Written By: - Date published: 1:11 pm, February 10th, 2015 - 74 comments
Categories: capitalism, john key, national, same old national, Social issues, Steven Joyce, you couldn't make this shit up - Tags: convention centre, sky city
John Key is softening us up for the prospect of more Government money being paid to SkyCity for the Convention Centre on the grounds that a convention centre reliant on the proceeds of gambling may be a bit of an eyesore. From Radio New Zealand:
John Key would not rule out a taxpayer top up to cover the construction cost over-run, as negotiations between the casino and the Government continued.
Under the deal, Sky City would build and design the centre for up to $402 million.
In return, it could operate another 230 gaming machines and 40 tables.
Last year, Sky City revealed the estimated cost could potentially reach up to $530 million.
Mr Key said that was because the design is bigger and ”flasher” than was originally proposed.
“Ultimately Sky City has worked off a concept through to something that now looks more like a project that’s ready to go.
“I’m keen to see the best convention centre I can for Auckland because this is a very long term asset.
“So I’d hate to see some sort of eyesore constructed downtown.”
Mr Key was asked whether the Government was willing to consider a taxpayer funded top up to cover the cost of construction.
“Ah I can’t rule that out today, what I can say is that we are working very closely with Sky City…to try and see if a deal can be completed but as I’ve always said the deal was never a done deal until ultimately everything was ticked off.”
Do you get the feeling that the Government is being done over by SkyCity? Of course it should do the proper thing and pull out of the contract as it is able to do even at this stage. But it seems to be captured by SkyCity and they are betting that the Government has invested too much political capital in the deal to allow it to fail.
This article by David Fisher in the Herald 18 months ago gives some insight into the bargaining process that had occurred. At the time Steven Joyce said that “[a]nything that is not written down is not happening.” Those words may come back to haunt him.
The article revealed Treasury’s concerns that SkyCity held all the cards during the negotiation process. The article also contained this passage:
The hard-fought deal saw SkyCity return repeatedly to push for concessions which had been ruled out, forcing officials bargaining for Economic Development Minister Steven Joyce to aggressively assert the Crown’s position.
The bargaining was informed by advice from other government departments, including a warning from the Treasury. Bureaucrats warned the Government away from the deal, telling Mr Joyce it was doubtful extra conventions would be attracted by the new centre.
He was also told: “[The] Treasury has strong concerns that private benefits to SkyCity will exceed public benefits to New Zealanders”.
The Treasury was also concerned that the Government “lacks adequate leverage” in the negotiations and if concessions to SkyCity’s demands could not be time-limited then consideration should be given to opening bidding again to others – or funding the centre directly.
Papers show the deal was effectively complete in May 2012 – when SkyCity baulked and insisted on greater protection for its investment and increased benefits.
Another 14 months of haggling followed, with officials juggling new demands from SkyCity right to the end.
Because of the flawed process adopted SkyCity has always been in a dominant position and able to demand more and more from the Government. It should do the decent thing and just say no to any further funding. If this means that the deal falls over then so be it.