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Both sides of Joyce’s dirty deal bad for NZ

Written By: - Date published: 4:50 pm, April 8th, 2012 - 89 comments
Categories: economy, national, uncategorized - Tags: , , ,

It’s interesting to see Fran O’Sullivan, fresh from attacking the Boag faction and praising Collins over the ACC affair, now having a crack at Joyce’s crony capitalism. Without doubt, Joyce’s dirty deal is a juicy target for his internal critics and an example of this government at its worst.

David Cunliffe has done sterling work bringing the details of this disgraceful ‘law for sale’ deal to the public eye. Unfortunately, much of the media coverage, including Q+A this morning has framed this as a question of whether the trade off between an economic boon from the convention centre and the social damage of more gambling is worth it. This is falsely construed because there is no economic boon from the convention centre – the government’s own numbers show it would barely break even with a BCR of 1.1 to 1.6 ie. barely break even under MED’s operatic assumptions. MED warns that SkyCity would demand ‘subvention’ -ie ongoing subsidies from the council and government in return for the added tourist income the centre would supposedly bring (I doubt it would attract many of these 1000+ person international conventions, not in today’s economic climate and with peak oil making air travel ever more expensive).

Around the world, convention centres actually make their money from these kick backs from governments, not from hosting the conventions themselves. They hold governments to ransom with the threat that they close and the tourist revenue will be lost and, thereby, turn the governments’ tourism revenue into private profit.

So, the convention centre is just a white elephant, which is why no-one will build it without government subsidies. Sky City’s price is a law change to allow it to make at least $40m a year profits and create 400 more problem gamblers. What meagre economic gains a contention centre might generate would also go back to its owner, SkyCity, via subvention.

SkyCity tried the same ‘convention centre for more pokies’ deal in Adelaide and were told to get fucked by the South Australian government.

So, the question isn’t whether we should give SkyCity more pokies and cop more problem gambling in return for an awesome convention centre. It’s whether we should accept SkyCity’s ‘gift’ white elephant, and have to pump millions in every year to feed it, and let them exploit more people in exchange. It’s not one side of this equation that is bad for New Zealand, it’s both.

89 comments on “Both sides of Joyce’s dirty deal bad for NZ ”

  1. Dr Terry 1

    This entire plan by the government seems “a den of iniquity”. Are they really willing to “sell their soul to the devil”, as it were (aiming at government income, of course). This is “cash before creatures”. In the days of M.J. Savage, human ethics were regarded as important and relevant to government policy. Is this absolutely NOT the case in the days of John Key? I guess the answer is patently obvious.

  2. Balanced View 2

    If you’re going to quote the MED BCR index, at least quote it correctly. It’s based on the initial build cost that the govt won’t have to pay.

    • fender 2.1

      When the very wise CV called you a SkyCity shill the other day he was 100% correct.

      • Balanced View 2.1.1

        How so?

        • fender

          Your total support for this corrupt Joyce deal makes me think you are on the payroll. And despite the name you use there’s been a total lack of balance in your unwavering support of this corruption.

        • felix

          The problem with your reasoning, Mr View, is that the govt is under no obligation to spend a single cent building convention centres regardless.

          • Balanced View

            Hi Felix. Very true. But as pointed out in the main article, the financial return from the convention centre alone is questionable, so at risk of not being built to begin with.
            This way, NZ gets an international standard convention centre and approx $80M a year in incremental tourism dollars.

            • fender

              SkyCity should just build and maintain their own next-door convention centre and let the market underwrite any losses should the numbers fail to deliver. Are there big queues at these slot machines are there?

              • Balanced View

                Why should they?
                I go to sky city about 10 times per year. I have never seen it so busy that you couldn’t get a machine. There must be something about the psychology of not wanting to sit next to someone that will make this venture by sky city profitable for them.

                • fender

                  “Why should they?”

                  I’m not saying they should. There no shortage of convention centres and no queues at machines, why the drama?

              • Balanced View

                If we want to target medium to large scale international conferences then we need appropriate venues, of which we have none that are currently suitable (apparently).

                • McFlock

                  Yes, it’s the lack of a conference venue that stops people flying 10,000km to have a conference here.
                  And the pretty mediocre BCR took “if you build it, they will come” into account, anyway.

                  • Balanced View

                    Well let’s not build or bid for anything then. After all, how could we be sure the benefit is really there……

                    • fender

                      Well they took a risk on a casino venture, if they want another wing on their empire why should taxpayers underwrite it?

                    • McFlock

                      That’s what BCRs are for: a BCR of say 1.5-2.3 in today’s climate would be awesome. But a lower limit BCR of 1.1 based on the economy a few years back would suggest that it might well be a white elephant in exchange for 3-400 more gambling addicts.
                      If you want to throw government money away without necessarily getting it back, try putting it into healthcare or education.

                    • felix

                      Mr View,

                      “Well let’s not build or bid for this thing then. After all, we’re not in the frickin’ casino business“.


                    • Balanced View

                      We’ll have to agree to disagree on your estimate of the number of additional problem gamblers produced from this deal. I personally can’t see many more being added at all.

                    • Colonial Viper

                      your estimate of the number of additional problem gamblers produced from this deal. I personally can’t see many more being added at all.

                      What you can personally see or not see is of no import.

                      What I want to see released is the amount of time, and the times, that SkyCity;s current pokies are more than 50% utilised.

                      This will give us a clue as to why they want these additional machines.

                    • McFlock

                      Fair enough, I only took the figure from a comment by the problem gambling foundation.
                      So what is an acceptable number of problem gamblers created by pokies in exchange for funding of a conference centre that might not break even over 20 years, in your opinion?

                    • bbfloyd

                      just more bullshit semantics masquerading as logic “balanced view” …. if your figures were provable($80million per annum) then any bank this side of copenhagen would be happy to underwrite any loan required to build it…..

                      the FACT is that the figures being pulled out of various arses (read “guess” a la bill english). including yours. ….

                      this is nothing more than another scam devised to allow national, and steven joyce to dispense their obligations to their owners and to ensure future financial support…..

                      i’m surprised that there are people on this site (quite clever people) who seemed to think you could be reasoned with…… i know as well as you just how pointless that is…..

                      when one has already sold their soul for the opportunity to worship at the feet of the money god, one becomes part of the problem… never the solution…..

                    • Balanced View

                      I heard someone from the Problem Gambling Foundation speak to this. I was given the impression that this figure is derived from an overall average, and doesn’t take into account that they will be added to an existing venue with 1600 already. For me, this should change the formula.
                      To answer your question, I would expect four or five full time jobs for every new problem gambler created.
                      How about you?

                    • McFlock

                      Shit, that ratio’s close to drug dealing!
                      My response is none for generic “jobs”. That’s a bullshit way to govern, because the harm caused will have flow on effects down the generations. You know what: nobody needs gambling to live, and we don’t need the conference centre for “jobs”.
                      Maybe NZ should start actually building shit again, rather than hoping to be a conference paradise in a shrinking global economy?

                    • Draco T Bastard

                      I was given the impression that this figure is derived from an overall average, and doesn’t take into account that they will be added to an existing venue with 1600 already. For me, this should change the formula.

                      It’s the one we’ve got so it’s the one we use. You want a better formula then I suggest you cough up the time and money to do the research to bring about a better formula. That said, the Problem Gambling Foundation is probably already working on one with their limited resources.

                      To answer your question, I would expect four or five full time jobs for every new problem gambler created.

                      Not bloody likely. At that sort of exchange rate there would be no way pokies would turn a profit.

                    • Balanced View

                      DTB, the jobs won’t be paid for directly out of pokie money, they will be paid for out of tourism dollars.
                      The argument about the cost of the convention centre, or it’s ongoing operational costs is one for the sky city board. They’re the ones that have chosen to take it on.
                      Even if it runs at a massive loss and only attracts half the number of international guests that have been forecast, NZ still wins provided the social cost isn’t to high.

                    • Draco T Bastard

                      …NZ still wins provided the social cost isn’t to high.

                      Which it is and some of those tourism dollars will be coming from the pokies.

            • Draco T Bastard

              We have no need of a convention centre as indicated by the fact that it doesn’t have a viable business case unless it gets a government subsidy.

              • fender

                No need for Govt. to underwrite this venture. Welfare is getting chopped sorry SkyCity, tough times ‘n’ all.

                • Colonial Viper

                  I wonder how many tax payer funded events John Key has promised SkyCity for this new convention centre.

                  And I understand that National frequently use SkyCity as well? I wonder if the National Party is going to get cut price rates at the new convention centre. They damn well should for all the help they are giving to SkyCity.

                  • fender

                    Yep it doesn’t matter where you move around this deal theres the same smell wofting about in the air.

              • locus

                DTB, the jobs won’t be paid for directly out of pokie money, they will be paid for out of tourism dollars

                And where’s there any evidence for that? I am working in Europe and over the past two years touting by conference organisers has skyrocketed. Venues can’t be filled, despite simply ridiculous incentives are being offered. Competition is cutthroat. Venue operators have to work out deals with hotels which are also discounting heavily. Moreover, it’s been said more eloquently by others – who the heck would come all the way to Auckland at vast cost, not to mention the time zone difference, when there’s hundreds more desirable venues closer to home? I think it was Rosy who suggested a name for this grotesque misuse of public funds: “the John Key Center”

            • seeker

              @Unbalanced view
              Stop trying to play the real devil’s advocate via dollar/economic temptation and by minimising, justifying or distracting from any negatives.

              Who cares what New Zealand gets in dollars the social cost is too great. Gambling is addictive and destructive to many and I believe you know that, just as Key and Joyce do. They just can’t resist making what they see as a “quick buck” no matter how and no matter who it harms. Banal, I know, but evil.

              • Balanced View

                You can’t be serious? So no matter how many jobs are created (yes the tourism dollars mean jobs) the social cost is too high?
                Based this ideology, the social cost of obesity (which is far greater) would lead you to remove all businesses (and jobs) associated with this?

                • Colonial Viper


                  Back to your 1000 jobs created for every problem gambler created irrelevant nonsense, are we.

                • Draco T Bastard

                  Based this ideology, the social cost of obesity (which is far greater) would lead you to remove all businesses (and jobs) associated with this?

                  Nope but that’s because I don’t do anything on ideology. I take into account facts and the fact is that obesity is, almost invariably, a condition of poverty. Poor people can’t afford to eat well enough (often combined with poor food education) and so are hungry all the time making them eat more of the poor food that they have. So, the solution to poverty is to improve the food that’s available to them.

                  • Balanced View

                    Poor food education I agree with. Affordability I completely disagree

                    • McFlock

                      Because education helps you think you’re better than poor people, whereas affordability makes it something other than a personal choice issue.

                    • Balanced View

                      Or, the less cynical amongst us will understand that nutritious food need not be, and usually isn’t, as expensive as the junk quite often consumed by people with an obesity problem.

                    • Colonial Viper

                      Wow BV you sound like you live in a country where milk is cheaper than Coke. If that’s true, I want to know about it ASAP because I want to move me and my kids there. Because in NZ, where we happen to produce billions of litres of milk, it turns out that milk is waaaaay more expensive than frakking sugary Coke.

                    • McFlock

                      Coke vs milk.
                      lean mince vs watery fatty mince.
                      low sodium bread vs 450(or even 500)mg/100g generic bread.

                    • Balanced View

                      Lol, the old coke vs milk trick. I don’t know anyone that drinks plain milk these days.
                      Beside, milk is only marginally more expensive than coke if you really want to use the comparison. Personally I would suggest water from the tap.
                      Fatty mince, this can easily be drained during the cooking process.
                      I’ve never even heard of low sodium bread, but the budget brands are usually pretty similar to the branded ones.
                      As I said, if willing, there should be no reason to use affordability as an excuse on diet

                    • McFlock

                      So you don’t know anyone who drinks “plain” milk these days?
                      Never wonder why?
                      Nice tip about draining fat. Still not as good as lean mince.
                      Most breads are sodium 350mg/100g. Budget plain white, last I looked, was 400mg. I saw another cheap bread at 500. Saw bread once as low as 150mg – about 3 tiimes the price of non-on-special Budget.

                    • Balanced View

                      I just had a look at the sodium levels on the loaf of bread I purchased from the dairy for $1.70. 296mg. The similar branded one I paid nearly $4 for from the supermarket has 320mg. Mostly irrelevant really, I’m sure that sodium levels in bread have little to add to the obesity problem.

                    • McFlock

                      fuck – which brand?
                      Bread’s been pissing me off since the doc put me on low sodium. Spoiled for choice, as sodium levels vary wildly between brands and types within brands. I’ve actually thrown up my hands lately and just not bothered buying it.

                    • Balanced View

                      Gold max from the dairy, natures fresh from the supermarket. Both white toast.
                      My biggest battle in bread is trying to find the best date. You almost have to conduct a grid search of the bread aisle to find that extra day.

                    • fender

                      “Beside, milk is only marginally more expensive than coke if you really want to use the comparison.”

                      2 litre milk: $3.50
                      2 litre coke: $1.80
                      P’n’save figures, 50%=marginal / nah unbalanced again

                    • McFlock

                      hmmm. I have a feeling I ditched NF for some reason related to sodium or something. Don’t recall seeing Gold Max anywhere.
                      Anyway, cheers for that – finally got some common ground 🙂
                      And so to bed.

                    • Balanced View

                      Fender, $1.80 for two litre coke, really? If that’s the case I’m going tomorrow. And for milk, I haven’t paid any more than $3 for two liters for at least two years, sometimes cheaper.
                      But as I said, if it’s too expensive drink water

                    • fender

                      Yeah good advice as theres shit loads of calcium in water.

                      Your balance reminds me of getting on the see-saw with someone like Brownlee

                    • felix

                      But it shouldn’t be too expensive in NZ to give your kids some fucking milk, BV.

                      That’s the whole point.

                      edit: swearing with you, not at you 😉

                    • Balanced View

                      So you’re allowed to use a comparison with coke, but I can’t use one with water?
                      How much calcium in coke?

                    • rosy

                      “Both white toast.”
                      You eat white bread?? How is that taking personal responsibility for your health? 😉

                    • felix

                      Missing the point again BV.

                      It doesn’t matter from a calcium point of view whether they’re having coke or water.

                      It matters that they’re not having milk.

                    • Balanced View

                      No Felix, the point (as much of a tangent to the original topic as it is) is that affordability shouldn’t contribute to obesity.
                      But on milk, I could understand why it is a reasonably pricey commodity. It is an amazing process to produce and get to store in such a short time.

                    • Balanced View

                      I know rosy! But it’s soooo good…..

                    • fender

                      Stuff the coke mate.

                      How about the milk and honey created by the casino getting welfare, clever buggers with friends on the 9th floor.

                    • Balanced View

                      Felix, you’re right. Should definitely be having some sort of dairy food. I don’t think it’s cost prohibitive, I think it’s a necessity and should be some of the first dollars spent of the weekly shopping budget

                    • felix

                      Pointing out that there are reasons for milk to be so expensive isn’t really helping your case though BV.

                      Sure it’s cheaper to drink water. That’s as read.

                      But it’s not an either/or choice. Kids need water AND milk.

                      edit: I’m getting a bit confused as to which comments are replies to which (teach me for butting in to a perfectly good thread) so I’ll bid you all a good night and a happy easter.

                    • Balanced View

                      Agree, I raised the water comment once coke was raised as an alternative.
                      Noting the importance of milk, as well as it being a food source on top of being a drink, it should be on every shopping list, no matter what you financial position. I don’t see it as being cost prohibitive.

                    • mac1

                      Here’s an article written in 2008 about the cost of milk and carbonated beverages and effects of consumption upon health.


                      Not good in 2008, pre NAct accession to power. It’s probably worse now.

                    • locus

                      the point (as much of a tangent to the original topic as it is) is that affordability shouldn’t contribute to obesity

                      Despite your continued disbelief there’s truckloads of good scientific research showing that affordability does contribute to obesity. Maybe a personal story will help? I was unemployed while with my wife was on a low wage and we had three teenage children to feed. We could save $30 a week (double that in today’s $) on getting the cheapest brand of everything. We grew our own veggies and tried to feed the kids healthy food, but to save that $30 we also filled up on pies, chips and cheap mince. And coke was a cheap treat. In our case the kids were skinny and always hungry. There is no way that we could have filled them up only on healthy food.
                      Thank goodness I didn’t have Skycity pokies on my doorstep encouraging me to win win win to make our lives easier.

                    • Colonial Viper

                      So the net net of all this is: BV has shown he has no real idea or understanding when he said

                      the less cynical amongst us will understand that nutritious food need not be, and usually isn’t, as expensive as the junk quite often consumed by people with an obesity problem.

                    • Balanced View

                      Viper, I stand by those comments 100%.

                    • RedLogix

                      Just for once I think I agree with BV.

                      In the last three months I’ve achieved three things:

                      1. Lost 12 kgs in weight and I’m fitter than I’ve been in decades

                      2. Eaten as much delicious tasty food as I wanted

                      3. Saved about $100 per month in food bills.

                      Now I agree that obesity is linked to poverty. But not for the obvious reason that “they cannot afford good food”. It’s more complex than that.

                      Part of the reason is linked to poor education, and a lot of it is a food industry perpetuating and profiteering off that ignorance.

                    • felix

                      Well done RL! What do you attribute it to?

              • mike e

                the real cost to the community is in the $ billions the damage gambling does to our society

                • Balanced View

                  Is it really billions?

                  • Colonial Viper

                    Yes indeed because if the damage to society was only $500M annually that would be quite acceptable to the corporate casino operators.

    • Eddie 2.2

      The bcr is the present value of the whole of economy benefits divided by the whole of economy costs

    • Eddie 2.3

      If the costs were just the capital costs, then the actual bcr would be even worse

      • Balanced View 2.3.1

        I’m pretty sure the costs used to calculate this BCR only include the cost of capital

        • McFlock

          Well, reread s9.2 in the article’s source document (government’s own numbers). You might change your mind.

          • Balanced View

            I don’t see anything there outside of direct capital costs with the small exception of $10.8M of subsidies for initial operating costs over the first three years
            Have I missed something?

            • McFlock

              Yep. The entire bit where they said operating costs are expected to break even after 3 years, hence the $10mil subsidy. Operating costs were examined in detail in s6.3, but I thought you would have picked up the gist from the BCR calculation section.
              So yes, not just capital cost was taken into account for the BCR.

  3. marsman 3

    Joyce seems to opt for policies that not only are bad financial deals but also damaging to people in general e.g. more pokie machines, more trucks on roads.

  4. Craig Glen Eden 4

    National are very good at giving tax payers millions to Corporate bludger’s. Wheres those 170,000 jobs we were going to get from the last budget?

    • Draco T Bastard 4.1

      Wheres those 170,000 jobs we were going to get from the last budget?

      I’m more interested in where the 170k jobs are from the previous budget. By now we should be seeing ~85k of them.

      • McFlock 4.1.1

        Any day now we should have the announcement that there are no unemployed people in NZ 🙂

        • Colonial Viper

          Of course there are no unemployed in NZ. Anyone who wants a job in this country can find work, so the people who aren’t working can’t be ones who want a job, which means they are lazy bludgers Q.E.D.

    • rosy 4.2

      How many NZ corporates could organise a conference requiring a large venue? And why would overseas corporates go to NZ with the travel cost and time involved? My bet the international organisations being targeted are political – Commonwealth heads of govt, ASEAN, APEC and the like – a vanity project methinks. The John Key Centre/Center (depending on how bought we are) 😉

  5. Eddie 5

    The paper says “every spent on the midtown option would bring $1.433 of benefits” -which is a shit bcr, ece is 8:1 or higher- that seems to be alk the costs. But, like I say, if it’s only the capital costs, and operational costs are needed as well to realise those benefits, then the total bcr is even more shit

    • Colonial Viper 5.1

      Don’t worry about the operational costs buddy, by removing the minimum wage and importing Filipino workers, they will be negligible.

  6. Acting Up 6

    The tory “Brighter Future” is coming our way. Pity that the brightness is the result of flashing video screens on slot machines, illuminating the deathy pallor of the trapped, frantically hitting those buttons in the hope of being declared a winner.

  7. DH 7

    I think that most people are missing the really important issue here, that of our laws being put up for sale. The legal restrictions on Sky City Casino were not put there for economic reasons, they were a reflection of our collective moral values.

    The laws we have are grounded in the basic concept of right & wrong. They are not based on economic formulas, these are NZ society’s morals here. If we’re prepared to change our laws for money then we have to also accept that our morality will change with it. Once we start down this track where does it end? What other of our laws will be sold next?

    The economics of a convention centre is an entirely separate issue to selling our laws and it’s the latter that people should be concerned about IMO.

    Definition of BRIBE
    1: money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust
    2: something that serves to induce or influence

    • seeker 7.1

      +1+1+1 DH.

      “The laws we have are grounded in the basic concept of right & wrong. They are not based on economic formulas, these are NZ society’s morals here .”

      Phil O’Reilly redefined morality on CloseUp when being interviewed about the Ports of Auckland debacle with Helen Kelly. When asked to take the moral highground on the situation by Helen he ignored her at first and so she said she would take a moral stand at which point he said of course he would take a moral stand -“It is about productivity and competitiveness” said the Lord High priest of BNZ. My hair stood on end, so this is how they justify corporate/business action now!

      All these cruel and wicked things they are doing to employees e.g POAL,Gbson and Pearson,Talleys Lockout, Oceania made sense. It means that in their rather twisted and lost minds they are behaving “morally” under their redefinition of an almost sacred, until now, human societal concept.

      First they get rid of society, then they highjack our language for their own machiavellian justifications. Furthermore, it appears that they don’t even know, or perhaps care, how soulless and lost they have become judging by Phil’s nonchalant chanting of this new order/definition of morality.

      Now I view all National policies through this evil definition/filter and realise they think they are behaving in justifiable,”morally” correct way. No wonder they are so self righteous about kneecapping our country and assaulting her people.Their sense of entitlement and arrogance is explained, as unearthly and disgusting as it is.

      Unfortunately for them they do not realise that the moral order of the universe will not be twisted, it will rebound and they will wish they had remembered that they are not the be all and end all. This can’t come soon enough, before there are too many more casualties in the name of productivity and competitiveness, the antimorality of Business.

      • RedLogix 7.1.1

        ”It is about productivity and competitiveness” said the Lord High priest of BNZ

        Literally exactly the same argument constantly trotted out 200 years ago to rebut and delay the abolition of chattel slavery….

    • joe90 7.2

      Just the down under version of social Darwinism.

      • seeker 7.2.1

        @Redlogix- unbelievable. Time stands still. Never thought ‘conservative’ could be so conserved.

        @Joe90- grotesque.
        So Nacts can be now known as SDs. Think SD needs a little vowel in between- can’t decide on o or a………But my preference, in anger at their unbecoming existence is o. I can now aptly call them SODs. Thanks Joe 90

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