Will the bank trick the favourite bettors? Those positively un-Australian people who gather around the Reserve Bank Board table every Melbourne Cup Day are the kind of narks who would just love to upset favourite backers so take the short price about a half a percent fall in interest rates at you peril. Last month they surprised the market by going for a full one percent reduction when the half was the odds on pick and maybe they’ll do it again. Here’s the latest latest Crikey Indicator on the November decision:

What a difference a day makes. If you keep making a different selection I suppose you will end up with a winner but it can be a bit confusing for the readers. David Uren, Economics correspondent for The Australian on Monday 3rd November 2008:

RBA may hold back on rate cut

EXPECTATIONS that the Reserve Bank will cut official interest rates by 50 basis points tomorrow could be dashed, with a chance emerging of a smaller reduction or even none at all because of the inflationary effect of the Government’s economic stimulus package.

David Uren, Economics correspondent for The Australian on Tuesday 4th November 2008

Reserve Bank to cut interest rates as housing prices crash

THE biggest fall in house prices in 30 years and manufacturing output dropping to recession levels will leave the Reserve Bank board with no alternative but to cut interest rates again today.

Don Burke a Worthy Nominee. As president of the green sceptics’ group, the Australian Environment Foundation, Don Burke had probably already done enough to win a nomination as the Crikey Audacious Lobbyist of the Year without taking a gig with the Gunns pulp mill project. But, once he did so, he clearly became a front runner for this prestigious award. Mr Burke, who achieved fame with his Burke’s Backyard television program, has taken the job as Gunns Limited’s paid “honest broker” for its environmentally challenged Tasmanian mill.

“I don’t like old-growth logging,” he told the Sydney Morning Herald when his paid appointment was announced. “My track record is going into the areas where the greenies will never go, and actually getting better outcomes.” Gunns executive chairman John Gay confirmed Burke’s role. “We’re committed to sustainable environmental practices and Don will have no problem telling us if we are falling short,” he said.

With our Crikey Audacious Lobbyist of the Year Award we are looking for the lobbyist, company or lobby group that in 2008 has employed the most deceptive, misleading, or otherwise problematic lobbying tactics in their attempts to influence political decision-making. The first nominee was Clubs Australia President Peter Newell whose story appeared in Crikey on 22 October.

Entries from readers are encouraged and should be emailed to to [email protected] before 14 November. Our judging panel at Crikey will draw up a short list to put to a vote of readers.

State governments love monopolies but racing will miss them more. The so-called commitment of State governments to competition policy has been made a joke of again — this time by Victoria with promised legislation to allow a betting exchange to operate in the state. The decision to licence an exchange, like Betfair which operates from Tasmania, was announced on Melbourne Cup eve by Deputy Premier and Racing Minister Rob Hulls. But there will be no new entrant into the wagering business with the new business to go to whichever organisation takes over the operation of the TAB from 2012.

Clearly the government decision is intended to provide an incentive to someone to take over the operation of the totalisator in a way that minimises the compensation the government will have to find to pay the existing operator Tabcorp for handing over its existing infrastructure and agency network. Watching in a rather horrified fashion from the sidelines as Mr Hulls tries to ensure a future for the racing codes at somewhere close to their existing prosperity are Racing Victoria Limited, Harness Racing Victoria and Greyhound Racing Victoria.

These three controlling bodies are beginning to understand that there is a real risk they will receive far less revenue from the new totalisator operator which will not have a share of poker machine revenue. Their chairmen last night issued a joint statement in response to the Government’s “announcement of wagering tax reforms for the new wagering licence to offset the loss of VRI (Victorian Racing Industry) gaming revenue from 2012 and to legislate for a review and adjustment process for ensuring the tax rates meet that objective.”

The joint statement is clearly sceptical that the Government decision to reduce the government tax take from wagering will provide sufficient compensation. It said:

The diversity and growth of gaming revenue has been a critical asset to the VRI since 1994 and its loss must be fully addressed.

We will work with the Government to ensure that there is an agreed safety net that properly takes into account the full extent of the loss of the VRI’s ongoing normal gaming revenue and the future growth it would have achieved over the period of the new licence had the gaming licence structure not been changed.

It is imperative that the Government work closely with the VRI to develop an effective mechanism that will adjust the tax rate to fully meet the loss of gaming revenue and that the partnership agreement between the VRI and the new licensee delivers the funding arrangements that are necessary to secure a viable and growing foundation for the VRI’s long term prosperity.

This is going to be a messy and troubling negotiation for the racing industries as the Treasury will be reluctant to continue the generosity that then Premier Jeff Kennett bestowed on them when he privatised the TAB. The gambling industry has changed considerably in the last few years after the Northern Territory Government broke ranks and gave favourable taxation conditions to corporate bookmakers and the High Court hinted that restrictions on advertising by them were illegal.

A glance at the advertisements in the Melbourne Cup form guides shows how the corporates are appealing to anyone half serious about having a punt. Tabcorp has joined in with its own corporate bookmaking business to add to the poaching of tote turnover and by 2012 the agencies it must be prepared to hand back will be the expensive to operate dinosaurs of the betting business. Those international invaders lining up at 3pm for a share of that $5.5 million in prize money should enjoy it while they can. The way things are going the horses will be racing for considerably less in the Melbourne Cup five years from now.  

Peter Fray

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