National 'won't walk away

Tuesday 10th February 2015

The government will do whatever it can to ensure the Auckland convention centre is built under a deal with SkyCity Entertainment Group, said Labour Party leader Andrew Little in his speech at the opening of Parliament for 2015, amid signs efforts are under way to fill the $420 million budget gap identified by the casino and hotel owner late last year.

"That mob won't walk away from it," said Little. "There's too much at stake."

The original $420 million estimated cost blew out to between $470 million and $530 million, SkyCity chief executive Nigel Morrison revealed in December.

In comments to reporters yesterday, one day ahead of SkyCity's half year earnings announcement, Prime Minister John Key said: "I'm keen to see the best convention centre I can for Auckland, because this is a very long-term asset, so I would hate to see some sort of eyesore constructed down town.

"There are issues around the construction of it. Obviously you can spend more and get something that looks a lot better, or spend a bit less and get something that looks worse."

That prompted howls of protest from Labour, the Green Party and a self-appointed critic of government spending, the Taxpayers Union.

The SkyCity share price was leading the NZX50 benchmark index higher late in trading today, up 2.9 percent to $3.88. In a statement, Morrison said SkyCity constructive discussions were continuing with the government.

"SkyCity remains committed to building, developing and operating the [convention centre] and we are optimistic we will come to a solution."

Deriding Key and Economic Development Minister Steven Joyce as "Masters of the Universe", Little said the government had put together a great deal for SkyCity, if not for the taxpayer.

The Auckland Council has made it clear it does not want to commit more ratepayer funds and SkyCity has said it does not have to complete the project, for which it has been guaranteed additional gaming machines to cover commercial risks and cost associated with the development, which is seen as a necessary piece of tourism infrastructure if New Zealand is to host conferences of global scale.

"The whole idea of the SkyCity deal was that Auckland would get an international class convention centre, paid for by SkyCity, in return for various concessions to the casino," the lobbyist's executive director, Jordan Williams, said in a statement. "That’s bad enough, but with Mr Key’s refusal to rule out taxpayer cash, SkyCity appears to have hit the jackpot.

"It was never suggested or intended that the taxpayer or ratepayer would have to shoulder any of the burden. If SkyCity underestimated the cost of the centre when they signed the deal, that's their problem. Any taxpayer support is nothing less than corporate welfare no matter how the Government spins it.”

The New Zealand Herald reported Joyce as saying that dumping the deal was an option, but not an attractive one.

"You always can, but there's nobody else volunteering to stump up $402 million to get us back to the same point," he was reported as saying. So walking away, you'd be effectively dropping that $402 million off the table."

BusinessDesk.co.nz

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