An influential Australian trade union has signalized to the New South Wales (NSW) government that the state’s intention to significantly increase casino duty rates from 1 July 2023 will result in lost jobs in the casino industry of the province. The state announced the tax reform at the end of the last year to begin on 1 July this year to increase funding for the regions that have recently been damaged by natural calamities.
Surprising support:
Although the United Workers Union may seem surprising support for the Star Entertainment Group, IAG reports that the Union’s executive director, Dario Mujkic, told the press that the government’s intention to punish Star for the failures to comply with anti-money laundering legislation may have adverse effects and consequences not only for the corporation but also for casino staff in the province.
Communities and businesses affected:
The government intends to use the funds generated through increased casino duty rates to help communities that have been affected by bushfires and floods in recent years. However, The Star’s operations in Sidney will be tremendously affected by these measures, as half of the company’s revenue came from the Sydney casinos during the fiscal year 2022. The move will simultaneously affect casino staff and may result in redundancies and fewer jobs available in the NSW casino industry.
Call for negotiations:
Therefore Mujkic called on NSW Treasurer, Matt Kean, to continue negotiations to try to come up with a mutually beneficial proposal. He said: “The New South Wales Treasurer hasn’t clearly thought through the potential impact of the proposed tax change on business operations and more importantly the workforce.”
Mujkic added: ”It’s time for the NSW treasurer to sit down and properly engage with The Star and the United Workers Union, repair the damage that has already been done, and agree on a path forward that is reasonable and does not put jobs at risk in any way.”
Adverse impacts:
Mujkic’s comments follow the recent Star’s announcement that The Star Sydney operations would be substantially impaired if the NSW state government implements the casino duty rates increase. The company expects that the change of casino duty rate would cost the company’s NSW operations in the range of US$277 million to US$1.12 billion.
“If implemented in their current form, the proposed duty rate increases would have a significant adverse impact on the profitability of The Star Sydney, further compounded by the changing operating and competitive environment as described above,” stated the company representatives. “In this scenario, The Star intends to undertake an urgent review of The Star Sydney’s operating model and assets, with a view to maximizing value for the group’s shareholders.”
Share value decline:
The proposed changes would, for example, introduce the 60.67% tax to poker machines in the NSW casinos despite the operator’s previous agreement with the government setting the tax rate at the range from 32 to 34 % until the year 2040. As the proposal suggests the casino duty charged at double the current rate, Star’s prospects are reflected by a significant decline in share value to as low levels as AU$ 1.29 this week, almost five times lower than the 2017 peak seen at AU$ 6.08.