Queensland Labor takes brakes off to keep Star casino in orbit

Cash-strapped Star Entertainment was awarded a Queensland government casino licence the day before the landmark $3.6bn Queens Wharf project opened, despite begging Premier Steven Miles for a financial bailout weeks earlier.

Brisbane’s new Queen’s Wharf precinct. Picture: Glenn Campbell

Cash-strapped Star Entertainment was awarded a Queensland government casino licence the day before the landmark $3.6bn Queen’s Wharf project opened, ­despite begging Premier Steven Miles for a financial bailout weeks earlier and failing to open its hotels and restaurants as promised.

The Weekend Australian can reveal the Queensland Labor government has watered down the conditions for Star to open the ­riverfront precinct, scrapping a ­requirement that all accommodation, dining and retail spaces be tenanted before the gaming floor could operate.

Annastacia Palaszczuk’s first-term cabinet signed off on the terms of the contract with Destination Brisbane Consortium in November 2015, but the Labor government has since removed some of the key handbrakes on the company, even as Star’s disciplinary and financial woes have deepened.

Sold to taxpayers as a major tourism driver that would put Brisbane “firmly on the map as a global tourism, leisure and entertainment destination”, the integrated resort development was supposed to open with 50 restaurants and bars, five premium hotel brands with more than 1100 rooms, and a residential precinct of approximately 2000 apartments.

In exchange, Star was given an expanded casino licence for Queen’s Wharf with a larger gaming floor and an extra 800 poker machines on top of its former Brisbane operation, Treasury casino.

But when it opened with much fanfare last week, it had just 340 hotel rooms and seven bars and eateries ready for trade – alongside a fully operational casino after the government granted the company an unconditional licence a day earlier. A source with knowledge of the original deal told The Weekend Australian it required Queen’s Wharf to open its hotels and have tenants for all its retail and restaurant offerings before the casino floor would be allowed to operate.

Queensland Premier Steven Miles. Picture: Lyndon Mechielsen

Former Queensland premier Annastacia Palaszczuk. Picture: NewsWire / Tertius Pickard

“It is all easy to say Star have met all their obligations under agreement, but it is clear the terms of the agreement have been changed to benefit Star and allow them to start their gaming business before the tourism infrastructure has been delivered,” the source said.

A Hong Kong Stock Exchange announcement from Star’s joint venture partner, Far East Consortium, detailing the agreement signed with the state on November 16, 2015, confirms the casino ­licence would be issued only “upon completion of the integrated ­resort component”, which would be an “iconic world-class” precinct with 1100 premium hotel rooms, as well as high-end food and commercial outlets.

In response to detailed questions about the changes, a government spokeswoman said “it was always planned for the Queen’s Wharf development to open in stages, as is common for developments of this size and style”.

“Destination Brisbane Consortium have met their obligations under the contract,” she said. “The Star has also fulfilled its obligations in terms of payments to the state government.”

Star Entertainment, which ­operates casinos in Brisbane, the Gold Coast and Sydney, was suspended from trading on the ASX last week following delays in lodging its annual financial results.

The company is now locked in crisis talks to try to raise $300m in short-term funding to continue operating Queen’s Wharf and stave off collapse.

Queensland’s Labor government, which is facing an election next month, has signalled it will offer the casino giant a tax holiday to prevent thousands of job losses.

Under the original agreement signed with the state, Star is required to pay a minimum of $880m in gaming taxes during its first decade of operation.

Asked on Thursday when Star had first approached his government for extra help, Mr Miles said the casino giant was “probably constantly in contact”. “But the first conversations I have been involved with have been over the last couple of weeks,” he said.

The company’s problems worsened last week when the second Bell inquiry in NSW raised more concerns about its suitability to ­retain its Sydney casino licence. In May, Queensland decided to defer the suspension of Star’s two Queensland casino licences – in Brisbane and the Gold Coast – until December, after hitting the company with a $100m fine last year. On Friday, Treasurer and Deputy Premier Cameron Dick said the government was “working through” negotiations with the company on a potential tax ­waiver, but repeated that saving jobs was the priority.

Mr Dick said there were 1600 jobs at Star’s old Treasury casino in Brisbane which had been transferred to Queen’s Wharf, 1400 jobs at the new development, and ­another 2000 jobs at the operator’s Gold Coast casino.

“The company has made a lot of mistakes, they are being punished for those mistakes, and rightly so,” he said. “But we are not going to punish the workers and the small businesses who are supplying into that incredible development … for the wrongdoings of others. Whatever happens, I’ll make this clear, state taxes must be paid, we will take a hard line with Star, and we will ensure that they pay their taxes.”

Mr Miles’ union, the United Workers Union – which has coverage over Star workers – pleaded with the Premier to grant Queen’s Wharf tax relief to help it stay afloat. UWU state secretary Gary Bullock is convenor of Labor’s dominant Left faction and Mr Miles’s self-described political “mentor”.

Opposition justice spokesman Tim Nicholls said the Star debacle “can be sheeted home to a politically desperate Steven Miles” and said it raised serious questions for the government.

“Something is seriously wrong when the government gives Star a casino licence when Miles already knew taxpayers were being asked for a multi-million-dollar bailout,” he said. “How does the government explain to the thousands of other Queensland businesses doing it tough … that a multi-billion-dollar company backed by foreign investment should benefit from payroll tax relief and gambling tax relief?

“Why in the middle of a cost-of-living crisis should Queenslanders’ be paying for Labor’s incompetence in this whole sorry debacle?”

It is unclear what would happen to Star’s assets in Queensland and NSW should the company collapse. Star’s single-biggest shareholder is billionaire pubs and pokies baron Bruce Mathieson. Asked whether he wanted to encourage the Queensland government to deliver support to keep the company afloat, Mr Mathieson said: “It’s like anything, when times are tough, everyone needs a bit of support.”

Asked about suggestions he would be interested in the Gold Coast casino if Star were to be broken up, Mr Mathieson said: “All you people know more than me … you’ll have to wait and see.”

An industry source said there would be a lot of interest from overseas because the Star’s licence offers a monopoly in a capital city, Brisbane, which had a surging population and would host the Olympics in eight years.