The devil is in the de­tail

Kapi-Mana News - - OPINION -

The po­lit­i­cal ruckus from the pro­posed deal be­tween Skycity and the Gov­ern­ment over the build­ing of a con­ven­tion cen­tre in Auck­land is show­ing no sign of abat­ing.

Last week, Eco­nomic De­vel­op­ment Min­is­ter Steven Joyce de­nied the Gov­ern­ment was sell­ing out our gam­bling laws in re­turn for a shiny new con­ven­tion cen­tre in the Queen City.

In Joyce’s view, such deals are done all the time, as when the Labour Gov­ern­ment changed the law to pro­vide in­cen­tives for the film in­dus­try.

Busi­ness lead­ers also expressed frus­tra­tion last week that ar­gu­ments about ‘‘ pol­i­tics and pok­ies’’ were de­flect­ing at­ten­tion from the con­ven­tion cen­tre’s al­leged eco­nomic ben­e­fits to Auck­land, and to the na­tion.

Thank­fully, Joyce’s own Min­istry of Eco­nomic De­vel­op­ment re­leased re­search in 2009 into the likely eco­nomic risks and ben­e­fits of an in­ter­na­tional con­ven­tion cen­tre in Auck­land.

Friends and foes alike of the pro­posal will find am­mu­ni­tion in the min­istry’s re­port, which finds that yes, if built in the right part of town – not the waterfront – such a cen­tre would even­tu­ally turn a profit.

To do so, how­ever, and un­til the cen­tre reached full ca­pac­ity, an ex­tra $ 10 mil­lion in sub­si­dies would be needed from the Gov­ern­ment.

More­over, all the cru­cial mar­ket­ing would have to be car­ried out by Tourism New Zealand and by Tourism Auck­land, and via the web­site run by the con­fer­ence in­dus­try’s lob­by­ing as­so­ci­a­tion.

In ad­di­tion, the min­istry found such a con­ven­tion cen­tre in Auck­land would be likely to suc­ceed only if other cities – such as a re­built Christchurch – scaled back any plans to com­pete for con­fer­ence busi­ness.

Also, since cater­ing on­site would be a likely in­gre­di­ent of the busi­ness model, other ho­tels and restau­rants in Auck­land could not ex­pect many ben­e­fits from the con­fer­ence vis­i­tors to the new cen­tre.

The clear win­ner from the pro­posal would ap­pear to be Skycity.

While the casino op­er­a­tor would need to meet about $300 mil­lion in up­front costs in build­ing the con­ven­tion cen­tre, Skycity would be al­lowed to in­stall ex­tra pok­ies in its cur­rent casino, and could ex­pect a steady sup­ply of well-heeled con­fer­ence at­ten­dees spilling over into its gam­bling op­er­a­tions in fu­ture.

All the re­lated risks – such as, say, the global trend to­wards tele­con­fer­enc­ing – would be borne by the tax­payer/ratepayer.

The public would also be pay­ing for mar­ket­ing the cen­tre here and over­seas, on top of that es­ti­mated $10 mil­lion in sub­si­dies un­til the cen­tre is fully op­er­a­tional and turn­ing a profit.

At which time, via a con­cept called ‘‘sub­ven­tion’’, the Gov­ern­ment would have to pay Skycity a per­cent­age fee for the wider eco­nomic ac­tiv­ity be­ing gen­er­ated.

Or, as the min­istry re­port puts it, ‘‘sub­ven­tion poli­cies recog­nise the eco­nomic value of con­fer­ences to host desti­na­tions’’.

To date, the Op­po­si­tion has largely fo­cused on how the pro­posed deal might af­fect the coun­try’s cur­rent prob­lems of gam­bling ad­dic­tion.

Yet Labour and the Greens have be­gun to call for a re-ten­der­ing of the en­tire project – which would at least en­able the eco­nomic mer­its of the con­ven­tion cen­tre to be re­ex­am­ined.

Joyce, for his part, is stress­ing that ev­ery­thing is still up in the air – from the ex­act num­ber of ex­tra pok­ies al­lowed, to the dead­line for strik­ing any deal at all.

As yet, the Gov­ern­ment is show­ing no sign of fold­ing its cards, and back­ing out en­tirely.

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