NZ race reform hits hurdles

The Minister of Racing is now taking a more cautious approach to reform of the racing industry after intense lobbying from racing clubs, warnings that the reforms are unworkable and signs from his majority coalition partner that it will not support some of the proposed changes.

The Minister, Rt Hon Winston Peters, who is also Deputy Prime Minister in New Zealand’s coalition government, commissioned a report on the racing industry from prominent Australian racing identity John Messara.

He recommended sweeping changes including stripping the New Zealand Racing Board of most of its powers, leasing out the TAB (which has a monopoly on off track betting) to an Australian operator, closing 28 of the country’s 48 race courses, and devolving power to run thoroughbred, harness racing and greyhounds to the respective codes.

Messara found that “on any test, the thoroughbred racing industry in New Zealand today is in a state of serious malaise.”

He recommended creating a prize pool of at least NZ$100 million ($67 million) to increase stakes and provide greater returns to breeders funded by tax reductions on the industry and selling up racing clubs’ land.

The most controversial change was use legislation to take the tracks from clubs, sell the land and invest the money in all weather tracks, better on track facilities and increased stakes.

When the Messara report was released in August 2018, Peters endorsed it as “ the way forward”, but in a speech to the Thoroughbred Racing Conference this week, he was more cautious.

Instead of an “Implementation Unit” which was to be set up to drive the changes recommended, he has now appointed a Ministerial Advisory Council which “will be charged with setting a sense of direction for the intended racing reforms. It will also report on opportunities and roadblocks to returning the racing industry to a well-managed and sustainable economic growth path.”

The five-member advisory council announced on Thursday includes some members known to be sceptical about aspects of the proposed changes.

In his speech, Peters said the government will “stay faithful to the Messara Report.

“ We are going to go for broke as much as it possibly can be done. He (Messara) will admit… that there are one or two things that we can’t do or we have to tweak or change.”

The importance of the phrase “as much as it possibly can be done,” is stressed by critics, and is seen as a softening of stance.

One critic told AGB that Peters still wants to be the saviour of New Zealand racing, but is finding that he cannot easily do so through the pathway set by the Messara report.

The majority partner in the government coalition, the Labour Party, has made it clear that it not at all keen to see off track betting outsourced to any Australian company.

Doing so would be at odds with the usual Labour Party stance that revenue generated in New Zealand by New Zealanders should stay in New Zealand.

It is a rhetorical line frequently used by Peters’ own party, New Zealand First, which is usually stridently nationalistic and anti-foreign ownership.

Peters’ speech is silent on the question of nationalising race tracks by legislation, but he has been advised that it is impractical and unworkable by at least one racing industry leader.

Although many racing clubs own the land they use for racing, many others do not.  Local councils, special purpose trusts and Maori tribal groupings often are the owners which makes the use of legislation to take the land very contentious at a local level, and is therefore regarded as a dangerous course politically.

The Ministerial Advisory Committee is seen as a way of making progress on aspects of the Messara Reforms that can be achieved and make sense.

“The Committee will develop a plan to operationalise the Messara Report to deliver better governance and economic outcomes,” said Peters.

The government was committed to reforming the racing industry, he added.

“The Committee will provide an interim report to the Minister for Racing by the end of February 2019, to be followed by Cabinet decisions, and legislation to modernise the industry.

The Committee is being created as a potential precursor to the establishment of a Racing Industry Transitional Agency (RITA), subject to future government decisions.”

Releasing the NZ Racing Board’s annual report board chair Glenda Hughes said the board welcomed the Minister’s initiative in setting up Messara Report and “we support the majority of recommendations, including refocusing the NZRB as Wagering New Zealand.

Peters’ own political party, New Zealand First, draws significant support in certain provincial areas which feel ignored in favour of big cities and taking away treasured local assets would not align well with the party’s values and would likely generate dissent among the party’s MPs.

“The industry is in urgent need of investment and the resulting revenue from repeal of the betting levy, new synthetic tracks and a refocused venue footprint, in addition to the benefit of NZRB’s strategic initiatives will be a game changer for racing,” she said.

However, determining the scope and scale of change is now being vested in an advisory committee of racing industry experts which will temper the bold ambitions of the Messara Report with a dose of practicality, and take into account the political reality of being in a coalition government and needing the votes of provincial areas to stay in Parliament.