Whatever the truth of Garrett’s story, it’s about gambling industry politics and influence

Former minister Peter Garrett retracted claims about receiving cash in an envelope from a representative of a gambling industry lobby group. AAP/Marianna Massey

Former federal minister Peter Garrett has retracted claims that he received cash in an envelope from a representative of lobby group Clubs NSW at a gambling industry event in 2004. He now says he received a cheque made out to his electorate office, which he returned.

Garrett’s retraction is a little remarkable. He was the source (in some detail) of the original story, in a book he’s launching next week, and via a new ABC documentary, KaChing!. We can only speculate as to his reasons for changing the story.

Clubs NSW “unequivocally rejected” Garrett’s earlier claims.

Perhaps a little less remarkable, but worth some attention nonetheless, are the significant amounts that club and pub interests donated to a fundraising body linked to Liberal MP Kevin Andrews.

When he was in opposition, Andrews was responsible for developing Liberal Party policy on gambling. He put that policy into practice when he became minister for social services, dismantling the Gillard government’s already watered-down poker machine reforms. Andrews’ policy was announced in a video introduced by Clubs Australia and Clubs NSW CEO Anthony Ball.

Despite the apparent strangeness of donating to an organisation supporting the re-election of a Victorian-based MP, a Clubs NSW spokesperson said the donations were for “no particular purpose”. There is no suggestion that the donations directly influenced Andrews’ decision-making. But the Abbott government, in enacting its policy, abandoned gambling reform.

The lobby’s profound influence

Many people are concerned about the relentless promotion of sports betting. We’ll find out soon enough if this generates a new cohort of people harmed by gambling.

At the moment, however, 80% of the gambling harm in Australia, and A$11 billion out of a gambling total of more than $20 billion, comes via poker machines in clubs and pubs. Sports betting, in contrast, is worth about $500 million a year.

There are about 200,000 poker machines in Australia. Half are in NSW. In 2012-13, people lost $5.2 billion on NSW machines. In 2014-15, Victorians lost $2.6 billion and Queenslanders $2.2 billion.

Prior to the last two NSW state elections, the Liberal Party signed memorandums of understanding with the clubs. The clubs thus support the Liberals, and the NSW government seems keen to help them out. In July 2015, this took the form of permitting the cash payout of up to $5,000 in winnings. Previously this was limited to $2,000. More than this and the money was paid by cheque.

The limit for deposits on gambling load-up cards was also upped, from $200 to $5,000. The clubs say this is for convenience of their members. Of course, this has nothing to do with making it more likely that any winnings end up back in the clubs’ pokies.

In Queensland, under the guise of “red tape reduction”, the now-ousted Newman government agreed to a batch of “reforms” to make life easier for club pokie operators. The new ALP government says it wants to wind back these “reforms”. Unfortunately, it has inherited a swarm of new casinos, with a second Brisbane casino approved, an additional casino on the Gold Coast being developed and a mega-casino proposed for Cairns.

Other towns – or, more correctly, developers – are clamouring for casinos too.

In Victoria, the Labor government recently announced a review of poker machine entitlements. There are 30,000 poker machines in Victoria – about 27,000 in pubs and clubs and the balance in the casino. The internal review was announced late on a Friday night, so confidence that it will actually address the harms of gambling is low. There’s no commitment to publication of the review’s report.

Prior to the Victorian state election in 2014, pubs and clubs lobbied the state for the conversion of their 10-year entitlements to licences in perpetuity, as in NSW. That effort died with the election, but they haven’t given up. The government could expect a windfall of revenue from the conversion of entitlements to licences in perpetuity, and even more if it allowed more pokies into the state. As Paul Keating famously remarked:

Never get between a premier and bucket of money.

The harm done to people is, it seems, incidental to the $5 billion that flows into state treasuries from gambling. Of this, 60% comes from poker machines.

Pokies are essentially addiction machines – computers housed in a retro box that combines a host of psychological tricks. Their sole purpose is to extract as much money as possible. By stimulating the production of neuro-chemicals, pokies do exactly what drugs do – give the user a pain-dulling reward.

The problem is, most people realise that heroin and ice are dangerous and addictive. When it comes to gambling, state governments give pokies the seal of approval, and the local pub or club is the dealer. Even worse, we know that pokies are cynically concentrated in disadvantaged communities.

State governments are legislators, regulators and beneficiaries of gambling. They are addicted to the revenue, and deeply conflicted as to their role. Even more troubling is that since 2008-09 poker machine operators have given more than $6 million in donations to the ALP and the Liberal Party. Most of this has gone to the Liberals – more than $4 million.

Is this a problem?

Gambling operators exist because governments license them. They are, in many ways, the ultimate rent-seekers. Without government imprimatur, they have no revenue stream.

Should such businesses be permitted to donate to politicians or political parties? And should they be permitted to influence government, legislation and regulation as powerfully as they do? The gambling industry’s campaign against the Gillard government’s reforms was extraordinary.

This is a lobby that knows how to wield power and does it with great expertise, backed by significant resources. As recent events in the US have shown, organisations like the National Rifle Association are entrenched in US politics, almost certainly to the detriment of good policy and the public interest. Australia’s gambling lobby may well be in the same league.

Disclosure of political donations in Australia is poor – perhaps as bad as the rules governing politicians’ travel entitlements. Rorting the latter seems to be a bipartisan sport. Giving gambling operators what they want in return for donations, and in fear of their enmity, may well be another.

Facts matter. Your tax-deductible donation helps deliver fact-based journalism.