Tuesday, 21 June 2022


Casino and Liquor Legislation Amendment Bill 2022



Casino and Liquor Legislation Amendment Bill 2022

Second reading

Debate resumed on motion of Mr LEANE:

That the bill be now read a second time.

Mr ONDARCHIE (Northern Metropolitan) (18:19): I rise to speak this evening on the Casino and Liquor Legislation Amendment Bill 2022. I can commence by indicating that the Liberal-Nationals coalition will not be opposing this legislation. The Liberal-Nationals coalition under the leadership of Matthew Guy has given its full support to the recommendations of the Royal Commission into the Casino Operator and Licence. The government keeps implementing a new recommendation every few months, so I suspect, if we do the maths, by the end of 2022—

Members interjecting.

The PRESIDENT: I cannot hear you, Mr Ondarchie. Please, members.

Mr ONDARCHIE: The government keep implementing a new recommendation every few months, so probably by the end of 2025 they might finally implement all of the 33 recommendations from the royal commission, but I will not be holding my breath. This would be comical if the issue was not so serious, but this government think that by putting off the full suite of recommendations Victorians will forget that they are at fault. The system was left to rot under this government. If the bill is passed today or in ensuing days, they will have 22 outstanding recommendations out of a possible 33, so effectively the government to date only support 33 per cent of the royal commission’s recommendations. I certainly hope that the government use the winter break to sit down and get on with this, because it is a very important issue. When you have a royal commissioner’s words that are so strong in their criticism, the government should be acting at lightning speed. Commissioner Ray Finkelstein stated:

The board were either lacking curiosity or were “asleep at the wheel”. Senior executives were “indifferent to their ethical, moral and … legal obligations”. Internal and external lawyers neglected to keep Crown focused on its need to remain of good repute “having regard to its ‘character, honesty, and integrity’”.

The Sydney Morning Herald stated on its front page: ‘Disgraceful, illegal, dishonest, unethical, exploitative, alarming’.

The purpose of this bill is to amend the Casino Control Act 1991, the Gambling Regulation Act 2003, the Liquor Control Reform Act 1998 and the Victorian Gambling Casino Control Commission Act 2011. Further, the bill makes arrangements for the gambling and casino regulator, the Victorian Gambling and Casino Control Commission, the VGCCC, and implements the government’s decision to separate gambling and liquor regulation by establishing a new regulator for liquor, the Victorian Liquor Commission, the VLC, and these amendments in this bill will transfer all aspects of liquor regulation which are currently under the VGCCC to the VLC.

This is the second bill incorporating recommendations of the Royal Commission into the Casino Operator and Licence. The commission was established to inquire into and report on the suitability of Crown Melbourne to hold its casino licence. This was preceded by the New South Wales Bergin inquiry, which found (a) Crown Melbourne facilitated millions of dollars to be laundered through a bank account of its subsidiary and (b) Crown Melbourne allowed operators with links to organised crime to arrange for junket players to gamble at the casino. Commissioner Ray Finkelstein AO, QC, handed down his final report on 15 October 2021. He made 33 recommendations. The commissioner stated:

… for many years Crown Melbourne had engaged in conduct that is, in a word, disgraceful. This is a convenient shorthand for describing conduct that was variously illegal, dishonest, unethical and exploitative.

Despite finding that Crown was unsuitable to hold a casino licence, the commissioner stopped short of recommending the licence be torn up. In coming to his final recommendation he pointed to the risk that the cancellation of Crown Melbourne’s licence would cause considerable harm to the Victorian economy and innocent third parties and losses of jobs. The government has given in-principle support to the remaining 24 recommendations after this first tranche of legislation. There are now 22 outstanding recommendations yet to be legislated, and as this amendment bill seeks to address just two of the royal commission’s 33 recommendations, we still have a fair way to go.

Recommendation 17 is about the function of inspectors. The commissioner recommended that inspectors be given the functions to ascertain whether money laundering or loansharking are taking place and whether illicit drugs are being sold; to make an exclusion order, where appropriate; to withdraw a person’s licence to remain on the casino premises; and any other functions prescribed by regulation. Recommendation 18, the second of the recommendations in this bill, is about the powers of inspectors. The commissioner also recommended that inspectors have free and unfettered access to all parts of the casino, all the surveillance equipment used by the casino operator and all the books and records of the casino. He further recommended that interference with respect to the performance of their functions is to be a strict liability offence which should carry a significant penalty.

There are many provisions in the bill today. Clause 3 inserts definitions of ‘illicit drug’, ‘loansharking’, ‘money laundering’ and ‘reportable conduct’ to support inspector reporting obligations. Clause 4 amends the Casino Control Act to allow disciplinary action to be taken for a single breach of the responsible gambling code of conduct. Clause 6 provides the VGCCC with enforceable undertaking powers similar to other regimes, including seeking court orders. Clause 8 requires inspectors to report to the VGCCC certain conduct they believe they observe within the casino, in line with the royal commission recommendations. Clause 9 inserts new sections to give inspectors greater access to the casino. On that, I have amendments to the bill, and I ask now that those amendments are circulated.

Opposition amendments circulated by Mr ONDARCHIE pursuant to standing orders.

Mr ONDARCHIE: Those amendments, which I will talk to further in committee, are essentially about clause 9 of the bill, where it talks about inspectors being able to look at the CCTV but only by asking for that in writing. I am looking to take out the bit about ‘in writing’ to give them unfettered access to the CCTV without any restrictions, and I will talk more about that in the committee stage of this bill.

Clauses 11 to 16, 37 to 43 and 45 to 62 amend the Gambling Regulation Act 2003 to reflect the separation between gambling and liquor regulation, as I have talked to earlier in my contribution. Clause 22 inserts new parts into the Liquor Control Reform Act 1998 to establish the new liquor regulator, the Victorian Liquor Commission, the VLC, which will include largely duplicating the Victorian Gambling and Casino Control Commission Act 2011, apart from the gambling-related provisions in that act. Clause 25 allows for the continuity of existing permits, demerit points, notices et cetera that are issued or recorded before commencement of a new regulator. Clause 31 provides for new ministerial directions relating to the VGCCC—however, not relating to operational matters. Clauses 33 to 34 provide new objectives for the VGCCC relating to harm minimisation. Clause 36 provides eligibility criteria for commissioner appointments. Clause 44 inserts certain non-delegable functions to the Casino Control Act 1991.

This bill implements some of the royal commission’s recommendations. We have sought feedback from a range of people, and I congratulate Shadow Minister for Gaming and Liquor Regulation Steph Ryan for her work in leading the coalition on this decision we are taking today. We have sought some feedback from Crown Casino, the Australian Hotels Association, Clubs Victoria, the Law Institute of Victoria, the Alliance for Gambling Reform and other places, and to date no great concerns have been raised with this.

We have given our support to the royal commission’s recommendations. Improving the powers and functions of inspectors is a good thing, but the value that we will get out of the government’s changes to the VGCCC are yet to be seen. However, I would say to you, like a lot of legislation that comes before this place, the issues only start once they leave this chamber. I hope the government can be proactive and transparent around the value of how these changes work in application, because the last thing we need and the last thing we should be doing is coming back in two years implementing more changes because the Labor government in 2022 failed to do their job properly. I remind the house that should this bill pass, the government will still have 22 recommendations out of a possible 33 to do. This is a government that came out beating its chest saying it supported the royal commission’s recommendations—all 33 parts—and here we are, such a long time on, and we have still got 22 more to tick off. Something does not sound right here. Something tells me there is something happening between the government and the casino operator. But we will find out more about that through things like IBAC, I suspect. The opposition will not be opposing this legislation.

Business interrupted pursuant to sessional orders.

Ms TIERNEY: I move:

That the meal break be suspended.

Motion agreed to.

Ms TERPSTRA (Eastern Metropolitan) (18:29): I rise to make a contribution on the Casino and Liquor Legislation Amendment Bill 2022, and in doing so I would like to highlight for the house that this bill is the next stage of the Andrews Labor government’s overhaul of the gambling regulations following the Royal Commission into the Casino Operator and Licence.

At the end of last year the Andrews Labor government established the Victorian Gambling and Casino Control Commission as a standalone gambling regulator to focus on holding the industry to the highest of standards. This bill will finalise the governance structure of the commission and respond to further recommendations of the royal commission with enhanced powers and functions, including giving casino inspectors greater access to surveillance equipment and casino records and requiring casino employees to assist inspectors to access and operate surveillance equipment to monitor all activity on the gaming floor. This bill will also protect Victorians from gambling-related harm by embedding this as part of the commission’s core functions, mandating that this shapes every decision that it makes. Liquor regulation will be transferred to a new liquor regulator within the Department of Justice and Community Safety, allowing the commission to focus solely on regulating the casino and gambling industries. The bill contains measures to ensure continuity in the transition to the new regulator, ensuring there is no disruption to regulatory activity and giving businesses the certainty that they need.

The royal commission handed down its final report in October last year, and the government responded to that report in record time. We legislated the commission’s nine priority recommendations through the Casino and Gambling Legislation Amendment Act 2021 in December last year. This set up the framework necessary to start holding Crown to account, including establishing the role of the special manager. Stephen O’Bryan QC, Victoria’s first IBAC Commissioner, has been appointed to the role, overseeing every single aspect of casino operations and reporting on its suitability to hold a licence over the next two years. Make no mistake, unless Crown can demonstrate to the regulator that it has become suitable, the licence will be automatically cancelled.

The legislation also dismantled the sweetheart deal put in place by the previous Liberal government which made Crown untouchable. This arrangement meant that Crown would be entitled to compensation for any changes to rules governing its operations, so if any rules were changed they would be entitled to compensation. The royal commission was highly critical of this deal, which only served to shield Crown from accountability. Abolishing it has paved the way for our reform program to restore integrity to Victoria’s casino. The legislation also increased the maximum penalty Crown could face from $1 million to $100 million, above and beyond what the royal commission recommended, and empowered the regulator to act directly on the royal commission’s findings. We have accepted the remaining recommendations in principle and will bring further legislation to Parliament this year to address these, ensuring the injustice uncovered by the royal commission can never happen again.

Just in terms of the former regulator, this former regulator was established by the previous Liberal government and its merged model of gaming and liquor regulation, and this model was not fit for purpose. We are completely overhauling how we regulate gambling in Victoria, as I said, with a dedicated new regulator, the Victorian Gambling and Casino Control Commission. The new commission has oversight of all gambling and gaming activities within Victoria from pokies through to the casino, with its core business also focused on protecting Victorians from gambling-related harm. Led by the inaugural chair and CEO, Fran Thorn and Annette Kimmitt, the commission has wasted no time holding Crown to account. Since commencing on 1 January 2022 it has already taken disciplinary action against Crown, imposing an $80 million fine for the China UnionPay process, which was uncovered by the royal commission. This is one of the largest fines imposed on a casino anywhere in the world. It has also been conducting a thorough investigation of unpaid casino tax, having already uncovered $61 million from Crown, responding directly to findings of the royal commission. And it has also signed a new memorandum of understanding with the federal anti-money-laundering authority, protecting Victorians from serious financial crime. So this government has wasted no time in getting on with implementing not only the recommendations of the royal commission but also the reforms necessary to support those recommendations.

So in terms of harm minimisation the Andrews Labor government is doing more to tackle problem gambling and the harm it creates than any government has before, and this bill is testament to that. This bill will enshrine harm minimisation as the guiding principle of how we regulate gambling and protect Victorians from associated harms by embedding this as a key objective. The commission does not currently have legislative objectives which guide how it regulates gambling. The bill will insert new objectives into the Victorian Gambling and Casino Control Commission Act 2011 to legally oblige the regulator to have regard to minimising gambling harm in its decision-making. Specifically, it will make minimising gambling-related harm part of the commission’s core business by requiring the commission to consider this in each and every decision that it makes. These reforms build on our strong record of tackling gambling-related harm, including increasing funding to the Victorian Responsible Gambling Foundation to $153 million over four years. This is the largest commitment to addressing problem gambling in Australian history. Labor introduced YourPlay, which is the nation’s first statewide precommitment scheme, and tightened restrictions on how much and where gamblers can access money in venues. Only a Labor government can be trusted to ensure we have the most comprehensive harm-minimisation measures across the country and will work with responsible venues and the people that they employ.

I could go on. There is much more I could say in regard to this bill, but I know that there will be perhaps others who may want to make some commentary on this. I will just finish on perhaps this aspect in regard to the bill and in regard to inspectors’ powers before I conclude my remarks: the bill will also introduce mandatory reporting requirements for casino inspectors who observe or suspect criminal activities, specifically money laundering, loansharking or the sale of illicit drugs. The commission must refer any such report to the agency responsible, whether that be law enforcement or the federal anti-money-laundering agency, AUSTRAC. The bill will also enhance inspectors’ powers, with increased access to surveillance equipment, books, records or documents at the casino. These were recommendations of the Royal Commission into the Casino Operator and Licence, which identified consistent failures on the part of the casino operator to use its surveillance equipment to detect money laundering and other crime. These measures will give inspectors the powers that they need to do their job and to assist law enforcement to do theirs.

I will conclude my remarks there and say again that the government is wasting no time in getting on with implementing these very important reforms. We have listened very carefully and taken heed of the recommendations of the royal commission, and we are acting on implementing those reforms. I commend this bill to the house.

Mr HAYES (Southern Metropolitan) (18:37): Thank you for the opportunity to speak to the Casino and Liquor Legislation Amendment Bill 2022. This bill looks like a step in the right direction after the most appalling revelations from the Crown royal commission in Victoria, an inquiry which revealed systemic failure; criminal behaviour, including fraud and money laundering; and the facilitating of organised crime. What is extraordinary is that it took so long for these investigations to be completed. The regulator said that Crown Casino went to some lengths to keep the scheme secret and itself devised a scheme allowing foreign punters to transfer illegal money out of China. How have successive governments and their regulators turned a blind eye to this for so long? It was only exposed when another state undertook an inquiry. It is a bit embarrassing for the government that the New South Wales inquiry had to do the Victorian Commission for Gambling and Liquor Regulation’s job. The Victorian government was quite happy to take the money from the industry and keep quiet.

We all know that gambling attracts big money, and we know that big money can be associated with money laundering, loansharking and the sale of illicit drugs. We know that it is prone to backroom influence and questionable donations, so it is plainly obvious that the gambling industry needs responsible oversight to stop corruption. So I welcome the establishment of the Victorian Gambling and Casino Control Commission in legislation and the implementation of the recommendations from the Royal Commission into the Casino Operator and Licence. It is a huge step forward.

While welcoming what the government has done here, I do question why Crown Casino has yielded such unprecedented power over the government for such a long time. I do support this bill and its work to start cleaning up this mess. The innumerable breaches by Crown Casino which enabled outright illegal and corrupt activity must be stopped. To be a company of this stature and to have participated in such devious and questionable behaviour is of great concern. Is it possible for a company that hides cash in shoeboxes, cardboard boxes and plastic bags for counterfeit money laundering able to be a trusted company again? It will require much higher standards of scrutiny from the government to properly regulate the casino and hold Crown accountable and hopefully this time beyond reproach. Crown says they are going to clean up their act and fix these systemic issues, but of course they are going to say that when there are billions of dollars at stake. Actions speak louder than words. I look forward to seeing real change, real oversight and a government that regulates this industry with initiative and with integrity.

Ms MAXWELL (Northern Victoria) (18:41): I rise to speak on the Casino and Liquor Legislation Amendment Bill 2022. This bill is the next stage of the Victorian government’s response to the 2021 Royal Commission into the Casino Operator and Licence, which includes changes to the regulation of gambling in Victoria. I would like to make some general comments on the findings of the royal commission and the sad fact that there needed to be one in the first place.

Casinos are certainly big business. Gambling taxes are around the fifth-highest source of revenue for the state. The casino is one of the largest employers and a major tourist drawcard. For many people, gambling is a bit of fun—you have a bit of a flutter. Sometimes you win, but plenty lose. Casinos are associated with notions of glitz and glamour. They have been successfully marketed that way—think of James Bond in Casino Royale, the playgrounds of Monte Carlo, the lights of Las Vegas. Casinos cater for the wealthy. They appear a bit elitist, and they can be utterly tempting to those aspiring to quick riches.

The other thing that casinos have long, long been associated with is crime. We are not talking about small-time crime either, but serious organised crime. Organised crime costs Australia up to $60 billion every year—$60 billion per year. When I brought my motion on illicit tobacco for debate in September 2021, I spoke about the links between proceeds of organised crime and child sexual exploitation, human trafficking, firearm offences and general violence. Organised crime and money laundering are explicitly linked, and the dark underbelly of casinos includes money laundering on an epic scale, loansharking, junkets and drug dealing.

Crown was found to have blatantly ignored directives about criminal associations and a multitude of shady practices that occurred in plain sight over many years. The royal commission that was finally initiated after media exposés and the Bergin inquiry cost $5 million, and the government will now spend millions in funding reforms that respond to the recommendations. Nothing seems to have occurred at Crown for many, many years, and reports made up the chain by inspectors simply disappeared into oblivion. They said that over time their roles were undermined, funding was reduced, responsibilities were diverted and audits were either irregular or completely absent.

The harms from problem gambling were also well documented by the royal commission and include family violence, forced prostitution, debt, poverty and suicide. It noted that the prevalence of people who experience problem gambling at the Melbourne casino may be three times higher compared to all Victorian adults who gamble. On average there may be somewhere in the vicinity of 462 problem gamblers at the casino at any one time, yet on an average day there were only around four interactions in response. Many of these concerns were raised with Crown by the regulator, and in its sixth review the regulator noted that Crown Melbourne’s approach to responsible gambling had not changed since the review five years earlier. One of the examples that the commissioner noted as ‘horrific’ was a problem gambler who would regularly go home and assault his wife, blaming her for his bad luck and ultimately forcing her into sex work to repay his gambling debts.

The cost of problem gambling is not just personal, it costs this state financially. So while gambling taxes deliver $2 billion every year to the state’s coffers, problem gambling costs $100 million in crime and to the justice system, $1.6 billion in terms of emotional and psychological issues, $2.2 billion in relation to family and relationship problems and $600 million in lost productivity and other related costs.

We support this bill and ongoing efforts to return to effective oversight of Melbourne’s casino and to wipe out the criminal activity associated with it. The merging of gambling and liquor regulation was described by the minister as a failed experiment, and federal MP Andrew Wilkie described the Victorian gambling regulator as ‘a lapdog, not a watchdog’. So with the starting point that low, the only way from here is up. The separation of liquor and gambling regulation will only be a success if the new regulators are well funded and given the powers for effective oversight and the capacity to ensure the casino complies. This is effectively early intervention, something I talk about all the time in this place. We have so many debates in this Parliament about IBAC and royal commissions, which deal with problems at the crisis end, once the damage has been done. In this instance if the regulator had been effective, as it should have been, there possibly would not have been the need for a royal commission. We need to ensure effective responses early across all our systems, because if we do not, we can see the ultimate cost—the economic cost, the personal cost—will far outweigh the revenue or any other benefit that one might espouse about having a casino in the first place.

Dr RATNAM (Northern Metropolitan) (18:47): I am pleased to rise to make some brief comments on behalf of the Greens on the Casino and Liquor Legislation Amendment Bill 2022. This bill is formally separating the two functions of the old Victorian Commission for Gambling and Liquor Regulation (VCGLR). It transfers the liquor regulation functions to the new Victorian Liquor Commission and further establishes the gambling regulation function in the Victorian Gambling and Casino Control Commission. The bill also amends the operation and functions of the VGCCC, including a new statutory objective for the commission to minimise gambling harm and problem gambling and a new function to undertake activities to minimise gambling harm. The Greens are pleased to see harm minimisation explicitly stated as a key objective and function of the new regulator. We are glad to see the government appears to be taking the recommendations from the royal commission seriously and is setting the regulator up to take a more active role in reducing and preventing gambling harm in Victoria.

The Greens have been calling for a complete overhaul of the regulator for years. In 2017 one of the very first things I did in this chamber was to move to refer the VCGLR to an inquiry. The inquiry would have considered the effectiveness of the regulator, its ability to carry out its functions and its ability to protect the Victorian community from the harms associated with the misuse and abuse of gambling, but my referral was voted down by both sides of this chamber. Over the next four years we repeatedly saw evidence of wrongdoing at the casino and the complete inability of the regulator to take any action in response. Whether it was handing out special chips that allowed pokies to run in autoplay mode, deliberately underpaying casino tax or turning a blind eye to money laundering and other criminal activity within the casino, the regulator did nothing. The VCGLR’s track record showed it had been unable or unwilling to prevent Crown from engaging in what Commissioner Finkelstein described as ‘variously illegal, dishonest, unethical and exploitative’.

Promisingly, there are signs of change. The new VGCCC recently issued a record $80 million fine to Crown Casino over the illegal practice of accepting Chinese bank cards at the casino premises. This is the first time an increased penalty has been issued since the maximum penalty was increased to $100 million from the previous paltry $1 million. As we pointed out at the time, a maximum fine of $1 million is loose change for a gambling behemoth like Crown, so we are pleased to see this reformed regulator showing they are willing to use their expanded powers as intended to ensure the casino operator actually faces the consequences of its actions. We are hopeful this trend continues and that the regulator utilises some of the new enforcement powers in this bill—like, for example, the ability to initiate disciplinary action for a single breach of the responsible gambling code of conduct instead of only after multiple breaches in the current system, which I wonder was ever used.

They have a big job ahead of them. International private equity giant Blackstone is preparing to take over Crown Resorts at the massive cost of $8.9 billion. It is not hard to see how we may be about to step out of the frying pan into the fire, as the Victorian casino is about to be folded into a multinational with an enormous casino portfolio. Blackstone owns the MGM Grand, Mandalay Bay and Bellagio casinos in Las Vegas and, through one of its subsidiaries, a massive 147 casinos across Spain, Italy and Latin America. The VGCCC will need to have both the teeth and the guts to stand up to this mega international firm and to ensure it plays by the local rules for casino management. And the government should be coming clean with the Victorian people about any discussion it has been having with Blackstone over the regulations that will govern the casino into the future.

We are looking forward to seeing the promised legislation that will implement the remaining outstanding recommendations of the royal commission, particularly the recommendations that relate to harm minimisation. Legislating recommendations like mandatory precommitment would be a major piece of gambling reform and would do a lot to reduce harm at the casino. I was very pleased earlier this year to hear the government promise to implement the mandatory precommitment recommendation in full, but going further than the recommendations, like the government did with the previous piece of legislation that implemented the Crown royal commission recommendations, would be game changing—like applying the precommitment recommendation to every gaming venue in the state, not just the casino, or like introducing dollar bet limits for all electronic gaming machines.

With just four sitting weeks left in the 59th Parliament the promised bill is a real opportunity for this government to show the Victorian people that it is serious about gambling reform and that it is willing to take a stand against the gambling industry and introduce real harm minimisation measures at the Victorian casino. The Greens are looking forward to working with the government on this legislation and pushing them further and faster on gambling reform.

Ms TAYLOR (Southern Metropolitan) (18:53): I move:

That the bill be adjourned until the next day of meeting.

Motion agreed to and debate adjourned until next day of meeting.