Nationals a firming favourite. The market has ended up with a National as a firm favourite to end up as Prime Minister of New Zealand after tomorrow’s election. The Crikey Election Indicator puts the Nationals as an 83% chance to Labour’s 17%.

Glenn Milne cut down to size. The little adventure of News Limited columnist Glenn Milne into electoral politics on his own behalf has ended with a humiliating defeat. In the ballot for the presidency of the National Press Club the long serving incumbent Ken Randall clearly defeated Milne by an overwhelming margin.

Dealing with a real crisis. Forget about all that international financial turmoil business. The Rudd Government now has a real crisis to deal with. The prospect of 25 per cent of Australian kids in child care not having a place where their parents can drop them off in the morning is giving Labor nightmares. Should the worst happen and ABC Learning Centres be shut down, then the Government would be facing a dramatic drop in popularity. It might be possible to recover from the coming recession but not from the anger of all those working families.

The receivers of ABC, those nice people from McGrathNicol who are looking forward to a wonderful earn from this company collapse while saying that the “interests of children and families are central to our considerations”, are well aware of the political realities. They know the federal government has no option but to provide the money to keep the kiddies with a place to be deposited so they are working, as they said in a letter to the parents yesterday, “constructively with the Group’s management, its financiers, the Australian Government and other stakeholders to determine the way forward.”

“Following extensive consultation between the Group’s financiers and the Commonwealth Government, a range of measures is being put in place to ensure the stability of childcare services for ABC families,” is how the letter delicately put the matter of this government bailout of a private sector failure. Translated it means that taxpayers will be kicking the receiver’s can for tens of millions of dollars.

Those strange people running smh.com.au. Never has the divorce between the Sydney Morning Herald as a newspaper and its website been more apparent than this morning. The paper’s state political editor Andrew Clennell led the SMH print version with a real exclusive telling how the State Government plans to increase the tax rate for people owning investment property worth more than $1.8 million from 1.6 per cent to 2 per cent – a move that should raise between $150 million and $200 million a year. But there was no mention of the story among the tens of different items on the home page of the SMH website until it made an appearance on the list of most read items after sufficiently devoted searchers had found it tucked away inside.

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 betting exchange 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 operate 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 if it is not again the successful tenderer.

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 this week 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 which keep lining up at 3pm on the first Tuesday in November 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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