Michael Pascoe: When a gift to gambling is sold as a housing initiative
Funny how things get reported. New South Wales, its citizens the world’s worst (i.e. biggest) gamblers, is gifting somewhere between $5 billion and $7 billion to the horse racing/wagering industry – but according to every media report, that’s somehow about affordable housing.
Well, maybe just at the margin. Subject to how hard the NSW Government negotiates with the powerful Australian Turf Club, a percentage of the 25,000 dwellings the ATC intends to develop on the site of the Rosehill racecourse might be reserved for “affordable” housing.
There was a saying in old Hong Kong that the colony was run by the Royal Hong Kong Jockey Club, the Bank (the HK & Shanghai Bank), and the Governor, in that order.
The rezoning windfall
It could similarly be said NSW is run by the clubs and pubs industry (electronic gaming machines), the ATC (wagering) and property developers, with the government of the day bringing up the rear.
Rezoning nearly 100 hectares at Rosehill for the ATC unites two of the big three – property developers are delighted about the prospects as the ATC lacks the expertise to develop the site itself.
The totally overlooked story is that Premier Chris Minns’ Thursday announcement is the biggest example yet of massive policy failure – the windfall profits all state and local governments gift to property developers with the stroke of a rezoning pen.
With only some rather random, opaque and proportionately minor “value capture” infrastructure contributions from developers, there is no greater financial honeypot than the rezoning game. In 2020, Dr Cameron Murray estimated Australian governments gift developers $11 billion each year.
And the way the game is played helps ensure housing prices keep rising.
The Premier’s media release was headlined “Once-in-a-generation opportunity for Rosehill and to secure the future of the NSW racing industry”. (https://www.nsw.gov.au/media-releases/proposal-to-relocate-rosehill-racecourse ) A rezoning gift worth at least $5 billion will do that for you.
As ATC chairman Peter McGauran said, it would set up NSW as the best resourced racing industry in the world.
NSW targets Victoria
He also hinted at the power it would give NSW over its Victorian racing rivals, which might raise the ire of his former state. For 25 years, Mr McGauran was the National Party member for the Victorian seat of Gippsland. Soon he could have the money to move the Melbourne Cup to Randwick – Melbourne’s November weather is often dreadful anyway.
The $5 billion is a conservative estimate. It’s based on roughly making an average profit of $150,000 on each of 25,000 units. Given that the ATC has the land for free, that is very conservative indeed – maybe try $7 billion.
And the government keeps giving. To arrive at the public announcement of the ATC’s unsolicited proposal and a memorandum of understanding, the Turf Club had two baseline non-negotiables: a Metro West station in Rosehill and being given the Horsley Park complex to develop a training facility for the 300 horses or so to be relocated from Rosehill.
Mr McGauran said that without the Metro station, there would be no project.
Chris Minns said on Thursday the new Metro station would cost more than $500 million. I asked an ATC spokesman if the club would be paying for that. His answer was an emphatic: “We hope not!”
The government ducks what might be negotiated under the MOU. Early days, etc. Some affordable housing might be on the cards. Social housing? Er, early days.
(There was one genuine policy improvement this week: the affordable housing element of developments making use of higher height and density limits near eight train stations will be in perpetuity – not time limited as they have been under the previous government.)
A reasonable person might think paying for the Metro station that makes the $5 billion or $7 billion profit (and it’s tax free – you know, “non-profit” clubs) would be the least the ATC could do. It would be less than 10 per cent of that windfall tax-free profit.
How prime does the Metro station make the Rosehill development? Try 17 minutes to the CBD and five minutes to Parramatta.
As it stands, the ATC is looking at more money than it might know what to do with. Aside from the new Horsely Park “state-of-the-art” training facility, its three other Sydney racecourses – Randwick, Canterbury and Warwick Farm – all get upgrades ranging from major to massive.
And it will buy (or talk the government into) a site for a totally new racecourse, a course aimed not at the shrinking number of punters and desperates who bother to visit most race meetings, but the wagering industry of TABs and online betting companies.
The new racecourse will be much smaller and not used for training. There will be a grandstand but negligible other facilities. It really just provides a track for television to broadcast horses running around in a circle for people to bet on.
It’s the wagering tail that wags the horse that drives the politicians to the bar and helps them drink. Premier Minns press release described it thus: “Several sites across Sydney will be earmarked and investigated for a new, world-class racecourse track and facilities.”
Sounds like a fair proportion of the land gained for housing at Rosehill will be lost for potential housing somewhere else.
Then there is the counterfactual: What might happen if the NSW Government said no to the ATC’s raiding of the rezoning honeypot?
Why not wait?
Without the proposed billions, racing in NSW is declining. Left to its own devices, the ATC is looking at being unable to maintain four racecourses. It would eventually need to sell at least one of them.
And what is the value of a large block of land zoned for a racecourse? Not much. It would eventually be cheap for a government seriously committed to affordable and social housing to buy and do what most needs to be done.
Someone on Twitter noted that it’s acceptable for government to compulsorily acquire land for roads and such – why not for housing?
The reality of politics means no way. Hundreds of citizens can lose their homes to a road-widening, but a government resuming a race track would be lucky to last a day.
Given the previous NSW administration being forced to back down on ending greyhound racing, anything that might offend the hayburner community is off limits – even if it is mainly about gambling and this is without going anywhere near horse welfare.
Australians lose more money per head gambling than any other country, and NSW residents lose more than the citizens of any other state.
Tells you something about who runs the place.