The Government did not use to give money to the racing industry like they now do. Before Helen appointed Winston Minister of Racing, Vote Racing was just $300,000 a year which paid for a couple of policy people in the Department of Internal Affairs.
He then introduced a number of policies that were of great benefit to the racing industry, and to companies active in the industry. I’ll take them in turn:
Aligning duty rates
The New Zealand Racing Board used to pay duty at around 18% and Winston got the rate reduced in the 2006 budget to 4% which is the rate paid by casinos. The cost of this is $33.6 million a year.
Now this policy was not opposed by Treasury. They said it was good policy, and I think National even supported this move. It did seem silly to have different rates. Having said that there is a difference between supporting a policy because you think it is a good policy, and supporting a policy because you think it will attract money from the affected industry or are in their pocket.
Accelerated depreciation for bloodstock
In the 2006 budget, Winston also proposed accelerating the depreciation period for purchases by New Zealand taxpayers of stallions that have not previously been used for breeding in New Zealand at a cost of up to $1.5 million per annum.
Treasury also supported this.
Further depreciation for bloodstock
Winston then tried to get accelerated depreciation extended to shuttle stallions in 2007. Treasury said:
Treasury does not support funding for this initiative, as it is low priority and represents low value for money. The depreciation rate for shuttle stallions is already concessionary relative to their economic life, and approving the request would represent an even greater concession. Furthermore, the depreciation rate for shuttle stallions should be lower than that for stallions not previously used in New Zealand, as the latter have a higher risk profile. Approving the request may also increase the risk of tax avoidance and set a precedent for wider extensions.
Further, there is also a risk that approving the request could increase the risk of these assets being used in tax avoidance schemes. In the 1980s there were significant tax avoidance schemes incorporating inflated values for bloodstock, which took advantage of the accelerated write-down rates available. In addition, approving the request may set a precedent for further extensions to the new depreciation rules.
But Dr Cullen ignored his officials to keep Winston happy so he could deliver to his funders. The cost for this was an extra $1.5 million a year also.
In the 2007 budget, Winston started to really deliver directly for his funders. He got Helen and Michael to agree to $1 million a year for the establishment of a contestable fund to enhance workplace safety and to raise the quality of facilities at racecourses.
You might wonder why we do not have a Vote Skiing to raise the quality of facilities on ski fields and improve skifield safety?
Again the officials were not convinced. Treasury showed they were not against all spending – they supported the accelerated depreciation and the reduction in duty. Treasury said:
Treasury does not support funding for this initiative, as it is low priority and represents questionable value for money. In particular, it is unclear as to the extent of under-maintenance of racing facilities and why clubs cannot raise sufficient revenue for improvements on their own, e.g. through increased entry fees, sponsorship and community fund-raising.
There is little information provided beyond the anecdotal about the extent of under-maintenance of racing facilities and why racing clubs cannot raise sufficient revenue for improvements on their own, e.g. through increased entry fees, sponsorship or community fund-raising. This makes it difficult to gauge the potential value for money of the proposed contestable fund
But once again Michael and Helen gave Winston his baubles.
Then came the most outrageous policy for his benefactors. The Government would stump up millions of dollars every year to be used as prize money in races or to quote the proposal “the establishment of a fund to promote feature horse and greyhound racing carnivals and to increase stake money in feature races”.
And again Treasury tried their best to stop Winston looting taxpayer money to pay back his financial backers. But again Michael and Helen agreed to back Winston and gave him $3 million a year.
Treasury does not support funding for this initiative, as it is low priority and represents questionable value for money. In particular, there is insufficient supporting information around why and to what extent racing clubs are unable to generate sufficient revenue through traditional sources, or the extent to which feature race stakes need to be bolstered to increase the racing industry’s profile and encourage greater investment. There would also be potential precedent implications across other industries from creating such a fund.
So how much does this all total up to? Well over a three year electoral cycle it is $121.8 million.
That’s what you call a good return on investment for $250,000 or so of donations.
Personally I think Winston sold himself too cheap.