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Thursday, 22 March 2012
Page: 2593


Senator DI NATALE (Victoria) (13:18): I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum and to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill 2012 puts a brake on the damage done to the Australian community by problem gambling and poker machines.

It may come as no surprise, but Australians are the world's most prolific gamblers. The average Australian bets over $1,500 per year. This adds up to a staggering $19 billion gambled away annually. This number includes sports betting, horse racing and online gambling. But more than 60 per cent—that is $12 billion dollars—is lost through electronic gaming machines, better known as 'the pokies'.

$12 billion is a lot of money and it comes at a cost to communities. While it is certainly no secret that Australians like a flutter on the Melbourne Cup, there comes a point when the problems caused by gambling become an area of serious social concern.

In fact, the data shows that around 15 per cent of the people who gamble weekly are 'problem gamblers'. These are people who struggle to stop gambling after passing the point at which they can no longer afford to lose the money they are betting. The people that fall within this group—typically, those who can least afford the loss—are disproportionately responsible for a shocking 40 per cent of poker machine revenue. A few hundred thousand Australians are paying a heavy toll, not just in dollars lost but also in terms of lives destroyed.

The Productivity Commission estimates the social costs of problem gambling at $4.7 billion per year. These statistics, as telling as they are, mask the real costs of problem gambling. For every problem gambler there is an entire family whose lives can be shattered. Social workers every day hear stories of people losing their homes, kids sent out to get jobs instead of studying and suicides. These impacts greatly outweigh the supposed 'community benefits' from gambling revenue.

It cannot be denied that problem gambling is a problem of sufficient magnitude to make action an urgent priority for government. The most obvious target for reform is the poker machines themselves.

One does not need to go far to find a poker machine in Australia. There are 200,000 of them in this country, and half of them are in New South Wales. We have the 7th-highest number of these machines in the world, which is alarming given our relatively small population. And it is not just the number of machines that is a problem. The typical Australian poker machine is capable of churning through a staggering amount of money in a short period of time—up to $1,200 or $1,500 in a single hour. In fact, Australian pokies are infamous for this high rate of loss. In the United States they are referred to as 'casino-style' machines and rightly so.

After all, it is no coincidence that poker machines are addictive. Billions of dollars has been spent on poker machine design, with the express goal of making them ever more addictive. This is based on a sophisticated understanding of the psychology and even the neurology of those susceptible to addiction.

While there are poker machines there will be problem gamblers. But there are ways we can limit the damage that they do to their users, and by extension millions of families around Australia.

In its landmark 2010 report on gambling, the Productivity Commission took a serious look at problem gambling and poker machines in particular. The Commission noted the high rate of loss of the typical machine in Australia, as well as a broad and inconsistent array of limits imposed on the machines in the various states. They called for a more 'coherent and effective' policy approach that targets high-loss machines.

One recommendation of the commission was to limit the amount of money a user can put into the machine at any one time. By only allowing $20 to be inserted at once, the user is forced to stop at intervals—perhaps half an hour, perhaps much less—to insert more money and thereby be more conscious of just how much was going into the machine. This is a common-sense suggestion that is supported by research. In some jurisdictions, this so-called 'load-up' limit is as high as $10,000. It is difficult to imagine how one could defend such an incredibly high limit.

Another recommendation was to limit the amount of money that a person can gamble with each push of the button on a poker machine. Current limits vary between $5 and $10 per spin, and a gambler can typically push the button more than 20 times a minute. It's easy to see how loss rates of $1,000 and more can be incurred on such a machine.

According to the commission's report, 88 per cent of recreational gamblers bet less than $1 per spin in any case. Problem and at-risk gamblers disproportionately favour the higher amounts. For this reason, limiting bets to $1 per spin would inconvenience few casual punters but could put the brakes on the losses incurred by those who have a problem controlling their gambling.

We are told that poker machines are a form of recreation. By limiting the typical losses from an hour's play to around $100 an hour, we would be bringing poker machines more in line with other forms of entertainment Australians enjoy on a night out. We would, indeed, be simply taking the manufacturers at their word.

This bill, the Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill 2012, implements the Productivity Commission's recommendations on a national level. By introducing a national $1 bet limit and $20 load-up limit, it creates a national standard in poker machine configuration that is designed to limit the social harms of gambling without impacting recreational players. The bill also limits the jackpots on machines to $500. Modelling has shown that at higher jackpots, the volatility of the machines is higher and the amount of time a user will spend on the machine with a given amount of money is shorter. This parliament's Joint Select Committee on Gambling Reform examined this issue and recommended prize limits of this amount. We agree this is sensible policy.

There are 200,000 poker machines in Australia and it will take time to make these changes. This bill provides ample scope for the industry to make the transition. From the start of next year, all poker machines sold must be capable of complying with these new conditions. Most venues have until 2017 to make sure their stable of machines are compliant before the changeover to dollar bet limits becomes mandatory. Clubs with 10 or fewer machines, smaller local clubs who typically replace their machines on longer time frames, have an additional two years to comply with the new requirements. This provides ample time for industry to make the transition.

The bill makes one further provision regarding regulation. Subsequent research and experience, or changes to poker machine design may make it necessary to further alter the parameters of the machines to keep loss rates down. The bill allows these parameters to be set via regulation, including the 'spin rate' of the machines, or how many games can be played in a minute. This is similar to the situation in the states, where spin rates are often regulated and where gambling ministers may have the discretion to vary the many parameters that govern a poker machine's operation.

The bill also seeks to address the issue of the myriad technical standards that exist for poker machines in Australia at the present time. It will aid both industry and future reform if all machines in Australia were designed and tested to a consistent national standard. The bill instructs the minister to take steps to work with the states on development of such standards.

It has been argued that the cost of pokies reform outweighs the benefits. For instance, in public comments industry figures have suggested that implementing a $1 bet limit could cost as much as $3 billion or more. These numbers are fanciful at best, and can only be based on the assumption that most machines in Australia would need to be replaced overnight. Because of the generous time lines provided for in the bill, by 2017 when the bet limits become mandatory the vast majority of machines in this country will have been replaced with compatible machines simply via the normal replacement lifecycle. The Tax Office allows the operators of machines to depreciate them over seven years. Because of this, and the ability of modern machines to have changes made to their software with a routine upgrade process, we estimate the cost to industry at a few tens or the low hundreds of millions of dollars over five years.

This is a small sum compared to the social costs. In the next five years, $25 billion or more will be lost by problem gamblers to poker machines. The costs of reform, measured against this damage done to Australian communities, is trivial. Of course, this reform will reduce the revenue poker machine operators receive from problem gamblers who account for 40 per cent of their income. We make no apology for this; in fact, this outcome is the entire point of the bill.

Limiting the loss rates of poker machines will not end problem gambling. More must be done to provide help to those who seek to escape the clutches of addiction before their lives and those of their loved ones are destroyed. But limiting the bets will limit the damage. Dollar bet limits is a simple, cheap and effective measure that will make a real difference in the lives of problem gamblers in Australia.

Debate adjourned.