Thursday, 15 March 2012
GAMING: AUCTION PROCESS
Mr GIDLEY (Mount Waverley) -- My question is to the Minister for Gaming. In the light of the Auditor-General's findings about the mismanagement of electronic gaming machine entitlements by the former Labor government, what impact does this have on the current and future Victorian government finances?
Mr O'BRIEN (Minister for Gaming) -- I thank the member for Mount Waverley for his question. As a former accountant he is someone who understands finances. It is very important that governments have a charge and a trust in dealing with public assets. The issuing of 27 500 lucrative 10-year gaming entitlements was something in relation to which the former government had an obligation to ensure that the Victorian taxpayer got fair value for money.
Between October 2009 and May 2010 the former government went through a process to issue those 27 500 licences. In June last year the Auditor-General reported on that process, and here is what he said:
"We valued the EGM entitlements in the range of $3.7 billion to $4.5 billion, with a midpoint of $4.1 billion."
Let us take the midpoint of $4.1 billion:
"The sale proceeds from the allocation fell significantly short of the fair market value of the entitlements. The industry paid $980 million ..."
The Auditor-General also said:
"The revenue obtained from the sale of the entitlements was around $3 billion less than the assessed fair market value of these assets."
Honourable members interjecting.
SUSPENSION OF MEMBER
Mr O'BRIEN (Minister for Gaming) -- I can understand why members opposite would not want to hear this, because it gets worse. The Auditor-General said:
"Large venue operators, rather than the community, are the beneficiaries of this windfall gain."
He said the factors responsible included:
"... a low reserve, inadequate information and training for venue operators, and poor decisions made during the auction."
Mr Weller interjected.
The SPEAKER -- Order! Does the member for Rodney want to go out again?
Mr Weller -- No.
The SPEAKER -- Order! I would be quiet if I were him.
Mr O'BRIEN -- What do those poor decisions mean? This is a great one from the Auditor-General. He says
"The auction was closed while bids were still being placed."
Only a Labor -- --
Ms Green interjected.
SUSPENSION OF MEMBER
Mr O'BRIEN (Minister for Gaming) -- It is no wonder that the former Labor government managed to blow $3 billion of taxpayer money when it ended the auction while people were still bidding.
Mr Nardella -- On a point of order, Speaker, the minister is debating the question. Questions and answers should refer to government business. The previous Labor government can be referred to, as per the precedents set in this house, in a passing manner but not to provide the whole answer attacking the previous Labor administration. I ask you to bring the minister back to answering the question.
Mr O'BRIEN -- On the point of order, Speaker, these are the words of the Auditor-General. Any criticisms that I have quoted are criticisms that the current Auditor-General made of the process of the former government, which comes directly to the point of the financial position this state is in today. It is directly relevant to the question asked.
The SPEAKER -- Order! I do not uphold the point of order.
Mr O'BRIEN -- The Auditor-General found $3 billion was blown by the former government; $3 billion of taxpayer money went up in smoke. The question is: what does that mean for Victoria's finances today?
When you look at what Victorian taxpayers will receive compared to what they should have received if fair market value had been obtained for those lucrative gaming assets, here is the answer: in 2012-13 Victorians would have received an extra $709 million; in 2013-14 an extra $623 million; the same again in 2014-15 and 2015-16; and $293 million in 2016-17.
We have a 10-year nightmare that Victorians cannot wake up from because of the absolute economic incompetence of the former Labor government. That is stopping us. That opportunity cost is safer roads, new hospitals, more schools and more police and police stations. That is the opportunity cost of Labor's economic incompetence. Victorians are sick of it, and they have now elected a government that will actually clean up Labor's mess.