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Issue #1602      July 17, 2013

Packer’s second stage win for super-parasite casino

James Packer has won the second (detailed) stage of his bid for a second Casino licence in Sydney, and hence for his proposal to build a huge casino and hotel building at Barangaroo whose proportions perfectly symbolise the corporate greed of his company Crown Holdings.

Echoing the words of Rupert Murdoch (and come to think of it, Uriah Heap) Packer declared: “It’s been a long journey, and I’m extremely humbled to be given this opportunity”.

He still has to negotiate his way through the third negotiating stage that terminates in either rejection or the signing of a contract. However, that’s virtually a foregone conclusion. The government has rejected a rival bid from Echo Entertainment, the company that runs the existing Star Casino at Darling Harbour.

Barangaroo’s treatment has been characterised by the insatiable avarice of would-be developers, and the eager complicity of successive state governments.

Nowhere is this more graphically displayed than in Packer’s $1.3 billion super casino proposal. Its proponents say it’s as impressive as the Sydney Opera House, but others have stated that it’s more suitable to Dubai or Las Vegas than Sydney.

At 250 metres high, it would be Sydney’s tallest building, far higher than previously allowed in the Barangaroo concept plan, and would cast enormous shadows on the CBD and surrounding suburbs. It has already caused major changes to the planning of the Barangaroo open recreation areas.

Packer claims the building would be carbon neutral. However, he also says he shouldn’t have to meet sustainability targets for the gaming rooms, because the intensive air conditioning they require consumes enormous amounts of energy, and the air-conditioning is required because patrons would be allowed to smoke in them.

But the reason they’ll be allowed to smoke is that Packer wants to attract the high rollers, so the government has given the gaming rooms an exemption from health and safety regulations!

Packer also wants the increase in the value of the hotel caused by the presence of the gaming rooms to be disregarded in determining the price of the site. He says that the government will get quite enough tax, and that increases in the value of the land would decrease the value of the licence.

For or against

By basing the selection for a second casino on the desire to maximise returns for the state coffers, and on the idea that what’s good for Packer is also good for the state, the government has effectively joined Packer as a fellow-parasite in the gambling industry.

Announcing the second stage approval, Premier Barry O’Farrell commented with great enthusiasm: “The value to gross state product and the value of extra taxes and fees from Crown was respectively 26 percent and 3 percent higher than the proposal put forward by Echo”.

The licence would cost Packer $100 million, and the gaming revenues would be taxed at 29 percent, not the 27.5 percent for which he was arguing. (Apparently he was entitled to negotiate his tax rate, rather than just having to pay it, as the rest of us do.)

Moreover, as a condition of the approval, the Crown casino must deliver at least a billion dollars in revenue to the state in its first 15 years of operation. But if you think that’s hard on Packer, think again.

He’s a multi-billionaire, and paying the government that much (on average $67 million per annum) would be chicken feed for him. With the help of investments in casinos in Macau he has more than recovered from the $300 million crash of his telecommunications company, One Tel, ten years ago.

Greens MP John Kaye commented:

“It’s all too easy for James Packer. For just $67 million a year Premier Barry O’Farrell is letting him plunge NSW further into the international casino economy. Far less than 0.1 percent of the state’s budget, the minute contribution Crown will make to the state’s bottom line is swamped by the social and economic costs”.

So many questions

The government agrees in principle (if that’s the right expression) with the issuing of a second casino licence, so why didn’t it invite open tenders?

In the unlikely event that Packer fails to win the third stage, tenders for a second licence will be invited anyway. So why didn’t the government do this initially, instead of treating the Crown scheme as an “unsolicited proposal” and entering into direct individual negotiations with Packer, a practice forbidden under normal competitive tendering processes?

Were the changes in the government’s conditions regarding Packer’s proposal, particularly the granting of permission for NSW residents to be VIP rollers, also applied to Echo’s bid, and if not, why not?

OK, Crown has said that poker machines would be banned in the casino, and that NSW residents who don’t qualify as high rollers (i.e willing to stake $25,000 minimum) would not be allowed in the VIP areas. But isn’t it true that other areas are to be set aside for them to indulge in bacarrat, blackjack and/or roulette?

Speaking of which, why are the minimum bets only $30 per hand for bacarrat, $20 for blackjack and $25 for roulette? Wouldn’t their presence, and the minimum bet size, create what one observer called “a full blown casino” that would ensnare ordinary working people in its vicious grasp, just as other casinos do?

Why is the redevelopment of Barangaroo being dominated by Packer’s casino proposal? Why is the government seriously contemplating approving construction of the proposed Crown casino, given that it’s a monstrosity, and surely the most arrogant building in Sydney?

Isn’t it true that the casino’s operations would provide an opportunity for money-laundering by local and overseas organised crime groups, as has happened in other casinos?

And above all, why should so much reliance for the state’s future development be placed on the corrupt gambling industry? Shouldn’t we be trying to reduce the devastating impact of gambling instead of promoting it? Shouldn’t we be striving to develop really productive industries rather than socially destructive ones?

And to reduce gambling’s impact, shouldn’t we be using powerful psychological deterrents, like the federal Labor government’s enforced inclusion of graphic warnings against smoking and the mandatory use of plain paper packaging for cigarettes?

As Bertoldt Brecht observed, so many particulars, so many questions.   

Next article – Income management comes under attack

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