Racing NSW leadership extension: what progress will two more years bring?

Minister David Harris, whose purview extends across five portfolios, is seeking to keep current Chair Russell Balding AO and Deputy Chair Saranne Cook in place beyond terms regularly mandated for directors of state-owned corporations.

With both Balding’s and Cook’s current terms set to end on December 18, the minister now has some hoops to jump through, as the proposed extension will need to clear parliament before the end of the year.

Claiming the need for ‘continuity of corporate knowledge to navigate changing regulatory and economic reforms confronting the racing industry over the next two years’, the media release lists four challenges facing the industry as the basis for Balding’s and Cook’s extensions. They are:

- Addressing funding challenges in response to changing wagering environments

- The need for increased transparency around animal welfare

- Implementing new training and skills programs across the industry

- Delivering a significant capital works program, mostly focussed on country racetracks, to futureproof the industry.

Déjà vu

It won’t have escaped TTR AusNZ readers that we have been here before, and twice, no less. When Balding was facing the eight-year limit to his tenure in 2019, the NSW government passed legislation for a two-year extension. Two years later, Balding was permitted to remain again for another two years, taking the tenure to 12 years completed to date.

NSW Treasury guidance released at the end of September recommend directors of State Owned Corporations serve a maximum of two three-year terms.

Whilst Harris and Racing NSW have followed the letter of the law throughout these extensions, it’s fair to say that the necessity for parliamentary consultation reflects the seriousness with which director terms are considered. To extend to 14 years - over double the State’s own recommendation, would indicate an unprecedented shift from corporate governance procedure.

Industry legend and former Racing NSW Chairman, John Messara, has spoken out about the announcement:

“I find it hard to believe that the State Government would extend the Chairman’s term on the board of Racing NSW and give him 14 years as a director. This is in breach of the existing statutory term, which had twice before been extended from the original eight years maximum.

“I implore the Premier to override the decision which is contrary to any norms of good governance. The existing board needs to be refreshed, as do all boards. In my opinion, new directors will need to have good racing knowledge and experience and be of independent mind.”

Magic Millions co-owner and Harvey Norman chief executive Katie Page-Harvey was drawn to comment on the matter, telling Sydney Morning Herald earlier this week:

“I don’t know Russell and I’m sure he’s a really good chair, but it’s unusual for a tenure of that sort of position to be extended multiple times.

“There are so many experienced people that could be refreshing the board. Government, as I understand, sets the tenure. I think it’s the right thing to follow what has already been legislated.”

In determining whether a director has become ‘too close to management or a substantial holder to be considered independent’, ASX guidelines state that ‘...the board should regularly assess whether that might be the case for any director who has served in that position for more than 10 years.’

Australian Financial Review journalist Mark Di Stefano certainly did his research, and suggested that Balding might consult Cook on the matter, her PhD ironically being in corporate governance at ASX-listed companies.

What’s at stake?

Taking a pragmatic approach, it is worth assessing some of the challenges outlined by Harris.

TTR AusNZ readers, uniquely placed to understand the stresses and strains felt inside our industry, realise the reality of skills training and the pressures of staffing shortages better than anyone, and have a universal respect for the heightened expectations required around equine welfare transparency.

A question asked of Harris and Balding sought clarity on plans to specifically address these challenges outlined in the statement:

Of the four challenges listed, at least three (skills training, capital works and equine welfare transparency) have been facing the industry for over a decade. Why should industry participants have confidence that you will be able to make progress on these now, with a further extension to your tenure?

Both Harris and Balding declined to answer the question.

Skills training has been in dire need in NSW, and many other parts of Australia, for years. However the situation became even more challenging in 2022 when Richmond TAFE closed its equine unit, with Racing NSW leadership to date offering no solutions on alternatives opening. While the most recent Stategic Plan (2019) raises the option of a training academy, no clear solutions are outlined in the last two Annual Reports that indicate this issue will be addressed within the next two-year governance term.

Interestingly, The Ethical Framework, which forms part of the NSW Government’s Public Service Commission gives ‘18 principles which guide the behaviour of people working for the NSW Government’. Under ‘Accountability’, the requirement to ‘provide transparency to enable public scrutiny’ is listed.

As part of our story in June, The Thoroughbred Report asked for clarification in how the Equine Welfare Fund is being utilised, to provide the very transparency expected of a government organisation that would allow for public scrutiny. The fund, which receives 1.5 per cent of prizemoney, has not had details of how it is operated widely publicised, leading to questions from industry participants around what the money is actually being used for.

At the time, Chief Operating Officer of Racing NSW, Graeme Hinton, referred this publication to the upcoming annual report, saying “there is additional info in our annual report that you should refer to.”

The 2023 annual report, which had not been released at the time of publishing in June, does not address the specific questions asked of Hinton, specifically regarding where the monies in the Equine Welfare Fund are invested, or how many horses have been rehomed through the Racing NSW welfare programs.

Further questions have arisen around the ongoing efforts to ensure retired racehorses are being adequately cared for once they have completed their racing careers. Racing NSW figures indicate a steep decline in the number of audits undertaken by officials. In the year ending June 30, 2022, there were 1287 retired racehorse audits completed, a number which decreased to 582 in the year ending June 30, 2023.

We raised both concerns to both Balding and Harris, as detailed below:

The 2023 Annual Report has been published, and we are still in the dark as to the transparent disclosure on the spend of the 1.5 per cent of prizemoney allocated to the Equine Welfare Fund, can you provide that detail now?

Can you clarify why retired horse audits have halved from last year, given that your own introduction to the 2023 Annual Report says that Racing NSW has been ‘…continuing to invest in our Integrity and Equine Welfare Programs, which I believe are second to none’?

Both declined to respond to the questions.

Messara also shared his thoughts on the funding challenge, which was noted in the tenure announcement, specifically suggesting ‘prizemoney being allocated to wasteful gimmick races’ were unsustainable.

“Such funds should instead be allocated to grass roots country and provincial prizemoney. While I appreciate that we need suitable aspirational races, the bizarre array of strange new races undermines the NSW and Australian Racing Pattern and the whole economic basis upon which our multi-billion-dollar industry is run.”

So, what’s next?

The absence of clarity brings us back around to the primary question; what will the RNSW leadership now deliver over the next two years that has not been possible throughout the previous 12-year tenure?

With Harris and Balding unforthcoming on answering specific pertinent questions surrounding the challenges outlined in the press release, the industry will need to have confidence that a renewed focus from existing leadership will see positive progress. The Minister’s office provided TTR with this comment:

“The Minister’s strong expectation with this appointment is there is increased transparency around welfare and rehoming, greater support for country races and a continued commitment to supporting a responsible, sustainable, and competitive racing industry.”

The question that remains particularly important for those eager to see the NSW horse racing industry poised to handle modern challenges and thrive in an ever-evolving era, is who might take over the reins in December 2025?

In that regard, the following question was posed to Harris:

Good governance addresses succession planning, and given continuity of corporate knowledge is mentioned as the primary reason for continued tenure, what are the plans for the RNSW board and CEO to ensure this is not again an issue beyond the next two years?

With no specific response to this question received from the Minister’s Racing Office, it appears the industry is expected to wait and see...

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