Select Committee say they have the right balance for racing’s governance

by Brian de Lore
Published 12 June 2020

The Transport and Infrastructure Select Committee should be extolled for all the hard work applied to the rewrite of the Racing Bill, which released last Monday, has seen a transformation from the dog’s breakfast it was in December at the first reading to a much more acceptable document for the racing industry.

But concerns still exist that racing risks forever dancing to the tune of the Minister of Racing, whoever that might be in the future, or an unsympathetic left-wing government, because the door is still ajar for an administrative intrusion of non-racing directors that have been the blight on this industry since 2008.

If you think about racing’s ills, it’s all about people and poor decision making. How else do you go from an equity position of $104 million to owing the bank $47 million in a dozen years? A beautiful result from running a business that can’t help but make money – they didn’t even have to send out invoices – only turn up on Monday morning and count the cash.

That’s how incompetent the directors of NZRB have been – grossly negligent to the extent that a class action should be taken against them (like Mainzeal) by the racing industry for incompetence and dereliction of their duties as directors. Between them all, they have all but wrecked the business by failing to accept good advice to set policies to maximise revenue streams, contain costs, and also to exacerbate the decline with a bunch of under-qualified and overpaid executives.

If racing has a future, the possibility of a repeat of previous directorship/management behaviour needs to have the door slammed shut treatment. Clause 46 of the legislation doesn’t entirely prevent that happening and relies to some extent on the goodwill of the Minister and his abhorrence of using the position for cronyism or political leverage of any description – pigs might fly?

…synergy of introduced clauses that will make for a better system…

The Select Committee doesn’t share those concerns. It views the Racing Bill changes as a synergy of introduced clauses that will make for a better system of spreading the governance that inevitably will give the industry more accountability and improved administrative flow.

In an email from a member of the Select Committee this week it stated, in part: “We have amended the TAB board appointment arrangements to ensure all the Racing Codes and sports bodies have the ability to make specific nominations (based on merit) to sit on the TAB board and we have also built in an appropriate degree of accountability in setting the TAB’s Statement of Intent and reviewing its Business Plans.”

It also went on to say: “Intellectual Property (IP): We have removed the proposed transfer of the IP to the TAB (it is currently owned by the Codes), a move which was heavily supported by the industry.

“Racing NZ: John Messara recommended a coordinating body called Racing NZ (to represent the Codes) be established to undertake a number of roles, such as setting race meeting dates and to act as the bridge between the TAB and the Codes.  The initial draft of the Bill only provided for this as an option, but the Bill now specifically incorporates this arrangement and clarifies Racing NZ’s role and responsibilities.”

My argument to the Select Committee that we would end up with too many lawyers and graduates from the Institute of Directors and not enough industry knowledge was countered by the concern that industry knowledge alone wouldn’t suffice and needed to be balanced by a degree of governance and wagering experience which would be fully accountable to the Minister and the House of Representatives.

Let’s remind ourselves of a sampling of former Ministers of Racing…

Let’s remind ourselves of a sampling of former Ministers of Racing – John Falloon (1990-96), Tau Henare (1996-98), Clem Simich (1998-99), Damien O’Connor (2003-05), John Carter (2008-11), and Nathan Guy (2011-17). Most of the damage talked about in these pages occurred during the Nathan Guy reign, but the point is, would anyone in racing want to rely on any of the above names having carte blanche on the appointments panel for the board of the TAB.

The rewrite of Clause 46 says the Minister appoints a three-person selection panel for the appointment board of TAB NZ, and according to the Select Committee, that selection panel will be highly-skilled in deciding on the selection of the make-up of the TAB board. The Minister then has a power of veto any nomination made by the racing codes, but if he does so, the code has the right to make one or more further nominations.

That three-person selection panel is not part of the board TAB board of seven. Also part of Clause 46 is (4) below which seems poorly worded with ‘must have regard to the need, collectively, knowledge of, – an opening as wide as the Sydney heads. It says:

(4) In appointing members, the Minister must have regard to the need for the governing body to have available to it, collectively, from its members, knowledge of, or experience in,—

(a) racing and sport administration at a national level:

(ab) sport administration at a national level

(b) the betting industry and market:

(ba) broadcasting:

(bb) technology related to betting or gambling:

(c) preventing and minimising harm associated with gambling:

(d) business, marketing, or economics.

What the Messara Review recommended was that the Minister appointed the chair and added to him/her would be the chairs of each of the three codes. They would become the panel of four who would then sit and appoint three independent board members of strict criteria to make up the board of seven. The Messara concept of the board would ensure the three codes of the racing industry would achieve adequate representation, and ‘skin the game’ would be revived in the administrative ranks.

…the professional directors and ex-civil servants will continue to arrive to tell the industry how to suck eggs.

But this current wording in Clause 46 relies on the Minister and Racing NZ, keeping everything on the straight and narrow. Inevitably, the racing industry will be only as good as the people in charge. If it gets more of what it’s had in the past, the professional directors and ex-civil servants will continue to arrive to tell the industry how to suck eggs.

Good people are capable of fixing inadequate governance procedures, but bad people will fix nothing and are always present for the wrong reasons.

The government has warned us that getting this legislation correct is a one in 15 to 20-year window of opportunity. But racing is bleeding so severely an industry won’t exist by the time Halley’s Comet comes back, so consider this the last waltz. And the last waltz was summed up by Frederick Nietzche when he concluded, “And those who were seen dancing were thought to be insane by those who could not hear the music.”  

The fear is that not enough racing people are hearing the music and therefore are dismissive of the immediate danger. It’s an incredibly apathetic industry. The TAB has been trading as insolvent since about Christmas, and the $50 million lifeline thrown to RITA three days before the Minister said it was going into administration should have been warning enough.

RITA Executive Chair Dean McKenzie’s website Update this week talks about the “Positive signs ahead: While we are certainly not out of the woods yet, the progress of the Racing Bill, an early return (and full) programme of domestic racing and revenues returning, in some cases, to pre-Covid levels provide enough reasons to be optimistic that RITA and the wider industry can come out of this crisis with some confidence.”

Not out of the woods yet? More like deep in the Amazon jungle!

Not out of the woods yet? More like deep in the Amazon jungle! And…the wider industry can come out of the crisis with some confidence. What has occurred to give the industry any confidence when communications are both rare and unbelievable.

Three and a half months after the cut-off date, the Half-Year Report has not been posted, and no explanation offered. But should anyone be surprised given the world has moved into the age no accountability or transparency in which the right to protest overrides all rules of COVID-19 distancing. A world that makes the destruction of statues acceptable or at the very least understandable (Mayor of Hamilton) and you may have seen Gone with the Wind for the very last time.

In March at the Beehive during the oral submissions to the Select Committee, Dean McKenzie’s submission on behalf of RITA was diametrically opposed to almost every other submission with that opposition primarily ignored in the rewrite.

Despite that stance, McKenzie wrote this week in his update: “Our initial view of the Select Committee’s recommendations is that the overall direction and structure of the Bill remains the same as it was before the Committee and is still in line with the direction of the Messara Report. The TAB will be established as a pure betting, broadcasting and gaming entity, and the Codes will have greater roles and responsibilities for developing and promoting their sport.”

Everyone’s entitled to change their mind and write their own history.


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