Politics and pokies a bad mix

GARETH MORGAN
Last updated 12:12 08/06/2012
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FAIRFAX NZ

TAKING A GAMBLE: There are limits to how far politicians .should reach

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OPINION: There's a bill in front of Parliament that advocates local councils be given the job of allocating gaming proceeds and deciding the location and number of machines in their area. The argument is that councillors are the right folk to reduce problem gambling, which affects about 2 per cent of recreational gamblers.

It's a stretch to see the proposal by Maori Party MP Te Ururoa Flavell in any way as a coherent way to address what it purports as its objective.

Looking through the headline sales pitch - addressing the 2 per cent addiction problem - and assessing the changes forwarded as a hammer to crack a nut, it's apparent there is another agenda - that the headline goals are a Trojan Horse for something else.

Mr Flavell promotes "empowerment" of the community, as if that were synonymous with handing control to local politicians.

His views of the efficacy of the democratic process are somewhat more rose-tinted than the norm. While it is understandable, from an unbridled political perspective, to think that the local balance of political power represents the balance of community preference on any single issue, it is an exaggeration.

Democracy has its limits, and one of them is that the political balance overall represents the balance of views on every policy issue. Another is the assumption that politicians are free of influence from lobbyists when it comes to political decisions on any single issue.

As Winston Churchill said: "Democracy is a very bad form of government. Unfortunately all the others are so much worse."

In other words, our political regime most definitely has limits, areas it should not enter into.

In the absence of Mr Flavell providing a specific rationale to why this particular community service should be politicised, it's easy to infer that he's just oversimplifying the reality, assuming that politicians are and always are the most appropriate people and political processes the most appropriate means to make all decisions for communities.

This is a step too far. If it weren't, our judges and police force would all be politicians. They are not, for very good reasons - the vulnerability of politicians to the undue influence of sector lobbies and their influence over the polls, not to mention the unsavoury extremes of kickbacks and bribes. That is why there are limits to how far the politicians' influence should reach.

Accepting the problem gambling argument that Mr Flavell suggests local councillors apparently will solve, despite it affecting a mere 2 per cent of punters, is little but a red herring, then the Flavell bill needs to be assessed solely on the merits of its case for politicising the distribution of funds for community benefit.

There's a problem here, because no case is put forward by Mr Flavell why this should be so. I can certainly think of many why it should be the last method to be taken seriously. The current situation is that Parliament sets down the terms of reference for the allocation - what it considers as community benefit. It is then left to trustees, each with the fiduciary duty of care that a trustee must assume (there's no political dodging open to trustees) to decide the allocation in accordance with those parliamentary principles. The rationale from Mr Flavell and associates as to why politicians are better equipped to assume this duty is noticeable by its absence. Consider the downsides.

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First, councils are manned by elected politicians whose decisions are subject to their perception of what politically is advantageous.

It is the nature of our adversarial and to an extent bipartisan political process that this structure inevitably involves a contest for resources between the constituencies of those political camps. In contrast, disbursement of gaming funds currently is according to a series of community benefit criteria set out by central government. This is independent of the politics of local body representation.

Accordingly, the appointment of trustees to carry out these duties subject to the wishes of Parliament is a relatively straightforward affair. Trustees have to comply, there is not the scope for political influence over the disbursement nor the discretion to divert the monies from what they were intended by Parliament to somewhere local body politicians may consider a good idea on the day.

Second, concentration of power. Local councils have several funding sources (including rates, income from owned enterprises) and allocate that funding across several activities - infrastructure, public amenities, social services. If councils procured responsibility for disbursement of even more money via directing gaming proceeds to their gambit of influence, communities would be exposed even more to the vagaries of local body politicians. A pure risk minimisation approach would not favour such concentration of power.

Third, poor incentives. If council funding becomes dependent on gaming proceeds, a moral hazard is presented. In order to realise the dreams of politicians the incentive is to encourage the community to gamble, to make machines more ubiquitous throughout the community. This runs absolutely counter to Mr Flavell's faith in politicians to reduce the numbers of machines.

Fourth, subjecting the number and location of machines to the local political process is fraught with conflicts of interest and invites corrupt practice - political donations for favourable consideration.

Mr Flavell is anti-gambling and he cites the inordinate damage it is doing to Maori communities, his constituency. For that he has to be admired and his concern supported. But his remedy is inappropriate. Not to belittle the damage for a minute, but the statistics on problem gambling suggest it is not a major issue.

Consequently, Mr Flavell's bill, which he argues is a first step on the way to getting rid of gambling, is a very round about and clumsy way of tackling his concern.

He should direct his efforts into ensuring that the $20 million which goes from the gambling industry to the Health Ministry for dealing with this issue is achieving appropriate, positive outcomes. He may well get a better result there than trying to drive gambling underground, which would be a far bigger disaster.

Gareth Morgan is a director of Gareth Morgan Investments.

- The Dominion Post

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