There are plenty of things in life
that make you angry and a tax hike is usually one of them. However, sin
companies making outrageous profits from heavily protected monopoly or
duopoly gaming licences is even worse, so this commentator is delighted
to see the Victorian Government clobbering the poker machine industry
with a tax increase that will bring in an extra $45 million a year.
Kennett Government did some very good things and some very bad things
when it came to privatisation but getting full value for lucrative
gaming licences was not one of its strong suits.
Kerry Packer’s PBL bought Crown Casino in an all scrip deal unveiled in December 1998 that valued the business at $1.6 billion.
Crown shareholders were issued with 90.4 million PBL shares which at
the time were worth $555 million based on PBL’s share price of $6.14.
Add to that the $1 billion in Crown debt and you got the $1.6 billion valuation on a complex that cost more than $2 billion
to build. However, PBL shares have since soared to last night’s close
of $14.97 so those same 90.4 million PBL shares issued to Crown
shareholders are now worth $1.35 billion. PBL and its $7 billion
controlling shareholder can easily afford an extra tax bill of $7
million a year.
Tabcorp was particularly hard hit yesterday
because the increase in the poker machine levy from $1,533 to $3,033
will cost it $21 million a year. Sure, this will be tax deductible so
Canberra will share in the pain but the stock tumbled 70c to $15.92
yesterday and lost a further 9c to $15.83 in a weaker market this
morning as it hit a new five-month low.
However, don’t feel too
sorry for Tabcorp, the $8 billion giant that was floated by the Kennett
government for just $675 million or $2.25 a share in August 1994. Then
opposition leader John Brumby, the man who announced yesterday’s slug,
was accused of sabotaging the float with threats to introduce new
competition but even the top of the government’s selling range was only
$2.70 a share.
Tabcorp has been such a cash machine it has paid
out about $5 a share in fully franked dividends over the past decade
and the first CEO Ross Wilson walked out in 2002 with a shareholding
showing gross profits of almost $60 million.
Then you have the
incredible greed being shown by the four trustees of Tattersalls,
fellow duopolist with Tabcorp in the non-Crown Victorian poker machine
market, who want a $100 million payout as part of the $2 billion
Tattersalls float. To take action in the Supreme Court just highlights
the obscene profits and greed of those waxing fat off Victoria’s
legions of problem gamblers who can least afford to enrich the pokies
Tattersalls were given their pokies licence for free
in 1991 – arguably the greatest act of incompetence by the Cain-Kirner
governments – and they are an insidious and secretive organisation that
sponsors everything that moves to distract attention from the financial
pain they inflict on the community.
To sum up my reaction in two words: sucked in.