Title: ENVIRONMENT, COMMUNICATION, INFORMATION TECHNOLOGY AND THE ARTS: Interactive Gambling (Moratorium) Bill 2000: Discussion

Date: 25 August 2000

Committee: ENVIRONMENT, COMMUNICATION, INFORMATION TECHNOLOGY AND THE ARTS

Reference: Interactive Gambling (Moratorium) Bill 2000

Place: Canberra Questioner: CHAIR; Bishop, Sen Mark; Lundy, Sen Kate

Responder: Mr Humphries; Mr Clark; Mr Gard

Page: 1 Proof: YES Database: Committees Considering Bills

Source: Senate

CHAIR —I welcome the representatives of the ACT, Northern Territory and Tasmanian governments to the table. The committee has before it your submissions. Do you have any alterations or additions you would like to make to your submissions?

Mr Humphries —No.

Mr Clark —No.

Mr Gard —I will be seeking permission to table an appendix to our submission, parts 1 and 2.

CHAIR —Please do.

Mr Gard —I will need to refer to it before I table it.

CHAIR —That is okay. If you provide it to the staff, they can photocopy it and we will all have a copy by the time you refer to it. Would you like to make an opening statement? I believe the Northern Territory and the Tasmanian representatives wish to be dealt with first, because they have a flight to catch.

Mr Clark —Thank you very much and thank you to my counterparts at the table. My preliminary remarks go to two parts. The first is some comments on the policy behind the bill, and then I would to turn some specific features of the bill. To begin with, it seems that in many ways we are in the same position that the states and territories were in some five years ago when we first started looking at Internet gambling—recognising that the risks of problem gambling, the increased availability of access and these sorts of measures led to the states looking very carefully at what their response would be. In essence, we have two policy options. The first is a total ban on all interactive gambling.

The second is to develop local, competitive sites that meet the highest possible standards for socially responsible gambling. The states and territories formed the view some five years ago that it was not realistically possible to block access to offshore sites. At this stage, I would suggest I have seen no new evidence that challenges that conclusion. Indeed, the CSIRO agrees that, while it is technically possible to block access, it has significant commercial and technical consequences. In effect, the costs outweigh the benefits. If so, the only option remaining is to develop local globally competitive sites that deliver gambling products to the most socially responsible standard.

As I suggest in my written submission, interactive technology enables socially responsible gambling measures to actually be built into the products. For example, you will have heard of betting limits, self-exclusion and the availability of self-diagnosis for problem gambling. No existing physical world product offers you these benefits. As a regulator, I would in fact prefer that all gambling was conducted on the Internet so that I could have access to those sorts of benefits.

In short, the fact is that we feel we should manage the change presented by the new technology rather than try to resist it. In this light, it is suggested a moratorium is misconceived. All it has done is retard the development of additional player protection measures by Australian regulators. It has made the task of developing a local globally competitive industry that much harder.

As I mention in my submission, we have a basic policy choice to make now. If we want no interactive gambling services to be provided to Australians by Australians then local consumers will access offshore poorly regulated sites. If it is preferred that Australians be able to access the best regulated sites in the world then an environment should be created for local operators to develop and improve their standards. This bill does not do that, with respect.

I now quickly turn to the bill. I would suggest that there should be no retrospective effects. The operation of the clause is unclear when one compares the terms of the bill with the public statements that have been made by the Commonwealth. I would suggest that the restrictions on current operators are too stringent. Operators work in a globally competitive market which requires the development and enhancement of new products. They cannot survive if they are simply going to be frozen to existing bet types or to existing sports types as suggested by the bill. The offshore restrictions have been commented on before.

Finally, I would observe that it may be somewhat unfair to adopt a criminal approach to stopping this activity and thereby avoiding paying compensation to operators who in good faith have invested millions of dollars to fulfil what has been a lawful activity. Thank you for the opportunity to make those statements.

Mr Humphries —As ACT Treasurer I have responsibility in the ACT government for the ACT legislation covering Internet gambling. I want to make a brief statement which I suspect covers a number of the issues which have already been raised in earlier submissions and comments today.

It has been our view, as has been suggested by the Northern Territory, that a choice was faced some time ago when looking at this area as to whether there should be a comprehensive attempt to properly regulate an area of emerging activity, or to attempt to push the activity out of sight and out of the purview of Australians altogether. The ACT government reached a view quite early on that the latter of those courses of action was technically impossible, outside certainly our power and probably outside the power even of the Australian government, and that it was important for that reason to develop a comprehensive legislative arrangement to ensure that interactive gambling, if it occurred, occurred in a properly regulated way.

We assumed that Australians, for example, would prefer to bet on an Australian site as opposed to a site based overseas, and that if we could provide well regulated effective sites, sites that offered protection, sites likely to ensure that Australian gamblers received their winnings if they won, sites that were otherwise appropriate in all respects, that Australians would use those sites in preference to overseas ones. We spent a number of years developing our interactive gambling legislation which was passed last year. When we first put the idea of the legislation on the table in 1998 and outlined the direction we hoped the legislation would take, there was no public reaction at all to that—no submissions from the public, no suggestions or comments or letters. We proceeded to bring forward the legislation and enact it and it received, as I recall, unanimous support on the floor of the Legislative Assembly. In fact, there were many supportive comments to say that this was the appropriate way to deal with an emerging area of interest. We have also, in that period, had support from the federal government for the approach being taken to develop a strong, effective regulatory regime around this activity.

So, we were disappointed and a little bit dismayed to see the federal government late last year, early this year, determine that it would take a different approach and would attempt to completely—certainly in the short term—put a freeze on any further development of such legislation, of such regimes, and potentially in the long term attempt to ban Internet activity altogether.

We believe we have met the federal government's earlier requirement to develop strong, effective regulatory regimes. We believe the ACT legislation does do that. I want to table in a little while, for the benefit of the committee, the process that needs to be undertaken to obtain an Internet gambling licence in the ACT. This document, three or four centimetres thick, is the information which an applicant needs to address in order to be able to successfully obtain a licence in the ACT. Although the legislation was enacted last year, we have only some 12 months later been able to register the first of our applicants because of the extensive processes of probity checking, competency assessment and other thresholds. It has taken time to have those particular thresholds met by the applicants, and we had the first of the applicants actually licensed to operate in the ACT in about May of this year.

Senator MARK BISHOP —How long does that process take from beginning to end? Mr Humphries —In this case, it took well over 12 months because it was extremely rigorous.

Senator MARK BISHOP —Is that the norm? Mr Humphries —These are our first applications, so it is hard to say. In subsequent years, if our legislation is allowed to stand, it may be that that period would be slightly shortened, but we would expect that that kind of process would be the norm in most cases in the future. Having made such a large investment in getting the process right, we have come to the position that it is not appropriate to attempt to now undo that process and to go back to a position that says that there should not be any regulation of this activity except, potentially, to outlaw it altogether, to prevent it operating at all within the Australian context.

The more important point I want to make about this is that it sends an extremely unfortunate signal about Australia's view about new technology and our capacity to work with it and to grow with it. We were involved to some degree in the earlier debate about the attempt to regulate pornographic sites or offensive sites on the Internet. I am also a member of the ministerial council on censorship which was engaged in that debate about whether or not it was appropriate to regulate the Internet. We expressed considerable misgivings about the legislation passed in the middle of last year that provided for certain sites to be taken down on take-down orders if they were deemed to be offensive and inappropriate. I understand that of the 30 million offensive sites from around the world available to Australians, approximately 100 have been taken down under that process—maybe a few more since the last time I checked, but of that order. It seems to me that that exercise has proved comprehensively that we have little or no chance of regulating that kind of Internet activity. We did not in that particular case. I do not believe that we have any chance of doing so in the case of Internet gambling either. The signal that it sends to Australians is that somehow we can control this new medium in a way which allows governments or communities to say, `We like this,' or `We don't like that,' and `Let's choose which it is that we will allow people to get access to.' It is not a realistic position to take and, at the end of the day, I believe that the net outcome of this exercise will be to prove that we do not have an effective way of dealing with this process.

I understand the government's objective in putting forward a 12-month moratorium on interactive gambling was to allow research to be done on whether such a ban was technically possible. I understand the issue was first raised late last year—around December—as an issue that the federal government was going to be looking at. I expect that if the legislation is approved by the federal parliament and, in due course, is given royal assent, it would come into effect late this year—I assume that is approximately the timetable we are talking about. It seems to me that we have got the 12 months research time already under our belts to determine whether the whole purpose of this exercise is achievable—that is, whether a ban is in fact technically achievable at all. I suspect that if we do not already have the answer to that question on the table in some form from the government, what it tells us is that the answer is that it cannot be done. If it could be done, I think we would have been shown that already, with what we know about the Internet.

As I have said, the ACT government's view is that this is sending an unfortunate signal about the nature of the Internet and it cuts across a great deal of work already done, providing for an effective regime around Internet gambling, in a number of states and territories.

CHAIR —Thank you very much.

Mr Gard —I do not know whether you want to take advantage of the opportunity to ask Mr Clark some questions now because he has to catch a 4 o'clock flight. I have no time constraints.

CHAIR —Perhaps you could give a brief overview, because I think a lot of the questions will be common. It takes me about seven minutes to get to the airport, Mr Clark.

Mr Clark —Thank you very much, Senator!

Mr Gard —I am the senior adviser to the Deputy Premier of Tasmania, who is also the Minister for Racing and Gaming. Racing and gaming is my major portfolio area. The government thanks you for the opportunity to present this submission. It is well known that Tasmania is regarded as a regional and rural area of Australia, and for that reason we have, in our current term of government, been looking for new ways to attract investment to our state. As you would know, Tasmania was a major beneficiary of the Telstra first tranche sale, through the efforts of Senator Harradine. In line with that windfall, the Tasmanian government considered that it should be pursuing new opportunities in the are of information technology. Prior to coming to government—

Senator MARK BISHOP —So gambling development in Tasmania is Senator Harradine's problem. Is that your argument, Mr Gard? Mr Gard —No, the Telstra money for the intelligent island. Prior to the Labor government winning office in Tasmania in 1998, the previous Liberal government amended the deed to allow Federal Hotels to develop Internet gaming. Since that time, up until its launch early this year, that company has spent some $14 million developing the site it is now operating.

When the Labor Party took government in Tasmania, we were approached—and I am not sure what the catalyst for it was—by a number of companies who were interested in coming to Tasmania and applying for a licence to operate Internet gaming sites. At that time, our legislation did not allow anyone to operate Internet gaming sites beyond that which was granted to Federal Hotels. Subsequently, we developed legislation which would allow an unlimited number of licences to be issued.

As of today, as a result of the changes in the legislation, there have been five conditional licences issued. There have been two NOILs issued—that is, Notice of Intention to Licence—and we have a number of international organisations either wishing to move their existing operation to our state, because of its tough regulatory regime, or wanting to start up new businesses with a Tasmanian gaming licence. The Tasmanian government regards the issuing of these licences and the attraction that it has for offshore operators as a positive for the state's economy. For instance, it has been indicated to us by at least two current licence holders that their expectations for infrastructure development in Tasmania would result in expenditure in the order of $100 million to $300 million in the medium term. That, in itself, indicates the kinds of benefits that can come from this particular activity.

For a lot of reasons that have already been said today, I have been instructed to reiterate that the Tasmanian government remains implacably opposed to a moratorium or a ban on Internet gambling. It considers that the Tasmanian gaming licences are issued under the strongest possible conditions of probity, and it expects that only top-class respected companies and/or individuals will apply and be granted those licences. The Tasmanian government also asserts that the regulations in place in the Tasmanian jurisdiction are exponentially more onerous that those which apply to terrestrially based casinos, for instance. A minor gambling at a terrestrial casino in Tasmania attracts a fine to the organisation in the order of $2,000. A minor accessing an online gaming site, if provided a service, faces a fine of not less than $60,000 for a first offence and a fine of not less than $100,000, plus two years jail, plus loss of licence for a subsequent offence. The Tasmanian government considers that the ability to control gambling online is enhanced by our regulations regarding online gambling in a far more comprehensive manner than is able to conducted in relation to terrestrial casinos. Earlier this year, and for the benefit of Hansard, the original, the first Ministerial Council on Gambling, was held on 19 April 2000 in Canberra, and the chair was Senator Jocelyn Newman.

On 17 May this year the state government wrote to Senator Alston and Senator Newman offering to sit down with the federal government and the states and territories to develop a national code of conduct to apply to Internet gambling. On 19 May 2000 we received a letter from the federal government inviting the Tasmanian government to have input into the development of moratorium legislation. Ten minutes after we received that letter and before we had time to respond to it, we received a press release from the federal government, from Senator Alston's office, announcing a moratorium.

Our original letter of 17 May 2000 was eventually replied to by Senator Newman late June or early July—I cannot remember the date—long after we made the offer and long after the federal government announced its intention to impose a moratorium. Earlier, you asked questions of some of the licence holders about whether they were given an opportunity for input into the legislation. The Tasmanian government was contacted very early in August to submit to NOIE its views on the technical, social and economic impacts of imposing a moratorium and ban. For reasons beyond the state government's control that deadline for that submission was not able to be met by 14 August and, in fact, the Treasury in Tasmania sought an extension for that submission. We were granted an extension but before NOIE received our submission the legislation was circulated. So the Tasmanian position on the moratorium legislation was not taken into account when we were promised it would be, and I have been asked by my minister to very strongly put that the government did not appreciate the fact that we were not able, despite being given an extension, to have input into the legislation.

The government is committed to ensuring an appropriate and regulatory framework which facilitates gain but recognises the government's social responsibilities. In terms of the social responsibilities we have a community support levy which is funded from profits of gaming machine operations in hotels and clubs. Twenty-five per cent of that fund goes to the development of community and clubs in the community, 25 per cent goes to social welfare groups, and 50 per cent goes to the development of problem gambling programs and studies and all the things that go with that.

I have to say that Tasmania at the moment, on the figures that we have, has a fifth of the national average of people regarded as having a serious gambling problem. Somewhere around 0.44 per cent of the Tasmanian population has a serious problem with gambling. It expands out to about 1.2 per cent when you take in those with a lesser problem.

The Tasmanian government believes that this is a direct result of our strong regulatory regime—a direct result. We have caps in venues and we have a statewide cap on gaming machines. The Tasmanian government does not believe that simply issuing licences for Internet gambling would result in an increase in problem gambling. In fact, the government is not aware of any evidence that has been presented to this proceedings, nor is there any that I have heard today or any that has presented to the Productivity Commission or the Netbet inquiry which purports to show, or does show, in fact, that Internet gambling is, or will lead to, an increase in problem gambling.

Senator MARK BISHOP —Mr Gard, to stop you there, does Tasmania have access to gambling machines outside the casinos in Hobart and Launceston? Is it widespread as it is, for instance, in Melbourne?

Mr Gard —Yes. We have game machines up to a cap in hotels and a different cap in clubs. I always get confused but currently it is 35 in hotels and 30 in clubs. In January 2001, the upper limit is reached when there are 40 in clubs and 35 in hotels. It could be the other way around, but that is the cap.

Senator MARK BISHOP —Right. So there are no restrictions outside the two major casino complexes?

Mr Gard —Only in terms of the cap that has been put in place through legislation.

Senator MARK BISHOP —Yes. Thank you, Mr Gard.

Mr Gard —I think I should stop there.

CHAIR —Thank you.

Senator MARK BISHOP —Mr Gard, you have already answered the first question. Perhaps Mr Humphries and Mr Clark could advise us if and when the Commonwealth contacted your respective governments for input into the bill under discussion? Mr Humphries —The contact we had on the bill was very similar to the contact that was had with Tasmania. It was about the same time. I am not sure exactly—about 10 minutes. It was about the same time that the announcement was made that we received correspondence inviting us to be involved in the development of legislation. Of course, we were aware earlier of the Commonwealth government's stated intention to consider this issue. We had thought that, after the ministerial council meeting on gambling, perhaps they were going to step back from that, but when we got their letter, we realised that was not the case.

Senator MARK BISHOP —Does the ACT government regard itself as having had effective input into the bill?

Mr Humphries —Since the original offer was put on the table at the time that Mr Gard made reference to it being put on the table, we have made some further comments to the federal government about the legislation. We did not believe the legislation was desirable or effective. Those views have not been taken up by the federal government. To the extent that we have put an issue on the table that has not been taken up, I suppose we have not been properly consulted, but at least we have had an opportunity to put that view before the legislation was actually produced.

Senator MARK BISHOP —Did you have the opportunity to put those views prior to the drafting and tabling of the bill on Thursday, 17 August in the parliament? Mr Humphries —Yes. We were not shown a copy of the bill in draft form or anything of that kind prior to it being tabled. We were asked about our input on the concept and we made comments in writing on the concept.

Senator MARK BISHOP —When were you asked for that input and when did you respond?

Mr Humphries —I could not tell you without getting some advice.

Senator MARK BISHOP —Give us a ballpark figure, Mr Humphries, because Mr Gard was very specific.

Mr Humphries —I will seek some advice on that.

Mr Gard —Can I just add that we received a copy of the bill the day after it was tabled in parliament from a licence holder.

Mr Humphries —I understand that there was an indication from NOIE that they wanted a view about six weeks ago. I am not quite sure what form that took. But we responded about three weeks ago to that initial approach, seeking views from NOIE.

Senator MARK BISHOP —So you were asked six weeks ago and you responded three weeks ago?

Mr Humphries —Yes.

Senator MARK BISHOP —You are the only government, company or industry body that has had such degree of contact, Mr Humphries. Would you mind taking that question on notice and formally advising us in writing, because I accept the advice that you have given us and your adviser's advice. But I find it odd that only the ACT government received notice of intention six weeks ago and was able to respond three weeks ago. Perhaps you could take that on notice and advise us in writing.

Mr Humphries —I will take it on notice. I am relying on our recollections rather than what we actually have in front of us.

Senator MARK BISHOP —I understand that. Mr Clark, can you answer the question as well?

Mr Clark —I am unable to say whether an approach was made to the Northern Territory government or to a central agency. I can say that, as far as my department is concerned, we did not see any request for input. I have approached officers from NOIE regarding input. In particular, when the press release was made and the announcement was made that new services would be affected, I sought clarification from officers of NOIE informally as to what `new services' actually meant. They were unable to give any advice. Effectively, the first time I saw the bill and its effect was when it was tabled.

Senator MARK BISHOP —Thank you, Mr Clark. The next question is to all three governments again. Have you had any complaints or advice from Commonwealth regulatory agencies like the AFP or the appropriate surveillance agencies within Treasury as to, firstly, the operation of your legislation and, secondly, the behaviour of firms issued licences subject to those regulations?

Mr Clark —We have established contact with a number of Commonwealth agencies, and AUSTRAC is the one that immediately comes to mind. AUSTRAC has not formally advised us of any concerns about our legislation. As far as the operations of operators, I understand AUSTRAC has conducted an audit of some of our operators. I am not sure what the result of that is, Senator. It lies in AUSTRAC's hands. Nevertheless, their concern, of course, would be money laundering.

Senator MARK BISHOP —Yes.

Mr Clark —That concern is one we entirely share. I might add that, in discussions with AUSTRAC officers over some time now, we have attempted to work towards a new scheme. As you would be aware, the Financial Transactions Reporting Act was drafted long before the Internet became live, and it adopts a very prescriptive approach to its operation. What we have tried to do is to find some mechanism whereby the objectives of that act can be migrated over to an Internet environment and still work. To answer your questions directly, no, I have had no direct contact from Commonwealth agencies expressing concern about the operation of any Northern Territory operators.

Senator MARK BISHOP —Mr Humphries, have you had any advice or complaint from the appropriate Commonwealth agencies—they being the AFP or AUSTRAC—as to the effectiveness of your regulatory regime or concerns as to the operation of firms which have been issued licences in your territory?

Mr Humphries —We have had no expression of concern from any of those agencies you referred to. Of course our legislation produced the first licensees only a few months ago, so it is not surprising that they would not have had any comments. I might point out that the AFP, as the ACT's police force, has been involved in the process of vetting our applicants. So it has been involved in one sense already in the process, and as far as I can tell it endorses that process.

Senator MARK BISHOP —Anything you would like to share, Mr Gard?

Mr Gard —No, not to my knowledge, but AUSTRAC is specifically mentioned in the legislation, and its roles in both the probity process and the tracking of financial transactions are outlined in our legislation.

Senator MARK BISHOP —I have one final question for you, Mr Gard. You mentioned there were five conditional licences and two notice of intent to licence. Are all seven of those intended to licence interactive gambling firms solely for offshore gambling purposes or also for within Tasmania or Australia? Mr Gard —If you leave aside the Federal Hotels Wrest Point licence, which is under a separate deed of arrangement, the Tasmanian government felt it was pointless to exclude Australians and Tasmanians from access to Australian based Internet sites, because they would simply go offshore. The government felt that, by excluding them from Australian sites, they would be excluding Australian Internet gamblers from regulated sites and forcing them offshore.

Senator MARK BISHOP —So, for example, a punter in Western Australia or Queensland can access a licensed site out of Tasmania to engage in interactive gambling?

Mr Gard —Theoretically—in the case of the Southern Cross casinos, which is Wrest Point and the Launceston Country Club—those two sites are not allowed to take clients from Tasmania. I am not sure whether it is Australia, as well, but I think it is from Tasmania at least. They have not sought to have that changed despite the fact that their licences issued under the Gaming Control Act do allow it. But I might add, a number of the licence holders that we have issued licences to have indicated to the Tasmanian government they are not interested in the Australian market because it is too small to worry about.

Senator MARK BISHOP —Okay, so the same argument as this morning, but they do have the right to offer that service to Australian residents?

Mr Gard —Yes.

Senator MARK BISHOP —Thank you, Mr Gard.

Senator LUNDY —Senator Bishop has covered the questions I was going to ask about at what point were you consulted, but I wanted to ask Mr Humphries some questions about potential liability facing the ACT government. We heard evidence this morning of a party that you had issued a licence to was now contemplating and pursuing their legal options about whom they, in fact, sue if the conditions of that licence are not able to be fulfilled in the conduct of their business. What advice has the ACT government sought and received to date with respect to your liabilities as a result of the success, perhaps, of the coalition's moratorium bill?

Mr Humphries —I can only say that I have received very general advice that it is possible that some action may lie against us on the basis of incapacity to deliver or to honour the licences that have been granted already by the ACT. It is very unspecific and I could not say that there is anything that has been sought from the ACT government solicitor, for example, that would substantiate that, but the possibility has been alluded to in advice to me.

Senator LUNDY —Yes. And it would be particularly interesting given what we have just heard about the point at which you are actually consulted about the potential federal ban. What about other state and territory governments—the Northern Territory and Tasmania? Can I ask the same question to you?

Mr Clark —I am unaware that any formal legal advice has been sought on this issue. But as a matter of practice, since the announcement in April we have required an indemnity to be issued by any operator in respect of any action to be taken by the Northern Territory government in respect of their licence.

Senator LUNDY —Okay. Tasmania?

Mr Gard —As I mentioned earlier, the only licence holder at the moment that has indicated that they would be suffering financial loss as a result of this legislation is The Federal Group. They have indicated that they had to spend in the order of $14 million developing their site. They have said publicly that should this ban proceed they will sue. The Tasmanian government is on record as saying that they will do all they can to support the Federal Hotels' action to recoup their losses.

Senator LUNDY —Mr Gard, on my information there are a number of interactive gambling licences issued in Tasmania for services that are not yet operating. Have you had any indication from those licence holders about any legal activity they may contemplate even though they have not started operating their business online as yet?

Mr Gard —No.

Senator LUNDY —But that is something I am sure you would be anticipating.

Mr Gard —Yes, I am sure we would be anticipating.

Senator LUNDY —Mr Clark, I just want to refer to the comment you made about the fact that the states were really at this point of contemplation some five years ago when the Internet was in fact emerging in a commercialised environment. I guess the question is: having determined at that point that it was not feasible, and having proceeded down the path you have, what issues are you able to offer to this committee as to why consistent legislation, or a consistent regulatory environment across the states, has not yet developed?

Mr Clark —I actually challenge that a consistent regulatory framework has not developed across the states and territories. It is true we do have areas of difference and tax rates is probably the key one. Since 1995—and I speak as a member of the national working party looking at gaming, as well as the national working party on interactive wagering—the commonality between the states far outweighs their differences. The draft national model was developed in 1997—I think that was when we put it out—and you cannot see better genuine evidence of a commitment to responsible gambling practices than that model. I think it has been adopted by almost every jurisdiction. What has happened is that each jurisdiction has learnt a little, and we learn from each other. I can give you two examples from the Northern Territory. The first was the $500 a month limit that you would have heard Lasseters mentioning in their evidence. That was not required by the model, it was something that we developed when we were working through the licensing process. The second is the requirement that filtering software be available from the site—Netnanny, Surfpatrol or whatever it might be. They were two that we have developed. I can say quite shamelessly, I will steal any good ideas from any other jurisdiction. That dynamic is how we have learnt. Certainly we support core national principles, and I think they have been adopted by everyone. If anyone can go further, well and good, and we certainly encourage them to do so.

Senator LUNDY —Mr Gard, could I ask you what your view is of a federally coordinated framework for legislation that allows the further development of state based laws in relation to online gambling? What is Tasmania's view on that?

Mr Gard —Since the ministerial council the government, through my minister, has offered on numerous occasions to sit down with the federal government and the states and territories to develop a nationally accepted code of practice, if you like—a regulatory model. We remain committed to that and the industry itself is committed to that. The industry supports what we want to do. As Mr Clark says, we are willing to pinch anything we can to improve our legislation.

I might just add that I would imagine, as in Tasmania, the legislation of the states and territories is a moving feast, because the Internet is a moving feast and you have to be flexible enough to be able to make those changes to take account of the new developments that are taking place hour by hour, if you like. To not do that, and to pass legislation to disallow us that right, sends the wrong message to the global community. We are telegraphing a fortress mentality, if you like.

Professor McMillen alluded to 1903. For God's sake, we are in the year 2000; we do not want to visit those days again. We need to be part of the global community. Tasmania wants to be part of that global community. For the government to propose a law that retrospectively makes illegal something that is currently legal—and let us remember, there is no moratorium in place at the moment, it is only a proposal for a moratorium—is essentially a dangerous misuse of executive power. To make something that is currently legal, illegal and something that will remain illegal, offline would make us a laughing-stock offshore.

Senator LUNDY —In terms of scope, this morning, I think it was Tatts.com, indicated that they felt it was an unintended consequence of the drafting of this legislation that the offline lotteries would be held stagnant and not allowed to develop new offerings and services. Have you had the opportunity to look at the scope of the bill in terms of what types of services it captures? If you have an understanding of that unintended consequence I would appreciate your opinion on it.

Mr Clark —Firstly, I note that it explicitly excludes telephone betting, which is probably the great irony because that is the most prominent form of interactive technology that we have and it has been used for betting for 30 years. However, where this bill does restrict development, to use the examples given in the explanatory memorandum, say, with wagering sites, is to restrict you to current bet types on current sports. The point I need to make is that this is a dynamic industry. You may recall the Tattersall's sweeps, the old, very large raffles where we had to tear off tickets, and those sorts of things. The fact is that products come, they get tired, they are replaced—and that is an ongoing process. This bill would, at least interactively, purport to limit them to that.

I take your point about Tatts.com. What we are seeing now with the Tatts card or registration and these sorts of things are all technically online because, even though it is fed through your local newsagent, it ultimately goes back to the computer in Melbourne. It may be an unintended consequence of this bill, but an inability to actually go with technical developments must have a significant effect on current viability. As I say in the submission, these are the very people we will be looking to to deliver the socially responsible gambling that we are all looking for, yet you are actually affecting their commercial viability. So if, at the end of the time, we decide a ban is not feasible, we will suddenly have to resuscitate them and get their viability back up to get that added social element that we are looking for.

Senator LUNDY —Further to that point, we heard from previous witnesses—I do not know if you were present, but if you were I would appreciate your comment—that a moratorium legislating that the status quo remain for a period of nine months from now would have the effect, because that Internet space is so dynamic, of killing off that industry as opposed to just holding it still, because it is relative to the pace of growth in the Internet industry. Do you agree with that position? Mr Clark —I entirely agree with that position. It is a dynamic area, it is a dynamic industry and, ultimately, we have to be globally competitive. We do not know how, five or 10 years down the track, Australian operators will stand in the global marketplace. We need to do as much as we can now if we want them to do what we want them to do to develop that market share. This is not status quo; this is actually retarding normal commercial development and therefore it is restrictive.

Senator LUNDY —What would 12 months be in Internet years?

Mr Clark —Exactly right!

Mr Gard —About a week.

Senator LUNDY —That is right. I was just interested in your view on that. Mr Humphries, with the ACT government seemingly being privy to this a little bit longer, have you done an assessment as to the impact on your net revenues as a government if not just the moratorium goes through but the whole Internet gambling presence in the ACT ceases to exist as a result of the passage of this bill? Have you done those assessments to your revenues?

Mr Humphries —No, we have not. There is some revenue from yearly fees associated with the issuing of the licence. The yearly fee for the first year for each of our licences is $200,000 and I think it is $100,000 for each year thereafter. It sounds like a lot of money but the cost of implementing this application process is quite high, as you can imagine. There is a significant amount of money at stake, but it is not a matter that we have tried to count up at this stage.

Senator LUNDY —Tasmania—I know you mentioned anticipated costs to the state earlier, but what about the actual licence collection?

Mr Gard —The licence fees, depending on the endorsement, range from $200,000 to $300,000 per annum, so a licence holder with five endorsements theoretically could pay $1 million to $1.5 million in a year in licence fees. That is for virtual gaming and table games. Gaming providers offering sports betting and fixed-odds wagering are also required to meet a gaming and wagering guarantee of $1 million or one per cent of annual turnover, whichever is the greatest. That is a guarantee, so it is not really revenue. I might add that the revenue projections in our first year of having these services available were so infinitesimally small that they were not included in our forward estimates for the budget, so we are not talking about big money in terms of revenue at the moment, other than for the licences themselves.

Mr Clark —For the Northern Territory, the revenue has not been the prime motivator, in any way, shape or form. We get the infrastructure developments. It is all very well to ask Telstra to lay your cable out into rural and regional Australia, but you have to have the content for them to recover their investment. With the development of these gambling sites, we have been able to put traffic on that cable and we have been able to encourage the growth of an IT infrastructure by way of service people and others who can encourage the development of an IT facility for the Northern Territory. Those wider benefits are far more important to us than any tax stream directly from the licensees.

Senator LUNDY —I thought it was important to explore the various interests, given that invariably people come to the table with their own.

Mr Clark —Thank you.

Senator LUNDY —I am very interested in the ACT and the Queensland government legislative model for the sharing of revenues between the different jurisdictions. Mr Humphries, are you able to explain what I understand to be some sort of tax revenue sharing formula that seeks to address in some way some of the concerns the larger jurisdictions have that you are drawing consumers from their jurisdictions and hence depriving them of revenue?

Mr Humphries —I cannot tell you very much about that, I am sorry.

Senator LUNDY —I am referring to regulation 12—the calculation of interactive gambling tax.

Mr Humphries —Regulation 12 of whose legislation?

Senator LUNDY —Your interactive gambling regulations.

Mr Humphries —We have not developed that as yet, so I cannot comment on what direction might be taken with that.

Senator LUNDY —What is their status?

Mr Humphries —What is the status of it?

Senator LUNDY —Yes. vMr Humphries —My understanding is that the regulation has not been made, so the issue has not been pursued at this stage, but I am happy to take that issue on notice and get back to you.

Senator LUNDY —Yes, if you could clarify that for me that would be useful.

Mr Humphries —Sure.

Mr Gard —Chair, could I explain the document I have put up? By way of background, and referring to the issue of player protection measures, the specific player protection measures included in our state's regulatory framework are: a prohibition on credit betting except for trading accounts; the use of player self-limits and self-exclusion mechanisms; the requirement for player registration for Internet gaming activities; and a prohibition on the advertising or access to simulated gaming through public venues that have computer terminals, such as Internet cafes, libraries and so on. The document that I have put up as an appendix to our submission is, I stress, a draft document. It has only just gone out to the licence holders for their comments, but it will give the committee some idea of the sorts of issues that are being addressed by the Tasmanian government. Earlier, Professor McMillen made comment about New South Wales and Queensland working on some kind of draft regulatory model to deal with player protection, and I just wanted the committee to know that Tasmania is also addressing that issue in a very positive manner. This will give you some idea of what we are proposing to do.

CHAIR —Thank you, Mr Gard. Mr Humphries, you are going to table something as well—is that right?

Mr Humphries —Yes, if I may. I want to table the instructions for applicants document. I might also just correct the record slightly. I indicated that our legislation on Interactive Gambling Act was passed last year. In fact it was in passed in 1998.

CHAIR —Thank you very much. I thank the witnesses for appearing.