avenues within the gambling portfolio. 

The main objectives of the review are to look at:

  • the long-term sustainability and effective allocation of funds to communities; 
  • whether the legislation remains fit-for-purpose;
  • whether the sector can be regulated more cost-effectively; and, of course,
  • preventing and minimising harm from gambling. 

This involves working with community representatives and other stakeholders on how we regulate the sector.

In short, we are seeking the most cost-effective regulatory model possible; one that maximises community funding, without increasing harm or driving growth in gambling.

These are difficult and important matters, and this is why we have sought input from community representatives and other stakeholders on how we regulate the sector.

In June 2016, the Department released a discussion document for consultation on the review.

This provided an opportunity for your sector to express your views on the issues and challenges facing the class 4 gambling sector and community funding, and ideas on how things might be improved.

Particular topics on which feedback was sought included legislative restrictions; the role of local government; regulatory functions and costs; club and non-club societies; and funding and distribution of grants to communities.

The Department received over 700 submissions during this process, which demonstrates a strong public interest in the pokies’ environment.

I am aware that the NZLTA made a submission, as did a number of individual licensing trusts.

The Department has also run a series of workshops with representatives from major stakeholder groups.

Feedback contained in the submissions, as well as information gained from the workshops and the Department’s own analysis, will inform my report back to Cabinet on the review’s progress.

It will also form the basis of the Department’s development of options for possible changes to class 4 gambling.

I expect to receive the report back from the Department in the next couple of months. 

My vision for the class 4 gambling sector is a safe, transparent and trusted gambling sector that benefits New Zealand’s communities, supported by an appropriate regulatory framework. 

Licensing trusts continue to play a key role in achieving this vision.

As you will be aware, my officials at the Department have been looking at the role and operations of licensing trusts in the class 4 sector.

This is to gain a better understanding of the environment that licensing trusts operate in.

The work is looking to balance any operational risks under the class 4 framework with the benefits that the current licensing trust model brings.

The aim is to provide better transparency of the role that licensing trusts play within the class 4 sector. 

As I have mentioned, licensing trusts are unique organisations.

On the face of their current structure, they can potentially control and influence at both a society and venue level.

However, it is important to recognise that the licensing trust model predates both the introduction of gaming machines to New Zealand in the 1980s, and the Gambling Act in 2003.

So it is vital that we work together to look at this matter further, to ensure that the operating model for licensing trusts is fit-for-purpose, and continues to adhere to and build on the principles of transparency, integrity and accountability.

I am pleased that my officials have engaged and consulted with you and management service providers on this work.

This kind of collaboration between the Government and the sector is fundamental to ensuring that the operating model is fit-for-purpose and assists licensing trusts to deliver ongoing benefits to our communities from class 4 gaming proceeds.

I appreciate and thank you for your collaboration with my officials on this important matter.

I encourage you to continue to work with the Department as the project progresses.

Regulatory stewardship

The class 4 gambling review and the project I have just described are an example of the constant need for exploration of whether legislative frameworks are fit-for-purpose, and whether the regulatory regimes sitting beneath them are cost-effective.

The Government expects that a regulatory system should deliver a flow of benefits to New Zealand that exceeds its costs, and that regulatory systems should be seen as an asset, not a liability.

We all know that assets require maintenance. Whether it is upgrading your venues or looking after the hardworking people your trusts rely on, I am sure you all recognise the importance of taking care of your assets.

In the same way, the Government needs to take care of its regulatory systems – just like it maintains its other assets, like its buildings or computer systems.

We need to ensure that our regulatory systems are flexible, proportionate, fair, and easy to access and understand.

This type of approach should support regulatory change and involves including regulated stakeholders as much as possible.

It is important that through engagement with the Department, you are supported as much as possible to understand and meet your regulatory obligations.

This shift towards seeing the regulatory role as one that negotiates outcomes and takes a problem-solving approach to becoming compliant is a positive one.

I am pleased that efforts to improve collaboration and build trust and transparency are making a positive difference in the relationship between officials and the class 4 gambling sector.

Unique role of licensing trusts and the future

You will of course know that NZLTA represents a range of trusts, from small ones operating only one tavern, to larger operations with a variety of licenses including hotels, accommodation, restaurants, cafes and taverns and bottle-shops.

Despite these differences in scale, all licensing trusts are unique community organisations with a long and proud history.

You play an incredibly important role in your communities, both through your contributions as democratically elected representatives and through the funds you distribute back to your communities.

This local focus is fundamentally important to the social and economic fabric of New Zealand’s regional and urban communities.

Whether it is the grants and donations you make to community organisations; the events you promote in your regions; or the people your trusts employ – you all make a social and economic impact.

An obvious and recently publicised example of this is the Invercargill Licensing Trust’s plans to develop a new hotel in the city’s CBD.

The associated potential for economic growth and a spread of initiatives in the surrounding area is a cause for optimism.

Times have obviously changed considerably since the Invercargill Licensing Trust was established in 1944 against the backdrop of prohibition.

Our “newest” trust, the Flaxmere Trust, was of course established in 1975!

This long legacy goes to show the ongoing opportunity for licensing trusts to contribute to community life.

You really do hold a special place throughout New Zealand, both socially and historically.

However, it is evident from the themes that have been discussed during your annual conference that the NZLTA has a focus on the future – whether through the changing face of tastes and hospitality, or technological and economic challenges and opportunities.

This is heartening to note, and I encourage you to foster this thinking to prepare for and adapt to these challenges and opportunities.

It is up to you and your communities, to whom you are ultimately accountable, to determine the future of licensing trusts.

Thank you again for the invitation to be here. I wish you all the very best and trust you have enjoyed this opportunity to catch up, collaborate and share ideas with licensing trust representatives from around the country.