Here’s an example of how lazy journalists and editors with an agenda can distribute a story that literally doesn’t add up.

The yarn that people were wasting their carbon price compensation payments started yesterday with The Australian Financial Review, was boosted by the ABC, and spread further today via The Daily Telegraph, based on gaming revenue data from Queensland (yesterday), NSW (today) and some anecdotal and minor statistical claims from NSW and Victoria. The argument was the same: because poker machine revenue had increased in May and June, that meant people were blowing their carbon price compensation on the pokies — another example of Labor waste and mismanagement.

Along the way, the figures got a little fudged. Yesterday The Fin said: “Poker machine revenues in Queensland jumped more than 7% in May… and rose almost 12% in June year on year.” The Tele covered the story today: “Queensland pokies revenue” had jumped “12% in June”. The ABC made the same error.

Plainly, if people receive a windfall cash payment, one of their means of spending it is gambling. The issue is, what evidence is there that this is happening?

For a start, always beware The Fin cherrypicking “year-on-year” figures — that’s how they’re still insisting we’re in the middle of an industrial dispute epidemic based on a spike in one quarter last year. Let’s look at the Queensland figures. For a start, The Fin reports used total spend. But the number of machines in operation changes from month to month. As it turns out, the number in Queensland had fallen in May and risen in June. So, you should use per-machine revenue to account for changes in the availability of opportunities to gamble.

This is the poker machine revenue per machine in Queensland as far as the figures go back:

So, indeed, May and June saw a rise in per-machine revenue but the spike in revenue is nowhere near as large as at other points last financial year. In August last year, for example, revenue spiked to well over $4000 a machine, without a carbon tax compensation payment in sight. In fact the rise in June, which was 4% above May, was well under one standard deviation for monthly per machine data. The May rise, which was larger, was just under one standard deviation — so in neither case were the May or June figures statistically significant. And bear in mind, the carbon price compensation payments only began rolling out from the fortnight beginning in the middle of May, and many families would not have received any payments until May 29.

You’ll also notice there’s a cyclical aspect to the revenue — it falls away at the start of the year (February is a short month, so revenue will always be lowest then) then builds again through the year with, in the case of Queensland, a spike in the middle of the year. So revenue can be expected to go up in at this time of the year anyway.

Dr Charles Livingstone, Senior Lecturer in the School of Public Health and Preventive Medicine at Monash University, told Crikey poker machine revenue tends to build through the year after a post-Christmas low point. He says any rise in revenue will reflect problem gamblers, who provide at least 40% and likely more of poker machine revenue.

“If they get any extra cash in their bank account, they’re likely to gamble it,” he said. “The real issue is these dangerous machines that allow problem gamblers to lose money very quickly.”

But somehow, what was a story about problem gambling and poker machines that allow high-volume, rapid losses, became a story about the carbon tax.

And where did problem gamblers get additional cash from? As we’ve already seen, many people did not get the first carbon price-related payments until the end of May. So how could they have driven a big rise in poker machine revenue? Stephen Koukoulas pointed out that everyone  — well, at least motorists and mortgage holders who drop their payments when interests rates fall — got extra cash in May because of the fall in petrol prices and interest rates. He also notes that retail spending in Queensland in May rose 5.6% — which, for those who want to blame everything on the government, begs the question: where were the “carbon compo payments boost beleagured retail” stories?

The Tele article today used anecdotal evidence and the April-June quarter data in NSW Office of Liquor, Gaming and Racing records on hotel poker machine profits. The office provided the data to Crikey; it shows a 5% rise for the year in the June quarter for hotels, and a 2.7% annual rise for the quarter ending in May for the much larger clubs sector. These are profit numbers, not revenue, so not particularly useful, and the clubs’ figure is barely above inflation.

So, people may be blowing any government handouts they get — carbon price compensation or not — on the pokies. But there’s no clear evidence that it’s happening.

The ABC is particularly culpable in this for failing to do some basic research on the numbers; instead, it simply offered he-said-she-said quotes from various sources. It did, however, note Livingstone’s view that the real issue was high-impact poker machines.

The logic behind such stories, in any event, is confusing: poker machine revenue doesn’t vanish from the economy; it doesn’t sit in the bottom of the machines, lost forever, but continues to circulate through the economy. The story thus becomes a moral judgment about gambling.

But plenty of goods and services carry moral judgments. What if carbon price compensation was spent on cigarettes, or alcohol, or junk food? Or watching a bad movie? Or buying Fifty Shades of Grey? There are plenty of unedifying consumer choices out there that carbon price compensation will be “wasted” on beyond poker machines.

Unless you think governments should be in the business of directing every welfare recipient, including those nice middle-class people on $100,000 a year, on how to live their lives, what’s the point beyond attacking the government?

Peter Fray

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