No shots fired in war on gambling

During Senator Spilka's Casino Love Fest, it was made clear that the state becomes the largest shareholder in promoting addictive behaviors. Sort of like the gambling pimp for the Commonwealth.

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Surely, some scoffed. Here's the experience from Down Under --

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"Governments are involved in nearly every aspect of gambling. They act as suppliers, tax collectors and police." That makes state governments extremely conflicted when it comes to addressing problems attached to the way the gambling industry operates.
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Of Government Addiction to Gambling Revenue and Those Ever Escalating Expenses --

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The irony of state government dependence on gambling taxes is that while the money is valuable in the short term to budget bottom lines, in the long term the effects of problem gambling on the community are felt through increased government spending on welfare, health assistance and counselling services.

Impartial studies indicate that for every $1 in tax revenue generated, gambling costs $3.

Non-government organisations such as Mission Australia have estimated that those costs ultimately outweigh the tax take...

Of Regressive Taxation and Social Inequality --

Poker machines are mostly used by lower socioeconomic communities (confirmed by the Productivity Commission). It makes for highly regressive taxation; that is, taxation targeted at low-income earners, punishing the poor far more than the rich. A good Labor leader should philosophically support redistributive taxation policies ahead of regressive gambling revenue streams.

Of the flawed argument about freedom --

Liberal politicians are likelier to shy away from doing something to curb the growth of gambling for philosophical reasons. Anyone supportive of free-market economics and freedoms of choice may suggest the right to gamble is an individual right. This ignores research that shows problem gambling is an illness that, as with alcoholism, restricts free will.

Campaign contributions --

...the consequence has been that the gambling industry donates far more substantially to the Labor Party than to the Coalition.

If the states are not addicted to the taxation revenue from gambling, the Labor Party is surely addicted to the campaign donations the industry throws its way.

Of Gambling Addiction Contributing to Homelessness --

Figures show that as many as 100,000 Australians are classified as homeless.

If the MPs took the time to ask those at the [homeless] shelters what factors contributed to them being there, they would have heard tales of gambling addiction as a contributing factor.

This is worth reading in its entirety.

No shots fired in war on gambling


Peter van Onselen, Contributing editor October 24, 2009

IN September 2007, then prime ministerial aspirant Kevin Rudd pledged to do something about the rise of poker machines across the country, after an ABC investigation into the effect of problem gambling in NSW.

"I hate poker machines and I know something of their impact on families," he said. He promised to find a way to reduce the reliance of state governments on poker machine tax revenue, the nub of the problem.

We now know that Rudd hates poker machines so little that the only recommendation in the Productivity Commission's draft report into gambling (released this week) that his government has committed to act on is to lift restrictions on online gambling sites within Australia.

In other words, measures that will add to the gambling industry, not take away from it.

State government dependence on gambling revenues is staggering. In the nation's two largest states, NSW and Victoria, gambling receipts make up about 12 per cent to 15 per cent of taxes collected annually. With the exception of Western Australia, dependence on gambling revenues are similar in other states.

As far as the rest of the Productivity Commission report is concerned, the federal government will think seriously about which way to jump on the recommendations when the final report is handed down next year. In this all-important public policy area - one that substantially contributes to social disadvantage - the Labor government will have done nothing to curb problem gambling in its entire first term in office. Is it any wonder Rudd is at risk of becoming a prime minister who goes down in the history books as someone who promises a lot but delivers little?

The Productivity Commission points out: "Governments are involved in nearly every aspect of gambling. They act as suppliers, tax collectors and police." That makes state governments extremely conflicted when it comes to addressing problems attached to the way the gambling industry operates.

Good public policy dictates that poker machines should be restricted to casinos, not lined up in every pub and club on the continent.

It is also the reason federal action is required. States are too conflicted. The Productivity Commission, in its draft report, notes that universal action across state borders is the only coherent way to do something about the hundreds of thousands of Australians who have a problem with gambling. Given that Rudd likes to spruik a commitment to co-operative federalism, here's a chance.

If Rudd is to live up to his rhetoric on this subject it will be costly to taxpayers. The Productivity Commission notes: "The gap between commonwealth grants to the states and their fiscal needs have to be filled through the states' limited avenues for own-source revenue. These include gambling." This is vertical fiscal imbalance: the fact the federal government collects most of the tax revenue but the states, on the service delivery end of government, do most of the spending. Unless Rudd can find a way to substitute gambling tax revenue with adequate commonwealth assistance, state administrations can't cut gambling tax dependence (thereby curbing access to gambling options) without harming frontline services.

WA is the exception. It can afford not to depend on gambling revenues (and doesn't) because the mining-rich west secures a bumper allocation of mining royalties each year. Pubs and clubs in the west are not permitted to house poker machines.

The irony of state government dependence on gambling taxes is that while the money is valuable in the short term to budget bottom lines, in the long term the effects of problem gambling on the community are felt through increased government spending on welfare, health assistance and counselling services.

Non-government organisations such as Mission Australia have estimated that those costs ultimately outweigh the tax take, but only through time.

Electoral politics tends to dictate that governments want to appear fiscally prudent, which means they can't just clock up debt while waiting for the economic benefits of reform to trickle through the economy.

Poker machines are mostly used by lower socioeconomic communities (confirmed by the Productivity Commission). It makes for highly regressive taxation; that is, taxation targeted at low-income earners, punishing the poor far more than the rich. A good Labor leader should philosophically support redistributive taxation policies ahead of regressive gambling revenue streams.

Liberal politicians are likelier to shy away from doing something to curb the growth of gambling for philosophical reasons. Anyone supportive of free-market economics and freedoms of choice may suggest the right to gamble is an individual right. This ignores research that shows problem gambling is an illness that, as with alcoholism, restricts free will.

In any case, for Labor the concept of the nanny state is not a foreign one and Rudd has shown a willingness to philosophically support active state growth. So intervening to do something about gambling, as Rudd pledged to more than two years ago, should not take another year before we witness even a beginning of action.

It isn't a lack of public support that is holding back Rudd. No-pokies independent senator Nick Xenophon has shown how popular taking on the gambling industry can be.

So what could be holding back Rudd? The liberalisation of gambling across the nation largely occurred in the 1990s and, perhaps surprisingly, mostly was done by state Labor governments. Rudd knows a little about this. Despite his moral doubts about the influence of gambling on communities when he was trying to get elected as prime minister, as chief of staff to then Queensland premier Wayne Goss he oversaw the introduction of poker machines across the Sunshine State.

It may only have been coincidental that Labor was predominately in power at a state level at the time that poker machines in clubs and pubs proliferated. But the consequence has been that the gambling industry donates far more substantially to the Labor Party than to the Coalition.

If the states are not addicted to the taxation revenue from gambling, the Labor Party is surely addicted to the campaign donations the industry throws its way. It is not just the big end of town connected to gambling that donates to Labor campaigns. Labor clubs operating pokies provide the Labor Party with more than $1million in campaign donations every year. Perhaps pragmatic strategic reasons explain why Rudd's rhetoric on gambling reform doesn't match his preparedness to act.

Soon after he was elected Prime Minister, Rudd insisted his backbenchers each visit a homeless shelter. It was a stunt but a good one. It put his MPs on the frontline of how social disadvantage could manifest itself. Figures show that as many as 100,000 Australians are classified as homeless. If the MPs took the time to ask those at the shelters what factors contributed to them being there, they would have heard tales of gambling addiction as a contributing factor.