July 09, 2018 07:07:59
The place of poker machines in Australian life, including whether they help create jobs, is hotly contested.
Pokies were front and centre in state election campaigns in South Australia and Tasmania this year, while some operators have been dogged by claims of malpractice.
During a radio interview discussing Tasmanian Labor’s proposal to remove pokies from the state’s pubs and clubs, World Vision chief advocate Tim Costello said earlier this year: “A million dollars spent on pokies only creates three jobs.” Is he correct?
RMIT ABC Fact Check investigates.
Mr Costello’s claim is not clear cut.
A lack of current data makes it impossible to make a definitive statement about gaming income and jobs creation.
The claim does accord with credible 2006 research, which experts consulted by Fact Check said they believed would likely still hold true today. However,the data it relies upon is now 17 years old.
Experts noted that some venues had used poker machine revenues to fund expansion in other areas of their business, such as dining services, which may have led to the creation of more jobs.
But they also said that money which goes through the pokies depresses economic activity in other areas where that money might have been otherwise spent. This makes it hard to say where jobs are being lost or created.
The available data
Mr Costello told Fact Check that the source of his claim, made on February 21, was a 2006 report by the South Australian Centre for Economic Studies that was commissioned by the state’s Independent Gambling Authority.
The report drew, in part, on an Australian Bureau of Statistics survey of businesses in the clubs, pubs, taverns and bars industries from the 2000-01 financial year.
The survey collected data on income, expenses, profitability and employment, and compared businesses with and without gambling facilities.
The South Australian report found that gambling activities in the hospitality industry were not as job-intensive as other activities, with every $1 million of gambling income creating the equivalent of 3.2 full-time equivalent jobs.
By comparison, the report estimated that there were 8.3 jobs per $1 million from sales of liquor and beverages, and 20.2 jobs per $1 million of takings from food and meals in hotels, taverns, bars and clubs.
The ABS no longer conducts the same survey of hospitality businesses, and experts told Fact Check there was no comparable recent research on direct employment from gambling expenditure.
Instead, accounts tend to be produced by smaller think tanks and research groups, complemented by testimony from interested parties such as business owners and employees.
The ABS does publish data on gambling-related jobsin its detailed quarterly release on the Australian labour force (see table 6).
Meanwhile, data on poker machine expenditure is included in annual statistics related to gambling in Australia published by the Queensland Government’s Statistician’s Office in co-operation with all Australian state and territory governments.
Is the data still relevant?
The Dean of Griffith Business School, Professor Fabrizio Carmignani, told Fact Check that, in a qualitative sense, the statistic still checks out.
But given the lack of current data it was impossible to guarantee the claim was accurate quantitatively.
“The 2006 data provides the exact numbers which show that pokies are less labour-intensive than other recreational activities,” he said.
“While we do not have a new study that confirms the exact number, this is still likely to be the case.”
Professor David Peetz, of Griffith University’s Department of Employment Relations, agreed that the numbers remained as solid estimates.
“Technically, there would be a small adjustment downwards due to inflation,” he said.
“That is, each year, the number of jobs a given amount of money — in nominal terms — would generate would reduce a bit as the cost to generate a single job would increase slightly.
“Over 12 years, this would add up to quite a bit but still not enough to materially affect the implication of the claim.”
Dr Charles Livingstone, head of the Gambling and Social Determinants Unit at Monash University, who specialises in pokies research and commentary, told Fact Check that the automation of pokies in the years since the report had not increased enough to change the ratio of estimated full-time equivalent jobs per $1 million of gaming income.
“In the club and hotel [poker machine] sector, there has been no additional automation beyond that existing in 2006, although the introduction of more up-to-date network monitoring systems has probably reduced employment in the industry sector that operates those systems,” he said.
Dr Livingstone said he expected the numbers to still be accurate, despite it being over a decade since the report was released.
He examined ABS data on gambling-related jobs since the SA report was published, and figures on gambling expenditure published by the Queensland Government’s Statistician’s Office in co-operation with all Australian state and territory governments.
He noted there were “no really noticeable changes in employment” in the sector and “much the same levels of expenditure, too”.
In light of this, he told Fact Check, there was “no reason to think that the three jobs per million dollars [ratio] has changed”.
Professor Michael O’Neil, the executive director of the South Australian Centre for Economic Studies, said that the job creation rate per million dollars spent still stood up to scrutiny.
He said that the centre had been working on more recent studies that verified the data, but these had not been completed.
“The ratio still holds at the machine — and net losses per machine — level, so that three jobs per million dollars of expenditure still holds,” he said.
“My view is that it is not disputed, and forthcoming reports will strengthen that conclusion.”
Why it can be tricky calculating gaming-related jobs
Due to pokies often being located in clubs and pubs, the hospitality and gaming industries regularly intersect, making it difficult to determine exactly how spending on gaming translates into jobs.
This difficulty was noted in the South Australian report: “While the estimates are not precise due to the nature of the data and simplified methodology used (e.g., staff may perform more than one activity), they should nevertheless provide a useful indication of the relative job intensity of particular venue activities.”
The point is made similarly in several other reports — the Productivity Commission’s 2010 report on gambling; the report into Removing Poker Machines from Hotels and Clubs in Tasmania: Economic considerations (2017); and, the latest Tasmanian Social and Economic Impact of Gambling Study (January 2018).
According to the latter, when it comes to estimates of full-time equivalent employment, “caution must be used when quoting these figures and it is important to note these accuracy limitations.”
What kinds of jobs are created by pokies?
Often, workers in pubs and clubs are expected to be “all rounders” who work across gaming and at the bar, as well as in a venue’s bistro area.
The main job created by pokies is that of gaming room attendant/supervisor, the person who, among other duties, maintains machines in the case of a malfunction, delivers snacks and drinks to punters, and processes payments.
If pokies are removed from certain venues, or their use is somehow restricted, then the money not spent on gaming is likely to be redirected to other recreational activities, such as dining and entertainment, or to expenditure in the retail sector.
Professor Fabrizio Carmignani
The position requires a gaming licence qualification, with one of the key responsibilities to be ready to intervene when a player displays traits of gambling addiction such as aggression, appearing sad or withdrawn, or gambling very fast and intensely.
Despite the low ratio of full-time equivalent jobs to million dollars lost on pokies, the machines can result in reasonably significant employment outcomes, according to the Productivity Commission’s 2010 report.
It noted that revenues from player losses in clubs and pubs played an important role in helping expand those businesses because “broadly speaking, clubs that have expanded their operations are likely to have done so partly through gaming”.
Upgrades, such as improved bistro services, TAB and sports betting facilities, often made hotels and clubs more profitable and able to employ more staff.
Professor O’Neil said that in such cases pokies expenditure had played an important role in the expansion of the businesses.
If you’re spending on something that gives you three jobs per million at the expense of something that gives you eight or 10 or 20 jobs per million, well, your net impact on employment is probably going to be negative.
Professor David Peetz
“What we’ve seen over time is increases in employment directly in that hotels and clubs sector, but it’s principally attributed to food prep and food services and that’s attributed to development, investment and expansion of a lot of hotels,” he said.
“At the end of the day, you can see the increase in employment but it hasn’t come directly from gaming itself — it’s actually come from facilities that hotels offer like the TAB, sports betting and generally the improvement in eating and hospitality services.”
Fact Check approached the national peak body for clubs and hotels, the Australian Hotels Association (AHA), seeking a response to Mr Costello’s claim and information on job creation through electronic gaming but did not receive a response.
The impact on other sectors of the economy
Experts consulted by Fact Check noted that Australians’ spending on the pokies could potentially be hurting other sectors of the economy, leading to fewer jobs being created in those areas.
Professor Carmignani said: “If pokies are removed from certain venues, or their use is somehow restricted, then the money not spent on gaming is likely to be redirected to other recreational activities, such as dining and entertainment, or to expenditure in the retail sector.”
Dr Livingstone and Professor Peetz both agreed, telling Fact Check that money going into pokies results in funds being directed away from bigger employers in retail and hospitality.
“If you’ve got a million bucks going into the local pokies, and often it’s many multiples of that in a suburban venue, then what happens is that that’s a million bucks that’s not available for other purposes,” Dr Livingstone said.
“Some of that is being diverted from fairly important purposes like rent, mortgage, meals, food, the basics of life… but that other part of it that would have been spent in local cafes, restaurants, going to the movies, or whatever, is not available for that purpose so it does have a tendency to deflate local economic activity,” he said.
Professor Peetz told Fact Check: “If you’re spending on something that gives you three jobs per million at the expense of something that gives you eight or 10 or 20 jobs per million, well, your net impact on employment is probably going to be negative.”
But Professor O’Neil did not entirely agree, telling Fact Check that while much of the spending on pokies was “new expenditure”, most had been diverted from spending on lotteries.
“One of the things you can see is that when [gaming machines] were put into hotels and clubs right around Australia, every single state experienced about a 30 to 40 per cent fall in expenditure on lotteries.”
Principal researcher: Claudia Long
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