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Community Affairs Legislation Committee
09/12/2013

STEWART, Mr Paul, Manager, ATM Industry Reference Group

WINGROVE, Mr Andrew, Member, ATM Industry Reference Group

Committee met at 16:10

CHAIR ( Senator Boyce ): The committee will now commence its first public hearing into the Social Services and Other Legislation Amendment Bill 2013. This committee has been referred schedules 1, 1A, 3, 4, 5, 7, 10 and 11. Tonight we will be looking at schedules 1 and 1A. Committee proceedings are protected by parliamentary privilege in Australia. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. The committee prefers all evidence to be given in public, but, under the Senate's resolutions, witnesses have the right to request to be heard in private session. It is important that witnesses give the committee notice if they intend to ask to give evidence in camera. If you are a witness today and you intend to request to give evidence in camera, please bring this to the attention of the secretariat staff as soon as possible.

I thank in advance all those witnesses who are appearing tonight for coming in on very short notice to provide evidence to the committee on the bill. I welcome representatives from the ATM Industry Reference Group. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I invite you to make a short opening statement and, at the conclusion of your remarks, I will be inviting members of the committee to put questions to you.

Mr Wingrove : Thank you for the opportunity to appear today. There is a great deal of uncertainty surrounding the ATM industry at the moment, and we felt that it was important that the committee hear firsthand from us about this. For those of you who are not familiar with the ATM industry, here is a snapshot: there are 30,000 ATMs in Australia altogether. Of these 30,000 ATMs, approximately 55 per cent are owned and operated by independent companies such as ours. The remainder are owned and operated by financial institutions such as banks. Regarding independent ATMs, we estimate in excess of 5,000 are located in pubs and clubs that have electronic gaming machines. Almost all ATMs in gaming venues are operated by independent ATM companies.

The ATM industry reference group is the industry body for independent ATM companies, and our members represent more than 90 per cent of all independent ATMs in Australia. The reason independent ATMs have grown in the past decade is because we specialise in providing a convenient way for Australian consumers to access their cash in a variety of locations including service stations, shopping centres, retail outlets, corner stores and hospitality venues. We are all about providing convenience to consumers in locations where they want to access their cash. We are not owned by gaming companies and we recognise the need to promote responsible gambling and gaming venues.

With regard to the changes proposed by the Social Services and Other Legislation Amendment Bill 2013, our sole focus is the amendment which would allow the responsibility for ATM limits in gaming venues to again rest with state and territory governments. The ATM industry strongly supports this amendment. The ATM industry also strongly supports this amendment being passed by parliament before it rises for 2013. The reasons for this are as follows.

Firstly, as things stand, current federal legislation provides for the introduction of a national daily withdrawal limit on ATMs and gaming venues to commence on the 1 February 2014. However, the new federal government has a clear policy position that states and territories should resume regulation of ATM limits. This is in conflict with the current federal legislation, and the amendment seeks to align the legislation with the government's policy.

Secondly, the ATM industry is uncertain about how to proceed and, given the imminent start date, 1 February 2014, the sooner the situation is clarified the better. The most effective way to achieve this is for the amendment to be passed by parliament before it rises this year. The ATM industry can then get on with the business of complying with the law with certainty and without duplication of costs.

The ATM industry is working with states and territories and understands that South Australia and the ACT are in the process of introducing daily ATM limits. The structure of these limits varies from the federal legislation and the uncertainty surrounding the Commonwealth legislation is complicating our compliance plans.

Governments in New South Wales, Queensland and the Northern Territory have indicated that they do not propose to apply ATM limits at this time. In all jurisdictions we have to ensure that our systems comply with the law, and there is a risk that the ATM industry will have to invest time and money complying with ATM limits in some jurisdictions, only for the limit to be withdrawn or varied once federal legislation changes. In essence our industry would be incurring wasted costs, in addition to the impact on consumer confidence in using ATMs, and this is the principle concern that we wish to put forward to you today. Thank you for the opportunity to appear today, and we are happy to take questions from the committee.

CHAIR: Mr Stewart, do you have a statement?

Mr Stewart : No, Andrew's statement represents the group as a whole.

CHAIR: Senator Di Natale.

Senator DI NATALE: I want to interrogate that a little bit more. So the basis of your support for the amendment is that it is a conflict between national and state policy?

Mr Wingrove : In part, yes.

Senator DI NATALE: So just explain that a little bit further.

Mr Wingrove : Sure. I guess at present there is a landscape for change and there has been for some time.

Senator DI NATALE: Please excuse me. I have to attend a division.

CHAIR: Perhaps you might like to continue answering Senator Di Natale's question anyway.

Mr Wingrove : Shall I proceed?

CHAIR: Yes, please. He will be able to pick it up on Hansard.

Mr Wingrove : Of course. So what we are describing is a landscape of some uncertainty between the legislation that is in place today, to be implemented on the 1 February 2014, and a policy position of the government which seeks to amend that. The senator asked me specifically about South Australia and the ACT. Working with all states and territory governments, the ATM industry has been consulting with those governments and they have indicated to us that they intend to have, in South Australia, a $200 limit on ATM withdrawals. Whereas, in the ACT, they seek to have a $250 limit that will be on a different time line per day—based on a gaming venue clock, as opposed to a calendar day clock, which is different from the federal legislation today. So, from an industry perspective—and companies that Paul and myself represent—we have a range of measures to seek to try and meet, and from a compliance perspective that is very difficult.

Mr Stewart : I guess our situation at the moment is, having consulted with those state and territory governments in the context of an overriding assumption that the new federal government's policy will be implemented at some point during this term of parliament, that we are trying to align those requirements of how the state and territories see that they will adopt ATM limits in comparison to the current federal legislation, which we still have as a piece of law as we sit today.

CHAIR: Are you able to give us the average cost of changing a machine to meet whatever the requirements happen to be?

Mr Stewart : It will vary from company to company, depending upon the technology that each company employs. But it is certainly tens of thousands of dollars for each company and would run into hundreds of thousands of dollars across the industry—

Senator XENOPHON: Per machine? How much per machine?

Mr Stewart : I do not have an exact figure per machine. As I stated, it will vary from company to company, depending upon the technology that they employ for any given machine.

Senator XENOPHON: Can you urgently let us know what it would be—without referring to any commercial confidentiality but could you give us a range of what your members say it would cost to alter a machine to-

CHAIR: Is it more about the fact that you need to develop the software and the per machine cost is not quite so relevant?

Mr Stewart : In some instances it is the cost of deploying it per terminal. In some cases, companies run terminals that rely upon a particular piece of software loaded to that terminal. Some of that can be done remotely and some of it needs to be done by a physical site visit to the ATM.

CHAIR: So it is different for each company?

Mr Stewart : It is different for each company. To your point, Senator Xenophon, we are happy to look at those numbers and come back to you on notice with a range of figures, because I do not have that data to hand from all of our members. The point that we are endeavouring to make is that, in the interests of some certainty and in the interests of not duplicating costs—

Senator CAROL BROWN: We were looking at a 1 February implementation. How far down the road are you with developing software?

Mr Wingrove : We have certainly commenced our preparedness for the change. I think it is fair to say though that, with the changing landscape and the uncertainty that we face, we are perhaps not as progressed as what we might have been without it. But certainly we have been working in the background, because, as you say, Senator, we have known about it for some time.

Mr Stewart : I think the other point that is worth making on that is there is still a large degree of education within our customer base that is hampering our efforts to move towards that compliance, should it be required, because there is a fairly strong feeling within the industry that the incoming government's policy will be what is delivered at a point in time.

CHAIR: So it is not unreasonable to say that on a commercial basis you did not perhaps progress as quickly as you might have from about mid-August or so?

Mr Stewart : Senator Boyce, that is absolutely correct.

CHAIR: Thank you.

Mr Stewart : Part of our inability to do that is the reluctance of engagement with our customers, given what they believe the outcome is likely to be.

CHAIR: Senator Xenophon, have you got questions?

Senator XENOPHON: Yes, I have, just very briefly, because I know how constrained we are for time. I do not quite understand the logic of your submission. If you are concerned about having a state-by-state approach, would it not make more sense for there to be a uniform federal approach so there is some national consistency, greater certainty for your members, and therefore lower costs? Ultimately that would be a better approach than having a state-by-state approach.

Mr Wingrove : Certainly that is possible, Senator, but what we have observed firsthand is that states are proceeding with different regulations, if you like. Cases in point are South Australia and ACT. From a technology standpoint, in order to make the machines and the systems compliant, we are dealing with multiple regulations already.

Senator XENOPHON: Right, but if there was just one set of rules at a national level, that would be preferable to a state-by-state approach in terms of consistency?

Mr Stewart : Even if the current federal legislation did remain in place, there are a number of other different rules at a state basis that we would still need to comply with, such as ATM placements et cetera, that effectively mean we are complying with yet another level of government. We are not actually removing the state and territory governments.

Senator XENOPHON: But ATM placements do not relate to the technology or software, do they?

Mr Stewart : No, they do not, but it is still a compliance burden that we need to—

Senator XENOPHON: But we are talking about the compliance burden, for want of a better phrase, in terms of having some uniformity with respect to ATM withdrawal limits at gambling venues.

Mr Stewart : And it may be that certain states and territories apply different limits to the Commonwealth, which again means that we are required to be compliant with a whole range of governments, not just a Commonwealth government.

Senator XENOPHON: To what extent do any of your members, private ATM operators, have any links to the venues in which they are located? Are there any commercial agreements or other arrangements that we ought to know about? In other words, is there a link between, say, a gambling venue and any of the ATM companies that you represent?

Mr Stewart : In terms of an equity position, is that the question?

Senator XENOPHON: Either equity or commercial relationships.

Mr Stewart : There are customer/supplier relationships, of course.

Senator XENOPHON: Anything with equity?

Mr Stewart : No, no equity. That is a question that would have been asked on several occasions.

Senator XENOPHON: So no issues of related parties or anything like that?

Mr Wingrove : No, it is purely a service and supplier relationship that we have.

Senator XENOPHON: And you are familiar with the Productivity Commission finding on gambling—at least in its first report back in 1999—that referred to a very close correlation between problem gamblers, particularly pathological problem gamblers, and access to an ATM at a venue? Non-problem gamblers rarely needed to use an ATM, whereas problem gamblers invariably had access to an ATM. It was quite a stark difference. Do you acknowledge that there is a link between ATM usage and problem gamblers—using those machines at a greater proportion?

Mr Wingrove : I am aware of the 1999 report, but not all of the complete details. From the industry's perspective, we have continued to support government initiatives around restrictive measures on ATMs to assist problem gambling, as it were. So, in that sense, as an industry, we do what we can to support that issue.

Mr Stewart : We are here today really not to debate records that may be in place on this. We are really here to represent our interests in relation to the great degree of uncertainty that our industry currently faces in our compliance efforts.

Senator XENOPHON: Can you give me a cost estimate of what it would cost to alter the machine as suggested in the legislation that is currently the subject of amendment? What range could you give us? Can you give me an approximate range of what it would cost to alter the machines in terms of software to comply with the proposed changes to be implemented by February 2014?

Mr Stewart : Senator, I think that is something that would be best taken on notice to give you some accuracy in those figures because we do not have those with us today.

Senator XENOPHON: But you would have been told by your members, would you not?

Mr Stewart : They are not figures that we have readily at hand today that we can quote to you.

Senator XENOPHON: But you are saying that there are significant costs involved for your members for the changes proposed in this legislation, correct?

Mr Stewart : Yes, we are.

Senator XENOPHON: But you cannot tell us what those costs are?

Mr Wingrove : I think it is fair to say that we are talking multiple thousands, multiple tens of thousands of dollars to implement.

Senator XENOPHON: Per machine?

Mr Stewart : For each of our companies the figures that we have spoken about would be tens of thousands of dollars per company that would run into hundreds of thousands of dollars across the industry. So, breaking that back to a per ATM level, it is something that we would have to get some accuracy on before we were able to quote those numbers.

Senator XENOPHON: Can you at least provide details of the basis upon which those assertions are made? In other words, quotes or whatever?

Mr Wingrove : Yes, we can take that on notice.

Senator XENOPHON: I think that is quite important, thank you.

CHAIR: Can I just advise you that we are reporting early on Thursday, so if you can get that information back to us as quickly as possible, that would be great. One more question, Senator Xenophon?

Senator XENOPHON: If there was a uniform national law, in terms of software for ATMs and respective withdrawals, that would actually be good for your members in the longer term?

Mr Wingrove : I think it is true in most walks of life that if there was a single uniform law it would make things simpler.

Senator XENOPHON: Rather than having six or eight jurisdictions?

Mr Stewart : I think the essence is, however, that we will always have six or eight jurisdictions applying different aspects that impact on our doing of business with our customers. The Commonwealth being involved in that just as one more jurisdiction that we need to be cognisant of with our compliance efforts.

Senator XENOPHON: But not if the Commonwealth's laws on withdrawals were the one and only uniform law that related to withdrawals?

Mr Stewart : That would be the case but I do not believe that is possible given that the states would still have the ability to apply differential laws over and above what the Commonwealth has imposed.

Senator XENOPHON: That is not quite what I asked but, anyway.

CHAIR: Senator Brown.

Senator CAROL BROWN: Thank you. You said earlier that one of the reasons that you have not progressed the work on the software that would be needed was because there were some issues around educating your ATM businesses. Can you just let the committee what the issues are around the education and how are you attempting to educate the sector?

Mr Wingrove : Simply put, while there is legislation before us to make this change, we also have a government with a policy position that will see changes and we also have some state governments, like South Australia and the ACT, with different positions. It is those issues that our clients, our members, if you will, are grappling with in seeking to understand that. So one component of us moving towards compliance before that date is the education of our client base. They are faced with just the same questions as we are: when or will that change, and if so how, and how do we seek to accommodate that? So, with that uncertainty, it is proving difficult to get a single clear message to our client base in terms of that education piece.

Senator CAROL BROWN: When did you start the dialogue with your members into what was required?

Mr Stewart : It varied a little per company, but typically around August of this year all of our companies commenced communications with our customers in terms of what they would need to do and what we would need to do to help them in their compliance efforts.

This piece of legislation is very different to any other state-based legislation that we have previously dealt with. There are actually fines and penalties that are levied on both the ATM companies and the venues under this piece of Commonwealth legislation, which is not something that we have had before. So we saw it as very much a joint effort with our customers in moving towards compliance. The thing that really stalled that, I guess, was the coalition's policy. When that was announced, there was a degree of reluctance on the part of our customer base to continue moving down that path. That is probably the thing. Moving forward to the election to where we are today, there is still that degree of uncertainty that is making it difficult to move towards that compliance level.

Senator CAROL BROWN: Thanks, Chair.

CHAIR: Thank you. I am just trying to think how to phrase this. Is the profile of an ATM user uniform nationally, or would some ATM machine owners configure their machines differently because of something about the local population—that might want more money or less money or something?

Mr Stewart : It is probably not driven by, strictly speaking, geography. It is probably driven by, perhaps, individual venue needs. There is not a lot of difference in the way that a machine behaves other than what is governed by regulation or legislation. There may be some particular requirements of an individual venue operator or merchant that may apply to that machine. And I do not really think there is anything other than that that really varies that is not driven by legislation.

Mr Wingrove : I think that is fair.

Mr Stewart : Our industry is made up of the companies that are represented by the ATM industry reference group, which are the three largest providers within the industry, as well as a wide number of medium- to small-sized companies, whose technology is perhaps not as sophisticated as ours, who we help through this process in making sure that they are aware of the compliance that they need to achieve as well.

CHAIR: Thank you, gentlemen. If Senator Di Natale has further questions he will put them on speedy notice. Thank you for your evidence here this afternoon.