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Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021

Hansard ID: HANSARD-1323879322-120573

Hansard session: Fifty-Seventh Parliament, First Session (57-1)


Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021

Second Reading Debate

Debate resumed from 10 November 2021.

Mr ANOULACK CHANTHIVONG (Macquarie Fields) (12:41:10):

I lead for the Opposition in debate on the Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021. The bill clarifies several definitions in the Gaming Machine Tax Act 2001 to ensure consistency across the State in applying tax collection practices on gaming machines. The bill is largely a housekeeping measure, and the Opposition will not oppose it. The changes provide certainty for gaming machine operators and potentially avoid future litigation about whether types of promotional prizes are considered legal bets that are liable for taxation purposes. With the significant changes in gaming technology, a bet can be placed using a range of monetary and non‑monetary methods. Our laws require regular updating to provide certainty and consistency for taxpayers and our tax revenue system.

Whilst there exists some understanding between operators and the New South Wales Government on whether such bets are taxable, these amendments give certainty for all parties involved. Schedule 1 inserts the updated definitions of outgoings, promotional prizes, progressive jackpot prizes, winnings and revenue that now include the use of promotional prizes. These definitional changes inevitably influence State revenue from gaming machines. As reported in July this year, Crown casino had to pay back $61 million in underpaid taxes after the Victorian royal commission found that incorrect deductions involving reward bonuses were provided to poker machine players. We want to avoid that situation in New South Wales.

Whilst the bill is relatively semantic in its nature, it provides me with the opportunity to pass some comments on the Liberal Government and its use of taxpayer money, given that we are debating taxation purposes of what is considered to be a bet. Let me start with some punter lingo: The odds of winning Powerball are between one in 76 million or one in 134 million; the odds of winning a million dollars in Lotto are one in eight million; and the odds of winning the top prize on the pokies are about one in 9.7 million. On any assessment, the odds of winning on these games of chance are somewhat astronomical. Yet they pale into insignificance compared with an everyday punter's odds in Sydney's west, south‑west and regional areas of getting a fair go from this Liberal Government. If this Liberal Government was a casino and subject to inspection, it would surely lose its licence and if it was a bookmaker, it would surely be run off the track.

Sadly, no amount of regulation or legislation will improve the odds for the average punter when it comes to getting its fair share from this Government because, under this Government, the odds are always stacked towards the house. Tollway owners, developers, lobbyists and consultants always win the jackpot under this Government. For them, it is always pay day. But we know that for every winner there are always multiple losers, and in this State it is not hard to find them—toll users, elective surgery patients, kids in hot classrooms, people trying to crack the property market, TAFE students, commuters inconvenienced by numerous transport bungles and that does not include all those who live in non‑Liberal seats and who, by default, miss out on Government spending in every budget.

There are losers everywhere under this Liberal Government. The "gamble responsibly" warning is well known in New South Wales; it is a pity that this Government does not heed its own warning when it comes to spending taxpayers' money. Perhaps recent investigations by the ICAC will be the catalyst for this Liberal Government to finally accept that it must also spend responsibly. I could go on ad nauseam about how this Government could raise the bar and spend responsibly, fairly and in the public interest. For example, it could heed its own department's advice and accept the data that lifts need to be installed at my local station in Macquarie Fields, or it could save billions of dollars in budget blowouts and build transport infrastructure locally. The door of this working-class economist is always open if the Government needs ideas.

Clarity and certainty are the themes of the bill before us at the moment. They are themes that I support, and the Opposition will not oppose this bill. My wish is that tax revenue that is collected under this bill is spent by the Liberal Government responsibly, fairly, and according to need and evidence. Public money and taxpayers' dollars are not the Liberal Government's political slush fund or personal piggy bank that it can raid without any sort of accountability.

Mr GEOFF PROVEST (Tweed) (12:46:10):

I make a contribution to debate on the Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021. The bill will strengthen the Gaming Machine Tax Act 2021 by introducing legislative amendments to provide clarity to taxpayers and clubs and confirm the legislative intent of taxing all bets placed on gaming machines regardless of the method used to place the bets. I am probably the only person in this place who has managed licensed clubs and held gaming licences—for over 300 machines at one stage here in Sydney, at the famous Revesby Workers Club, and at the Tweed Heads Bowls Club in Tweed, which is a very large club. I begin my deliberations on this bill by applauding the club movement. It is always there in times of disaster. Towns out west—in Forbes and so on—are currently facing floods. I am sure the local clubs are stepping up to the plate and offering assistance and support wherever they can. Clubs are crucial. Whether in the city or in the regions, they are great places for our local community. I cannot forget hotels. I am pretty swayed towards clubs, but hotels also provide a valuable service.

The amendments modify a number of definitions relating to the tax liability on profits. The existing definitions have been in place since the Gaming Machine Tax Act was introduced. They need to be clarified so that there is no doubt for clubs and hotels about their tax liability. All clubs and hotels endeavour to do the right thing. Having been on the other side of the fence with the club movement, I know it is sometimes difficult to understand. The gaming market is intense. A lot of people are vying for the gaming tax dollar and there are a lot of incentives or inducements being placed out there. Clubs and hotels are very heavily regulated in New South Wales at the moment. I have often had concerns about online gaming, where you can get credits, inducements and a whole raft of things. Very little online money is taxed, as the operations are usually based overseas in exotic places like the Bahamas and the Caribbean. I think that is a chief concern.

The proposed amendments are focused on key definitions under section 3 of the Gaming Machine Tax Act. The first objective of the amendments is to clarify that tax has been and will continue to be payable on bets placed on gaming machines using promotional prizes, including reward schemes or any other marketing or promotional activities offered by venues. As members may know, many clubs and hotels across New South Wales offer player reward schemes or promotional prizes to encourage players to enjoy their time on gaming machines at their venues. Under some schemes, players can accrue bonus or reward points to play on gaming machines or to claim other prizes in the venue, including food or non‑alcoholic beverages.

Those points are based on the player's spending or use of the venue services, including the use of gaming machines, and cannot be exchanged for cash. Bets that are made with bonus or reward points or other promotional prizes have always been treated as taxable by Liquor & Gaming NSW under the Gaming Machine Tax Act 2001. The bill confirms that long‑established understanding of the law by Liquor & Gaming NSW, and clarifies the tax liability for those clubs and hotels that offer promotional prizes, including reward schemes, thereby improving the transparency and simplicity of our tax system. The bill seeks to make it easier for taxpayers to understand their taxation obligations.

The second objective of the bill is to clarify the point at which a bet is recognised as revenue and therefore taxable for the purposes of calculating tax liability. For the purposes of calculating tax liability on profits, which is broadly calculated as revenue less outgoings, a bet becomes taxable when it is placed on a machine, rather than when money is inserted into the machine. That is a valuable point. Over the years I have found that certain people—even in this place—use the definition of profit as opposed to what is taxable and so on. We will often hear, particularly in the other place, the claiming of large profits, which is not the case because that is gross income. In conjunction with the objective, the outgoings part of the tax calculation is also clarified in the bill to be recognised when a prize, including a progressive jackpot prize, is won from playing the machine.

Those amendments provide clarity for clubs and hotels when it may be unclear as to the point at which a bet is recognised as part of the calculation of gaming machine tax. They are also consistent with the longstanding tax treatment and collection practice by Liquor & Gaming NSW. Further, the proposed legislative amendments align certain technology and concepts commonly used in other gaming machine legislation, such as the Gaming Machines Act 2001, namely replacing "money invested" with "bets". That ensures a common understanding and interpretation of gaming machine legislation by taxpayers and the regulator.

Finally, the bill clarifies that the scope of revenue from a gaming machine in the Act has always included and will continue to include bets placed through non‑cash means, such as stored value cards and digital wallets. That confirms that all bets placed on the machine, regardless of the payment method used, are taxable. The amendment seeks to ensure that clubs and hotels enjoy their tax liabilities in an industry that is likely to experience further technological developments in payment options and gaming machine functionality. Many years ago when I was managing licensed clubs, that "great" Treasurer of New South Wales Michael Egan, hailing from Cronulla, introduced a poker machine tax that would have devastated the club industry. The clubs formed a consortium with ClubsNSW, when Josh Landis was around and quite a few other dignitaries.

I have been outside this place standing on the other side of the fence holding a placard with the words, "Axe the tax"—and we should axe the tax now—because it was going to have a devastating effect not only in the Tweed but also across the State. I am sick and tired of certain people in positions of power in this place making comments about the club industry. We all love our local RSLs, workers clubs, bowls clubs, golf clubs and so on. They are run by hardworking people trying to do the right thing. But they are continually under attack from certain elements of other political parties who make spurious comments about their behaviour. At the end of the day, they are the clubs we go to in times of need. How many of us in this place have been at a club during a natural disaster? How many politicians have been at a club for a wedding, a community meeting, a wake and so on? Clubs are where we go. I stood in Michael Egan's office and he said, "You have a very good case, but I cannot do it because I'm getting pressure from others." Good on Michael Egan wherever he is; at least he had the guts to tell us the truth. Please leave our clubs alone. They have been doing a tremendous job and will continue to do so into the future with the intent of promoting community sports. As I said, clubs are the places we all go to; this is the Australian way. Leave our clubs alone. I commend the bill to the House.

Mr MARK COURE (Oatley) (12:55:03):

As a former director of Oatley RSL & Community Club, and as vice president of the club a few years ago, it is an honour to speak to the amendments. The bill proposes amendments to deliver key clarifications to tax payable under the Gaming Machine Tax Act 2001. Clubs and hotels in New South Wales offer reward schemes and other promotional prizes that can be used to play on a gaming machine or to claim non‑monetary prizes and rewards within the venue or with participating external retail outlets. Current definitions within the Act can be ambiguous, so clarifications are needed to provide greater certainty for taxpayers. The objectives of the bill are to clarify key definitions, ensuring that bets made with promotional prizes such as bonus or reward points across clubs and hotels in New South Wales are taxable, that the point at which a bet is made is when it is taxable and that bets placed through non‑cash methods are also taxable. In doing that, the bill confirms that all bets placed on a gaming machine are taxable in accordance with the original legislative intent of the Gaming Machine Tax Act 2001, which is how Liquor & Gaming NSW has understood and applied the Act since its commencement.

The first amendment in the bill relates to the definitions of revenue from a gaming machine and profits more broadly. Since the commencement of the Gaming Machine Tax Act 2001, tax has been collected on revenue that a venue has been taken to have received from bets made with promotional prizes including bonuses and reward points. That approach is consistent with the tax treatment of similar loyalty benefits offered by New South Wales casinos and bets offered by wagering operators who are liable for the New South Wales point of consumption tax. Clarifying those definitions makes it clear that a bet placed using promotional prizes is part of revenue from a gaming machine and therefore part of the calculation of taxable profits. Taxing the use of promotional prizes on gaming machines supports the Government's commitment to reduce gambling harm across the State by making it less financially attractive to venues to offer prizes which encourage more spending on machines.

The gaming machine tax disincentivises the uptake and use of gaming machines by venues. That is consistent with the Office of Responsible Gambling's vision of working towards zero gambling harm across New South Wales and aligns with the measures taken by the Government to reduce the individual and social costs from harmful gambling. The measures include introducing strong gambling advertising restrictions, reducing the total number of gaming machine entitlements in coming years through forfeiture laws and capping the number of gaming machines allowed in high‑risk areas, covering 20 per cent of the State plus the Fairfield local government area. In some places Hurstville is regarded as one of those high‑risk areas.

The second amendment in the bill makes it clear that the point at which a bet is recognised as revenue and becomes taxable is when the player places a bet, rather than when money is inserted into the gaming machine. The amendment updates certain definitions, including the "revenue" definition, to align with terms used in other gaming machine legislation, such as the Gaming Machines Act 2001. That will assist in ensuring a common understanding and interpretation of legislation by taxpayers and the regulator. By clarifying and confirming longstanding tax collection practices, the amendments will also ensure that tax is calculated based on the value of the gaming machine's turnover meter, which increments when a bet is accepted by the machine. Aligning the legislation with the current approach to tax calculation will make it consistent with other Australian jurisdictions, which broadly define taxable gaming machine profits as the total amount wagered or bet less winnings paid or payable. Finally, the bill seeks to clarify the scope of "revenue from a gaming machine" in the Act with respect to bets made by a player in a machine through non‑cash means. For tax purposes, that ensures that regardless of the payment method used to fund a bet, all bets placed in a machine have been and will continue to be part of the revenue from a machine used to calculate tax liability. The amendments put forward provide certainty and assurance to taxpayers of their historical and future tax liabilities.

I could talk further about the Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021, which is only one of the many amending bills that I have spoken about today. In conclusion, the bill proposes amendments to deliver key clarifications to tax payable under the Gaming Machines Act 2001. I mention some of the clubs in my area: Oatley RSL, Mortdale RSL, Penshurst RSL, South Hurstville RSL—a fine establishment—and, of course, Club Central Hurstville. Each of those clubs provides so much for the community. I am not superstitious but when it comes to election night I am. In the past 20 years, every time I have been on the ballot paper as a councillor and as a member of Parliament I have had our victory party at Oatley RSL. Earlier this year my son, little Sammy, was baptised, and we had a lunch at Oatley RSL. As a former director and vice president of Oatley RSL, I can confirm that it does a great job in the local community. It gives so much back to the community, not only on Anzac Day and Remembrance Day. For the benefit of the member for Terrigal, I note it is not only the meat raffles on a Friday night at Oatley RSL.

Mr Adam Crouch:

They're pretty good.

Mr MARK COURE:

They are pretty good. It does so much for the community and gives so much by way of community outreach. It provides venues for community clubs, groups and associations. Oatley Heritage and Historical Society and Oatley P&Cs also meet at the club. Mortdale RSL provides a base for Probus club lunches on a Wednesday afternoon. It is not only Probus and community groups that meet at Mortdale RSL. I also have branch meetings there. All our clubs do wonderful work in our community, including community outreach through a number of club grants announced each year. In particular, I acknowledge Club Central Hurstville. My predecessor in this place and current mayor of Georges River Council, Kevin Greene, is a good guy and a director of Club Central Hurstville. I speak to him regularly about some of the wonderful work the club does in the local community.

That is really just to put on record, in a quick minute or two, some of the wonderful stuff that our local clubs and our service clubs do and have done over many years. To the point raised by the member for Tweed, they do provide a strong backbone to the community. When there are natural disasters, those clubs open their doors. They are a base for many, many people. They are a local focal point that people come to. People love going to their clubs and supporting their clubs because they provide so much to the community. I put on record my thanks and appreciation to all our clubs—not just in my electorate but in electorates right across New South Wales.

Mr ADAM CROUCH (Terrigal) (13:05:11):

I speak in support of the Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021. I note that the Treasurer has been in the Chamber for almost the entire debate. I acknowledge him bringing forward this amendment and also the excellent work done by his staff. I will also touch on the great work that clubs and organisations do on the Central Coast, with the time that I have. The Government recognises the importance of transparency and simplicity for New South Wales taxpayers. New South Wales club and hotel venues offer amazing promotional prizes, such as player reward schemes, under which bonus or reward points can be accrued by playing gaming machines. Player reward schemes have operated since at least the early 2000s and tax has been collected on revenue from those types of bets. The reward schemes, or any of those sorts of marketing promotional activities, can rapidly evolve, and legislation must keep up and provide clarity over time. That is why this amendment, albeit not large, is incredibly important.

The bill reinforces the Gaming Machine Tax Act 2001 by introducing legislative amendments that will provide greater clarity and certainty for taxpayers in the gaming industry by confirming past and current tax collection practices. In addition, gaming machine technology is developing at a rapid pace, and our taxation system must be robust and flexible enough to provide certainty for taxpayers. The Government continues to explore the use of technology such as a gaming card or other non‑cash means to play on gaming machines, seeking to strengthen gaming machine exclusion measures to restrict problem gamblers.

I have spoken in this Chamber many times about the experience of problem gamblers and how important it is that protections are put in place to support not just the problem gambler but also their immediate family, and also their friends in some cases, in light of the effect it has on them. For example, digital wallets are accessible through a smart device—such as a mobile phone—and are becoming increasingly widespread due to the added convenience and security they offer. Almost no‑one goes anywhere these days without their phone; with the QR code check‑ins, it is basically mandatory to carry a phone. So it seems logical that a digital wallet becomes the next extension of that. The COVID-19 pandemic has proven that businesses are able to adapt and pivot quickly with their practices when confronted with new realities like social distancing and the QR codes that I just mentioned. On the Central Coast, it has become second nature. Everybody is used to QR codes now. Obviously, they have become synonymous with providing accurate and timely information quickly.

The proposed amendments in the bill seek to clarify the original legislative intent of the Gaming Machine Tax Act 2001, making clear the meaning of the law as has been understood by taxpayers and, of course, the regulator itself. This will ensure that betting on gaming machines with points earned under player reward schemes or any promotional prize used to play a machine will continue to be taxable for the purpose of gaming machine tax. The bill also clarifies that regardless of how a player accrued credits to play, the point at which a bet is recognised as taxable is when the bet is placed rather than when the money is inserted into the machine. That not only confirms current and longstanding tax collection practices but also seeks that tax collection continues to be when the bet is placed on the gaming machine regardless of the method used to the place that it is bet. That means that revenue calculations are and will continue to be based on the value of the gaming machine's turnover meter.

Finally, the bill is aligned to other government initiatives. These changes will be relevant as the Government continues to work with industry stakeholders on potential cashless payment solutions for gaming machines, with companies like Aristocrat and also Wests in Newcastle committing to trialling the digital experiences for its patrons. I have had the pleasure of being at the Goulburn Soldiers Club with the Temporary Speaker who was previously in the chair, which is an outstanding location. In addition to that, the 39 clubs on the Central Coast make a truly outstanding effort for our region, providing so much support for everybody from one end of the Central Coast to the other, whether it be the Ettalong Diggers club, the Breakers Country Club, the fantastic club at Mingara, Diggers at The Entrance or the Doyalson RSL—

Ms Jodie Harrison:

The Doylo.

Mr ADAM CROUCH:

The renovations going on at the Doylo are outstanding. The member for Charlestown has obviously been to the Doylo as well. It is a spectacular club, which is reinvesting in its community. The community support is huge for our clubs and they get the same in return. The commitment from the clubs to our community is equally as incredible. The ClubGRANTS program is outstanding. Organisations from one end of the Central Coast to the other in all members' electorates have received financial support through that program. In times of natural disaster, we know that the clubs provide additional support to people. Whether it be the Doylo, the Breakers, the Davistown RSL, Gosford leagues club, they are all putting their hands up, wanting to be first to help our community on the Central Coast and surrounding areas, as well as donating to other regions in times of trouble.

I give a big shout-out to Paul Barnett at Mingara. I think I spend most of my life at Mingara. There is always an event going on there, and his team do an amazing job looking after their community. They have upgraded the club significantly, but that is nothing compared to the amount that organisations like the one at Mingara and others give back to our community. It is really important to acknowledge the great work that clubs do across New South Wales. I also give a shout-out to Phil Walker, who is the chair of clubs 39 on the Central Coast.

Mr Matt Kean:

A great man.

Mr ADAM CROUCH:

He is absolutely a great bloke. This year they are providing funding to RYSS. Every year ClubsNSW Central Coast, which has 39 clubs on the Central Coast, looks at an event or an organisation that would benefit from funding. I give a big shout-out to all the clubs on the Central Coast. I thank them for all the work they do. I acknowledge the Treasurer and his team for introducing the Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021. It is an excellent piece of legislation. I commend the bill to the House.

Mr MATT KEAN (HornsbyTreasurer, and Minister for Energy and Environment) (13:12:21):

— In reply: I thank all members for their contributions to debate on the Gaming Machine Tax Amendment (Promotional Prizes) Bill 2021. The bill represents a minor yet significant change to ensure that the original legislative intent of taxing all bets placed on a gaming machine is captured under the legislation. It clarifies, modifies and confirms longstanding tax collection processes. We collect taxes from promotional prizes such as reward points, and this amendment confirms that bets placed in this way have been, and will continue to be, taxable. I commend the bill to the House.

The ASSISTANT SPEAKER:

The question is that this bill be now read a second time.

Motion agreed to.

Third Reading

Mr MATT KEAN:

I move:

That this bill be now read a third time.

Motion agreed to.

The ASSISTANT SPEAKER:

I will now leave the chair. The House will resume at 2.15 p.m.