Story transcripts

Packer's Punt

Monday, May 14, 2012

Reporter: Karl Stefanovic
Producers: Stephen Taylor and Ali Smith

The Packers know a thing or two about business, so when they talk we tend to listen.

Now, James Packer wants to talk about tourism but in typical billionaire style it's a blunt message; The industry has seen much sunnier days.

The big question then is how do we fix it? Packer says by getting Asia, and especially China, to visit us.

And forget cuddly koalas and shrimps on the barbie, give them gambling.

Of course, Packer would say that, he's our biggest casino operator but he's also promising that if we follow his plan, all of Australia will win.

Full transcript:

KARL STEFANOVIC: The Packers know a thing or two about business so when they talk, we tend to listen. Now, James Packer wants to talk about tourism. But in typical billionaire style, it's a blunt message. The industry has seen much sunnier days. The big question then is how do we fix it? Packer says by getting Asia and especially China to visit us. Forget cuddly koalas and shrimps on the barbie, give them gambling. Of course, Packer would say that – he's our biggest casino operator. But he's also promising that if we follow his plan all of Australia will win.

STORY – KARL STEFANOVIC: Macau might seem like a strange place to begin a story about Australian tourism but this could be our tourism future. Ritzy hotels, restaurants, high-end shopping, over-the-top entertainment and most importantly, casinos. Fuelling it all, China's booming middle-class and James Packer doesn't want us to miss out. How lucrative is the Chinese middle-class?

JAMES: I think it may be even a bigger story than the internet. You know, it's like saying, "how big a deal is the internet?" The Chinese middle-class is going to change the world.

KARL STEFANOVIC: James Packer already owns successful casinos in Melbourne and Perth. But his $2.5 billion City of Dreams resort in Macau is something else and it has to be – because here, competition is fierce. Forget Las Vegas – Macau is now the Mecca for world gambling.

JAMES: This year, Macau is forecast to have $40 billion in revenue, so it's six times bigger than Las Vegas, which is just extraordinary.

KARL STEFANOVIC: There's an unbelievable amount of money in town.

JAMES: There's a lot of money in town, a lot of money in town.

KARL STEFANOVIC: And that money has changed the way the Packers do business. Where James's father Kerry, concentrated on a mighty media empire, now the business is dominated by casinos and hotels. Today his personal wealth is tipping $5 billion. But James's first foray into casinos in Las Vegas was very nearly a disaster for the entire empire.

JAMES: I got plenty of guesses wrong on things in the past as well. I don't want to pretend I have some great insight, but we made some bad investments in America and fortunately, I think we will make a lot more money in China than we lost in America. But when the global financial crisis came along in 2008 it was scary times if you were in the middle of building $5 billion buildings. It wasn't perfect.

KARL STEFANOVIC: Scratching your head –

JAMES: "I hope this turns around."

KARL STEFANOVIC: Must have been a huge concern for the organisation, but when it turned around it must have been justification?

JAMES: I think I'm the luckiest person in Australia. Obviously when the world started getting better and Macau, you know – Macau came good in a big way, it made for a much better alternative than the alternative.

KARL STEFANOVIC: While Macau thrives, in Australia much of the tourism business is grim. Steve Watson was happily running his crocodile tours on the Proserpine River in Queensland for a decade. Then the perfect storm – a rising Aussie dollar, creaking local infrastructure and crippling cyclones meant no tourists. Last year was just awful for Steve and his wife, Jackie.

JACQUI: We weren't just slowing down, we stopped. We didn't get phone calls for days. It was quite scary. We couldn't afford to pay us a wage for six months.

STEVE: I've been working all my life basically, and in 40 years it was the first time I'd been on the dole.

KARL STEFANOVIC: All over Northern Australia, it's a similar story. At Airlie Beach, business is so bad they're offering six months free rent for shops on the main street. Out in the beautiful Whitsunday waterways, something I never thought I'd see – once mighty resorts like Lindeman Island, shut down. It's such a shame that everything has gone so wrong.

JAMES: It is very sad. It is very sad.

KARL STEFANOVIC: Do you feel that at all?

JAMES: Of course. I think that, you know, like every Australian, you don't want to hear stories of people working really hard and putting their heart and soul into something and business being really tough for them.

KARL STEFANOVIC: It's a far cry from the golden days. Almost 30 years ago, Paul Hogan made Australia a must-see destination for the world. Since then, the ad men have tried, but often failed to compete with Hoge's success. Now, James says we can't rely on our natural charms alone.

JAMES: I'm not saying that casinos for Chinese tourism is the only answer for Tourism Australia. But equally, I think that a lot of the Chinese tourists like man-made attractions as well as natural attractions. So I think we need better hotels, better restaurants, better shopping, better attractions. That's what I think we have to do.

DON: My personal view is at the moment, that I don't think casinos rank particularly highly on long-haul visitors coming with their families for a traditional Australian break.

KARL STEFANOVIC: Don Morris is the boss of Tourism Queensland. He's no fan of casinos and they think the Chinese want an experience that they can't get at home.

DON: Luxury to many Chinese and Asian people is simply to be able to walk on a beach. Luxury can be having bare feet and sticking your toes in a beautiful, pristine, sandy beach. So we are different and you don't need a casino to drive Chinese business to Australia.

KARL STEFANOVIC: You don't think building casinos would make any difference in terms of the number of Chinese coming here?

DON: In the short-term, no, I don't think it will make much difference.

KARL STEFANOVIC: Aren't we a place that is more physically attractive though – koalas, kangaroos, the great natural landscapes?

JAMES: Tourism around the world, the successful tourism around the world, is about man-made attractions. The biggest tourist destination in America is New York. The second biggest, tied, is Orlando and Las Vegas. Las Vegas gets about 40 million people a year. I think maybe the greatest natural attraction in the world is the Grand Canyon. It's a half-hour drive from Las Vegas and gets about 3 million a year. You go to Europe. The biggest attractions in Europe: London – man-made, Paris – man-made, Venice – man-made. You go to Asia – the biggest attractions in Asia: Dubai, Macau, Hong Kong. It just is what it is – and Singapore.

KARL STEFANOVIC: If you want to attract Chinese tourists, you have to be bigger, better and bolder than the competition. Here in Singapore, they have taken that to a whole new level. When the architect of this building said he wanted to construct a pool 150 metres long on the top deck – that's 57 floors up – the owner said, "Well, why not?" Here in Singapore, the sky is literally the limit.

NOEL: Singapore doesn't do things in small leaps. They make a major leap forward.

KARL STEFANOVIC: I see that. That's strong decision-making.

NOEL: It is indeed.

KARL STEFANOVIC: Noel Hawkes is a vice president and chief spruiker for the $7 billion casino Resorts World Sentosa, which has been teeming with Chinese gamblers since it opened two years ago.

NOEL: The figures were staggering. Tourism arrivals in 2010 increased to 11.7 million – which was a 20% increase over the previous year. But the staggering increase was in spending – it went up by 50% to $18 billion.

KARL STEFANOVIC: While Singapore has embraced the economic success of casinos, here, we're a little more cautious and there's fair dinkum debate about the social impacts of gambling – especially poker machines. The easiest question and the easiest criticism of you is "well, of course James Packer wants more casinos in Australia because James Packer gets to line his pockets."

JAMES: Sure. So what I would say is I would say, "have a look at Singapore – I’ve got nothing in Singapore – and the reality is these guys have gone out there and thought about it and they have said that attracting millions more Chinese tourists over the forward years is going to be hugely beneficial to their country and they have done it."

KARL STEFANOVIC: Because there will always be people who say, "hang on a second, we don't want the Chinese in Australia and we certainly don't want gambling to start with."

JAMES: Yeah, I think there will always be abolitionists and I don't think that there are many examples where abolition has been terribly successful.

KARL STEFANOVIC: You know that there’s the feeling in Australia that there is something inherently wrong with gambling – how do you overcome that?

JAMES: I push back on that – I think some people say that. I think the vast majority of people don't have that view. You hear the stories – and this is one of the reasons I'm out here – I'm really sick of people looking at me as though our business is some sort of sinful business. I am hugely proud of our business. Our business made in 2011, $340 million after tax. We paid $680 million in tax. So we paid twice as much tax as we made in profit. We’ve got 17,000 employees. And you know, 66,000 people a day on average come to Crown and Burswood – soon to be Crown Perth. It's fun for some of the abolitionists to pretend that 66,000 of those people have a problem or we have some kinetic hold on them or they don't know what they're doing. You know what? Those people, the vast majority of them are betting within their means and they are there having fun.

KARL STEFANOVIC: While James Packer already controls the casino markets in Perth and Melbourne, it's no secret he'd also like a serious tilt at Sydney. The Packer pitch is for a $1 billion hotel, with gambling, here at Barangaroo – right in the dress circle of Sydney Harbour. It's designed to attract the Chinese but at the moment, it's only attracting controversy. Does it need a casino, though? Sydney needs the infrastructure, but does it need a casino?

JAMES: What we’re talking about a tables-only casino, no slot machines and tables because that is predominantly the game of choice for Chinese gamblers. The reality is if you are going to build a hotel full of – call it $1 billion – the rooms alone won't pay for it.

KARL STEFANOVIC: Do you want that licence?

JAMES: I genuinely believe if we get the chance to do something in Sydney, the people of Australia will win out of that proposal. There will be jobs, taxes, tourism – there’ll be more people coming to Australia looking to spend money and I think that is a good thing.

KARL STEFANOVIC: That sounds like a big 'yes' to me.

JAMES: That's a big 'yes'.

KARL STEFANOVIC: Back on the Proserpine River, it's a good day. The boat is full, even though the big crocs are a bit shy. Steve Watson would gladly welcome Chinese tourists anytime. He and his family will try anything to turn around the bad times of the last few years. How do you keep smiling, you two? God, I don't know how you keep smiling!

JACQUI: We live in a wonderful place, it’s a fantastic place to live and work. It really is. We're very blessed, my kids have a wonderful life here.

KARL STEFANOVIC: That is why you keep going. Casinos or crocs, on my journey through Asia and Australia, it's clear everyone wants something different from their holiday. But perhaps what overrides everything else in tourism is the need to have fun and that's one lesson James Packer has learned from his father, Kerry.

JAMES: My dad was the smartest bloke in the room – he was the smartest bloke in the room. But he loved being in a casino – it was the most fun thing he did. It was the most fun thing he did. He knew what he was doing.

KARL STEFANOVIC: What do you think he would make of your empire now?

JAMES: Oh, you know, I think that you know, there would be some things he would be happy with, there would be some things he'd be not happy with.

KARL STEFANOVIC: Would he like it here in Macau?

JAMES: He’d love it.

KARL STEFANOVIC: How much would he love it?

JAMES: A lot.

KARL STEFANOVIC: You'd have him punting in your casino?

JAMES: If he was here, mate, it wouldn't be my casino, it would be his.

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