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By: Bill Saunders 

New South Wales Thoroughbred Racing Board Chairman, Tony Hartnell, was predictably unsurprised at the less than ecstatic response from Thoroughbred Breeders NSW and Aushorse to his announcement this week regarding a proposed levy on stallion owners to help fund an incentive scheme for NSW racing.

Describing their attitude as "vehemently opposed", Hartnell asserted that neither breeders' body supported a prizemoney incentive scheme for NSW racing, even though the TRB felt that it was needed to improve the returns to owners.

Where Hartnell appears to have caused most angst, is by releasing a detailed proposal outlining the incentive scheme without consulting either NSWTB or Aushorse about the key funding component, which would see $3 million of the $7 million required raised by a levy of 10% on service fees in excess of 60 mares per stallion.

The NSWTRB proposal is headed "Rich NSW Incentive Scheme Set for Introduction" which would seem to indicate that its all systems go. However, closer perusal of the detailed proposal reveals that only $4 million of the estimated annual cost of the scheme is to be funded by a $660 fee per horse plus a contribution from TAB revenue by the NSW industry. This part of the funding is definite according to Hartnell.

The proposal to raise the remaining $3 million is nowhere near as well defined. In fact Hartnell admits that "its a statement intended to open up debate" on the issue of a levy on the service fees of the more successful stallions to raise funds for racing generally.

The TRB's statement on the reasoning behind the levy says :-

"This scheme is conceived of largely as a way to keep some benefit in Australia from an activity that is currently dominating Australian breeding, namely foreign stallions with foreign controlled operations, which contribute in a minimal way to Australian racing whilst at the same time taking very substantial benefits from Australian breeders and owners and the Australian tax system."

TBNSW President Richard Turnley denies that foreign stallion owners are benefitting disproportionately from Australian racing as suggested by the TRB. "Australian breeders have a greater choice of stallion than anywhere else in the world" he said. "They are also getting very much better value for money than they would elsewhere" alluding to the Australian service fees for shuttle stallions, which are often a fraction of their Northern Hemisphere fees.

Turnley pointed out that the foreign stallion owners are major investors in Australia. "Ask any country town if it would like to have a Coolmore invest in the area - the answer is yes" he said. He responded to the tax reference by saying "there is no evidence that they are avoiding paying tax under our system".

Aushorse Chairman John Messara pointed out that many of the more successful stallions are owned and/or managed by Australian operators. "Jack Ingham runs one of the largest studs in the country and is also one of the largest supporters of racing as an owner" he said. Describing the TRB proposal as "poorly conceived and poorly researched", Messara went on to say that "an incentive scheme in New South Wales is not necessary because our breeding industry is very strong".

Stressing that his views were personal, Messara was at pains to explain that Aushorse had not yet met to consider its corporate attitude to the TRB proposal. He was however "somewhat outraged" and viewed the proposal as "discriminatory" and "a free kick to Victoria".

This latter comment is worth considering further, because Victoria is to blame for much of the thinking that a prizemoney incentive scheme is needed in New South Wales. While Victorian racing goes from strength to strength, with capacity fields in both city and country races, New South Wales is struggling to run city meetings with more than 70 or so acceptors.

Much of the credit for the strength of Victorian racing is ascribed to the Super VOBIS scheme, which provides incentives which can double prizemoney for 2 and 3 year old races. The scheme is funded in a roughly similar way to the proposed NSW scheme. However the major difference is that the "stallion levy" component is provided in Victoria by the State Government.

According to Hartnell, in New South Wales this is not an option because the Government has refused to provide such funding, hence the TRB's resort to the stallion levy. However the TRB's proposed method of administering the levy may have the paradoxical effect of strengthening Victorian racing further.

This is because the TRB intends that the imposition and distribution of the levy be controlled by the adoption of a new Australian Rule of Racing, which would then become binding on all Australian Principal Clubs. Because the bulk of the revenue raised will come from New South Wales stallion owners, a proportionate distribution along the lines of the number of horses registered in each state, will see Victoria receive a windfall bonus of roughly the same as NSW is expected to receive - $3 million per year.

The "policeman" for ensuring that the levy is collected will be the Registrar of Racehorses who operates under the control of the Australian Racing Board (ARB) - the peak governing body of Australian racing. The TRB proposes that the Registrar not accept the registration of any horse by a stallion subject to the levy if it hasn't been paid.

This part of the TRB proposal has aroused a storm of protest from TBNSW in particular, who have suggested that adoption of such a rule would be challenged in the courts as being a restraint of trade. Hartnell's response is that racing operates as a kind of parallel legal system to that of the traditional legislative and court system of the rest of society. He points out that "the whole of the current Australian Rules of Racing is either contrary to the Trade Practices Act or it is not. You can't selectively attack parts of the Rules of Racing under the TPC, without rendering all of them invalid".

Given the animosity of the breeders, there is logic in the way that the TRB is going about getting the stallion levy part of its proposal accepted. By amending the Rules of Racing, it will be binding on all states. However, the Rules of Racing are by and large not determined by the breeder bodies, but by those who run the race clubs. The ARB is composed of representatives of each Principal Club, which is essentially one Club from each state. However, the voting power of the Board is not one man one vote, but is weighted in favour of the larger states.

All amendments to the Australian Rules of Racing require a two-thirds majority, which is 19 votes. One can safely assume that the 6 votes from NSW are already in favour of the TRB proposal. The proposal is so beneficial to Victoria, that it is hard to see how they could vote against it. Equally the benefits to the "non-breeding" states of Tasmania and Northern Territory are all out of proportion to the risks. So it only needs one of the other 3 states to vote in favour and the rule change could become reality.

Undoubtedly, there will be some heavy lobbying before the issue is put to the vote at the next ARB meeting in June.

By: Bill Saunders 

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