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Mr MIKE BAIRD (Manly) [5.53 p.m.]: I speak on the NSW Lotteries (Authorised Transaction) Bill 2009. I support the shadow Minister for Gaming and Racing, who argued eloquently in outlining why the Opposition is opposed to this legislation at this time. The member for Cessnock raised some concerns and we need to put them right. He said that licences will not be cancelled, and that appears to be the argument being put forward on the Government side. However, we need to be clear that licences have a maturity date. What happens when those individual licences with newsagencies mature, whether in one day, two months, six months or three years? That is what the Opposition is very concerned about in relation to this bill. Certainly the Government is saying it is not going to cancel licences, but what happens when the licences come up for renewal? That is the important question and that is why we are very much concerned for newsagencies, which generate a huge number of jobs across this State. So I support the shadow Minister and will speak against this bill.
The sale of NSW Lotteries has been put forward as policy by the Liberal-Nationals Coalition and it is no surprise that we will continue to support that policy, but it has to be carried out at the right time and with the right structure. There is no doubt the proceeds from such a sale could be used to provide important services and infrastructure for the community. I will refer later to how the sale proceeds are to be used. We say that now is not the time to do this, for two reasons. When and if an asset is sold it is always in your interest to get the best possible price, but we have only to look at the current economic climate, whether it be the equity markets or the debt markets. It does not take Einstein to work out that now is a very difficult time to sell anything, let alone an asset that is very cash flow sensitive. Certainly at the moment no-one on the other side of the House can say that we are going to get the best value for these assets by selling them now. One would have to query why we are in such a rush to offload them.
We also have a huge concern about the protection of jobs. A number of newsagencies have contacted us about this. They are not just small businesses; they are at the heart of every small community. Newsagents work around the clock and build relationships with every person they come in contact with. They are doing it tough like every other business in this State at the moment. I cannot see any reasons for supporting a bill that makes life even tougher for newsagents at this time. We heard a lot about jobs in the budget and we would argue that this legislation could potentially take jobs away from communities across the State. We would be happy to work collaboratively with the Government to produce the sorts of provisions we need to protect newsagencies. I will not go into the detail of the legislation but I want to raise a couple of points concerning the level of probity. I wonder whether the Minister for Gaming and Racing should be directly responsible for some of those issues. I am certainly willing to listen to argument on that, but I will put forward some recommendations.
This bill allows for the privatisation of NSW Lotteries and includes two licences—an operator licence providing regulatory oversight of the operator's integrity and capability and product licences allowing direct regulatory oversight of each game. It retains the intellectual property currently owned by the business, including games and brands, in Government ownership. These include games such as lotteries, Lotto, Powerball, Pools and scratchies. The Minister for Gaming and Racing will continue to be the lottery regulator. The bill allows for a three-year employment guarantee—I will touch on that as well—and a transfer payment, with employees having the choice to remain employed in the public sector. The State will continue to collect duty from the sale of lottery products, which in the past three years amounted to more than $300 million per annum.
What are we trying to achieve with this legislation? One could argue that lotteries in this market and indeed around the world are a very competitive business. One could argue quite strongly that it is not necessary that a Government be involved in this business. I understand that is the premise behind putting this asset up for sale. It also brings forward future cash flows for use today and once they are brought forward it raises the question of how they are used. They should not be used for recurrent services, which is what the bill seems to allow. It appears to allow the money to be put straight into consolidated revenue. Our argument is that if we are going to sell an asset's future cash flows they should be put directly into capital, not recurrent services. They should go into infrastructure.
Looking at market conditions at the moment, I will give the example of an A-rated business. A number of potential suitors for this business would have an A credit rating. Before the markets dislocated with the onset of the global financial crisis the cost of credit to an A-rated company was about 100 basis points. That has blown out to about 290 basis points, which is almost a 200 basis point increase. If we discount the cash flow and the 30-year licence those 200 base points will have a huge impact on the price. Why is the Government rushing into this sale? Surely it wants to maximise profits. Let us wait for stability to return to the markets and let us provide some form of protection for small businesses. Clearly, this State Government needs the money.
Having reviewed its budget, I can understand why it is looking at every opportunity to bring money into this State. The State budget is in the red like never before. If we take out Kevin Rudd's money, over the next four years we will have an $8 billion deficit underlying the State budget. Clearly, it is necessary for the Government to find these funds, but it should take account of some of the concerns that have been raised. The Government must not use those cash flows. If they are spent on recurrent services they will be lost forever. We must legislate to ensure that those cash flows are invested in long-term assets that benefit this State. Because of the way in which this legislation is structured, that is not likely to occur. I spoke earlier about the fact that the markets are low, but they will recover.
Why is the Government not prepared to wait for those markets to recover? The time frames are uncertain and they remain uncertain today. Over the past 72 hours equity markets have continued to be volatile. Let us wait for stability to return before we determine what to do in relation to this matter. The last thing we want is a fire sale. Before the last election the price of this transaction was costed at around $600 million. Varying prices are available from brokers in the market through to the Government's own spokesperson. Let us wait and determine whether we are likely to get the best possible value. We will have only one shot at this transaction. I have seen no reserve price in the budget papers. It should be clearly understood by the Government that it should not sell any asset when it decides to do so without establishing a maximum and a minimum sale price. Any transaction should not go ahead if a minimum price cannot be achieved.
Where is the money going? I said earlier that this money would be going into recurrent funding. Ideally, a separate fund should be established into which this money should go and it should be spent only on critical infrastructure. This Government's budget is all about jobs even though we have a high rate of unemployment in this State. Employment figures in this State are going backwards at a rapid rate. In the next 24 months tens of thousands of people in New South Wales will lose their jobs. Government forecasts confirmed those figures, even though it was highly optimistic about employment levels. Government forecasts confirmed that tens of thousands of people would lose their jobs so we should be doing everything possible to increase job opportunities.
Newsagents across this State who have written to Opposition members have expressed a great deal of concern, in particular, as 16 per cent of their revenue is gained from that source. When this legislation is revisited—I hope it is revisited when we have better market conditions—and it contains protections for newsagents we will be keen to look at it. I refer to division 2, proposed section 21A, Review of suitability of licensee. Subsection (1) states:
The Minister may from time to time determine whether in the opinion of the Minister the licensee under an operator licence and each close associate of the licensee remains a suitable person to be concerned in or associated with the management and operation of the business conducted under the licence.
In many respects those provisions should be kept at arm's length. At the moment we are separating regulations from owners, which might well solve that problem. Have we set those provisions apart in a way that will result in the highest level of probity? I encourage the Government to consider those matters. Opposition members will be opposing this bill. From an ideological viewpoint we are supportive of the concept but we are not supportive of it at any cost. Opposition members cannot support the bill because it lacks the necessary protections required for newsagents across this State. The Government has not given newsagents any assurances and it has not worked with them to ensure that they will be comfortable if a transition of ownership takes place. Because of current market conditions we cannot support this bill. In the current climate taxpayers would not be getting the best price from the sale of such an asset. The Government has only one shot at selling this asset so it should maximise its sale price and the return to this State. The sale involves a 30-year licence but if the sale takes place it will be 30 years before any government can revisit this issue. At the moment the Government is not maximising the price for that 30-year cash flow. The Opposition believes that the sale of this asset is against the interests of newsagents and jobs and it is against the interests of the people of New South Wales.
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