Counting the Cost Inquiry into the Costs of Problem Gambling Final Report December 2012 © State of Victoria 2012 This final report is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968 (Cth), without prior written permission from the Victorian Competition and Efficiency Commission. Cover image of Spring Racing Carnival at Caulfield reproduced courtesy of the photographer, Tony Feder. ISBN 978-1-922045-32-4 (paperback) ISBN 978-1-922045-33-1 (PDF) Disclaimer The views expressed herein are those of the Victorian Competition and Efficiency Commission and do not purport to represent the position of the Victorian Government. The content of this final report is provided for information purposes only. Neither the Victorian Competition and Efficiency Commission nor the Victorian Government accepts any liability to any person for the information (or the use of such information) which is provided in this final report or incorporated into it by reference. The information in this final report is provided on the basis that all persons having access to this final report undertake responsibility for assessing the relevance and accuracy of its content. Victorian Competition and Efficiency Commission GPO Box 4379 MELBOURNE VICTORIA 3001 AUSTRALIA Telephone: (03) 9092 5800 Facsimile: (03) 9092 5845 Website: www.vcec.vic.gov.au An appropriate citation for this publication is: Victorian Competition and Efficiency Commission 2012, Counting the Cost: Inquiry into the Costs of Problem Gambling, final report, December. About the Victorian Competition and Efficiency Commission The Victorian Competition and Efficiency Commission (VCEC), which is supported by a secretariat, provides the Victorian Government with independent advice on business regulation reform and opportunities for improving Victoria’s competitive position. VCEC has three core functions: reviewing regulatory impact statements, measuring the administrative burden of regulation and business impact assessments of significant new legislation undertaking inquiries referred to it by the Treasurer, and operating Victoria’s Competitive Neutrality Unit. For more information on the Victorian Competition and Efficiency Commission, visit our website at: www.vcec.vic.gov.au Disclosure of interest The Commissioners have declared to the Victorian Government all personal interests that could have a bearing on current and future work. The Commissioners confirm their belief that they have no personal conflicts of interest in regard to this inquiry. 13 December 2012 Mr Kim Wells MP Treasurer of Victoria 1 Treasury Place MELBOURNE VIC 3002 Dear Treasurer VCEC Inquiry into the Social and Economic Costs of Problem Gambling In accordance with the terms of reference received by the Commission on 14 June 2012, we have pleasure in submitting the Commission’s final report Counting the Cost. Yours sincerely Bill Mountford Presiding Commissioner Dr Matthew Butlin Chair Terms of reference Inquiry into The Social and Economic Costs of Problem Gambling in Victoria I, Kim Wells MP, Treasurer of Victoria, pursuant to section 4 of the State Owned Enterprises (State Body – Victorian Competition and Efficiency Commission) Order (‘the Order’) hereby direct the Victorian Competition and Efficiency Commission (‘the Commission’) to conduct an inquiry into The Social and Economic Costs of Problem Gambling in Victoria. Background The liberalisation of Victoria’s gambling laws in the early 1990s resulted in the development of a substantial and important industry. Today, the gambling industry plays a significant role in the Victorian economy, contributing to employment, tourism, productivity, investment and state revenue. It has been estimated that the net benefit to the community from Australia’s gambling industry in 2008-09 ranged between $3.7 and $11.1 billion (Productivity Commission 2010). Given the relative size of our industry, Victoria’s share of the net benefit is substantial. There is, however, strong evidence that gambling can adversely affect some individuals, their families and friends, and communities. The number of people affected by problem gambling is likely to be significantly greater than the number of problem gamblers in Victoria. The impacts associated with problem gambling include health and emotional problems, family breakdown, financial hardship and gambling-related crime, all of which create significant costs for the individuals, the community, business and government at all levels. While many of these costs are known, the full impact of problem gambling may not always be readily apparent. Government receives the financial benefit from the licensing and taxation of the gambling industry while the costs created by problem gambling are more widespread, falling on, amongst others, governments, community organisations, employers, families and individuals. The Victorian Government has, therefore, committed to undertake an inquiry into the extent of the social and economic costs of problem gambling in Victoria. The aim of this inquiry is to inform policy makers and the community about the true costs of problem gambling and where they fall. This will help ensure that government, the community and industry have the information and incentives necessary to reduce problem gambling, to develop harm reduction strategies that are based on robust evidence, targets and performance indicators, and thereby increase the net benefit from the conduct of gambling for all Victorians. TERMS OF REFERENCE VII Scope of the inquiry The Commission is to inquire into and report on the economic and social costs of problem gambling in Victoria, including: a) the cost of providing direct services designed specifically for problem gamblers and their families and friends; b) any other indirect costs to the social welfare system; c) costs associated with impacts on mental and physical wellbeing for both individuals and the health system; d) costs to the justice system, including the cost of detecting, prosecuting and punishing gambling-related crime; and e) costs to business, including lost productivity and the impact of gambling-related crime. The Commission, as it considers relevant and appropriate for the above scope of the inquiry, should have regard to: previous studies that have examined the costs of problem gambling, particularly the Productivity Commission’s 2010 Inquiry Report on Gambling; the differential costs of problem gambling across geographical areas of Victoria, for example between metropolitan Melbourne and regional Victoria, or between local government areas; and the costs of problem gambling to all sectors of the community, including the gambling industry and the Commonwealth Government. Inquiry process In undertaking this inquiry, the Commission is to have regard to its objectives and operating principles as set out in section 3 of the Order. The Commission must also conduct the inquiry in accordance with section 4 of the Order. The Commission is to consult with the gambling industry, responsible gambling and welfare organisations, health and community groups, business and relevant Victorian and Commonwealth Government departments and agencies. The Commission should draw on the knowledge and expertise of relevant Victorian Government departments and agencies, and may conduct special surveys or hold public hearings at its discretion. The Commission is expected to produce the following documents: an issues paper at the beginning of the inquiry process; a draft report containing analysis and initial findings for public comment; and a final report after the receipt of public submissions to be provided to me as soon as possible, but not later than 6 months after receipt of these terms of reference. KIM WELLS MP Treasurer Received: 14 June 2012 VIII COUNTING THE COST