- Date published:
8:25 am, May 27th, 2015 - 101 comments
Categories: Abuse of power, corruption, john key, national, Politics, Public Private Partnerships, same old national, Steven Joyce - Tags: sky city
I have followed this issue for a while.
Originally this Government decided to grant valuable gambling concessions in consideration of which Sky City would build a new convention centre. Simple really. Let Government sacrifice its sovereign right to legislate for the public good by giving a private corporation an income stream in consideration of which Auckland gets a shiny new building.
Let me break this down even more. Allowing a corporation to increase the incidence of gambling with all of the attendant misery is worth something to it, so lets give it power to increase gambling in consideration of which Auckland gets an extra convention centre and John Key gets a ribbon cutting event.
The Government has thrown a lot of PR at it. Yesterday it and Sky announced:
Sky City previously tried to get Government to pick up more of the tab. The estimate of the value of regulatory benefits varies but one estimate is that the cost of the original convention centre could be paid by three years of the anticipated increased earnings. This was the deal of the century where the Government sold increased misery so Sky City could build a shiny new building. And going back and seeking further contributions from Government showed an utter disdain for political sensitivities not to mention a complete lack of moral standards.
This is not a “win win”. Sky City had a contractual obligation to build a big enough convention centre so that a certain amount of economic activity was going to be generated. It is now building a smaller centre so that less economic activity is going to be generated but it still gets the same regulatory concessions. The Government should pull the pin on this deal even if it does rob John Key of a ribbon cutting opportunity.
The Sky City Convention Centre will be this government’s single largest economic development project in its 7 years. It will also be the single largest building in the country, and stand as John Key’s great political monument.
It won the job in 2011 with a $350m construction bid. By 2013 that cost was $402m and government had to agree to gambling concessions worth $527m, and valuable TVNZ land was thrown in as a sweetener.
With the massive design, cost, capacity and legislative alterations required for this job, those original losing bidders, The Edge, Ngati Whatua, Infratil and ASB Showgrounds, now know the extent of this corrupted process. It is a shame they did not judicially review the award process. If they had the results would have been interesting if not potentially damaging for the Government.
This is clear when you think of the history of the matter. In May 2013 this government announced that the centre would cater for 3,500 delegates, attract 33,000 more of them to Auckland, and generate 1,000 construction jobs. The latest announcement shows that its specification and benefits have been scaled back faster than a Treasury GDP forecast.
Andrew Little’s quote that “it’s not a Convention Centre, it’s a Concessions Centre” seems very apt.
When it opens, will this be what we should have spent $527 million – and Parliament’s independence – on?
Update: it looks like some sleight of hand is going on. A supplemental agreement has been entered into by the parties. Under the supplementary agreement entered into by the parties there is a change of contractual terms applying to “future development unit” land and under clause 4.2 a Sky City acknowledges that it has “derived additional value from the redefinition of the land and Future Development Unit”. Presumably now it has more land that it can deal with in which ever way it wants to. So the Government has in essence kicked extra money Sky City’s way by reducing Sky City’s contractual obligations.