Racing Industry Bill - RITA’s Assessment of Venue Proposals

13 January 2020

As outlined in our December communication, the Racing Industry Bill has been introduced into Parliament. The RITA Board welcomes the Bill and considers that, once passed, it will give effect to many of the critical changes required to revitalise the New Zealand racing industry.

The Bill includes some changes to support the industry’s discussions around the makeup of racing venues, and we have received plenty of questions on RITA’s view on what exactly is being proposed. The purpose of this update is to provide you with RITA’s understanding of the venue proposals in the Bill to help inform any feedback you may wish to provide at the Select Committee consideration of the Bill. 

RITA believes that, overall, this Bill supports the process of change the industry needs, and also ensures that where change is proposed, every Club will be treated fairly and respectfully and have its position genuinely heard and considered. We believe the Bill gives the industry the framework to address its venue issues, which have remained unsolvable for decades, in a structured and transparent manner.

This flowchart summarises the expected process for the evaluation of venues. 

Racing Venues

The vast majority of us acknowledge that our current racing venue footprint isn’t sustainable. We have too many venues for the size of our industry, and we haven’t got enough capital to bring all venues up to the right standard of safety and quality for participants and punters. 

As we all know, this isn’t just an issue that’s been identified recently by John Messara. It was identified 50 years ago in the McCarthy Royal Commission Report from 1970; and is an issue we know we must address if we are to revitalise our industry. 

However, we also know that Clubs are deeply passionate, and some are understandably concerned about potential change in their communities. With a number of RITA Board members and Management having been involved in the operation of a number of clubs, we have an acute awareness of the effort and contribution that grassroots volunteers have put into their venues, racing and the wider community over many years.

We believe the Bill ensures Code decisions in this area must follow due process. Essentially, the reforms are aimed at ensuring that Clubs have rights to be fully involved in the decision making process to determine the best infrastructure footprint for the industry. 

Proposals in the Bill

The Bill reflects the preference for any potential venue changes to be resolved by the industry through voluntary agreement between Clubs and Codes. This is best achieved through the further development and enhancement of the joint-Code Future Venue Plan (FVP) process.

To support the FVP process, the Bill sets out four key proposals:

  1. New legal requirements on the Codes to act fairly and with a sense of social responsibility to their communities;

  2. Enabling the criteria for assessing venues to be set by the Government through a regulation. This means the set criteria will be transparent and apply to venues fairly;

  3. New principles aimed at ensuring racing property is used in the best interests of the racing industry; and,

  4. Restrictions on Clubs entering into property transactions without the approval of their Code (although Codes may choose to grant approval generally or to any conditions they see fit). 

Each of these proposals are further explained below, and we welcome feedback on any of them.

New Requirements on Codes

While the Codes are proposed to hold additional powers in the Bill (including in relation to venues), there’s some important new checks and balances which they will be subject to, as well. 

These include two new requirements that the Codes must legally follow when carrying out their functions:

  • Complying with the rules of natural justice (this has a specific legal meaning covering the rule against bias and the right to a fair hearing); and, 

  • Exhibiting a sense of social responsibility by having regard to the interests of the community in which they operate.

Criteria for Assessing Venues

The FVP process will be used to determine whether a venue is surplus or not, and will be based on a venue evaluation. The criteria for evaluation will be set by the Government in a regulation. Regulation-making is a formal process run by the Government, and Clubs will have the opportunity to submit on the actual specific criteria for the regulation (after the Bill has passed). 

RITA has commissioned some independent advisors to begin developing some venue evaluation criteria which will help form the basis of the regulation. The aim is for this to be designed to be as objective as possible, while accepting that a number of the inputs are naturally subjective. It is likely that the criteria will consider venue performance against areas such as: financial performance of the Club; industry return; alternative use value; community engagement; future potential; performance; Governance; and regional contribution. 

The Government formalising the venue evaluation through a regulation means it will be applied to venues fairly and transparently. Codes will be legally required to undertake the process according to the regulation in determining which venues are surplus. This will not be optional. Principles of natural justice will need to be observed.

A summary of the approach outlined above is included in the attached flowchart. 

New principles for use of Racing Property

The Bill also includes principles that, ‘that the value of racing property is retained in the industry and is used for maximum industry benefit.’

It’s hard to disagree with these principles. We owe it to those who have put years of hard work into Clubs and venues to ensure the industry they love continues benefitting from the fruits of their labour. This will only be after the statutory assessment process has been undertaken in a fair and transparent manner.

Restrictions on dealing with a racing venue

The Bill proposes a new restriction on Clubs which requires them to obtain the written approval of their Code before entering into property transactions with the venue (if they own it). For example, this moratorium covers such things as transferring, vesting, mortgaging, or giving a security interest in land that comprises a racing venue owned by the Club. 

As this measure is designed to support the FVP process, the Code may grant approval to Clubs generally or specifically, and subject to any conditions they see fit. The Government can also make an Order in Council which would stop this restriction in the Bill from applying from a future date (for example, after the FVP process has concluded).

Ministerial Proposals

There are other venue proposals in the Bill which are intended to be used as a last resort only.  We agree it’s important to have some fair, independent processes in place in order to resolve any disagreements in the industry. 

While the Codes will be expected to determine this with the prescribed criteria through the FVP process, it’s a potential outcome that many clubs will continue racing at their current venues. It is likely that some may voluntarily agree with the Code to race at an alternative venue, with the surplus venue utilised for a new purpose. This could involve becoming a training facility, being developed for commercial benefit, leased, or selling it (which some incorrectly default to). 

It’s possible that in some instances the Code and Club will either not agree to the best proposed use of their assets, or the Club may not choose to enter into negotiations with the Code. 

In these circumstances, the Bill proposes a new process:

  • The transfer of surplus venues to the Code through an Order in Council recommended by the Minister (note: this doesn’t apply to Reserve Land).

With regard to this process, before the Minister recommends an Order in Council, the Minister must first appoint an independent reviewer with relevant knowledge and experience to review the proposal. The independent reviewer must invite submissions from the relevant racing Code (or Codes) and racing Club (or Clubs) before preparing advice to the Minister. It is likely this independent review will also involve a visit to the venue and consultation with key stakeholders.

Before making a decision, the Minister must also take into consideration the purposes of the new Act, and all Clubs and community groups involved at the venue, whether they own it or not. 

There is also a provision in the Bill whereby if a Club is not racing, the Code may recommend to the Registrar-General to wind up a Club that is no longer racing. This would apply to a Club the Code has determined has not promoted, conducted, or controlled any race meetings in the previous racing year; or is no longer registered with the Code or is failing, or has failed, to meet criteria set by the code for continued registration with the Code. 

However, before making any final decisions, the Code must give the Club notice of its preliminary determination that the club is no longer racing, including the reasons for the determination; and then give the Club at least 40 working days in which to respond to the preliminary determination.

It’s important to remember that these two processes are intended as backstops only. We also can’t forget the impact of the new legal requirements on the Codes which will ensure that those Clubs who are affected are treated fairly and without bias. 

Conclusion 

Submissions on the Bill are due to Parliament by 11 February. This is the busiest time of year for most Clubs up and down the country, and we know there is a lot in this Bill to take in. 

We reiterate that we are happy to help clarify any questions you may have. These questions are best sent to [email protected]nz

We also encourage you to attend the upcoming regional industry conversations where we will be able to further discuss issues pertaining to the Bill.