Property price boost predicted for state’s pokies pubs
Federal Group stands to reap a significant increase in the value of its pubs under new pokies tax arrangements, but is remaining tight-lipped on whether it will cash in on the capital gains.
Tasmania
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FEDERAL Group is not saying whether it intends to sell off any of its 12 pubs, with the state government’s proposed gaming policy set to significantly increase their capital value.
The new model for Tasmania’s gaming industry, detailed last week, would bring an end to Federal Group’s monopoly and transfer control of machines to pubs and clubs, with individual licences to be issued to venues.
The government said the company would be close to $25 million worse off under the new arrangement, which includes a 3 per cent increase to the Community Support Levy, reaping the state an additional $3 million, while pokies in pubs will be taxed an additional 8.3 per cent, and those in clubs an extra 7.3 per cent. However, the tax on casino pokies would fall by nearly 12 per cent.
Independent economist John Lawrence said the hit to Federal Group’s revenue would be offset somewhat by the forecast capital growth in their pubs.
“If they [pubs] can get a licence for 20 years, that means that they’ve got a nice capital gain that they can cash in,” he said.
“At the licence level, each pub becomes a separate asset, which then can be sold on.”
A Federal Group spokeswoman said the company’s own modelling showed it would lose approximately $20 million in revenue each year under the proposed new policy.
“This annual loss is entirely different to theoretical capital values,” she said.
“It is irrefutable that the Federal Group will be substantially worse off as a result of the proposed gaming legislation.”
The Mercury asked whether the company intended to sell any of its 12 pubs – which include the Brooker Inn in Lutana, the Elwick Hotel in Glenorchy, and Hotel Valern at Moonah – if the government’s policy became law. But an answer was not provided.
Finance Minister Michael Ferguson said it was “illogical” to compare an ongoing annual revenue loss for Federal Group with an estimated “effectively one-off” capital value rise based on a 20-year licence.
“It is comparing apples with oranges,” he said.
Mr Ferguson said the policy would secure hospitality jobs, support problem gamblers and put more money in state coffers to be spent on essential services.
In a joint submission to a parliamentary inquiry in 2017, Federal Group and the Tasmanian Hospitality Association endorsed the individual licence model.
“The proposed model would redistribute (electronic gaming machine) revenue from Network Gaming to hotels and clubs,” the submission read. “This would result in a significant increase in the capital value of hotels and clubs by an average of over $1.5 million.”
Independent Nelson MLC Meg Webb said the government should release modelling on the expected outcomes and financial viability of all industry stakeholders – including single-operator venues in regional areas – instead of focusing only on the effect on Federal Group.
“The policy we see today is exactly what Federal Group asked for, so of course it is designed to maximise its profits and it must be delighted with this result,” she said.
“Federal Group will remain the dominant industry player through its casinos, as owners of 12 of the most lucrative pokies hotels and the virtually foregone conclusion that, through Network Gaming, it will become the licenced monitoring operator.”
New gaming tax rates revealed as monopoly ends
FEDERAL Group will lose around $20 million a year when its gambling monopoly ends under new tax arrangements unveiled by the state government on Wednesday.
But the announcement has anti-gambling campaigners adamant that the industry has received everything it asked for.
Premier Peter Gutwein released details of the Future Gaming Market reforms for five weeks of public consultation.
The bills are expected to go before parliament later this year and be in place for 15 to 20 years from the middle of 2023. They do not contain new measures to reduce problem gambling.
Consistent with the Liberals 2018 state election policies, the proposed legislation provides for an end to Federal Group’s gambling monopoly, gives control of poker machines to pubs and clubs and reduces the number of machines, introduces a new separate licence for Keno and provides for two licences to be available for high-roller nonresident casinos in Hobart and Launceston.
Newly announced are cuts to tax rates: for casino poker machines falling from 25.88 per cent to 13.91 per cent; on casino Keno from 5.88 per cent to 0.91 per cent and on casino table gaming from 0.88 per cent to 0.91 per cent.
Hotel poker machine tax will rise from 25.88 per cent to 33.91; club pokies tax rates will rise from 25.88 to 32.91 per cent and the non-casino Keno operator will pay 20.31 per cent compared with the 5.88 per cent currently levvied.
And new casinos will pay tax on a sliding scale from three to seven per cent according to turnover.
The community support levy increases from four to five per cent in pubs, from zero to three per cent in casinos and is unchanged four per cent in clubs.
Revenue flowing into government coffers and the community support levy is projected to increase by around $8.5 million a year and Federal Group’s gaming revenue will drop from $108 million to $84 million a year.
Mr Gutwein said the tax rates were modelled on those in effect in northern Queensland, the most comparable gambling jurisdiction to Tasmania and would ensure a fairer distribution of gambling revenue.
“The policy that we are releasing today will result in more money for essential services such as health and education,” he said.
“It will provide job certainty and security for Tasmanians working in our pubs and clubs.
“At the same time, there’ll be more support for problem gamblers and as promised, we’re ending the Federal Group’s monopoly here in Tasmania.”
The Liberals’ 2018 election win was heavily underwritten by an influx of cash from the gabling industry in response to a Labor proposal for a ban poker machines in pubs and clubs.
Federal Group Executive General Manager Daniel Hanna said the company would review the legislation in detail before commenting further.
“As Tasmania’s largest private sector employer and major tourism and hospitality operator, we need to consider the full impact that these arrangements would have on our company,” he said.
“Federal Group is extremely proud of the way we have managed Tasmania’s gaming industry as the exclusive licence holder for nearly 50 years.”
Nelson MLC Meg Webb was unimpressed.
“On first glance, it looks like the industry is getting virtually everything they asked for when they wrote the policy,” she said.
“We need to dig into this and ask where really should we be looking to deliver good outcomes to the Tasmanian people?”
“Reform should be about that, not delivering the industry all its hopes and dreams.”
And independent Federal MP Andrew Wilkie said revenue falls would be offset by the increase in value of pokies venues once they owned poker machine licences.
“The bottom line is that today is payday for the parasites in the poker machine industry who bankrolled the Liberal Party’s 2018 election win,” he said.
“They will all be delighted with this fabulous return on their investment.”
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