NZ First risks regional backlash against racetrack closures

Winston Peters has marketed himself as a champion of the regions, and Shane Jones has similarly promoted himself as such – see ‘Champion of Regions’: Jones holds true to title – with his billion dollar Provincial Growth Fund handouts.

But one of Winston’s biggest hobby horses (and possibly one of his biggest benefactors) is the racing industry. And he is now proposing a radical plan to close a lot of race tracks around the regions and centralise them in three big cities. This is both a clash NZ First priorities, and a risk of backlash.

RNZ: Plan to cut 20 race tracks ‘gamechanger for industry’

The racing industry is facing two choices, significant change or death, says Racing Minister Winston Peters.

Mr Peters has released an independent report by Australian racing expert, John Messara, that concludes the industry is in a state of “serious malaise”.

The report recommends include almost halving the number of tracks and outsourcing the TAB’s commercial activities to an international operator.

Mr Peters said the racing industry was at a tipping point from which it won’t recover unless it took on on board all the reforms put forward by John Messara.

Officials will produce a Cabinet paper from the report’s 17 recommendations, which Mr Peters said was a chance to change the fortunes of the industry and push the reset button.

Mr Messara has proposed reducing the number of tracks from 48 to 28 and Mr Peters said that will have to be a reality if the industry wants to turn around its dwindling profits.

“Every region will retain a race track. There just won’t be the proliferation right now which in stark contrast to a big industry like New South Wales, has far more race tracks. It just doesn’t make any logical sense,” Mr Peters said.

What may be good for the racing industry may not be seen as good for the regions who lose their race tracks.

Taranaki will lose two out of three of its race tracks if the recommendations go ahead.

Taranaki Thoroughbred Racing board member and judge Ron Stanley said racing was getting incredibly more competitive and that required top facilities and cutting back the number of tracks.

“I think it’s a brave decision, we should have been doing it a few years ago. We’ve always had too many tracks”.

The towns who have tracks that may be closed may think differently.

New Zealand Thoroughbred Racing chief executive Bernard Saundry also backed the proposals which he described as a “gamechanger for the industry”.

“One of our biggest issues is we can’t spread the amount of money we have across 48 venues and improve the sport. So we need to consolidate our spending and make sure we’ve got a number of venues that have good race track surfaces and good customer facilities so that New Zealanders can enjoy the great things about New Zealand thoroughbred racing,” he said.

Centralisation in big cities has been a feature of the ‘neo-liberal’ reforms that Peters has been scathing of (for political purposes, I don’t know if he believes it).

But Peters is putting the racing industry ahead of the regions.

The Provincial Growth Fund will stump up the cash – expected to be about $15 million – for the tracks that Mr Messara has recommended building in Awapuni, Riccarton and Cambridge.

Mr Peters said taxpayers will accept that cost because racing “isn’t just about people turning up at the track in their Sunday best” – it’s about an industry that employs tens of thousands of people.

So he is championing an industry over people in the regions. He and the racing industry are going to pick winners and losers.

I’m not sure how well regional taxpayers and voters will accept that cost if it takes their tracks away.

“We will ensure that every region retains at least one track so there is racing there. And we will consult with the industry on these tracks that are to be closed. But we have to change, even if it is unpopular.”

Peters the prince of populism is prepared to push policies that may be unpopular in many regions – neo-liberal reforms of the racing industry means more to him for some reason.


And – it’s interesting to see how Peters intends using the Provincial Growth Fund to fund NZ First policies over and above what was negotiated in their Coalition Agreement.


ODT report on the winners and losers in the south in Seven race tracks face closure

In his report he recommended thoroughbred racing at Timaru, Kurow, Oamaru, Waimate, Omakau, Winton and Gore should cease.

Mr Messara recommended Wingatui, Ashburton, Ascot Park, Cromwell, Waikouaiti and Riverton hold race meetings in the lower South Island.

Closing Oamaru, Timaru and Gore while retaining Waikouaiti seems odd. I arrived at the Waikouaiti races this January to find out they had been cancelled due to track conditions.


UPDATE:

IRD advised against good looking racehorse tax break

IRD advised against giving tax breaks to the race horse breeding industry nine years ago, as they did recently, this time warning it could cost ten times what Winston Peters has suggested. But the Government went ahead with the only tax cut included in this year’s budget.

Stuff: Officials warned against racing tax breaks

Inland Revenue officials have warned against tax breaks for the racing industry, saying they could cost the Crown up to $40 million in lost revenue – but the Government is proceeding regardless

NZ First and its leader Winston Peters had been backed at the election by prominent racing industry figures, who demanded those bloodstock tax breaks, as well as an all-weather track and control of the NZ Racing Board.

Peters’ policy was a big win for the racing industry, because they had failed to convince the previous National Government to implement the tax relief. Inland Revenue documents seen by Stuff warn of the potential for race horse owners to game the system.

Officials saw no need for tax relief to the industry, but worked on tax rule changes with tighter restrictions. But that policy was dismissed by industry players just before the election.

Peters’ policy allows tax deductions for an investor who buys a race-horse and declares an “intention to breed for profit.” He said it would cost $4.8m.  He’d previously tried to introduce the deductions when racing minister in the previous Helen Clark government.

Details of Peters’ new policy are vague. But a strikingly similar proposal was advanced by the Racing Board last year. Officials cautioned against it because the deductions could be claimed even if a breeding business never eventuated.  The Racing Board believed the policy would cost around $5 million a year.

IRD didn’t accept that figure and put the cost at around $40 million a year because it had the potential to apply to an extra 7000 horses a year.

My mother loved horses and every one of them looked good to her. It wouldn’t be hard to find someone who has an eye for good looking horses – which could be any that apply for the tax break.

I don’t know where the ‘7,000 horse a year’ come from – NZ Racing: “In 2015-16, the industry produced 3500 foals and exported 1700 horses”.

Stuff;

Former Revenue Minister Judith Collins confirmed she couldn’t reach agreement with the Racing Board. She said a 2013 court case involving IRD and a racing syndicate, known as Drummond vs the Commissioner of Inland Revenue, made it difficult to implement the tax breaks that the industry was asking for.

“I wouldn’t have or couldn’t have opened up a complete change in policy without actually complying with the law. The law was pretty clearly stated in [that case] that just buying a horse and hoping you might breed from it one day was not actually a business.”

Collins said she would be “deeply surprised” if Peters wasn’t given the same advice. “It does smack of a lack of rigor when it comes to policy development.”

A similar claim from former revenue Minister Peter Dunne.

Peters said:  “The same arguments against bloodstock tax rules were raised during my previous tenure as Racing Minister, they were false then and they are false now.  The evidence comes from when the previous Finance Minister Michael Cullen agreed to a similar approach and the positive impact that generated for the industry.

What would the IRD and previous Revenue ministers know.

“There are legitimate reasons bloodstock tax investment helps create investment in horse racing which in turn will generate greater revenue for the taxpayer.  It will become fiscally positive.

“The National Party has been naïve and poorly managed the racing industry, nor did it maintain the previous rules on tax write downs.  The racing industry has become at best static and has not been achieving its genuine potential. The bloodstock tax write downs announced in Budget 2018  help attract new investors to the breeding industry.  And next year’s Yearling sales at Karaka will be one to watch.”

Peters’ party got vocal and financial support at the election from industry players. ​

With the tax breaks he has given them there could be more spare cash available for donations and campaign assistance.

See Bloodstock tax rules to change

Minister for Racing Winston Peters today announced changes to bloodstock tax rules for the New Zealand racing industry as part of Budget 2018.

“The Budget allows $4.8 million over the next four years for tax deductions that can be claimed for the costs of high-quality horses acquired with the intention to breed”.

“These changes mean that a new investor in the breeding industry will be able to claim tax deductions for the costs of a horse as if they had an existing breeding business. To qualify, the horse must be a standout yearling.”

Yearlings don’t race. I don’t know how it will be decided if a yearling is a stand out so it qualifies for the tax break. This hadn’t been decided by budget time a month ago.

Stuff: NZ First gets tax change for race horse investors through the gates

Each yearling would need to be assessed based on the “virtue of its bloodlines, looks and racing potential”.

“Further consultation with the industry will be undertaken to finalise policy settings, draft legislation and set up administrative processes,” a statement released by Peters said.

Will IRD get to determine “virtue of its bloodlines, looks and racing potential”, or will ‘the industry’ be allowed to decide this for themselves?

Fake claim of fake news

But that appears to have been a fake fake. On the news tonight: Winston Peters announces a multi-million dollar all weather horse racing track is on the way

He’s promising the racing industry a multi-million dollar track that can be used even when its pouring with rain. Mr Peters says it is expected to cost around $10 million to construct.

It comes as several races throughout the country had to be abandoned.

So why isn’t money distributed around the country to help maintain tracks? Pouring money into one region seems  questionable use of available funds.

The Minister says both taxpayers and the industry will be helping to pay for the new track.

Mr Peters is also promising tax relief for owners who are breeding horses for racing. He says the current legislation, which he delivered last time he was Racing Minister, isn’t working like it should.

Peters has friends in the racing industry, I’m sure they will like to have special tax relief.