11 Feb 2015

No sign Govt will walk away from SkyCity

10:12 am on 11 February 2015

The Government is showing no sign of backing out of the SkyCity convention centre deal despite the likelihood it will have to put in more public money.

Economic Development Minister Steven Joyce said using taxpayer money was the least preferred option, but there may be no option.

An artist's impression of the convention centre.

An artist's impression of the convention centre. Photo: SKYCITY

Under a deal struck in 2013, the SkyCity casino operator agreed to build a $402 million convention centre in Auckland in return for an extra 230 gaming machines and 40 tables.

But late last year SkyCity announced it was short $70 million to $130 million in funding because of cost over-runs and design improvements and was seeking a top-up from the Government.

Mr Joyce said the Government could walk away from the deal.

"And I know the opposition are very keen for us to walk away and that's not new. But the point is you want a convention centre for Auckland, and we do, we want a very good one. Nobody else is volunteering to turn up and spend $402 million on it, nobody ever has.

"So yes, you could walk away but to get to the same point you'd have to stump up another $402 million."

Sky City's chief executive Nigel Morrison has said the casino was making a significant tourism investment by paying for the convention centre and he absolutely expected the Government to help plug the funding gap.

Chief executive of the Auckland Chamber of Commerce Michael Barnett said the numbers for the convention centre still stack up and the deal is still a good one, but taxpayers need to know what they are getting for their money.

Labour Party economic development spokesperson David Clark said the writing was always on the wall.

He said the Government did a bad job of negotiating the deal.

"The independent experts say it was a very good deal for Sky City. They know they've got the Government over the barrel. They know the Government's got political egg on its face and they're leveraging it."

Under the contract, if the estimated cost of construction exceeded $402 million, SkyCity and the Government could agree to design modifications, cancel the deal or either party may pay the other cash.

Mr Joyce said it was not possible to structure the initial deal in such a way that made clear any cost over-runs would be met by SkyCity.

He said they were talking about a slightly more costly centre and the decision is whether they should all pay a bit extra.

But Green Party co-leader Metiria Turei said SkyCity should be made to meet the full project costs, regardless of the blow out.

She said SkyCity was set to make a $70 million profit and did not need further cash and concessions from the New Zealand taxpayer.

The Government would not say when a decision would be made on what to do about the convention centre.

But if it pulled out, then under the contract, the Crown is liable to pay SkyCity up to $10 million.

Key wary of 'eyesore' in Auckland

Prime Minister John Key said yesterday that unless money can be found to cover the shortfall for building the convention centre, it could end up being an ''eyesore'' in downtown Auckland.

Mr Key was asked whether the Government was willing to consider a taxpayer funded top up to cover the cost of construction.

Prime Minister John Key (right) in a media scrum with RNZ Chief Parliamentary Reporter Jane Patterson.

Prime Minister John Key (right) in a media scrum with RNZ Chief Parliamentary Reporter Jane Patterson. Photo: RNZ / Alexander Robertson

"Ah I can't rule that out today, what I can say is that we are working very closely with SkyCity ... 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."

Labour leader Andrew Little yesterday said there was no way taxpayers should have to cover the shortfall and said the next port of call for the Government would be Auckland ratepayers.

"Who we all know are flush with cash; they want them to pay for it if the taxpayers won't, well it's all rotten."

New Zealand First's Winston Peters said the Government had been backing a dud and should abandon the deal.