Hooked, page 9
To be fair to Kirner, there were additional factors weighing heavily on her mind when she made the decision to legalise casinos and poker machines in Victoria. Neoliberalism was in the ascendency throughout the English-speaking world. ‘The market’ demanded balanced budgets and reduced borrowing and debt, and the recession in Victoria in the late 1980s and early 1990s increased the appeal of this ideological fetish.15 But Kirner had more pragmatic considerations as well. She was concerned about the thousands of Victorians who were travelling across the border to New South Wales to play the pokies, with the consequent loss of potential revenue to Victoria. Hobart’s Wrest Point, too, was a competitor for the tourist dollar.
Despite all the factors that went into her gambling strategy, in Kirner’s mind it was only part of a broader goal: to develop a cultural vision for Melbourne as part of the state’s economic recovery. The centrepiece of this vision was to be the construction of a new museum at Melbourne’s derelict Southbank site.
When the premier launched a national and international campaign in 1991 to find an investor to build and run a casino, the project was little more than a sketchy idea. Kirner established a Casino Control Authority (CCA) to oversee the tender process. How big would the casino be, and how many poker machines would it be licensed for? Kirner would not get to decide these issues, as Labor was decimated at the October 1992 state election and ejected from office.
Compounding the irony of Kirner’s decision to unleash Big Gambling in Victoria, the Reserve Bank reported in 1994 that Victoria had begun moving out of recession in 1991, while she was still premier.16
Big Gambling’s best friend
If Kirner had laid the foundations for gambling as a legitimate economic strategy, her replacement, the irrepressible Jeff Kennett, became its cheerleader. Following his win at the 1992 state election, the incoming premier embraced Big Gambling as the saviour of Melbourne and Victoria at large. The domineering new premier announced the sell-off of the TAB for a $750-million windfall to the government. But Melbourne was also to get the world’s second-biggest casino, with several thousand poker machines. It was to be the state’s ‘beacon of hope’, the symbol of a new Victoria, as Kennett liked to declare.
But the politics of realising this vision would mire Victoria in years of controversy. The Southbank casino would be both an engine of economic growth and a political and social battleground. In addition to the proposed mega-casino, Kennett continued the rollout of poker machines into the community, finally capping their number in 1999 at 30 000. The hotel industry pushed hard for three years for a lift in the number of pokies in the community. And the cap came after years of community outcry.17 Nevertheless, the pokies horse had well and truly bolted, and Kennett had got his gambling-led recovery in Victoria.18
How had it come to this? Pokies were poisonous and casinos attracted criminal activity. Why were the lessons from New South Wales ignored? The short answer lies in the outsized personalities of Kennett and the casino’s two main proponents, businessmen Ron Walker and Lloyd Williams. The three were connected via longstanding friendships and were embedded in Melbourne’s elite power structures.
As one commentator noted, Melbourne’s mega-casino was always ‘Kennett’s show’.19 Where did the drive for such a risky venture come from? Born in 1948 into a comfortable but not affluent family, Kennett was educated at his father’s alma mater, Melbourne’s elite Scotch College, an institution dripping with privilege, chauvinism and the virtues of free enterprise.20 But Kennett didn’t quite fit the mould. As one journalist familiar with his story has noted, young Jeff was neither very smart nor very sporty, but he had something many other Scotch College kids in the post-war years may have lacked: ‘His dad, Ken, a gifted sportsman, was extraordinarily accepting of his awkward son; while his mother, Wendy, a clever woman from a disciplined German family, lavished him with praise.’21
Kennett’s passion was the school cadets, under whose influence he became an enthusiastic ‘shouter’ and a strutting ‘toy soldier’, amping up the discipline of his troop.22 The combination of enabling parents, the rarified air of an elite private school and the trainee authority in the cadets brought out Kennett’s key personal quality, widely noticed by commentators: a brashness extending to arrogance. This manifested in his trademark political style: a ‘sock-it-to-em’ confidence’23 combined with a high self-regard. With his trademark foghorn baritone voice, Kennett had a knack for attracting attention.24 As one commentator explained: ‘Mr Kennett is the sort of politician who could never make a speech, anywhere, any time, on any subject, without putting in a plug for his party and himself.’25
Kennett understood the value of self-promotion better than most. After a stint in the army in the late 1960s, he had created his own advertising agency. Only 28 when elected to the Victorian parliament, he became a minister at 32 and leader of the opposition at 34. In 1992 he became premier at 44.
As soon as he grasped the levers of power, Kennett created a cult of personality. One commentator described the phenomenon succinctly: ‘Jeff was the message and the media was the vehicle.’26 Inevitably, the cult of personality came with an autocratic style of leadership. Kennett didn’t like critics, either in his party or in the public. The implications of the ‘Jeff show’ were clear: Kennett could do anything he set his mind to and sell the benefits. A mega-casino in a traditionally conservative state? No problem.
But Kennett also had a debt crisis to solve. And here he leaned heavily into the prevailing neoliberal economics, making cuts to essential social services and reducing the size and cost of government. As one journalist explained, the first days of the Kennett government were ‘a textbook example of how to use a mandate’. After a brief sitting of parliament, Kennett shook Victorians with a mini-budget of savage cuts: the loss of 15 000 public-sector jobs, the closure of schools and rural train services, the scrapping of leave loadings, a 10 per cent increase in utility prices, and a $100 tax on households. ‘We seized that opportunity,’ Kennett later explained.27
And the new premier seized the opportunity to build a megacasino crammed with poker machines. He had willing partners in Lloyd Williams and Ron Walker, who owned a property development company, Hudson Conway, along with Melbourne corporate heavyweight Sir Ron Carnegie, who had ‘impeccable establishment connections with his sandstone college pedigree, Toorak abode, Sorrento holiday retreat and Melbourne and Australia club memberships’.28 Hudson Conway was one of the bidders for the casino project. The three formed Crown Ltd, listed it as a company and used it for the casino tender.
Williams was also embedded in the Melbourne establishment. A racehorse owner and keen gambler, he was a board member of the Victorian Racing Club and the mastermind behind the construction of the casino project.29 And he and Kennett were close friends. ‘He’s a good buddy of mine,’ Williams said in 1998 of his relationship with the premier.30 Flamboyant, unflappable and always immaculately attired, Williams seemed always to wear a cherubic smile. But nothing could mask the truth: he was a driven man with a touch of megalomania. Williams loved to talk, especially about his big vision: a gigantic casino complex for Melbourne.31
By appearance, Ron Walker perhaps didn’t look the part of a member of Melbourne’s establishment, with his lanky frame, red hair and pugilist’s features, along with his blue suits that appeared to have been bought off the rack at a street market.32 But after making his fortune in the chemical and property industries, his name was synonymous with ‘big business, big development and big money’.33 In addition to making money, Walker’s interests were contributing to Victorian public life. In the mid-1970s he became mayor of Melbourne and unsuccessfully floated the idea of a ‘small but sophisticated casino’.34 Afterwards, he headed up the Melbourne Major Events Company, which sought to bring international events to the city. He was also a longstanding treasurer of the federal Liberal Party, where he was reputedly the highest political fundraiser in Australian history.35 Walker was a powerful backroom operator, ‘an organiser, a man who makes connections and deploys them’, as journalist Sean Carney wrote.36 He too was a close friend of Kennett.
At much the same time that Kennett opened the tender process for Victoria’s casino, New South Wales Liberal leader John Fahey brought his state’s long paralysis over legalising casinos to a close with the announcement that a site for one had been selected: Darling Harbour. But plans for the casino merely bobbed along; Fahey lacked the dynamism of Kennett.
A deal for mates?
When Kennett came to power in 1992, the movers and shakers in Melbourne – including Williams and Walker and those involved in the Major Events Company – had long believed that the state needed a new vision for tourism to attract international visitors. As there were no spectacular sights in Melbourne or Victoria more broadly that could compete with the likes of the Great Barrier Reef, Sydney Harbour or Kakadu, the state needed some ‘big bang’ attractions – like a casino and the Australian Formula 1 Grand Prix – ‘to force itself on international visitors’.37
Kennett inherited the Casino Control Act legislated by Joan Kirner’s government in 1991. It was a convenient piece of legislation because of its contradictory aims about how the proposed casino should be run. While the purpose of the act was to ensure that the casino remained ‘free of criminal influence or exploitation’ and that gaming should be ‘conducted honestly’, the casino was also required to fulfil the grander aims of ‘promoting tourism, employment, and economic development generally in the State’. The Act also required the licensee of the casino to develop a responsible gambling code of conduct but gave no guidelines as to what such a code should include.
The tension between the casino’s broader economic role and the necessity to act ethically was obvious. How strictly would the casino be regulated by politicians keen to see it succeed and fill the government’s coffers?38
From the moment he became premier, Kennett took decisive action. He charged Ron Walker – a self-confessed petrol head – with pinching the Grand Prix from Adelaide, and made plans for a much bigger casino than the Kirner government appeared to have had in mind. The two projects were linked in the minds of Kennett, Walker and Williams: cashed-up visitors to the Grand Prix would help fill the planned mega-casino.39
Kennett quickly overturned the Kirner government’s decision to set aside the massive Southbank site for a planned Melbourne Museum. As anti-casino advocate Reverend Tim Costello explained, Kennett erased the previous government’s vision of a cultural Melbourne with the museum at its centre. His government sent the museum to Carlton, and the handover of the prize site on the river to a gambling den was a fait accompli.40
The change of site was symbolically important. Prior to European settlement, the Kulin people of the Wurundjeri tribe lived and hunted along the Yarra River flats, catching fish, eels and mussels. Later, the area became the first port of Melbourne, with factories and warehouses built between the 1860s and 1920s. Kirner’s plan sought to respect this history with a museum for the people; in Kennett’s hands, the site was devoted to extracting profits from the people.
Costello emerged as the leading opponent of the casino project and the introduction of pokies into Victoria. His voice would be heard regularly over the next three decades, mobilising public opinion, leading campaigns and engaging with politicians on the dangers associated with poker machines and gambling as a corporate enterprise. One confronting experience had thrust him into the battle against the industry. Trained as a lawyer and a Christian minister, he’d recently set up a legal aid service in the St Kilda Baptist Church. One day in the early 1990s a woman walked into the service in dire circumstances: she’d stolen $60 000 from her employer to feed her pokies habit. Happily married with three children, she’d never before been in trouble with the law. Costello represented her. The case was cut and dried, and the woman received four years’ jail. ‘I remember visiting her in prison and asking myself the question: how does a woman who’d barely had a speeding ticket end up in jail for four years? What are these machines?’ he recalled. That was when he started to take an interest in pokies.41
With lightning-fast approvals courtesy of a Melbourne City Council, a temporary Crown Casino was established in the World Trade Centre, on the north bank of the Yarra, in June 1994. It quickly became a runaway success. In the meantime, the selection process to choose a bidder to build the permanent casino got underway. The tender comprised two parts: the design itself, and the price offered for the licence.
After an initial round of culling, two consortiums were left vying for the prize: Hudson Conway, the company owned by Williams, Walker and Carnegie; and Crown Melbourne Casino Ltd (MCL), comprising the hotel chain ITT-Sheraton and builder Leighton Holdings. The involvement of Kennett’s good friends from Hudson Conway was a ticking political time bomb for the premier.
Critics at the time alleged that the process by which the winning bid was selected was shrouded in secrecy, under the guise of commercial-in-confidence protocols. When Hudson Conway was announced as the winner of the lucrative licence in September 1993, a political storm broke loose – one that would dog Kennett until he was ousted from power in 1999. The opposition Labor Party and the press began asking questions: was Kennett’s promise that the tender process would be ‘as pure as the driven snow’ correct, or was the integrity of the process somehow compromised? It was on the public record that Crown Ltd – the company established by Williams and Walker to build the casino – was allowed to change its bid three times during the process.42
On the day the licence was awarded, Kennett was questioned by ABC reporter Greg Hoy about problem gambling. Incensed, the premier banned his ministers from appearing on Hoy’s program, The 7.30 Report, a position he maintained for years afterwards.43
Important as Hoy’s question was, it was sidelined by accusations of dodgy dealing between Kennett and his mates. In fact, it emerged from investigative reporting by The Sunday Age in 1994 that the Victorian Casino Control Authority had declined to nominate Crown as the preferred bidder. As the paper noted:
The confidential reports, which have been seen by The Sunday Age, show that Crown increased its bid by $80 million in the last days of the tender race. The ‘topping up’ lifted Crown’s bid marginally above Sheraton-Leighton’s. Also, in some financial areas assessed in the reports, Sheraton-Leighton’s offer was better than Crown’s. And the report also expressed concern over Crown’s bid and corporate structure.44
In 2000, and in response to continuing public interest, Kennett’s successor as premier, Labor’s Steve Bracks, released 10 000 pages of documents relating to the tender process. While most of these were legal/contractual material, sensitive communications documents were also included. The Age spent weeks reviewing them and found flaws in the process.
The documents found breaches of the rules governing the process, including a lack of written records of some of the meetings with the bidders, and the absence of taped records of private meetings. Williams wanted changes to government policy on gaming venues to increase the profitability of the casino. Specifically, he wanted to ban venues with more than 105 poker machines within a 100-kilometre radius of the casino. The documents revealed that Williams told the CCA that the banks would not finance Crown’s bid unless the ban went into place.45
In addition, as The Age reported, the casino documents showed that:
Late in the tender process the Crown bid was reported to be well below that of its competitor. But with a late extension granted, Crown is understood to have lifted its offer. The late increase, and accurate newspaper reporting of the Sheraton-Leighton bid, led to widespread speculation that someone in government had leaked to Crown’s benefit.
Tony Jolly, commercial manager of the CCA, later said he ‘certainly’ believed the MCL bid had been leaked, but that it was impossible to identify the source.46 The leak was supposed to have helped Hudson Conway improve its bid.
Within days of losing the contest for the licence, MCL alleged to the CCA that the Kennett government had leaked details of its bid, allowing Crown Ltd to lift its offer.47 In the end, Crown paid $200 million for the licence fee.
In 1996, agitation by Victorian Labor Party senators succeeded in establishing a select committee into the Crown tendering process, but lack of cooperation by the Kennett government forced it to abandon its proceedings – but not before committee members called for a full judicial inquiry or royal commission into the controversy.48 Kennett, not surprisingly, was furious at the prospect of federal involvement in what was strictly a state matter.
Both Kennett and Williams have strenuously denied that they engaged in any undermining of the probity of the tender process, and there the matter has rested. Even so, the allegation of a dodgy tender process dogged Kennett. Writing in 1998, Ewin Hannan from The Age addressed these claims:
During the past five year, the Premier Mr Kennett, has had to battle the perception that his friendship and political connections with Mr Ron Walker and Mr Lloyd Williams have led to government favours for the casino. Critics, led by Labor’s Mr Rob Hulls have hammered the claim that Crown under Mr Walker and Mr Williams have been beneficiaries of ‘special mates deals’ from Mr Kennett.49
Hudson Conway was allowed to make substantial changes after they were announced as the winning bidder. The size of the project was increased to allow for an additional 150 gambling tables, an additional 1300 poker machines and a trebling of hotel rooms.50 Crown paid an additional $125 million in fees for this expansion. Almost by stealth, Melbourne found itself with a mega-casino packed with poker machines and gaming tables within a vast entertainment centre.
All the while, the anti-pokies lobby, led by Tim Costello, was publicising the social harm they saw emanating from Crown, and from the pokies that had been allowed into the broader community. Costello received continual threats of legal suits and barrages of verbal abuse.51 Throughout, he never lost sight of a key question: ‘How have private interests displaced the public good?’52
