Woolworths 2010 AGM election speech

November 18, 2010

Speech explaining "no pokies" candidacy to shareholders and directors at Woolworths AGM

Thanks Mr Chairman,

Good morning shareholders. As you might have gathered I'm involved with Senator Nick Xenophon, Tim Costello, Paul Bendat from pokiewatch.org and others in an ongoing campaign to end Australia's status as the world's biggest gamblers.

In addition to running for this board, I'm also a councillor in the City of Manningham, in Melbourne's east, where five of our 7 pokies venues are associated with this company. Our 116,000 citizens lose almost $70 million a year on the pokies – more than they pay in rates. Our council is considering quadrupling the miserly rates Woolworths' pokies venues pay us each year.

Woolworths is the biggest pokies operator in Victoria with about 40% of the revenue from losses in hotels. Victoria has the most lucrative machines in Australia and the worst prevalence of problem gambling. Woolworths somehow gets customers to lose about 30% more on their machines than the state average.

I believe we need more directors in tune with the global focus on corporate social responsibility. In particular, I am concerned about potential damage to the Woolworths brand and franchise from its operation of more than 12,000 pokies through the ALH joint venture with Bruce Mathieson. Woolworths is the only major retailer in the world to have built a large gambling business. I believe Woolworths should exit the pokies business or, at the very least, manage its 12,000 pokies in a sustainable and responsible manner.

In addition to the harm sustained by the Australian community from more than $10 billion lost each year on the pokies, existing ALH pokies have seen our pokies venues become a soft target for violent crime. There is also a reported government investigation into management practices at our Richmond Tavern and Aces Sporting Club relating to a defunct basketball and social clubs.

The company's junior pokies partner, Mr Mathieson, is also reportedly able to grant pokie licenses in favour of his preferred AFL club, Carlton.

Woolworths must show leadership, without waiting for prescriptive legislation from the Federal Government, by embracing full pre-commitment as detailed in the final report of the Productivity Commission. This is paragraph 7.5 of the agreement between Andrew Wilkie and Prime Minister Julia Gillard.

This leadership can be demonstrated by publicly pledging to implement a system of compulsory, non-transferable and binding pre-commitment for gamblers in our associated pokies venues. While such a pledge would reduce Woolworths' gambling income derived from addicted gamblers, if not undertaken, Woolworths risks significant damage to shareholder and brand equity. Ultimately, in this era of greater corporate social responsibility, it also risks being unfavourably screened by professional investors who are signatories to the United Nations Principles for Responsible Investment.

I've just read you substantially what I submitted as a platform before the Woolworths censors to my right stepped in and removed it from the notice of meeting distributed to all shareholders. They whittled it back to a miserable 68 words, whilst Ian McFarlane got more than double that allocation.

I guess I'm perplexed why this once-great Australian company remains so resolutely determined to bleed gambling addicts dry more efficiently than any other pokies operator in Australia.

Woolies are at times a brutally efficient operation and if that means taking an approach of “if it's legal, we'll do it” then so be it.

Dick McIlwain is a man well known to many Queenslanders. He was appointed CEO of Unitab in 1989 and is now the CEO of Tatts Group in Melbourne.

When the Victorian Government kicked Tatts and Tabcorp out of the pokies business and decided to let venue owners like Woolies become pokies operators, Dick McIlwain publically said the following in April this year:

''I am not unhappy to be getting out of the poker machine business; they are not the sort of business I want to be in long term and they're on the nose all around the world.''

I asked Dick McIlwain to clarify his comments at the recent Tatts Group AGM in Melbourne and he said the following:

"The comment about being on the nose, when you look anywhere around the world, and look in Victoria and everywhere else. Pokie machines attract an inordinate amount of attention from people who are concerned about gambling problems. As a result, there is a persistent, continued attempt, certainly successful in most places, to constrain the way you operate pokie machines - and that's the genesis and the basis of the comment."

In other words, Dick McIlwain accepted the argument. Contrast that with Bruce Mathieson's comments to 774 ABC Melbourne presenter Jon Faine earlier this year when he described Tim Costello, Nick Xenophon and Paul Bendat as “the three imbeciles”.

The Woolworths approach – certainly with Mr Mathieson directly running the pokies business – seems to be particularly hard-line.

The Financial Review's Street Talk column flagged the possibility of Woolies exiting the pokies business in February when it reported and I quote:

"The latest talk of separation comes as a result of Woolworths' discomfort at being tagged as Australia's largest pokies operation.”

Ten months later, still no movement.

Can't you directors smell? Your pokies business stinks. It's on the nose. It's destroying lives.

Chairman and directors – I hope you're feeling particularly uncomfortable.

I hope there won't be the need to go through this again next year.

I'm also running in the Victorian election as an independent candidate on a "no pokies" platform and I invite Mr Mathieson and the Melbourne-based directors to come along to a forum being held next Tuesday with Tim Costello, Nick Xenophon, the Gaming Minister and various other players. You might learn something about the level of community concern.

Shareholders, I ask for your support to send a message to the board that it returns to the basics of providing every day value for Australian consumers, rather than running this huge gambling business which deluges misery on tens of thousands of vulnerable Australians.

I'd like to finish with the story of Theresa Lawson – she used to work at Woolworths Supermarkets as a payroll officer.

In 2004, Theresa was jailed for a minimum of 4 years after stealing $2.7 million from our company to feed her pokies addition.

There are hundreds of Australians who've done the same thing since 2004. They've stolen many tens of millions from their employers – and the biggest beneficiary has been our company – the biggest pokies operator in Australia. Most of these people are first time criminals - because they are victims of an addiction to an extremely dangerous product. A product that this great company should not be associated with.

I thank you for the opportunity to address you.