Mount Alexander SC v Victorian Commission for Gambling and Liquor Regulation... [2013] VCAT 101 | Case summary

Mount Alexander SC v Victorian Commission for Gambling and Liquor Regulation... [2013] VCAT 101 | Case summary | Zoe

[33]

The Maryborough Highland Society Inc. (MHS) has sought the approval of premises in Castlemaine as suitable for gaming with 65 gaming machines.
If approved, and subject to other planning and licensing approvals, MHS proposes a $3.5 million restoration and redevelopment of a historic railway shed in Castlemaine, known as the Old Goods Shed, to create a multi-purpose entertainment facility comprising a bar/bistro and café/lounge, a 357 patron function room, and a gaming lounge. The venue will also provide two meeting rooms and a small community art space.
At present, there is only one approved gaming premises in Mount Alexander Shire, with 30 gaming machines at the Cumberland Hotel in Castlemaine operating as a 'pub' gaming venue. If the MHS proposal is approved, it would be the first 'club' gaming venue in Castlemaine, and would more than treble the number of gaming machines in that community.
The Victorian Commission for Gambling and Liquor Regulation[1] (Commission) determined on 3 February 2012 to grant the approval, pursuant to s 3.3.8 of the Gambling Regulation Act 2003 (GR Act).
The Mount Alexander Shire Council (Council) had made a submission to the Commission under s 3.3.6 of the GR Act, addressing the economic and social impact of the proposal for approval on the well-being of the community of its municipal district. The Commission found that the net effect on well-being would be neutral. The Council contests that finding, and seeks a review of the Commission's determination by the Tribunal, pursuant to s 3.3.14(2) of the GR Act. This proceeding deals with that issue.
A local community group, Enough Pokies in Castlemaine Inc. (EPIC) has been formed to oppose the application, and has done so vigorously.
Since the Commission decision, the proposal has been modified. A separate entity, the Castlemaine Sports and Community Club Inc. (CSCC), was established with the intent that it will operate the proposed facility subject to a management agreement with MHS.
Both EPIC and CSCC were granted the opportunity to be heard at the Tribunal hearing, without being joined formally as parties. Given the commonality of interests, MHS and CSCC were jointly represented.
A large volume of background documents, evidence and submissions were provided in the course of a 10-day hearing. Whilst I have considered all of the documents, evidence and submissions, I have referred in these reasons only to the material I consider necessary or desirable to substantiate the decision on relevant and determinative matters.

[35]

MHS was first established in 1858[2] and has, within its long and rich history, organised the popular highland gathering in central Victoria (since 1859) and the running of the Maryborough Gift foot race. MHS already operates a 56-machine gaming facility in Maryborough in conjunction with its bowls club and associated sporting facilities. I visited that venue in November 2012, as well as visiting relevant sites in Castlemaine.
MHS obtained the entitlement to 65 gaming machines for Mount Alexander Shire at the statewide auction in 2010, with the intent of establishing a new venue and thereby increasing its member base and relevance, and pursuing its broader objectives beyond Maryborough into surrounding districts. It had, in 2010, also assisted the struggling Kyneton Bowling Club (then operating 25 gaming machines) with a financial rescue package, and the MHS has now effectively taken over the operations of that club.
At the time of the Commission hearing, MHS had proposed to operate the Castlemaine venue through a club run as a sub-group of the society, governed by a sub-committee under the MHS Rules (known as the Castlemaine Committee) with three members resident in Mt Alexander Shire and three appointed by MHS[3]. All club members were to be members of MHS.
In granting its approval for the Castlemaine venture, the Commission placed substantial weight on the identity, characterisation, integrity, motivation and experience of MHS as the applicant for approval, and its role as a successful community-based philanthropic organisation[4].
As a result of changes to transfer rules in 2011[5], and perhaps partly because of local opposition to its proposal, MHS facilitated the formation of a separate Castlemaine-based club (i.e. what is now the CSCC), with the intent that the entitlements to the 65 gaming machines be transferred to it once all relevant statutory approvals have been obtained. CSCC was incorporated on 11 May 2012.
The lack of clarity or certainty about the role or independence of CSCC in the modified MHS proposal has been the cause of some community disquiet. Although CSCC is a separate incorporated body, MHS proposes to exert a high level of control over CSCC through a management agreement[6]. The agreement was only finalised and executed on 22 August 2012 (the third day of the hearing), with a copy tendered to the Tribunal and other parties later that day.
Key elements of the MHS modified proposal, when read in conjunction with the management agreement and other material, provide:
- MHS will arrange a bank loan of $3 million on behalf of CSCC, at cost (i.e. on bank terms, but without a premium payable by CSCC to MHS), to finance the restoration and redevelopment of the Old Goods Shed. MHS will oversee the redevelopment;
- MHS will lend a further $1.2 million to CSCC, on terms, to establish the club business. MHS may unilaterally contribute additional amounts, to be added to the loan;
- MHS will transfer the gaming entitlements to CSCC, with repayments covered by a bank loan secured against those entitlements;
- CSCC will pay MHS a one-off project management fee of $400,000, which will be added to the loan (and thus be repayable, on terms);
- CSCC contracts MHS to operate the club business, with CSCC to pay MHS an annual management fee of $250,000 per annum, payable monthly, in addition to other operational costs;
- a minimum community cash contribution of $50,000 per annum will be paid from the revenue of the club business to not-for-profit community groups in Mount Alexander Shire, to be paid after operating expenses and bank loan re-payments. (There is ambiguity in the agreement and evidence about who will control this contribution, and the extent to which it is 'guaranteed');
- MHS will ensure that a minimum community in-kind contribution to the value of $150,000 (or $200,000 less the cash contribution) per annum is provided as part of the club business for the benefit of not-for-profit community groups in Mount Alexander Shire - e.g. free use of club facilities, meal vouchers etc. (There is ambiguity in the agreement and evidence about what this might entail, and where it ranks in the order of payment obligations);
- any surplus revenue from the club business to be returned to CSCC for distribution by CSCC in accordance with its Community Contribution Program. (There is ambiguity in the agreement and evidence about what this may entail. This program is not restricted to Mount Alexander Shire[7]);
- MHS holds a charge over CSCC assets, and CSCC grants MHS a broad power of attorney. In addition, MHS can conditionally sell the club business.
MHS tread a fine line in the hearing, in attempting to extol the virtues of CSCC as an independent and Castlemaine-focussed body, whilst at the same time relying on MHS's effective operational control to contend that nothing of substance had changed since the Commission hearing.
Some of the proposed management arrangements between MHS and CSCC are at a level of detail well beyond that which is relevant to my decision. As will be seen, the Tribunal only has an interest in these arrangements to the extent they materially influence or change the net economic and social impacts of the proposal on the well-being of the community.

[37]

This proceeding is not a referendum on gaming machines in Castlemaine, nor the virtues or ills of the operation of gaming machines generally.
Whilst there was a broad range of issues canvassed at the hearing, some more relevant than others, this case ultimately addresses a single fundamental question posed by the GR Act. Is the Tribunal satisfied that the net economic and social impacts of the MHS proposal for 65 gaming machines at the Old Goods Shed in Castlemaine will not be detrimental to the well-being of the community? If the Tribunal is not so satisfied, the GR Act mandates that it must not grant a gaming premises approval.
This question is to be answered objectively on the basis of the evidence and submissions presented to me at the hearing.
On basis of evidence and submissions in this proceeding, I am not satisfied that this 'no net detriment' test has been met for this particular proposal. In particular:
- the proceeding before the Tribunal is sufficiently different to the case before the Commission, such that the Commission's decision cannot be given the considerable weight it might ordinarily deserve. The Commission's decision remains relevant to the assessment;
- there are deficiencies and uncertainties in the MHS case, which were exacerbated by the late introduction of its modified proposal;
- the economic impacts of the proposal, considered alone, will be positive, but only moderately so (and not 'moderate to strong' as the Commission had found). In particular, the MHS proposal would provide new facilities, generate gaming expenditure that will have positive flow-on effects in the local economy, and will not unreasonably impact on local businesses. However, some of these benefits have been over-stated;
- the social impacts of the proposal, considered alone, will be negative, and moderate to strongly so (and not merely 'negative or at best neutral' as the Commission had found). There are some undoubted competitive and community benefits in having a 'club' venue that offers an alternative to the current gaming monopoly in Castlemaine at the Cumberland Hotel (at least for those that will use it), but these are to be counter-balanced against the risk of problem gambling and the extent of community opposition. Some of the social disbenefits have been under-stated;
- although the issue of community contributions was a significant issue of debate in the proceeding, those contributions are clouded in a degree of uncertainty, and they have not proven significant to the overall decision.
The net economic and social impacts of this proposal remain finely balanced, although perhaps not to the same degree as before the Commission. Despite a strong 'anti-pokies' sentiment in some sections of the Castlemaine community, there are some undoubted benefits in the MHS proposal. However, the evidence and submissions in this case, considered collectively, lead me to the opinion that the net social disbenefits will outweigh the net economic benefits of the proposal such that the overall net impact of this particular proposal on community well-being will be negative. The range and intensity of community opposition, and perceptions of a change to the social character of Castlemaine through a trebling of gaming machines in the town through a single approval, without sufficiently clear benefits to the Castlemaine community and the broader community of the Mount Alexander Shire, reinforce this view.
I might also add that it is as much the lack of sufficient probative material from MHS on the determinative issues (and the uncertainties and inconsistencies in its material) that has led to the outcome in this case, rather than any knockout blow from the Council or EPIC on any single issue. For example, MHS provided the Tribunal with little expert or objective material to assess the social impacts of the proposal, other than a limited desktop review by the economist Mr Quick. As the applicant for statutory approval, MHS has failed to persuade me overall that the 'no net detriment' test is met for this proposal. Conversely, the Council (with assistance from EPIC), has made out a case that some of the economic benefits of the proposal are uncertain or have been over-stated, and that the social disbenefits of the proposal have been under-stated.
An applicant for a statutory approval should not assume that the Tribunal will overlook serious gaps and anomalies in its evidence. To favour the MHS case in this proceeding would imply that 'near enough is good enough' and that gaming premises approval is the default outcome in proceedings of this nature. That is not the case. Where community well-being is in issue in a finely balanced matter, the Tribunal needs to be properly and positively satisfied that the statutory test has been met. I am not so satisfied.
This summary of conclusions is not exhaustive, and should not be treated as a substitute for the more detailed reasons that follow.

[47]

The GR Act allows for the setting of state, regional and municipal caps on the number of permissible gaming machines. No relevant cap is exceeded in this case. A cap is not an aspirational level of gaming machines for an area. The fact that a region or municipality may be below, or even well-below, a cap does not of itself imply that further gaming machines can or should be approved.
The Commission noted that the purposes of the GR Act have evolved over time, and both the Commission and the Council drew my specific attention to the 'policy context' of the GR Act summarised through six principles set out in the second reading speech for the Bill[9], and said to guide future gaming policy:
- developing and reinforcing the government's commitment to responsible gambling through measures that assist and protect problem gamblers and those at risk of becoming problem gamblers, their families and the wider community;
- developing and maintaining the state's commitment to the highest standards of probity for gambling service providers;
- accepting gambling is a valid activity for many Victorians who are entitled to expect ongoing high standards of service, transparency and accountability from the gambling sector;
- ensuring that the legitimate financial benefits of gambling (both private and public) are transparent, appropriately recognisable and fairly distributed to the Victorian community;
- that to the extent possible consistent with the other principles, gaming service providers operate in a competitive environment; and
- establishing proper consultative processes to ensure that appropriate information is given to, and input is received from, the wide variety of persons interested in gambling including stakeholders, affected parties and, to the widest extent possible, the broader Victorian community.
I agree with the Commission that the overall regulatory framework makes it clear that the potential for the provision and use of gaming machines to cause harm needs to be balanced against individual rights of self-determination, and the legitimate benefits of gaming being fairly spread throughout the community. Indeed, the policy seeks to endorse and facilitate responsible gambling.
The policy will be of particular relevance where discretion is to be exercised by a decision-maker under the GR Act, and will often favour a gaming approval. However, the government has seen fit to implement the policy, in part, through setting a specific statutory pre-condition for gaming premises approval under the GR Act. The Commission (and, on review, the Tribunal) must not grant the approval if it fails to meet the so-called 'no net detriment' test. Whilst the policy provides part of the context for decision-making, it is this statutory test, and the other mandatory considerations under the GR Act, that most directly apply to gaming premises approval, and that apply in this proceeding.

[54]

Section 3.3.7 of the GR Act sets out a number of matters that the Commission [and, on review, the Tribunal] must consider, or about which it must be satisfied in determining whether to grant an approval. These are that:
- the Commission must be satisfied that the applicant has authority to make the application in respect of the premises (s 3.3.7(1)(a));
- the Commission must be satisfied that the premises are, or on the completion of building works will be, suitable for the management and operation of gaming machines (s 3.3.7(1)(b));
- the Commission must be satisfied that the net economic and social impact of approval will not be detrimental to the wellbeing of the community of the municipal district in which the premises are located (s 3.3.7(1)(c)).
- the Commission must consider whether the size, layout and facilities of the premises are or will be suitable (s 3.3.7(2));
- the Commission must consider any submission made by the relevant responsible authority (s 3.3.7(3)); and
- the Commission cannot approve an area as a gaming machine area unless that area is wholly indoors (s 3.3.7(5)).
This proceeding is only concerned with the third of these matters - the so-called 'no net detriment' test.
To the extent the Tribunal need concern itself with the other mandatory considerations in s 3.3.7, I agree with the Commission that none would lead to a refusal of the application. I note that:
- MHS has conditionally leased the Old Goods Shed from VicTrack, and it made the gaming application with the knowledge and consent of the owner of the premises;
- subject to completion of redevelopment generally in accordance with plans tendered to the Commission, and the obtaining of any necessary planning or building approvals, the size and layout of the premises appears broadly suitable for the management and operation of gaming machines. No part of the gaming area is proposed outdoors; and
- the Commission properly considered the submissions made by the responsible authority (i.e. the Council) under s 3.3.6 of the GR Act, albeit that it came to a different conclusion on net detriment.

[67]

The most obvious way to follow the 'statutory signposts' referred to in Romsey is to first establish the positive and negative impacts of approval - i.e. separately establish the likely economic benefits and disbenefits of the proposal and the social benefits and disbenefits. Surprisingly, this does not always occur.
The task of indentifying likely benefits and disbenefits will not always be straightforward given the overlap of socio-economic issues, and the quality and availability of relevant data and cogent evidence. Some economic outcomes may have social consequences, and vice versa.
In Romsey Hotel Pty Ltd v Victorian Commission for Gambling Regulation (Romsey #2) [15], Justice Bell noted that economic and social benefits were distinct categories, but that they may overlap. His Honour suggested that, in appropriate cases, this may lead to them being considered together, as the 'no net detriment' test is a composite test[16]. Most however choose to consider them separately, as I have done in this case. For impacts that may be both economic and social - for example the benefits of gaming consumption - it was indicated in Romsey #2 that it did not matter whether the benefit was considered on the economic side, or the social side, or both, so long as it was included and not double-counted in the ultimate composite test[17]. I agree.
The task of considering economic and social benefits and disbenefits will invariably require a greater attention to detail, and more cogent evidence, in circumstances where the outcome of the 'no net detriment' test is likely to be more finely balanced. Here, the Commission had decided that the impact of the Castlemaine approval was 'finely balanced'. Indeed, it concluded that the net economic and social impacts on the well-being of the community "will be neutral". Despite this, on a review of the Commission's decision in a fiercely contested proceeding, MHS struggled to clearly articulate before the Tribunal exactly what the economic benefits and disbenefits of its proposal were, and what the social benefits and disbenefits of the proposal were[18]. MHS did not (nor the other parties) provide a list of the matters it contended as relevant economic or social benefits and disbenefits until directed to do so by the Tribunal towards the end of a 10-day hearing. On some issues, there appeared to be a scattergun approach to the submissions and evidence, leaving it to the Tribunal to make of it what it might. This is clearly unsatisfactory.
I note that in Royal Benalla Hotel v Victorian Commission for Gambling Regulation[19], a decision delivered since the hearing in this case, the Commission's counsel had provided the Tribunal in that case with a table of likely economic and social benefits and disbenefits, and with some comments relevant to the relative weight to be given to particular factors. The table is replicated in that Tribunal's decision. It is a useful way of transparently dealing with the 'no net detriment' test, and might perhaps be considered for wider application. Indeed, it would be beneficial if all parties in a proceeding where the 'no net detriment' test is in issue provided a clear list of the likely economic and social benefits and disbenefits that each party relied upon - if not at the Commission level, then certainly at the Tribunal. It would force parties to properly identify relevant factors, isolate the substantive areas of disagreement, and to direct their evidence to the determinative issues arising from the 'no net detriment' test. It also allows the Tribunal to offer greater transparency in its decision in being seen to deal with each of these factors, albeit that the relevance and weight it attaches to particular factors may differ from the parties.
I have adopted a similar approach here, by listing in tabular form in Part C of these reasons the economic and social factors identified by the parties in response to my direction.

[74]

Ultimately, then, resolution of the 'no net detriment' test is a matter for judgement for the Tribunal in each case in satisfying itself whether there will be 'no net detriment' arising from the approval. That judgement may well depend on the nature and extent of particular evidence and submissions in a particular application. The task will also invariably require a greater attention to detail, and more cogent evidence, in circumstances where the outcome of the 'no net detriment' test is likely to be more finely balanced.
Expert evidence is useful - indeed, often critical - in properly identifying relevant economic and social impacts, and providing details or a professional opinion (and the material upon which it is based) that enables a quantitative or qualitative assessment to be made about each factor. I agree, however, with the Commission that the ultimate issue - the resolution of the 'no net detriment test' - is a matter for judgement by the Tribunal rather than a matter for individual expert 'opinion'. Expert witnesses should generally avoid advocating a particular overall outcome for the proceeding, given that their individual evidence needs to be seen as impartial and for the benefit of the Tribunal, is limited to the matters within the expert's expertise, and forms only part of the overall assessment.
In this case, both Mr Quick (for MHS) and Ms Rosen (for the Council) purported to provide a concluded professional opinion on the net economic and social impacts on community well-being. However, Mr Quick had undertaken only a limited social impact assessment, and Ms Rosen had undertaken no economic impact assessment. The individual assessments within their respective expertise are very helpful, but their ultimate overall opinions are of limited (if any) value.
Beyond the evidence of experts, there will, of course, in any community, also be community leaders or those with standing to speak objectively about their community or part of it, or about a specific economic or social issue affecting that community. However, it is difficult for a Tribunal to glean evidence about community-level impacts from individual lay witnesses who simply proffer their own partisan view, and I query the usefulness of such evidence in a case such as this. How does one consider and compare the passionate view of an individual EPIC supporter about his or her sense of community well-being against the equally passionate (but diametrically opposed) view of an individual CSCC supporter about that same community? Whilst their individual views may be reasonably and genuinely held, they are each presenting their own perspective of 'community' - sometimes narrow or selective - and the Tribunal has to make an assessment about the objectivity and weight to give to those views. It is an unenviable task. The single-mindedness of a pro-pokies or anti-pokies view can lead to self-serving evidence of limited probative value - demonstrated to a degree in this case, for example, by the competing evidence of Mr Jeffries and Mr Stretch. Evidence of individual witnesses of this type can provide relevant background, but has not proven determinative in this case.

[78]

The Tribunal is often told (as it was in this case) that community attitudes surveys across Victoria regularly demonstrate opposition to gaming machines in the range of 75% to 85%, with a slightly lower opposition if the venue is operated by a not-for-profit club rather than a pub. Although now a little dated, the 2003 Victorian Longitudinal Community Attitudes Survey[22] showed that:
- a substantial majority of Victorians (85.1%) considered gambling a serious social problem in Victoria - in particular gambling through electronic gaming machines;
- non-gamblers (87.3%) and gamblers (74.2%) agreed that gambling was too widely accessible;
- non-gamblers (88.5%) strongly disagreed, and gamblers (68.8%) disagreed, that gambling has improved the social life of their suburb or community; and
- non-gamblers (93.7%) and gamblers (85.5%) were significantly inclined to prefer an overall reduction in gaming machines.
As indicated earlier, a Tribunal proceeding about a gaming premises approval is not a referendum on gaming machines, and the playing of gaming machines is an acknowledged lawful activity that many Victorians enjoy. However, some applicants for gaming approval seek to use this general proposition as a basis for refuting or downplaying the relevance of community apprehension about gaming machines evident from a community attitudes survey. In this case, it was also suggested by MHS that the opposition by some Castlemaine residents to the application was 'within the normal range of opposition' to a new gaming venue in Victoria, or slightly lower, and thus of limited relevance or weight. The inference was that community opposition would need to be overwhelming, or higher than the average range of opposition, in order to militate against approval[23].
I do not consider this the correct approach. In particular, the Court of Appeal in Romsey made it clear that community apprehension about the advent of gaming machines is capable of constituting a relevant social impact occasioning relevant detriment to the well-being of a community. It may be a salient fact giving shape to the matter of social impact, and a community attitude survey for a particular community may provide evidence of this - even if not expressly referrable to a particular proposal[24]. The Court of Appeal in Romsey also made it clear that:

[80]

It follows that, whilst community apprehension is not an over-riding factor (in the sense that the proceeding is not a referendum on gaming), it is certainly a relevant factor in the consideration of particular social impact within, and as part of, the 'no net detriment' test. It is relevant to consider the extent to which a particular approval may lead to unhappiness or discontent in a particular community, and thus be detrimental to the well-being of that community[26]. A community attitudes survey may provide relevant evidence of this, as noted in Romsey #2[27].
In considering the weight or relevance of community apprehension as part of a consideration of social impact, it is not in my view appropriate to discount it as being less relevant solely on the basis that a community attitudes survey shows it to be similar to, or slightly lower than, some notional state average. It is the well-being of a particular community that is being considered, where the community attitudes and level of impact on that particular community is relevant. As will be seen, the survey in this case reflected general opposition to a gaming venue in Castlemaine that the Commission described as 'about average'[28]. Irrespective of how the opposition compares to any state average, which may be broadly relevant, it is a level of opposition that should still properly be taken into account in its own right.
Moreover, given that the factors that constitute well-being are often largely qualitative, not quantitative, the statistical level of opposition or community attitude is not wholly determinative. Other factors, such as the way in which community apprehension is manifested in a particular community, may also be relevant. The range and intensity of community opposition in this case is, in my opinion, a matter of some significance.
As the Court of Appeal stated in Romsey, the weight to be given to the evidence is, of course, a matter for the decision-maker, and will depend on the nature, extent and cogency of the evidence in a particular case[29].

[81]

The Tribunal is often told (as it was in this case) about the insidious effects of problem gambling through gaming machines, albeit affecting a relatively small percentage of the population. The Productivity Commission Inquiry Report on Gambling, February 2010[30] notes that:
- an estimated 600,000 Australian adults (just under 4% of the adult population) play the pokies weekly or more. 15% of this group are problem gamblers, and a further 15% face moderate risks;
- based on available survey data, between 0.5% and 1% of Australian adults suffer significant problems from their gambling, and a further 1.4% to 2.1% experience moderate risks that make them vulnerable to problem gambling;
- although there are substantial difficulties in calculating gambling expenditure, it is estimated that problem gamblers account for an average of 41% of total gaming machine expenditure[31], with the likely range for moderate risk and problem gamblers together being 42% to 75%;
- whilst it is not possible to be definitive, in 2008-09 it is estimated that the benefits from tax revenue and the enjoyment of gambling for recreational gamblers ranged between $12.1 and $15.8 billion, and the costs to problem gamblers ranged between $4.7 and $8.4 billion.
In response to an enquiry by me about the weight the Commission gives to the Productivity Commission report, given other reports and opinions proffered to decision-makers from time to time about problem gambling, the Commission indicated that it 'regularly relies' upon this report[32]. Indeed, the Commission tendered the report to the Tribunal and took me through relevant parts of it.
As indicated, the GR Act fosters responsible gaming to minimise harm caused by problem gambling, whilst accommodating those who wish to gamble without harming themselves. It has been said that the task of minimising problem gambling requires a multi-dimensional approach that goes well beyond the approval of venues or the regulation of the number of gaming machines[33]. I agree. However, some applicants for gaming approval seek to rely upon these general propositions to downplay the relevance of problem gambling to the consideration of a particular approval - either by treating it simply as a legislatively 'accepted' consequence of lawful gaming, or by suggesting the matter can be solely addressed through particular 'responsible gambling' initiatives at the premises.
It is true that, given the regulatory framework, the issues of problem gambling cannot be treated as an over-riding factor that mandates refusal at a threshold level. As noted by the Tribunal recently, whilst there is much to be said for a precautionary approach to gaming matters because of the issues of problem gambling, a true precautionary approach would be to ban further gaming machines - an approach that the State turned aside from two decades ago[34]. It is not an approach open to the Tribunal.
Responsible gambling initiatives, such as the adoption of the Mercury Group responsible gambling guidelines proposed at Castlemaine, are also important. They further the purpose of the GR Act to foster responsible gambling and minimise harm. They reduce - at least in part - the weight and extent of the negative social impacts of gaming for the purposes of the 'no net detriment' test for a particular venue. However, equally, given all gaming venues claim to adopt responsible gaming guidelines and initiatives in one form or another, they are not a silver bullet to the ills of problem gaming. The Productivity Commission report acknowledges that the prevalence of problem gambling has declined slightly since the 1990's - perhaps due in part to responsible gambling initiatives - but it remains a serious social issue despite several years of responsible gaming initiatives at gaming venues.
In applying the 'no net detriment' test, it is therefore insufficient to address the problems of social gambling simply by relying on responsible gaming guidelines and initiatives. In Whittlesea City Council v George Adams Pty Ltd (Laurimar Tavern)[35], the Tribunal stated:

[86]

In the case before me, Mr Quick did not refer to 'elevated' problem gambling, as he had in Laurimar Tavern. He did however rate the risk as small, referring to the policies and procedures that an experienced operator would put in place, and also to the low density of gaming venues in the area, and a view that two gaming venues would not have higher problem gambling than one. These were generic views that I do not consider were sufficiently particularised to the proposal before me.
In this case, EPIC called as a witness a self-confessed problem gambler. Without in any way belittling the difficulties faced by that gambler, or his courage in talking about those difficulties in a public forum, individual evidence of that nature is not particularly helpful to the Tribunal's assessment of the social impact of problem gambling on the well-being of a particular community as a whole.
I agree with the Commission that the broader issue of problem gambling is relevant to the Tribunal's consideration of the 'no net detriment' test at a community level. It is now generally accepted that problem gambling is more likely to arise, albeit without clear correlation, in areas of socio-economic disadvantage. Social impact assessments therefore commonly, and properly, have regard to indicators such as the Socio-Economic Indexes for Areas (SEIFA) published by the Australian Bureau of Statistics - although these are not wholly determinative. There is room for debate in a particular case about what areas of a gaming venue's catchment or municipal district should be considered as a measure of its socio-economic status. Moreover, the inputs or factors that might particularly influence a SEIFA index outcome in a particular community (e.g. a higher older-age population) do not necessarily correlate with factors relevant to the prevalence of problem gambling in that community.
In addition, given the last of the Productivity Commission findings set out above, it is not just the potential social impact of problem gambling that needs to be considered in the context of the well-being of a particular community. A proper consideration of economic impact would also seem to require some netting-off of the costs to problem gamblers against the economic benefits of a proposal. Economic impact assessments commonly quantify the likely economic benefits of a gaming approval, but rarely (if ever) the costs of problem gambling. This was the situation in this case.
I am mindful of Judge Macnamara's recent remarks in Royal Benalla Hotel, agreeing with counsel in that case that, in attempting to come to grips with the issue of problem gambling, decision-makers are doing little more than stabbing in the dark. He added:

[89]

In considering the 'no net detriment' test, the number of new gaming machines proposed is obviously relevant, but the number is not of itself determinative of the extent of impact. An increase in gaming machines at an existing gaming venue (a 'top-up') will likely have a lesser net impact than the introduction of machines at a new venue, and the economic or social impact evidence in support is likely to be more straightforward.
However, the introduction of 50 gaming machines into a community will likely have a different impact if that community already has, say, 200 machines rather than 20, or none at all. The addition of a new gaming venue will likely have a different impact if that community already has, say, five venues rather than one. There are likely differences as between pub and club venues, and as between 'destination' venues and those likely to attract 'convenience' gambling.
The differences in impacts may arise through differences, for example, in net gaming expenditure per machine, the effects of competition and transferred expenditure, or employment, or perhaps for the prevalence of problem gambling. In the preceding paragraphs, I say 'likely' differences in each case because there appears to be no clear correlation between the number of gaming machines and these other factors, and the evidence or impact in each case may differ from expected norms. Indeed, the potential differences are such that a standard socio-economic assessment that does not deal with these differences may prove unreliable.
The Whitehouse/Geotech model commonly used to estimate gaming expenditure is regarded as being somewhat superficial, in that it relies on a limited range of inputs and does not discriminate between top-ups and new venues. Its use by MHS in this case was criticised. Its use in a straightforward case may be sufficient but, in a very 'finely balanced' case, I believe a more sophisticated analysis is warranted.
Here, the proposal is for 65 gaming machines at a new venue, in a town (and, indeed, within a whole municipal district) that presently has only 30 machines at one venue. It is a trebling of gaming machine numbers and density, from a low base. Whilst it is not an identical situation to, say, Romsey where the proposal was for the first gaming machines in a town that had none, it is a potentially significant change for the Castlemaine and broader Mount Alexander community. As the Council and EPIC contended, this is not an incremental change.
That is not to suggest that a significant change will always be negative, or that an incremental change will always be positive[38]. As Justice Bell commented in Romsey #2[39]:

[93]

If the Tribunal is not satisfied that the 'no net detriment' test is met, that is clearly fatal to the application given the opening words of s 3.3.7(1) of the GR Act. The test is a mandatory pre-condition to approval. However, although s 3.3.7 sets out certain mandatory considerations for the decision-maker, the provision is not cast in exhaustive terms. If the Commission or Tribunal is satisfied that the 'no net detriment' test is met, it still has an ultimate discretion whether or not to grant the approval.
Given the decision I have reached on the 'no net detriment' test in this case, it is not necessary to examine the full extent of that ultimate discretion here save to make the following general comments:
- any general discretion must be exercised having regard to the purposes of the GR Act and, in particular, the specific purposes of Chapter 3 of the GR Act dealing with the regulation, supervision and control of gaming machines;
- if all of the mandatory considerations under the GR Act favour the grant of an approval, one would expect that the ultimate discretion will commonly favour approval - other than in relatively rare or exceptional circumstances arising in a particular case. In such a case, any such circumstances should be separately and transparently identified;
- given the statutory framework under the GR Act, there should be no expectation by an objector that the ultimate discretion will be exercised against an approval solely on a philosophical 'anti-pokies' basis, where the 'no net detriment' test has been satisfied.
In Ocean Grove Bowling Club v Victorian Commission for Gaming Regulation[40], Justice Morris had commented that, even where satisfied as to the specified matters in the GR Act, the final decision on an approval may be influenced by broader policy considerations, drawn from the content and objectives of the Act as a whole.
The Council argued that, even if I agreed with the Commission that the net economic and social impacts here were neutral, I should still refuse the application having regard to the 'cloud of uncertainty and inconsistency' in the material presented by MHS, and having regard to the broader policy considerations including the six policy principles I have referred to above. It is fair to reflect that those uncertainties and inconsistencies (particularly resulting from the changed arrangements between MHS and CSCC), and the underlying policy context, have bolstered my view that the 'no net detriment' test is not satisfied here, rather than separately weighing upon any ultimate discretion. However, had they done so, and without having to decide the issue, this may well have been one of those relatively rare or exceptional cases where the ultimate discretion would have militated against an approval even if the 'no net detriment' test had been satisfied.

[100]

As has been noted in other cases, his Honour's comments on this issue were obiter and non-binding. Nonetheless, the Commission and Tribunal have often referred to the 'doubt' created by these comments and/or have expressed reluctance to depart from a view expressed by the then Tribunal president. I note however that in Royal Benalla Hotel[44], without expressly discussing the issue, Judge Macnamara recently imposed a condition to secure contributions to community based and not-for-profit organisations, and presumably believed he had power to do so.
I consider that the Commission and Tribunal does have power to impose a condition to secure community contributions relied upon by an applicant to support the suitability of premises for gaming. I reach this view without necessarily disagreeing with the sentiment expressed by Justice Bell in the context of the particular matter before him in Romsey #2. Given my ultimate decision, my comments are also obiter. However, the matter was argued at some length before me, with the Commission's counsel in particular arguing that the Commission and Tribunal does have power, and it is thus useful to make comment to attempt to resolve some of the lingering doubt on this issue.
I consider the power to impose a condition to secure community contributions exists in an approval for premises operating under either a pub licence (as in Romsey #2 or Royal Benalla Hotel) or a club licence (as here), but is perhaps strongest for premises operating under a club licence. In particular:
- I agree with the Commission that the statutory landscape for gaming has changed since Romsey #2, including a re-defining of the Commission's functions through the Victorian Commission for Gambling and Liquor Regulation Act 2011, and the breaking of the Tabcorp/Tattersalls duopoly that has led to clubs being more involved in decisions affecting their gaming operations;
- although his Honour in Romsey #2 referred to the power in s 3.3.9(3)(c), he did not refer to the additional broad condition-making power in s 3.3.9(4) set out above, expressly authorising conditions on any matter for which provision is made under the GR Act. Provision is made in the GR Act for community benefits, including a requirement in s 3.6.9 for community benefits statements from the holder of a club licence. Ministerial directions under the Act require such statements to detail donations and community contributions. Clubs pay a lower state tax on gaming revenue than pubs, because of their community purposes. Given the Act deals with this issue, I consider it is part of the Commission's functions and a lawful matter for conditions;
- in Romsey #2, the concern expressed by his Honour was with the imposition of a condition mandating donations. This is slightly different to the more common scenario of using a condition to secure community contributions voluntarily offered by an applicant, to ensure the commitment is realised;
- in Romsey #2, his Honour referred to the matter of community donations being the function of the 'Community Benefit Fund'. I suspect that was intended as a reference to the Community Support Fund under s 3.6.12 of the GR Act that applies part of the gaming revenue from pub licences. If that is the case, I understand that to be a state-wide fund that does not necessarily return equivalent funds to the particular community in which the gaming machines are located;
- as is evident from many Commission and Tribunal decisions, the extent of local community contributions will often be highly relevant to the consideration of the 'no net detriment' test under the GR Act. In a finely balanced case, a commitment by an applicant to pay a minimum amount out of its gaming revenue to local community organisations or projects may well be the matter that tips the balance in favour of approval, having regard to the net effect on the well-being of that community. In my opinion, there is a necessary implication, bolstered by the broad condition-making powers in ss 3.3.9(3)(c) and (4) of the GR Act, that such a pivotal commitment should be capable of being secured by condition if the Commission or Tribunal thinks it fundamental to its approval.
Although I consider power exists, it may not always be appropriate to impose a condition about community contributions. I agree with the sentiment in the quote from Justice Bell in Romsey #2 above, that the Commission should not be placed in the position of being seen to mandate donations of a particular kind to particular groups - certainly not through the Commission unilaterally imposing contribution commitments of its own volition. I also agree with the Tribunal's recent comments in Francis Hotel Pty Ltd v Melbourne City Council[45], where it also noted public policy reasons whereby payments to third parties should not necessarily be used (or be perceived as being used) by an applicant to 'buy' an approval, or to create a bidding contest for approval. This may be more of a concern in pub cases, rather than for clubs that have a clear community purpose in the activities to be funded by the gaming machine revenue.
However, where a community contribution commitment has been made by an applicant in good faith and for a proper purpose, as part of an application for premises approval, and which is considered by the Commission as a significant benefit in the balancing of socio-economic factors, it may well be appropriate to secure that contribution with certainty through a condition on the gaming approval.
Had I been minded to grant an approval in this case, I would have imposed such a condition to secure the MHS offer of a minimum $50,000 per annum cash contribution to not-for-profit community groups in Mount Alexander Shire from its gaming revenue. I would not however have mandated particular recipients, on the basis that a club should have some discretion on a year-to-year basis as to who receives contributions (and in what amount) within a properly structured community contribution program.

[102]

Giving the Commission's decision 'considerable' weight is not to be equated with giving it 'over-riding' weight. There would otherwise be no purpose for a de novo review. However, I agree with (and am nevertheless bound by) the view that the Commission's decision should only be disregarded transparently, and for good reason. That has been equated in other cases as giving 'due deference' to the Commission decision under review, given the Commission's expertise. However, where the case before the Tribunal is different in a significant respect from the one presented to the Commission, "the deference to be given to its expertise will be affected by the weight given to those differences"[47]. Furthermore, it will not be necessary to detail every difference in every case, as in many cases the case presented to the Tribunal will be easily distinguished[48].
Here, there are two main reasons why I have departed from the Commission's decision to approve the premises as suitable for gaming, based on its finding that the net detriment to community well-being was 'neutral'.
First and foremost, as detailed below in Part C of these reasons, the case before me was very different to that before the Commission. Although he later tempered his comments, even the Commission's counsel opined at one stage that the MHS application was now so different that he was uncertain whether it was a review of the Commission decision anymore, and whether it was thus even competent. The different application, submissions and evidence before me lead, in my view, to a different outcome.
This primary reason for departing from the Commission's decision can perhaps also be tested in a slightly different way. Although I have approached the matter as a hearing de novo, and considered all the material afresh, the Commission's decision should still be regarded as having 'considerable weight' as a decision on the material then before it. There, the Commission came to the view on that material that the net impacts were neutral (i.e. finely balanced, and neither positive or negative). If the modified proposal outlined to me, and the additional material presented to me, removes or reduces the likely benefits found by the Commission (without introducing other benefits) and introduces or increases likely disbenefits beyond those found by the Commission (without removing others), then logically this must tip the balance from a pre-existing neutral position to a net negative position. That is the situation here.
Secondly, to the extent the Commission's decision remains at all relevant given my first and more significant reason, I consider that the Commission appears from the wording of its decision to have overstated the economic benefits by not sufficiently noting and netting-off of the likely economic costs, and by giving insufficient weight to other economic and social disbenefits. The Commission also dismisses any change to the social character of Castlemaine on the basis that there are already 30 gaming machines in the town and, to my mind, appears to have given insufficient weight to the range and intensity of community opposition in Castlemaine. In the case before the Commission, I accept that the matter was even more 'finely balanced' than before me to the extent reasonable minds might reasonably differ about the outcome, but I believe the evidence at least arguably supported a refusal of the application at the Commission level.
It is perhaps worth making one further observation about the Commission decision. It was raised in this proceeding, and has recently been raised in other proceedings, that some parties may be intentionally running a limited case before the Commission, and 'keeping their powder dry' for a longer and more detailed Tribunal review. Sometimes, this may simply be an inevitable consequence of the shorter hearings necessarily undertaken by the Commission at first instance given its functions, procedures and resources. But if it is true that parties are seeking a tactical advantage from this, it will inevitably lead to the Tribunal hearing a case different to that at the Commission, and make it harder to give the Commission decision the considerable weight it otherwise deserves. Such a tactic runs counter to the intent of the regulatory and review regime, undermines the integrity and expert role of the Commission, and ought to be discouraged. The Commission and Tribunal may need to review their respective processes to limit such a trend if that is what is occurring, or perceived to be occurring, in practice.
However, having considered the cases before the Commission and Tribunal in this proceeding, and by reference to the differences I have identified in Part C later in these reasons, I am not persuaded that such a tactic is being employed here.

[103]

I agree with the Commission that the requisite standard of 'satisfaction' to be reached in applying the 'no net detriment' test is not to be equated with a curial standard based on a balance of probabilities. The courts have made it clear that administrative decision making based on being satisfied about a future likelihood (i.e. here, whether there will be no net detriment to community well-being) is different to establishing the likelihood of a current or past fact in dispute on the balance of probabilities[50]. That satisfaction may be derived through the balancing of relevant considerations, based on sufficiently probative material, leading to a logically reasoned and non-arbitrary judgement.
Subject to anything to the contrary in an enabling enactment, it is generally accepted that there is no strict or ultimate onus of proof in review proceedings before the Tribunal. I consider no strict onus arises in this proceeding under the GR Act. That said, a responsibility lies with the applicant for a statutory approval (i.e. here, MHS) to persuade the Tribunal that the statutory approval should be granted, and thus to persuade the Tribunal that the 'no net detriment' test has been satisfied[51]. This is sometimes referred to as the 'persuasive burden', but it should not be applied in a rigid manner that makes it a formal onus of proof by default.
Given the absence of any strict onus of proof, it commonly falls to any party or participant in a review hearing that asserts a particular fact or contention to provide sufficient probative material, legal authority, or logical reasoning to support that assertion. This means that, despite any 'persuasive burden' on the applicant for statutory approval, an applicant for review before the Tribunal (i.e. here, the Council) still bears some responsibility to provide and establish its grounds for review[52], and a participating objector (i.e. here, EPIC) still bears some responsibility for substantiating its basis for objection. They need to do more than simply make bare assertions, and then sit back and contend that the applicant for statutory approval has the burden of persuading the Tribunal to the contrary. That could otherwise lead to the 'persuasive burden' becoming a strict evidentiary burden by default.
It follows that, where a Council is alleging that an approval will be detrimental to the well-being of its community, it should assist the Tribunal by placing before it relevant evidence and submissions on this issue. Indeed, as a representative of the community, the Council will often be uniquely placed to do so. The GR Act expressly acknowledges its role in this regard.[53]
I disagree with the Commission's submission to me that this means that the Council, as the applicant for review, has a legal responsibility to demonstrate where the Commission 'fell into error'. That responsibility may arise on a judicial review, but does not strictly arise in a review by way of a full hearing de novo on the merits. Despite this, given the Tribunal's responsibility noted in Romsey above, the Tribunal will be assisted if the Council indicates, in turn, why it considers any central reasoning in the Commission's decision ought to be disregarded.
I consider that the Council (and, to a large degree, EPIC) has discharged its responsibilities in this case. Unfortunately, MHS has in my view failed to provide sufficient probative material to support some of its key assertions - particularly in relation to likely social impacts. Because MHS also bears the 'persuasive burden' of satisfying the Tribunal overall that the 'no net detriment' test has been met, this is doubly damning to its cause.

[106]

I agree with EPIC's counsel that the dissatisfaction with the poor quality of predictions about expenditure or transferred expenditure are not because they are academically unsatisfying, but because the figures actually matter. The level of new gaming expenditure, and how much is spent in the local government area, is relevant (indeed, often fundamental) to assessing the economic and social impacts of a particular gaming proposal. If those impacts are being assessed to consider the net impact on community well-being, the community whose well-being is at stake deserves some rigor in that assessment. So too, then, does the Commission or Tribunal that has to make that assessment.
For example, here, the economist Mr Quick has relied upon Mr Whitehouse's (and, in part, Mr Gill's) predictions of gaming expenditure and transferred expenditure as the basis for his assessment. Economic predictions will never be entirely accurate and are, after all, a matter of opinion, based on assumptions, and as much an art as a science[57]. But here, even with reasonable consensus about the level of transferred expenditure (31 to 35%), the gaming revenue predictions vary from $2.7 million (Whitehouse) to $4.2 million (Gill, upper) per annum, with predictions for new expenditure in the local government area varying from $1.7 million to $2.7 million per annum. These are material differences. If Mr Whitehouse's and/or Mr Gill's material lacks rigor or proves unreliable, then Mr Quick's socio-economic assessment that relies on it is also seriously undermined - the proverbial house of cards falls.
It is also difficult to put lesser, but nonetheless important, amounts such as a $50,000 community contribution into context when predictions of the revenue (and the profit to be derived from it) to support the contribution are within such a broad range. As will be seen, the matter became more complicated in this case with MHS adopting Mr Gill's mid-point predictions in its modified proposal, rather than those of its own expert Mr Whitehouse, seemingly because Mr Gill's figures better supported the outcome it sought to advance. Although acknowledging MHS's decision to apply Mr Gill's predicted gaming expenditure levels, Mr Whitehouse refused to concede that his predictions were wrong. Somewhat perversely, the Council and EPIC then applied Mr Whitehouse's predictions, rather than those of the Council expert Mr Gill, to demonstrate that the revenue from the modified proposal would be insufficient to support the community contributions if indeed Mr Whitehouse's predictions were correct.
The Commission could also perhaps assist in better flushing out relevant information in Commission proceedings about a particular case, or disseminating better information from its research and collection of statistics over time, although there may be some limits to the extent of material that the Commission can reasonably or lawfully provide. It is ultimately a matter for the applicant for approval to satisfy the Commission and Tribunal about issues such as gaming expenditure to a sufficient level in a given case from available information sources. The Commission's position in this case was unhelpful, albeit in fairness that it arose from a largely consensus position between the two main parties at the Commission hearing. Despite acknowledging that the outcome was finely-balanced, the Commission merely indicated in its decision that it did not find it necessary to resolve the conflicting opinions of Mr Whitehouse and Mr Gill[58], and simply adopted a wide range incorporating both estimates of gaming expenditure. If the Commission's decision is to be given considerable weight in a Tribunal review due to its 'specialist expertise and unique experience', as noted from Romsey earlier, the Commission needs to more clearly demonstrate that expertise and experience in dealing with difficult concepts such as gaming expenditure or transferred expenditure and/or by indicating why conflicts in the expenditure forecasts are (or are not) important in a particular case.
In this case, the economist Mr Quick presented a combined economic and social impact assessment, despite having only prepared an economic impact assessment before the Commission. The MHS evidence of Dr Miller was withdrawn and he was not called by MHS. Mr Quick's expertise to give social impact evidence was criticised by the Council in this case, as it has been in other cases.[59] Moreover, Mr Quick's social impact assessment here might be best described as a broadly based desktop review, rather than a detailed analysis, and some of his social impact 'assessment' amounted to little more than bare assertions, or a reflection of material provided to him by MHS's advisers as part of his instructions. Under cross-examination, Mr Quick properly conceded some limitations in his expertise or direct qualifications to deal with social impact assessment, and Ms Rosen's greater expertise in this discipline. However, I agree with Mr Quick that he nonetheless has the broad experience to undertake the level of combined socio-economic review that he has - particularly also given the available resources and capabilities of his firm Urbis. I do not question Mr Quick's professionalism in the task he undertook, which may well have been sufficient in a less contentious matter before the Commission. The problem here is that MHS and its advisers ought to have known that this was a case at the Tribunal (hotly contested by the Council and EPIC on the issue of social impact) where a more detailed social impact analysis was required beyond what Mr Quick could reasonably deliver alone. As I have indicated, the community whose well-being is at stake deserves greater rigor in the assessment and so too, then, does the Tribunal that has to make that assessment.
Despite all of the foregoing, I acknowledge that there must also be some balance brought to bear in what is sufficient probative material in a given case. A simple case may justify more limited evidence on relevant matters. New venues may require more detailed evidence than modest top-ups at existing venues. But as I have indicated earlier, much greater attention to detail in a Tribunal review will invariably be required, with more cogent evidence, in circumstances where the Commission has already determined the 'no net detriment' test to be 'finely balanced' and where its decision is being vigorously tested on review. The evidence should be directed to the key determinative and contentious issues. The failure of MHS and its advisers to appreciate this, and respond to it, has contributed materially to the outcome in this case.

[109]

I have earlier set out the key components of the modified MHS proposal, based on the management agreement now executed with the CSCC. As I then indicated, some of the proposed management arrangements between MHS and CSCC are at a level of detail well beyond that which is relevant to my decision.
My interest is solely focussed on those aspects that potentially affect the economic or social impacts of the proposal in a manner that influences the net impact on the well-being of the community. Beyond this, it is not a matter for the Tribunal (nor, for that matter, the Council or EPIC) to enquire further into the finer detail of the day-to-day management arrangements. They are a matter for the venue operators.
The fact that a community club may sub-contract some of its operations to another body, or incur interest-bearing loans to fund its venture, is neither novel nor inherently concerning. In the ordinary course of events, the forecast budgets and cash flow for a proposed gaming venue would not normally need to be examined in such detail as occurred in this case. Even the ultimate profitability or viability of gaming operations at a particular venue is not of itself of supreme relevance in deciding whether to grant premises approval (but is rather a matter of legitimate commercial risk for the operator), save to have a reasonable level of confidence that the claimed economic and social benefits can and will be delivered.
Here, EPIC attempted to make much of whether the MHS modified proposal was 'within power' under the MHS constitution, or the extent of its tenure under the lease over the Old Goods Shed (where the lease expires on 1 June 2023) or the tenure of the gaming entitlements (which expire in August 2022). I have not attached much relevance to these matters or considered them of much determinative weight. Constitutions can be amended, lease terms extended, and entitlements renewed. Whilst none of this is guaranteed, nor too is the converse. I do not consider it appropriate to assume only a negative outcome in future commercial dealings.
Having said that, there are aspects of the modified proposal that are quite relevant, albeit acquiring different levels of weight in the overall assessment. These include:
- the supposedly 'guaranteed' minimum community contributions to not-for-profit organisations in Mount Alexander Shire sit behind some other commercial commitments, and are not at all guaranteed, and possible future contributions beyond the minimum amounts are less certain and not tied to not-for-profit organisations in Mount Alexander Shire. The management agreement is ambiguous about this in relation to the minimum $50,000 cash contribution, and silent about the priority order (if any) for applying the $150,000 in-kind contribution[60]. If it is applied as part of the day-to-day business expenses, the in-kind contribution will have priority over the cash contribution, and further increase the 'risk' that there will be insufficient funds to meet a cash contribution. Moreover, the modified MHS budget forecasts rely on adopting the Mr Gill mid-point revenue forecasts to meet these contributions - a matter of at least some doubt;
- the $400,000 project management fee and $250,000 per annum management fee payable to MHS are conceded by MHS to include a significant profit component, and the management fee is stated in the management agreement to be payable in addition to other operating costs. It is not surprising that MHS seeks a reasonable return for its risk in this venture, but this profit is for the benefit of MHS and its community purposes outside of Mount Alexander Shire, and well-exceeds the minimum $50,000 per annum cash contribution for community purposes within the shire. The social benefits to Mount Alexander Shire (and Castlemaine in particular) are thus diluted, significantly in my view, through this arrangement. [I note that MHS argued that these fees were inherent in its original proposal, but this is not at all evident in the material, where the Castlemaine venture was to operate as a sub-club];
- the MHS evidence suggests that its control over management will be used to introduce efficiencies and shared services between the Maryborough and Castlemaine (and perhaps Kyneton) operations -e.g. catering through an executive chef, having events or touring performers at Maryborough also in Castlemaine. This is a sensible arrangement, but perhaps dilutes the employment and economic benefits claimed for Castlemaine if some of these matters are being centrally managed elsewhere;
- there is a clear lack of experience on the part of CSCC, evident from its own office-bearer witnesses, to fulfil its obligations under the management agreement - or even to fully understand those obligations. There is uncertainty, as between MHS and CSCC as to who would control certain functions, including the future community contribution program.
As will later be discussed, Mr Quick's socio-economic assessment relied on the original proposal, and did not account for these modifications.

[111]

It will be evident from what I have said earlier that the case before me was very different to that before the Commission, to the extent that I do not feel bound to give the Commission's decision the considerable weight it would ordinarily justify. I strongly disagree with the MHS assertion that the case before the Tribunal was 'substantially the same' as its case before the Commission.
I also disagree with the Commission's counsel that, overall, none of the new material before the Tribunal should displace the findings of the Commission about the likely economic and social impacts of the proposal. This should be self-evident from some of the matters I have listed below, but the Commission's contention is largely contradicted by its own submissions on particular matters. For example, as noted earlier, the Commission indicates that a fair reading of its reasons for decision reveals that it placed substantial weight on the identity, characterisation, integrity, motivation and experience of MHS as the applicant for approval, and its role as a successful community-based philanthropic organisation[61]. It then indicates that the totality of material before the Tribunal does not clearly reveal who will now be the ultimate permit holder (as between MHS and CSCC), and that CSCC has no experience in running a large organisation, no experience with implementing a scheme for community contributions, and that it is somewhat unclear what CSCC's specific objectives are apart from operating a gaming venue[62].
It is not necessary to detail all of the many differences in the case before the Commission and the case before the Tribunal. But by way of example, I make mention of the following matters:
- the 'modified' MHS proposal described earlier, and the role of CSCC in the venue and gaming operations, has led to different financial arrangements that potentially affect economic and social impacts. The 'new' evidence led from MHS and CSCC office-bearers before the Tribunal was often contradictory and/or revealed a lack of clarity or understanding about the independence of CSCC, how the management and financial arrangements would work as between the two organisations, and who would be responsible for implementing a community contribution scheme;
- the two experts on gaming expenditure, Mr Whitehouse for MHS and Mr Gill for the Council, had provided written reports to the Commission but did not give oral evidence. They were, however, called and cross-examined at the Tribunal, albeit that MHS indicated it now adopts Mr Gill's estimates. Moreover, MHS's immediate past president, John Inglis, later conceded in evidence that MHS considered Mr Whitehouse's revenue forecasts (i.e. MHS's own evidence at the Commission) to be 'rubbish'[63], and the MHS general manager, Malcolm Blandthorn, prepared his evidence for the Tribunal based on Mr Gill's estimates. MHS therefore essentially relies on different gaming expenditure forecasts than in its case before the Commission;
- the formal economic impact evidence before the Commission was largely from Mr Quick for MHS, and based on the original MHS proposal and, at least in part on Mr Whitehouse's now disregarded gaming expenditure estimates. Mr Quick gave different evidence at the Tribunal, albeit still largely based on the original MHS proposal, and he indicated he had not seen the new management agreement. In the Tribunal hearing, EPIC called expert evidence from an economist, Mr Henshall, that was not before the Commission, and which casts doubt on some of Mr Quick's and Mr Whitehouse's analysis. [EPIC also called expert evidence through an academic Dr Livingstone that was not before the Commission, although I have attached less weight to it];
- Dr Miller had been called by MHS before the Commission on social impact matters, and a community attitudes survey. Although MHS filed a statement for Dr Miller at the Tribunal, he was not called. Indeed, his evidence was later expressly withdrawn by MHS, and his survey was not relied upon before the Tribunal. [I note in any event that the Commission had not placed weight on Dr Miller's evidence];
- Mr Quick is an economist and had provided only economic impact evidence at the Commission. At the Tribunal, he purported to also provide a social impact assessment, whilst conceding (at least in part) some limitations in the assessment and his qualifications or expertise to provide it, and also conceding Ms Rosen's greater expertise in social impact assessment. Mr Quick's evidence was however the only expert social impact evidence called by MHS at the Tribunal hearing;
- the Commission had given little weight to the Council's economic and social impact evidence presented by a council officer, Ms Wallace, based on an apprehension of bias on her part. At the Tribunal, the Council did not call or rely upon Ms Wallace, but instead provided a new, separate and independent social impact assessment prepared by Ms Rosen that had not been before the Commission;
- the Council called additional evidence through local officers of the Salvation Army and Anglicare, and EPIC called a medical practitioner and a leader of the East African community, and other witnesses, all relevant to specific social issues regarding the Castlemaine community that does not appear to have been before the Commission;
- both EPIC and CSCC had a greater involvement in the Tribunal proceeding. Indeed, CSCC had not been formed at the time of the Commission hearing.
There were also numerous different lay witnesses called as between the Commission and Tribunal hearings and, perhaps, a greater examination of some issues in submissions over the course of a 10-day Tribunal hearing as opposed to a 2-day Commission hearing. This implies no particular criticism of the Commission. Although it is not to be encouraged, it will still commonly be the case that a 'review' hearing at the Tribunal will receive more detailed material than the decision-maker at first instance, from those who seek to challenge the initial decision.
Interestingly, and somewhat disturbingly, MHS appears to have called less expert evidence in relation to the 'no net detriment' test at the Tribunal than at the Commission - so much so that I was moved to indicate to MHS as early as Day 3 of the hearing that:

[114]

In the introduction to these reasons, I mentioned that MHS had, in 2010, assisted the struggling Kyneton Bowling Club with a financial rescue package, and the MHS subsequently took over the operations of that club. The Commission had seen that as a positive attribute, in its reliance on the integrity, motivation and experience of MHS.
MHS called evidence from Mr Hammond, the president of the Kyneton Bowling Club, who indicated that the MHS intervention and take-over was the 'white knight' that had saved the club from annihilation. He was very thankful for MHS's generosity, long-sightedness, and commitment to the not-for-profit sector, and that the club now had the prospect of returning to surplus, albeit not yet making a surplus. I accept this evidence.
The MHS take-over of the existing Kyneton operations, including a bowls club, is very different to that proposed under the management agreement with CSCC for a new gaming venue at Castlemaine that does not include any dedicated sports facilities or any pre-existing operating debts. I am not wholly convinced by EPIC's concerns with the Kyneton 'take-over' and its analogy or ramifications for Castlemaine.
That said, EPIC also relies on the Kyneton experience as illustrative of MHS's inability to accurately forecast future operating surpluses, and thus to deliver community contributions. The material indicates that MHS forecast a surplus of $85,800 in 2010/11, but a loss of $566,812 was recorded, no management fee was paid to MHS, and no surplus was returned to fund a contemplated $20,000 community contribution.
This is of indirect relevance, albeit that I have not attached great weight to the specific Kyneton operations or figures given the background and operational differences I have mentioned. I say it is indirectly relevant because MHS relies on a similar style of budgeting for Castlemaine, and one that also optimistically forecasts an operating surplus at an early stage in the CSCC operations in order to deliver the economic and social benefits it proposes. Moreover, although I believe MHS has prepared its forecasting in good faith, through its general manager Mr Blandthorn, he readily conceded that he is not an accountant. There is no evidence to indicate the forecasts have been independently verified - particularly given the debate about gaming expenditure estimates as between Mr Whitehouse and Mr Gill.

[115]

I turn now to consider the specific economic and social benefits and disbenefits of the MHS proposal, based on the evidence and submissions before the Tribunal.
In doing so, whilst there has been some emphasis in these reasons so far on the modifications to the MHS proposal, there are many aspects of the proposal that remain unchanged, and these are considered also. Some attract significant weight in the overall assessment.
For each of the economic benefits and disbenefits, and social benefits and disbenefits, I have first listed in a table all of the perceived benefits and disbenefits identified in writing by the parties and EPIC themselves on the last day of the hearing, in response to my direction that they do so. Some have been slightly reworded to match similar items raised by others, and it is noted where some items were qualified (e.g. if accepted only in part, or considered neutral, possible, or uncertain). Unsurprisingly, some items are raised as both economic and social impacts. There are several common items acknowledged by all but, as can be seen, there are also some items claimed as a benefit by one and as a disbenefit by another.
MHS and the Council provided only a list of general benefits and disbenefits, without allocating them as between economic and social factors as requested - I have attempted to allocate them appropriately. Unsurprisingly, each party and EPIC focussed most on items that supported their respective cases although EPIC acknowledged many benefits, whilst. MHS purported to list only one disbenefit (problem gambling), and then attempted to indicate why it was not a disadvantage in this case. For this reason, I found the MHS counsel's response to the listing of benefits and disbenefits a little disingenuous. It is also contrary to MHS's own evidence through Mr Quick that had properly noted other disbenefits that I have included in the table.
The list in the table is illuminating in that it does not include some items that were the subject of debate during the hearing, and includes others that attracted little attention at the hearing. It perhaps demonstrates the usefulness of the task, as I indicated much earlier in these reasons, in forcing the parties to properly identify relevant factors, isolate the substantive areas of disagreement, and to direct their focus at the hearing to the determinative issues arising from the 'no net detriment' test under the GR Act. It perhaps also demonstrates to a divided community how a matter can be objectively considered under the established regulatory regime, rather than through an acrimonious debate based on misconceptions, mistrust and misinformation.
The Commission was not required to provide a list. Its decision speaks for the items it considered relevant. I have included in the table many of the items expressly canvassed in the Commission decision, but they should not be considered exhaustive of all issues taken into account by the Commission as, in fairness, the Commission was not aware its decision might be disseminated in this way.
The weightings in the table are mine, and form the basis for the discussion that follows. However, I do not discuss all items in detail - only those I found particularly determinative or where they were the subject of detailed evidence or submissions in the hearing.

[156]

As indicated earlier, MHS now adopts the mid-point gaming expenditure forecast of the Council's expert, Mr Gill, rather than its own expert, Mr Whitehouse. That is, a revenue estimate from the gaming machines of $3,796,000 per annum, within a range expressed by Mr Gill as between $3,321,500 and $4,270,500.
I agree with the criticisms of Mr Whitehouse's estimate of likely gaming expenditure of $2,673,263 through his Geotech model. Mr Whitehouse himself conceded some limitations in applying the Geotech model to a new gaming venue where gaming performance figures are not available[65], and the model is based on a limited range of inputs - some of them highly subjective. As I have earlier indicated, some of these limitations were highlighted recently in Peppermill Hotel[66]. The model is also believed to be less accurate in predicting expenditure within clubs rather than hotels[67]. I agree with EPIC's witness Mr Henshall that the Geotech model will not properly capture and allocate expenditure by residents in the relevant local government area outside that area, nor the extent of custom likely to come from outside the area[68].
As the Commission decision notes, Mr Whitehouse's Geotech model includes an upper-bound confidence level of 75%, in part to respond to these limitations. Here, his evidence is that there is a 75% chance the actual gaming expenditure will be equal to or below $3,047,520. That amount is still below Mr Gill's low-point forecast. Whilst Mr Whitehouse acknowledged that MHS had chosen to adopt Mr Gill's estimates in this proceeding, he still did not accept Mr Gill's estimates and claimed his model had 'never knowingly under-predicted', and 'the majority of the results have been within 10% of the prediction'[69]. As EPIC noted, the Commission has also previously expressed a view that the Geotech model tends to over-estimate rather than under-estimate gaming expenditure[70].
MHS's immediate past president, John Inglis, now suggests that MHS considers Mr Whitehouse's gaming expenditure forecasts to be 'rubbish' (and stated that MHS held this view even at the Commission hearing when MHS relied on these forecasts). Nonetheless, the MHS budget attached to Mr Inglis' witness statement[71] had used a gaming expenditure estimate of $3,003,000 - below Mr Gill's low-point and very similar to Mr Whitehouse's 75% upper-bound confidence level. As the Commission decision notes, once Mr Gill's initial report had been prepared, MHS had its revenue expectations further considered by a Mr Baldi, general manager of the Mercury Group Victoria (a large gaming service provider), who preferred Mr Whitehouse's opinion to that of Mr Gill[72].
Somewhat unhelpfully, the Commission did not offer any expert insight on this issue in its decision, simply stating: "In the end, the Commission does not need to resolve the conflicting opinions as between Mr Whitehouse on the one hand and Mr Gill on the other"[73], and instead accepting a broad range between the two.
The MHS general manager, Mr Blandthorn, prepared an updated financial analysis to reflect the modified MHS proposal, which was produced at the resumed December hearing[74] in response to a request by EPIC. In this material, MHS now relies on the mid-point of Mr Gill's gaming expenditure forecasts - i.e. $3,796,000 - well above all previous forecasts relied upon by MHS. As will be seen, it became 'necessary' for MHS to do this to reach a break-even point for the venture. The updated material was based on a set of assumptions, including one that the loan amounts are re-paid over 9 years (rather than 10). MHS itself challenged this assumption, but I do not consider it unreasonable. Whilst it is also reasonable to assume the lease and gaming entitlements can be renewed beyond the initial periods granted, prudent budgeting would suggest that loans be re-paid within the period of guaranteed tenure.
Without having undertaken a formal analysis, Mr Henshall thought both Mr Whitehouse and Mr Gill's estimates were conservatively low. Before Mr Blandthorn's updated material was produced, Mr Quick had suggested it was reasonable to use the lower estimate for gaming revenue, as CSCC club revenue from a large number of machines would be lower than the current monopoly revenue at a single hotel venue[75]. Despite this notional endorsement of a more conservative approach, Mr Quick however also used Mr Gill's higher mid-point estimate in his evidence to the Tribunal (as opposed to having used Mr Whitehouse's estimate in his earlier evidence to the Commission), simply noting MHS's willingness to now accept Mr Gill's estimate.
Given the conflict in the evidence, I am left with the sense that there is a clear and unresolved issue about likely gaming expenditure in this case, and that MHS's decision to now adopt Mr Gill's mid-point forecast is one of expediency, rather than necessarily being soundly based. It has implications for matters such as community contributions, and the extent of other benefits, considered further below.

[157]

Despite all of the above, and whether the gaming expenditure would be within Mr Gill's range or not, there will be a level of additional gaming expenditure in the community with consequential flow-on economic benefits. There is consensus that the transferred expenditure will amount to approximately 35% - i.e. transferred expenditure from the Cumberland Hotel[76]. This means, if one adopts Mr Gill's range, that there will be 'new' expenditure in the local government area varying from $1.7 million to $2.7 million per annum. I have indicated some concern with the breadth of this range, as a basis for decision-making, but it is the only evidence before me.
Mr Quick notes that there is the potential for some diversion of trade away from other businesses in Castlemaine, but this will be in the range of 1% to 1.5% of total retail expenditure in Castlemaine. Mr Henshall suggested it may be 1.9%. Either way, I agree that this is a relatively low level of impact, well within acceptable levels for the impacts of competing commercial development. At a macro-level, it will not affect the ability of local businesses to trade even though the impacts will not necessarily be evenly distributed. I also agree with Mr Quick that, at a macro-level, the economic stimulus generated from the project will be greater than the loss of trade and/or transferred expenditure between local businesses.
That said, I do not necessarily agree with Mr Quick as to the extent of the net benefit, nor the conclusions drawn from Mr Quick's analysis by MHS.
First, Mr Quick notes that the share of new gaming expenditure in the municipality that is attributable to responsible gambling is a positive. Although he then properly notes that the share of new gaming expenditure generated by problem gambling is an economic impact, there is nothing in his report or evidence apart from this acknowledgement that suggests he has actually netted-off this 'impact' in his assessment of the economic stimulus, employment and other benefits derived from the new expenditure.
Secondly, and relatedly, there is no attempt by Mr Quick to quantify the share of new expenditure generated by problem gambling, save for a one-line comment that 'This will be a minority of the spend'. Given the Productivity Commission figures outlined earlier, suggesting problem gamblers account for between 22% and 60% of total gaming expenditure (with an average of 41%) and a likely range for moderate risk and problem gamblers between 42% to 75%, there is no certainty that the new gaming expenditure in Castlemaine will be a minority of the new spend, or a minor part of the total gaming expenditure in Castlemaine. Even if this is so, there is simply no analysis by Mr Quick to assess this, or to analyse this in the context of this proposal.
Thirdly, I agree with Mr Henshall that Mr Quick is equivocal in stating that an increase in gaming machines does not necessarily increase problem gambling levels significantly'[77]. Here, the new expenditure would arise through a trebling of gaming machines in Castlemaine, at only its second gaming venue (and first club venue). The new expenditure will inevitably represent a high proportion of total gaming expenditure in the town. There is no attempt to analyse the likely impact of problem gambling on the expenditure derived.
Fourthly, although Mr Quick makes reference to the new facilities attracting new expenditure from tourists and other visitors to the Shire, and this is perhaps likely, there was no evidence to assist in quantifying the extent of that benefit. Most of the 'new' expenditure will likely come from within the Shire. Mr Quick also conceded that he had not taken account of any economic value of money leaving the local government area as a consequence of gaming expenditure.
Fifthly, I agree with Mr Henshall that there has been no attempt by Mr Quick to analyse or factor in the costs to families, or the costs of services, to deal with problem gambling. Mr Quick conceded this[78].
None of these matters necessarily changes the economic benefits from being net positive, but they do potentially dilute the extent of the benefit. I consider that Mr Quick's consideration of overall economic benefits lacks rigor or completeness given the finely balanced nature of this proposal, and in my view ought to be treated with a degree of caution.
There was no attempt by MHS to deal with the opportunity cost of the proposal in economic terms - e.g. new expenditure of $1.7 million to $2.7 million per year on gaming (amounting to over $20 million over 10 years), to provide primarily for a one-off development of a $3.5 million gaming facility. This issue was raised by Mr Henshall. I have not given this issue much weight in this proceeding. Whilst the opportunity cost of a proposal may be indirectly relevant to a broadly based socio-economic assessment about it, the Commission and Tribunal must ultimately consider the impact of the specific proposal before it. I also agree with Mr Quick that it is not really relevant to look at the total amount of revenue relative only to the initial investment, nor to treat all of the gaming revenue as a 'loss' that needs to be off-set[79], as Mr Henshall effectively contends. The gaming revenue not attributable to problem gambling is an economic benefit, rather than a loss. As is evident from the foregoing discussion, my concern with Mr Quick's evidence, however, is that he does not clearly articulate or estimate what part of the gaming revenue is attributable to problem gambling, and that does potentially need to be off-set.
For the record, I have not given weight to the comments in Ms Rosen's social impact assessment that directly relate to economic impact. As she properly conceded[80], such matters fall outside her expertise, and she has only relied indirectly on the economic analysis of others insofar as economic impacts have social consequences.

[158]

Mr Quick notes that, apart from short-term construction jobs, the MHS proposal will generate employment of 31 FTE jobs directly at the facility, with 25 FTE additional jobs generated through supplier employment multiplier effects.
The Commission accepted this evidence at face value, but there are a number of comments that can be made about it.
First, I note initially that Mr Quick's 'evidence' of the 31 direct jobs is simply based on instructions from MHS - he has undertaken no separate analysis. He indicates the figure is based on the experience of MHS at its other venues, although Maryborough and Kyneton are quite different facilities based in each case on pre-existing bowls clubs. Castlemaine will offer no dedicated sport facilities at its venue.
Secondly, Mr Quick's opinion was provided in relation to the original MHS proposal. The MHS evidence about the modified proposal is that MHS seeks to obtain operational efficiencies through running operations at Maryborough, Kyneton and Castlemaine (e.g. a joint executive chef) and presumably some of the management will also be based at Maryborough. There may or may not be the same level of jobs in this proposal, but the evidence was not updated.
Thirdly, and importantly, Mr Quick gave evidence that only 8 of the 31 FTE jobs would be directly linked to gaming. As Mr Henshall noted, most of the jobs at the venue will be associated with non-gaming activities - kitchen, dining, bar etc. It is questionable then the extent to which the non-gaming jobs can be considered an economic benefit to a gaming venue proposal. In Laurimar Tavern[81], the Tribunal considered it inappropriate to assess all employment generated by a proposal, as much of it would be in non-gaming jobs. The Commission contended that such an approach is artificial, as the 'no net detriment' test essentially requires all impacts of a proposal to be considered. I am sympathetic to that view. I think the non-gaming employment is a matter to be assessed in each case in terms of its relevance and weight - it is an indirect benefit of the gaming approval, but perhaps of slightly lesser weight than the direct gaming jobs in the overall impact analysis. As EPIC noted, the Productivity Commission has commented that most employed in the gaming industry are highly employable and would be in demand elsewhere in the services sector. Gaming does not create net employment benefits, but diverts employment from one sector of the economy to another[82]. Either way, MHS did not adequately respond to this issue.
Fourthly, Mr Quick gave evidence that the 31 FTE jobs was not a net figure - he considered that there would be no job losses elsewhere, as the economic impacts of less than 1% to 1.5% would be spread across other business to the extent that no business suffered an individual impact sufficient to warrant a job loss. In macro-economic terms, I do not think this outcome necessarily follows, and Mr Henshall's evidence was that the impact would not necessarily be spread evenly but would impact most in the food and beverages sector (rather than retail generally) - particularly if food at the bistro was subsidised by gaming revenue or food vouchers provided through an in-kind community contribution arrangement. Moreover, if gaming expenditure of up to a $1 million (i.e. 35% of Mr Gill's gaming expenditure range) is estimated to be transferred from the Cumberland Hotel, one would be surprised if there was no impact on employment there.
Finally, Mr Quick conceded in cross-examination that perhaps 50% of the additional multiplier jobs would be generated outside the municipality. Only some would be local.
As with the economic impact analysis, none of these matters necessarily changes the employment benefits from being net positive, but they again dilute the extent of the benefit. Given the reliance Mr Quick places on new employment and its flow-on impact to economic activity, his (and MHS's) failure to deal with these countervailing factors means that this aspect of the economic assessment ought also to be treated with a degree of caution.
EPIC noted in its final submissions[83] that gaming is a low-density employer compared to the retail sector, in that gaming employs less people per dollar of expenditure. Expenditure in the retail sector thus provides a higher overall employment benefit to the economy, the benefit of which is lost if jobs are diverted to gaming. For similar reason to my earlier comments on the 'opportunity cost' of the proposal, I have not given this issue much weight in this proceeding.

[159]

In particular, the doubt about the forecast gaming expenditure levels considered above leaves me in some doubt about whether and if the minimum community cash contribution of $50,000 will be realised. This contribution is highly relevant to the economic benefits being assessed, and was relied upon by Mr Quick as 'guaranteed', and by the Commission as important to its decision. MHS asserts this contribution as one of the key attributes of its application.
Somewhat alarmingly, Mr Blandthorn's updated material provided at the December hearing evidences that the minimum gaming expenditure required for the proposal to break even is $3,515,508. That is, higher than both of Mr Whitehouse's estimates, higher than the previous MHS budget attached to Mr Inglis' witness statement, and higher than Mr Gill's low-point forecast. Indeed, MHS needs to rely on Mr Gill's mid-point forecast of $3,796,000 per annum just to break even. Without a break-even venture, loan repayments will take precedence over other payments, and any cash contribution will not be realised.
It seems that this is at least partly conceded by MHS. In the final written submissions initially presented to the Tribunal, MHS stated that 'it is not expected that the cash contribution will be less than $50,000, but if it is, the in-kind contribution must be at least $200,000 less the cash contribution'. It also stated that the community contributions would 'if possible' include a minimum cash contribution of $50,000[84]. Only after this written statement was queried by me, MHS's counsel subsequently presented an amended version of his written submissions that attempted to omit these words and qualify the statement.
Accordingly, I do not place great weight upon the proposed cash contribution in this case. I disagree with MHS that the management agreement with CSCC makes the community contributions more certain than in the case before the Commission. I consider this cash contribution is now clouded in uncertainty. In any event, it is a relatively modest sum of money that does not sufficiently tip the balance either way, given other factors in this case.
Insofar as the in-kind contributions of $150,000 (or $200,000 less any cash contribution) are concerned, these are also clouded in some uncertainty, such that I do not give them great weight. It appears, albeit without clarity, that these in-kind contributions will include free room hire, free food and beverages (in the form of vouchers to community organisations), and unspecified 'assistance with fund raising'[85], and will be provided as part of the day-to-day operations of the venue within normal operating expenses. Given the management agreement, it is likely that the in-kind contribution will therefore be controlled by MHS.
The MHS and CSCC witnesses were collectively unsure of exactly what the in-kind contributions might entail, who would control them and whether, for example, the free room hire was within the in-kind contribution or not. Mr Inglis thought the meeting room and community arts space was in addition to the $200,000 and would be administered independently of CSCC by the Council or a local arts group[86].
For Community Benefits Statements provided by clubs annually to the Commission, the Commission sanctions a wide range of so-called 'in-kind' contributions, some of which seem to be notional, or the claiming of expenditure that would have been incurred anyway, or subsidies enjoyed by club members and guests. As an example, it includes the charging of the cost of voluntary services provided by club-members to others in the community. [This would seem to me dilute the voluntary nature of those services]. MHS's own statements for its Maryborough operations, provided to the Tribunal, include similar contributions. Whilst there is no doubt some indirect community benefit in these 'in-kind' contributions, the broad arrangements for what can be claimed, combined with the limited evidence here about what may be included, means that the direct additional benefits of the contribution are at best notional and uncertain, and cannot be given great weight in this case as an economic benefit.
Even if the community benefits are realised, I agree with Mr Henshall that they represent a very small proportion of the gaming expenditure at the venue. The $50,000 cash contribution for example represents only 1.3% of Mr Gill's mid-point gaming revenue forecast, such that a very small percentage of the gaming revenue is actually being returned to the wider community as a direct counter-balance to the social impacts, with the main economic benefits being to CSCC and MHS. Moreover, here, the combined $200,000 cash and in-kind contributions, if realised, are still less per year than the management fee of $250,000 payable to MHS in addition to its other operating costs, and which contains a significant profit component. There is no doubt that MHS is entitled to a return for its risk, but the effect is that a greater economic benefit as between these two items will flow to Maryborough rather than Castlemaine.
This is not an argument in itself for a greater community contribution in Castlemaine, nor an indication that a higher guaranteed community contribution in Castlemaine would necessarily lead to an approval. It simply indicates that the community contribution proposed here is not a significant economic benefit in the overall scheme, and should not be accorded great weight as an economic factor.
I agree with EPIC that, although considerable time was spent in the proceedings considering the nature and terms of the community contribution, it nonetheless represents a comparatively insignificant benefit in financial terms to other tangible and non-tangible disbenefits of the proposal[87], or indeed other tangible or indirect benefits.

[198]

I have commented earlier on the limitations of Mr Quick's social impact assessment for MHS, being more akin to a broad desktop review and containing a number of bare assertions. I have also mentioned the MHS decision to withdraw the evidence of Dr Miller.
The omission of Dr Miller's evidence has no material implications for my decision, as the Commission has consistently rejected Dr Miller's opinion on problem gambling (and did so in this case also[89]). It is appropriate for the Tribunal on review to consider all the material before the original decision-maker, at least to a general level, and having done so I agree with the Commission on this issue. Dr Miller's opinion that there are positive social impacts from the proposal relies strongly on his opinion that there is no causal link between the number of gaming machines in an area or expenditure on gaming, with the prevalence of problem gambling. The preponderance of academic research and government studies to date would suggest otherwise, or at least suggest a likely link that warrants a cautious approach. That was the view of Ms Rosen, Mr Quick, and Dr Livingstone. I agree with the Commission that it should not proceed, nor should the Tribunal, on an assumption that the number of gaming machines in a municipality will have no impact on the prevalence or social effects of problem gambling.
It is unnecessary to discuss Dr Livingstone's critique (on behalf of EPIC) of Mr Quick and Dr Miller's evidence, as it essentially makes the same criticisms.
Conversely, I have largely accepted the approach of Ms Rosen (for the Council) based on relevant international principles for social impact assessment as outlined in her report[90]. I say 'largely' accepted, because I consider Ms Rosen has perhaps overstated the 'precautionary principle' insofar as it might conceivably apply in this case. I prefer the sentiments of Judge Macnamara in Royal Benalla Hotel that I have outlined earlier. In addition, Ms Rosen has purported to express an overall view on community well-being without having herself undertaken (or having the expertise to undertake, as she concedes) a formal economic impact analysis.

[199]

There is little controversy in the underlying population, demographic and socio-economic statistics provided by Mr Quick and Ms Rosen for Mount Alexander Shire and the surrounding region.
Of relevance, Mount Alexander Shire has a higher older adult population (65+), and slightly higher rates of unemployment, single parent families and people on low incomes, relative to regional Victoria. I agree with Ms Rosen that there is a level of social and economic vulnerability arising from these factors, and others specifically arising in the socio-economic profile of Castlemaine - a high proportion of households without internet, emerging communities including East African (with the largest Sudanese community in Australia outside Melbourne), and many with low proficiency in English, a high concentration of prisoners and their families, and an economic sector heavily reliant on tourism.
This potential vulnerability is also borne out in the SEIFA Index of Disadvantage [91], which measures relative levels of disadvantage. I am advised that Castlemaine has a SEIFA score (963), below the Victorian regional average (986). Mount Alexander Shire ranks 30th out of 80 municipalities in regional Victoria (where a higher ranking demonstrates greater relative disadvantage). At a statistical local area (SLA) level, Castlemaine ranks higher (i.e. greater disadvantage) than the balance of Mount Alexander Shire, and Castlemaine ranks 36th out of 204 SLA's, putting it in the highest 20% for relative disadvantage in regional Victoria.
The SEIFA Index of Disadvantage is commonly used by the Commission (and the Tribunal) as an indicator of relative disadvantage and, as I have indicated earlier, it is now generally accepted that problem gambling is more likely to arise, albeit without any clear correlation, in or near areas of greater socio-economic disadvantage. The approval of gaming facilities therefore attracts greater scrutiny in or near areas of higher relative disadvantage[92]. That is at least the prima facie position here.
However, as Mr Quick rightly notes, the SEIFA Index of Disadvantage is based on a limited range of ABS statistics, is used for a broad range of purposes, and is not determinative by itself of a greater risk of problem gambling arising in an area of greater relative disadvantage. I agree with Mr Quick that the SEIFA index can be influenced by an older age profile, and that the elderly are usually retired, may have accumulated wealth and lower living costs, and are not necessarily 'disadvantaged' in a more general sense. Further, although the elderly are frequent players of gaming machines, there is no correlation that suggests the elderly are more susceptible to problem gambling - indeed the contrary is perhaps more likely. There is no clear profile of a problem gambler, but it is generally accepted that the elderly are under-represented amongst problem gamblers.
The problem here for MHS is that, if Mr Quick is right on this issue (as I believe he is), his opinion simply serves to undermine the reliability of the use of the SEIFA index in this case as an indicator of the likely social impacts of gaming in Castlemaine. It does not however serve to substantiate the converse proposition. It does not mean that the community is not vulnerable. Mr Quick offers little in the way of any alternative indicator that he can demonstrate may be more reliable in the context of this case. I prefer Ms Rosen's more detailed analysis in this regard.
I agree with the Commission's position on this, in this proceeding. Its counsel stated that the combined evidence of Ms Rosen, Mr Quick, Mr Henshall and Dr Livingstone is, in effect, that the evidence about the connection between problem gambling and accessibility is not settled but it is possible more gaming machines leads to increased revenue from problem gamblers and a higher impact on communities displaying lower socio-economic demographic statistics. In light of that evidence and support for a precautionary approach, it would be appropriate for the Tribunal to account for the possibility that some of the new expenditure will come from problem gamblers[93].

[200]

There is currently a low density of gaming machines in Mount Alexander Shire, with 2.04 gaming machines per 1000 adults (i.e. 18+) in the Shire[94]. If the MHS proposal is approved, this would increase to 6.42 machines per 1000 adults - i.e. more than treble. This would be within the range of the Victorian (6.00/1000) and country Victorian (6.37/1000) averages, and much higher than the averages for nearby Macedon Ranges Shire (2.91/1000) and Hepburn Shire (4.19/1000). Interestingly, Central Highlands Shire, centred on Maryborough, has 9.40 gaming machines per 1000 adults, amongst the highest in the state.
Mr Quick gave evidence that low density "is generally considered to be an indicator of reduced risk" of problem gambling[95]. This is consistent with Ms Rosen's evidence. Given this, it is surprising that Mr Quick then simply makes the bald assertion that the density here will not increase above typical non-metropolitan levels, without further analysis. A comparison with notional average densities elsewhere is not determinative of social impact in this case. It cannot be extrapolated that a below-average density means that a community can absorb more gaming machines to some notional average level without impact. As Ms Rosen notes, here there will be a trebling of gaming machines, and a trebling of gaming machine density, through a single approval. It cannot be concluded that the proposal will not contribute to problem gambling. On Mr Quick's own primary hypothesis - i.e. low density indicates reduced risk - that current 'reduced risk' of problem gambling in Castlemaine is being removed, and increased from a low positive base to average state levels.
The increase from a low base to average state levels can also have an impact on the character of the town, or a community's own perception of its character. I agree with EPIC that to change a town from one in which gaming is a very minor feature of the entertainment, hospitality and tourism landscape to one in which gaming is just as accessible as in any other Victorian town can alter its identity[96].
The current expenditure per gaming machines in Mount Alexander Shire is approximately $226 per adult and would likely increase to $350 to $407 (the upper figure being based on Mr Gill's high point for gaming expenditure), compared to a state average of $611 per adult.
Consistent with this, Mr Quick gave evidence that expenditure on gaming machines per adult in Mount Alexander Shire is low, and will remain relatively low. However, he then asserts that increased gaming machines or increased expenditure does not equate to increased problem gambling (due to the majority gambling responsibly) and there being no evidence that two venues leads to higher problem gambling than one (given problem gamblers already have access to the first venue).
Again, Mr Quick's relative comparison to notional state averages is not necessarily conclusive. Moreover, I do not agree with the Commission's support in its decision for this aspect of Mr Quick's evidence through its finding, on balance, that a member of the Castlemaine community that has a particular predilection for gaming machine use that is problematic already has good access to gaming at the Cumberland Hotel. Indeed, its position before me appears to have changed in emphasis. As its submission to me noted:

[202]

It is useful to read this comment also in the context of the Commission comments drawn from the Productivity Commission report[98]. The Productivity Commission has been somewhat equivocal about a link between small changes to accessibility and harm, but here the change is not small.
As Ms Rosen demonstrated by reference to available data[99], it cannot be assumed that an increase from one venue to two will not increase problem gambling. That argument may perhaps carry greater weight if there was an increase in venues in an area from, say, five to six, or seven to eight - i.e. where the change is more incremental, and off a higher base, and where the increase in gaming machines is also more incremental. There, it is more logical to assume that any problem gamblers may already have greater accessibility to gaming facilities, and perhaps already 'disguise' their gambling habit from venue operators by playing multiple venues. The argument does not hold as well in an increase of venues from one to two. The Commission had acknowledged that two venues in the town would increase access and reduce the ability of a venue operator to observe a patron's complete gaming machine use[100]. It is reasonable to assume that at least a proportion of the additional gaming expenditure will come from problem gamblers, and from new gamblers, some of whom may become problem gamblers.
In addition, as Ms Rosen's evidence demonstrates, the Loddon-Mallee region (within which the Mount Alexander Shire is located) already has a higher proportion of low risk gamblers than the state average (6.12% vs. 5.70%) and a higher proportion of problem gamblers (0.78% vs. 0.70%)[101]. It is conceivable that low-risk gamblers may be attracted to a second venue - particularly at a club venue. A recent Council survey of welfare services also indicates that one in ten clients accessing the local housing service report gambling problems, and one in three seeking relief through the Castlemaine branch of St Vincent de Paul report gambling problems, primarily from gaming machines[102]. There is already some indication of problem gambling, even with current low gaming machine density and low expenditure per adult, and I do not think MHS's somewhat simplistic and dismissive approach to an increase in density and expenditure is a sufficient response.
Again, I prefer Ms Rosen's more detailed analysis to that of Mr Quick. That is not to say that no increase in gaming machines at Castlemaine could ever be contemplated. However, a trebling of gaming machines and gaming machine density, and a doubling of venues, through a single approval, is certainly not an incremental change that the community can easily absorb without some impact, and I consider MHS has failed to deal adequately with this.

[203]

At a generalised level, the new facilities to be provided through redevelopment of the Old Goods Shed will provide a social benefit for those that use them. There will be a modern café/bar/bistro and new entertainment facilities, and a community space, which adds to the facilities on offer in Castlemaine, and for the broader Mount Alexander Shire and visitors to it. All parties accepted this.
Mr Quick noted that these facilities may enhance social interaction and cohesion, and reduce the incentive for local residents to travel outside the Shire to access similar facilities. Mr Quick also acknowledged the social benefit of additional gaming facilities in a club environment, for those responsible gamblers who like to play the pokies.
I have said that this social benefit of the new facilities exists at a generalised level, but I make the following observations.
First, the MHS proposal is essentially for new food and entertainment facilities and a large gaming facility. As the Commission noted in its closing submission, it is somewhat unclear what the objectives of CSCC are apart from establishing the venue and operating 65 gaming machines. The CSCC has no history as a sporting or community organisation and the venue is not attached, for example, to a bowls club or other major sporting infrastructure that may be enhanced through the gaming revenue. [Mr Jeffries indicated that the 'sports' offer (of what is called the Castlemaine Sports and Community Club) may be indoor sports such as darts or hooky, although the space even for this is not evident on the plans].
Ms Rosen notes a state average for country Victoria of 35 gaming machines per venue. Most are therefore more modest venues in terms of their gaming facilities, but here the proposal is for 65 gaming machines. If the essential ingredient in this proposal is the gaming facilities themselves, then there is an element of this venture, in reality, being an end in itself - the provision of gaming for its own sake. Whilst that may benefit those who use the facility, I am not convinced that provides a significant social benefit at a community level.
Secondly, the nature of a club licence means that there will be limited access to some facilities other than to CSCC members and their visitors, or visitors from outside the region. The social benefit will be primarily to CSCC members, rather than the local community generally. I agree with Mr Quick that a club environment will potentially enhance social interaction in the use of some facilities -e.g. the café/bistro/bar - but I equally accept Ms Rosen's evidence that one of the attractions of gaming machines, for those that play, is the capacity to play alone[103].
Thirdly, there is no function room in Castlemaine capable of holding 350 patrons, and there is undoubtedly a benefit in the provision of such a facility, albeit that there was no evidence as to the need for, or likely extent of use of, such a large space. However, Ms Rosen and several EPIC witnesses outlined a range of smaller function facilities in Castlemaine. Ms Rosen also gave evidence about a Council survey of community service and facility needs in 2010/11 that found a number of existing facilities to be under-utilised (including the market building and Town Hall), and that a review of sports and recreation facilities indicated a need for specific sporting infrastructure, but no priority for bars, exclusive purpose built facilities catering to target groups, or large social spaces[104].
Fourthly, the so-called 'community space' at the venue does not appear to respond to any identified need. The two meeting rooms are quite small (37 m2 in total) and there is uncertainty in the evidence whether they will be given over to the Council for community use, or controlled by MHS or CSCC with notional room hire credited as an in-kind contribution. The community arts space is also quite small (70 m2) and is also the space that accesses the meeting rooms, and provides access to the backstage stairs for the function room. Somewhat ridiculously, the plans attached to Mr Quick's report suggest the art room will fit 70 people. [At one person per square metre, that must be a mistake]. Its functionality as an arts space is unclear, and the evidence of Ms Rosen (based on discussions with the Council) is that this proposed space would not align with the needs or wishes of local arts groups[105]. MHS challenged this view, but produced no contrary evidence.
Again, from a social impact perspective, I prefer the more detailed evidence of Ms Rosen to the generalised commentary of Mr Quick. MHS's proposal for the non-gaming facilities appears to be based on a 'Field of Dreams' strategy (i.e. 'build it and they will come') whereas Ms Rosen's evidence, largely unchallenged by MHS, is that the non-gaming facilities to be provided through the MHS proposal will not satisfy any expressed or latent demand. These matters dilute, significantly in my view, any generalised social benefit of the new facilities at a community level.

[204]

The was considerable debate at the hearing about the location of the venue at the Old Goods Shed - its distance from the centre of town, its proximity to the railway station, its proximity to the Salvation Army outlet catering for disadvantaged people, and its proximity (within 500 metres) to residential areas known to be pockets of particular socio-economic disadvantage or where particular mortgage and rental stress was evident. The Council showed a time-lapse DVD showing the traffic and pedestrian movements near the Old Goods Shed and the railway station over the course of a typical day.
The intent of the evidence and submissions from the Council and EPIC in this regards was to attempt to demonstrate that the venue would be in a prominent location in Castlemaine, where large numbers would pass and/or congregate. It was thus contended that the venue would attract 'convenience' gamblers, rather than being a 'destination' venue where a person would need to make a conscious decision to go to the venue to gamble. It is commonly accepted that convenience venues are more likely to attract problem gamblers.
I did not find the Council and EPIC evidence on this issue compelling. The Old Goods Shed is well setback from the normal transport and pedestrian routes to the railway station, and the railway line and goods yard acts as a separator to the residential area beyond. From my own inspection of the site, I agree with the Commission that this venue would operate more in the nature of a destination venue. I also accept the evidence of Ms Hutchison from the Mercury Group (to whom I will later refer) that a person attending the Salvation Army premises is unlikely to be 'attracted' to the nearby gaming venue in a convenience gambling sense, given the limited hours of operation of the Salvation Army premises and the sign-in arrangements proposed at the gaming venue.
MHS suggested that the restoration of an historic and disused goods shed was of social benefit, whereas the Council and EPIC queried whether the use of a prominent building for gaming was compatible with its heritage value. I heard insufficient evidence to form a view either way. In its opening written submissions, the Council had also suggested that this proposal represented the first application that had come before the Commission or Tribunal involving the conversion of a long-standing public asset to a privately operated gaming venue, with most new club gaming venues being on private 'greenfield' sites in fast-growing or developing communities. I do not know whether that is correct or not, but it did not become the subject of further evidence or discussion in the hearing and I have not therefore given it weight in the decision.
All other things being equal, I do not consider the location of the Old Goods Shed to be a factor that would, by itself, warrant the refusal of premises approval under the GR Act. I have not of course considered any separate town planning or heritage issues.

[206]

I have already said much about problem gambling, particularly through gaming machines. At a general level, the Productivity Commission statistics speak for themselves.
Problem gambling will inevitably be a negative impact in any social impact assessment, deserving of a relatively high weighting. However, having regard to the statutory regime under the GR Act, as it presently exists, it is not an over-riding factor. I have also noted that the task of minimising problem gambling requires a multi-dimensional approach that goes well beyond the approval of individual venues or the regulation of the number of gaming machines. The debate in the federal parliament over the last year or so also bears testimony to that. Problem gambling is not going to disappear as a phenomenon. The key in any socio-economic assessment, for the purposes of the 'no net detriment' test, is therefore to consider whether a specific venue proposal is likely to have particular impacts - positive or negative - deserving of special attention, and as part of the overall assessment to consider whether other economic and social benefits outweigh the impacts of problem gambling in terms of the net effects on community well-being. The counter-balance provided by the implementation of responsible gambling initiatives is also important in this regard.
I have made general mention of some of Ms Rosen's research on the impacts of gambling in Castlemaine and its impact on families and welfare services. The Council also called evidence from the Salvation Army (Sean Attard) and the CEO of St Luke's Anglicare (Dave Pugh) about their respective clientele and branch operations in Castlemaine, the incidence of problem gambling in the area and the effect on local families, and the impact on their limited support services - including a Gambler's Help program run by St Luke's. Both expressed concern about the MHS proposal.
EPIC called evidence from a medical practitioner (Dr O'rtenzio) - the only psychiatrist in Castlemaine - whose work includes treating patients with gambling problems or addiction, and who proposes to close his practice if the approval proceeds because of the pressures of increased demand and already high waiting lists. I also heard from the president of the East African Community of Castlemaine (Chan Nyok) - a community that includes the largest South Sudanese community in Australia outside Melbourne - about the particular gambling propensities of that ethnic group, and his concerns about the number already attracted to regular (and problem) gambling at the Cumberland Hotel.
None of this evidence is individually determinative, and it deserves a variety of weighting according to its individual probative value. Collectively, however, it paints a picture of the implications of problem gambling from a uniquely Castlemaine perspective that was largely unchallenged by MHS, and certainly not contradicted by any evidence to the contrary.
It is perhaps a little galling that the only material questioning of the Salvation Army and Anglicare witnesses by MHS's counsel was to ask if their agencies would be willing to provide additional support services to assist in dealing with any problem gamblers generated by its proposal, if approved. In this context, I also note in passing an interesting observation made by Ms Rosen. By reference to the Community Benefit Statements filed by MHS with the Commission for 2010/11 for its Maryborough operations, MHS appears to apply no part of its recorded community contribution program to the Class A item for donations or sponsorships for "services for the prevention and treatment of problem gambling"[107]. It is perhaps surprising that MHS seeks to rely on community agencies to assist with support services, but it does not directly support them.
More generally, although a club may provide a more accessible and welcoming experience for gamblers, Ms Rosen expressed the opinion, having regard to the Productivity Commission report[108] that:
- regular gaming machine players are the most lucrative cohort of patrons for a club;
- problem gambling is more pronounced amongst those who gamble regularly, and many who join a club such as the CSCC do so because they gamble regularly and because of the gaming opportunities the club provides; and
- gambling at clubs is directly associated with problem gambling. Problem gambling is not necessarily more prevalent at 'pub' venues.
Against this, Clubs Victoria and Mercury Group Victoria Inc. have both developed responsible gambling guidelines and initiatives for use in club venues. The Mercury Group is a not-for-profit organisation established in 2012 to provide services to individual venue operators since the removal of the Tabcorp/Tattersalls duopoly. The Mercury Group's 'responsible service of gaming' (RSG) guidelines are, by all accounts, regarded as a good industry practice, and MHS uses them for its Maryborough operations and proposes that they be used at Castlemaine.
Ms Hutchison from Mercury Group (and a past responsible gambling policy co-ordinator for Clubs Victoria) gave evidence about the RSG guidelines, including the development of Codes of Conduct and Self-Exclusion programs, in conjunction with the Department of Justice and the Commission. She also detailed the arrangements that usually apply at a venue including staff training arrangements, venue materials and displays, complaints resolution, and code and program reviews. Under cross-examination, it became apparent that not all problem gamblers entering a self-exclusion program are separately interviewed by a Mercury Group or club representative, given the operation of the self-exclusion across a number of venues, but I do not consider this unduly limiting to the overall intended operation of the RSG guidelines at Castlemaine.
I accept Ms Hutchison's evidence, save that I do not share her (or MHS's) view that MHS can or should rely on the Salvation Army for support with self-exclusion programs. MHS and CSCC need to control their responsible gaming initiatives from their own resources.
In accepting Ms Hutchison's evidence, I might say that I would expect nothing less from a gaming premises applicant such as MHS - i.e. the implementation of best practice RSG guidelines, self-exclusion programs, and other responsible gambling initiatives, and with provision for continuous review and improvement. That must be taken as a given, such that it is not a social benefit unique to this proposal but an absolute necessity in all proposals. A requirement for a responsible gambling code of conduct (to be approved by the Commission) was also introduced by the Gambling Legislation (Problem Gambling and Other Measures) Act 2007.
I make a number of additional observations.
First, the Mercury Group RSG guidelines are not a panacea for problem gambling. Despite their wide implementation over the past few years, responsible gambling initiatives have not stopped problem gambling. They do however reduce the risk or prevalence of problem gambling, and thus reduce the extent of negative social impacts that would otherwise apply. They act as a material and important counter-balance to the risks of problem gambling in the social impact assessment.
Secondly, the Mercury Group RSG guidelines are only as good as those who implement them. As I have indicated, the Commission had placed substantial weight on the identity, integrity, and experience of MHS as the applicant for approval. Mr Quick placed great weight on the RSG's in his assessment and gave evidence that CSCC was 'committed' to the guidelines, and that 'the management of the CSCC are experienced gaming operators'[109]. I suspect this was intended as a reference to MHS rather than CSCC, or at least I hope so. I was in fact astounded by the complete lack of knowledge or understanding of those CSCC office bearers called to give evidence, in response to the cross-examination of them, about their statutory responsibilities under the GR Act, the operation of the Mercury Group codes and guidelines, or indeed any responsible gaming initiatives.
In Laurimar Tavern[110], the Tribunal had considered that, despite an operator separately requiring a venue operator's licence under the GR Act, the proposed operator's experience was also relevant to premises approval, as was its commitment to best practice guidelines. I agree. The Council here suggested it is not just relevant, but critical, and that CSCC's demonstrable inexperience militated in favour of refusal. It indicated it was not aware of any previous application where the true or underlying applicant (i.e. CSCC) was not even in existence at the time of the application. Whilst I share some concern about the uncertainties in the future MHS/CSCC relationship, I ultimately agree with the Commission's submission that, come what may, MHS would still be exercising substantial control over the club's operations through the management agreement. That MHS 'control', combined with a commitment to the Mercury Group RSG's, gives me some comfort that there would be a sufficient and appropriate response to the implementation of responsible gambling initiatives if the proposal was approved, and that this would materially reduce (but not remove) some of the negative social impacts inherent in any gaming premises approval.

[207]

I now turn to the vexed issue of community attitudes to this proposal, but an issue that I think is one of the pivotal issues in this case.
A community attitudes survey had been undertaken within Mount Alexander Shire in November 2011 by Wallis Consulting. It was undertaken on behalf of the Council, and presented at the Commission hearing. It thus relates to the original MHS proposal. The survey author, Jayne van Souwe, was unavailable to give evidence before me, and evidence of the survey was instead led through Dr Beadnell. Interestingly, apart from measuring attitudes to gaming and this particular proposal, the survey had also included some questions about community well-being and happiness, and the social character of Castlemaine.
For my part, it is sufficient to refer to the following outcomes of the survey:
- only 19% of respondents thought there was room for more pokies in the Shire. 43% thought the current number about right, and 36% thought there were too many or should be none;
- there was a high awareness (84%) of the MHS proposal, with a 94% awareness in Castlemaine itself;
- 65% of respondents overall were 'opposed' (15%) or 'strongly opposed' (50%) to the MHS proposal. The level of 'strong opposition' was higher (60%) in Castlemaine itself. By comparison, 31% 'supported' (19%) or 'strongly supported' (12%) the proposal. The level of 'strong support' was slightly higher (16%) in Castlemaine. Only 3% did not have a view;
- 75% of respondents overall were 'opposed' (8%) or 'strongly opposed' (67%) to the inclusion of 65 gaming machines in the development. This number rose to 87% of those who had rated their current well-being as very high,
- 80% of respondents overall regarded themselves as being 'happy' (39%) or 'very happy' (51%) living in Mount Alexander Shire. The happiness level was higher (88%) in Castlemaine itself. A similar percentage of respondents overall (79%) had a 'high' (45%) or 'very high' sense of well-being in Mount Alexander Shire. Again, this was slightly higher (82%) in Castlemaine itself;
- 50% of respondents overall thought they would be 'a bit less happy' (23%) or 'a lot less happy' (27%) if gaming machines were installed at the Old Goods Shed. The level of unhappiness was slightly higher (54%) in Castlemaine itself. 43% thought they would feel the same. Only 6% thought they would be 'a bit happier' (4%) or 'a lot happier' (2%);
- 42% of respondents overall thought their well-being would 'decrease' (29%) or 'greatly decrease' (13%) if gaming machines were installed at the Old Goods Shed, with 53% anticipating no change;
- 72% of respondents overall thought the introduction of gaming machines at the Old Goods Shed would have a negative impact on the social character of Castlemaine, with only 12% thinking there would be a positive impact;
- 71% of respondents claimed they would be 'extremely unlikely' or 'not very likely' to attend the venue if the MHS proposal proceeded.
Although Ms van Souwe did not give evidence before me, MHS referred me to the Commission transcript of her cross-examination at the Commission hearing where she had said that the survey was only a point-in-time assessment of happiness, and implicitly agreed that it is difficult to gauge community happiness through a single survey question[111]. I accept this concession at face value.
As is commonly the case with surveys, there was some debate about how particular questions had been framed. Unsurprisingly, all parties also attempted to put their own spin on the survey results. I do not consider there is any demonstrable bias in any questions that undermines the survey results. MHS claimed in its closing submission that there was a 'blatant' misdescription of the proposal in the survey, and that the opposition would be 18% less if it had been stated that the proposal would be run by a not-for-profit organisation[112]. The MHS witness Mr Inglis had expressed a similar view, based on the same premise, considering the opposition evident from the survey to be 53%, as indeed initially had Mr Quick. I do not accept this. Question 3 of the survey, which had asked whether not-for-profit management would overcome opposition to poker machines in entertainment facilities, was a generic question not directly connected to the MHS proposal, and was only asked of those opposed to gaming machines. For the specific questions about the MHS proposal, it had been clearly indicated that MHS was the proponent. Mr Henshall had examined the survey results and explained the context of the responses and indicated that, even if the various responses were read together in the way advocated by MHS, it still demonstrated that 64% of the community would be opposed to the MHS proposal with not-for-profit management[113]. Mr Quick conceded his miscalculation during his evidence-in-chief, and accepted Mr Henshall's analysis[114]. I find MHS's closing submission on this issue disingenuous in the face of this concession by its own expert witness.
In any event, there was a general consensus that the survey results showed a level of opposition that was 'about average' or an outcome that even compared favourably with general community attitudes about gaming machines where up to 80% oppose gaming machines or want numbers reduced[115]. As I have nonetheless indicated, I do not place the same weight as the Commission in any comparison with state averages. There is a high level of opposition that should properly still be taken into account in its own right.
I agree with MHS that it would be wrong to decide an application based solely on a poll, even if fairly conducted, and I have not done so.
MHS claimed in its closing submission[116] that the survey was now out of date, and there was now "a strong level of support" and "broader community sentiment (e.g. support in surveys and other evidence)", and "genuine and widespread support for this proposal" and that even if the survey was a true reflection at the time "this may not be the case now". There was little evidence to back these bald assertions. In particular:
- the survey was prepared in November 2011 for a Commission hearing in February 2012. At the start of the Tribunal hearing in July 2012, it was still only a few months old, and remains a little over a year old for the purpose of my decision. I am not convinced it is out of date, or certainly not to the point of being obsolete or completely unreliable. I accept that the survey only represents a single 'point in time' position. It nonetheless remains relevant, and the numbers speak for themselves;
- I accept that CSCC has now been formed and had attracted 1571 members as at 10 December 2012[117], most of whom reside in Castlemaine or nearby. That indicates a level of support that is clearly relevant. But, mathematically, as a percentage of Castlemaine's population, it is still well within the 31% support for the proposal shown to exist in the November 2011 survey, and does not demonstrate one way or another whether the overall level of community support for the proposal has shifted since then and, if so, in which direction;
- the evidence of Ms Rixon and Mr Jeffries takes the matter no further. Their opinions about support for the proposal, whilst no doubt genuinely held, are very generalised and are not substantiated by reference to any objective basis other than increased membership numbers. They amount to bald assertions in themselves. They are also both CSCC office-bearers, and their opinions must be weighted accordingly;
- the evidence of Mr Braybrook, a local radio announcer, that he is 'aware that there is a large amount of support' is similarly generalised and unsubstantiated by reference to any objective basis. He is also a CSCC member. His opinion that his personal sense of well-being and happiness will be 'greatly increased' if the proposal proceeds[118], whilst no doubt genuinely held, is the view of one individual in the community among many. Statistically, if the Council survey is still relevant[119], his opinion is shared by only 3% of Castlemaine residents in terms of 'greatly increased' happiness, and by no other Castlemaine residents (and only 1% of the Shire) in terms of 'greatly increased' well-being arising from the proposal. Even if community sentiment has shifted, I cannot conceive that Mr Braybrook's opinion is now, or is likely to be in the foreseeable future, a majority view.
MHS has not undertaken any updated survey. Its own previous survey, undertaken by Dr Miller and presented to the Commission but not to me, had apparently shown a similar level of opposition to the Council survey. It did not address happiness or well-being[120]. It would be purely speculative to suggest what the outcomes of any new survey might be.
That said, as I have indicated, I have acknowledged there is some community support for the MHS proposal, and the support that does exist is passionate and genuine and increasingly vocal. The Council and EPIC acknowledged this also. But this is not simply a numbers game either way. EPIC's membership rivals that of CSCC[121]. Moreover, a raw statistic that 65% are opposed to the MHS proposal, or that 75% are opposed to the inclusion of 65 gaming machines in the development, may lead to the social impacts being assessed as net negative (as in the Commission decision) but still without that being sufficient by itself to tip the overall balance (i.e. the net effect on community well-being) against the proposal when other factors are considered.
What is particularly telling for me in this case is not the raw statistic of surveyed community opposition within what might be considered 'normal' levels, but the range and intensity of that community opposition in this case. It is a case that is almost unique in that regard.
The range and intensity of opposition is most evident to me through the following:
- a local body 'Funded by People Not Pokies' (FPNP) has been established to assist and provide an alternative revenue stream for sporting and community bodies, rather than gaming revenue. The Castlemaine Football and Netball Club - a 153 year old club of some standing in the town - has entered into a sponsorship proposal with FPNP and, as part of this arrangement, has made a contractual pledge not to accept gaming revenue[122];
- every general medical practitioner in Castlemaine has provided written opposition to the proposal[123];
- 164 businesses in Mount Alexander Shire oppose the proposal, including 75% of local hospitality venues[124];
- 36 local musicians have registered opposition to the proposal, and expressed concern about the potential impact on the live entertainment scene[125];
- local support groups such as the Salvation Army and St Luke's Anglicare have been prepared to get involved on behalf of the Council and give evidence in the proceeding about their concerns[126], as have community groups such as the East African community president called by EPIC [127];
- the Council has taken a very pro-active stance against the MHS proposal, and has 'stayed the course' in a lengthy proceeding (bisected by a municipal election) and has presented an evidence-based case rather than relying on general advocacy submissions. Two of its expert witnesses (Ms Rosen and Dr Beadnell) had cause to comment in evidence about the unusual level of intensity of opposition from the Castlemaine community in this case;
- EPIC also detailed the unusually high volume of meetings and rallies, meeting attendances, objections, media coverage etc in relation to the opposition to this proposal compared to other gaming proposals elsewhere[128].
None of this is individually determinative, and some of it no doubt reflects a well-managed campaign strategy by EPIC, including in the proceeding before me. But it is unusual in the Tribunal's experience to see this level of opposition manifested and maintained over an extended period of time, and involving the Council, community leaders, businesses, and sports and community groups in the way that it has. It is not just 'noise' (a term MHS's counsel used) from a group of vocal individuals. Even if there is an element of 'campaign strategy', it is no easy task for the Council and EPIC to assemble this range and depth of material and evidence. It is also most telling that there was no counter-balancing evidence from MHS and CSCC on these issues, other than the very limited evidence of the three CSCC members Mr Jeffries, Ms Rixon, and Mr Braybrook to which I have referred. Under questioning, Ms Rixon was unable to identify any sporting or community group in Castlemaine with which CSCC might affiliate or support for the purpose of furthering its notional community purposes.
I would not, in saying this, wish to imply that anybody seeking to oppose a gaming premises approval would succeed in doing so simply by adopting the approach of the Council and EPIC in this case. But the range and intensity of opposition to the MHS proposal has been demonstrated in this case to a level where it is deserving of greater weight than might ordinarily be given to 'normal' levels of opposition to development proposals of this nature or scale.

[208]

I have, to a large extent, already dealt with the issue of community contributions - at least in terms of indicating that they are clouded in a degree of uncertainty.
The cash contribution of $50,000, if realised, and if applied for the benefit of not-for-profit organisations in the Mount Alexander Shire, would obviously have some social benefit to its beneficiaries. I have no sense of what those organisations might be, or what the benefits might be. As I have just indicated, Ms Rixon was unable to identify any sporting or community or not-for-profit group in Mount Alexander Shire that might be particular beneficiaries. The Castlemaine Football and Netball Club, for example, has signed a pledge not to accept sponsorship or donations derived from gaming machine revenue. Neither Ms Rixon nor Mr Jeffries had yet though about what a community contributions program might entail. Mr Inglis (for MHS) expressed a view that he would like to see Castlemaine and Kyneton run highland gatherings similar to Maryborough, although there was no evidence to indicate whether that was what CSCC wanted, or what the community wanted, or whether any not-for-profit organisation yet existed in Mount Alexander Shire with that purpose.
The lack of any clear idea about what the community contribution might entail became exacerbated by the somewhat desperate offer, made by MHS's counsel on the last day of the hearing, to give the $50,000 to the Council each year to deal with problem gamblers or for its (i.e. the Council's) community purposes. It bears out the Commission's view that CSCC's purposes are unclear save for establishing the venue and operating 65 gaming machines. I am left with the impression that MHS and CSCC may regard the $50,000 community contribution here simply as a cost of doing business, in seeking to obtain the gaming premises approval, rather than itself having a committed community purpose. I have previously commented on the public policy reasons whereby such a practice should not be condoned.
Despite this, I am prepared to allow for the prospect that the $50,000 community contribution commitment has been made by MHS in good faith, and I note it was considered by the Commission as a significant benefit in the balancing of socio-economic factors. Had I been minded to support approval, I would have imposed a condition to secure the minimum annual cash contribution, to ensure it was delivered to not-for-profit community groups in Mount Alexander Shire.
Insofar as the in-kind contributions of $150,000 (or $200,000 less any cash contribution) are concerned, these are also clouded in some uncertainty, such that I do not give them great weight from a social impact perspective. Nonetheless, if realised, they would provide some benefit. Again, as I have indicated, the MHS and CSCC witnesses were collectively unsure of exactly what the in-kind contributions might entail, and who would control them. There is the potential that MHS (and Maryborough) will receive greater benefit from the annual management fee of $250,000 than will flow to social benefits in Castlemaine from the in-kind contributions.
I reiterate my agreement with EPIC's submission that, although considerable time was spent in the proceedings considering the nature and terms of the community contribution, it nonetheless represents a comparatively small benefit in overall terms. Other factors weigh more heavily as determinative factors in this case

[209]

The above analysis again speaks for itself.
It is true, as the Commission contended before me, that many of the fundamentals of the proposal, from a social impact perspective, have not significantly changed although some are clouded in a degree of uncertainty by reason of the modified proposal.
However, I have indicated that I generally prefer the more detailed evidence of Ms Rosen (that was not before the Commission) to that of Mr Quick. Whilst I do not consider concerns about problem gambling to be over-riding, I am not convinced that the risk of increase of problem gambling is as 'low' as found by the Commission. There is nonetheless a counter-balance in the implementation of responsible gaming initiatives.
I have received and attached greater weight to evidence about the range and intensity of community opposition. I consider it important here that there is a proposed trebling of gaming machines and a trebling of gaming machine density from a low base, through a single approval, that will create a likely social impact greater than a more modest incremental change.
I do not entirely agree with the Commission's view that the aspects of life in Castlemaine that make it a great place to live, work and raise a family will not be significantly changed, and their bolstering of this view by adopting Mr Quick's observation that opposition often dissipates after development occurs[129]. First, as the Commission notes elsewhere, Mr Quick's opinion on this is outside his expertise. Secondly, even if this view is one that is commonly accepted, it is not universally the case, and it is not necessarily one of broad application to a gaming application (as opposed, say, to a town planning objection). Dr Beadnell agreed in this case that, despite a 'normal' overall level of opposition, there were higher than normal levels of 'strong' opposition, and a 'greater' than normal sense of anticipated impact on happiness or well-being, evident from the Council's community attitudes survey[130]. The strength of opposition evident through the other material before me also suggests the opposition is more deep-rooted and widespread than is most often the case. It stems from a very strong sense of identity by a very large section of the Castlemaine community about the social character, values, and future aspirations of its community, even though not all in the community share those values and aspirations. I do not think that opposition will dissipate as readily as the Commission believes, and I consider the Commission has under-valued the likely longer-term social impact of this proposal.
Moreover, I do not agree with the Commission's conclusion that the social character will not change appreciably simply because, unlike the township of Romsey, Castlemaine already has some gaming machines[131]. Similarly, I do not agree with MHS that the decisions in Romsey and Romsey #2 can be distinguished simply because the Romsey township had no gaming machines at all, and that its character as a 'Pokies Free' town was threatened with significant change. If that be the test, then no community of a town that already had gaming machines could ever reasonably oppose further gaming machines, and community attitudes would be rendered meaningless. That is certainly not what is suggested in the extracts from Romsey and Romsey #2 set out earlier in these reasons.
The social character of a town comprises many attributes. But even on just this aspect, I agree with EPIC that a town's character can be just as much defined as being 'Pokies Lite' (with only one pub venue with limited gaming machines) within a diversified range of other arts, leisure and entertainment offerings, such that a trebling of gaming machines in a single approval could represent a substantial change to its character and sense of identity.
I believe that, based on the evidence and submissions (again, much of which was not before the Commission), the Commission's finding that 'there the net social impact ... would be negative or, at best, neutral' understates the likely extent of that social impact. I do not consider the evidence before me, properly analysed, justifies a finding of any possible neutral impact from a social perspective.
I find that the likely social impacts of the MHS proposal will be negative, and moderate to high.

[210]

As I have indicated throughout these reasons:
- this proceeding is not a referendum on gaming machines in Castlemaine. It is a decision about a particular proposal;
- the Tribunal must ultimately be satisfied that the net economic and social impacts of the MHS proposal for 65 gaming machines at the Old Goods Shed in Castlemaine will not be detrimental to the well-being of the community. It is not just a consideration of net economic and social impacts per se, or whether the proposal is generally acceptable or beneficial, but whether the net effect of the impacts will be detrimental to the well-being of the community;
- ultimately, the resolution of the 'no net detriment' test is a matter for judgement by the Tribunal, based on the evidence and submissions before it. The weight to be given to the evidence is a matter for the Tribunal, and will depend on the nature, extent and cogency of the evidence in a particular case.
In exercising that judgement, the outcome will be self-evident from all of the foregoing discussion about the issues I consider relevant, and the importance I attach to particular matters.
To my mind, the net economic and social impacts of this proposal remain finely balanced, but perhaps less so than before the Commission. Despite a strong 'anti-pokies' sentiment in some sections of the Castlemaine community, and the uncertainties in the MHS proposal I have highlighted, there are some competitive and community benefits in having a 'club' venue that offers an alternative to the current gaming monopoly in Castlemaine at the Cumberland Hotel, and which provides additional food, function and entertainment facilities in the town. There will be economic benefits from the gaming expenditure. However, this proposal seeks to treble the number of gaming machines in Castlemaine, through a single approval and from a low base, without sufficiently clear benefits to the Castlemaine community and the broader community of the Mount Alexander Shire. This is not an incremental change where the impacts could perhaps be more readily absorbed by the community, or where the economic benefits at a community level are so great that they outweigh the impacts.
In Romsey #2, Justice Bell had spoken of a 'tipping point' that might be exceeded by a new venue or additional machines in a community, in terms of detrimental net impact on community wellbeing. I consider this proposal exceeds such a tipping point for this community.
On the evidence before me, I do not accept the Commission's conclusion that "there are few economic and social disbenefits other than spirited community opposition that in part may not be rationally based"[132]. In my reasons, I have highlighted some of those disbenefits, and those I think dilute the benefits relied upon by the Commission in granting its approval. In particular, I am left with the impression that there is a preponderance of strong community opposition to this proposal, deeply felt, and with many holding a view that their happiness and well-being will be adversely impacted by this MHS proposal, and that the social character of Castlemaine will be adversely affected. To the extent that there is also some support for the proposal, that has led to a degree of community conflict and division that also has implications for community happiness and well-being.
The evidence and submissions in this case, considered collectively, lead me to the opinion that the social impacts will be moderately to highly negative, that there will be a significant effect on the social character of Castlemaine, and that this will outweigh the moderate net economic benefits of the proposal.
I am not satisfied that the net economic and social impacts of the MHS proposal for 65 gaming machines at the Old Goods Shed in Castlemaine will not be detrimental to the well-being of the community.
The 'no net detriment' test is a mandatory test under the GR Act. Given my finding, it follows that the Council's application for review to the Tribunal must be upheld, the Commission's decision must be set aside, and the MHS application for premises approval under the GR Act must be refused.

Mount Alexander SC v Victorian Commission for Gambling and Liquor Regulation & Ors

At a glance

Court

Decision date

Source

Judgment (289 paragraphs)

Mount Alexander SC v Victorian Commission for Gambling and Liquor Regulation & Ors (includes Summary) (Red Dot) [2013] VCAT 101 (14 February 2013)

Parties

Legislation Cited (4)