11 Feb 2015

English backs SkyCity status quo

8:14 pm on 11 February 2015

The Finance Minister has warned the Government will have to cut other spending if it gives money to SkyCity to build an international convention centre in Auckland.

An artist's impression of the convention centre.

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

Bill English said using taxpayers' money was a last resort and no one had come to him asking for it.

When the Government signed the deal with SkyCity in 2013 it was estimated the centre would cost $402 million.

Prime Minister John Key said the company had changed its plans and now estimated it would cost more than $500 million.

During the finance and expenditure select committee's review of the Budget Policy Statement Green Party co-leader, Russel Norman, clashed with Mr English as he asked questions about the deal.

Finance Minister Bill English in question time.

Finance Minister Bill English in question time. Photo: RNZ / Alexander Robertson

"The National Party Government is not ruling out giving $100 million plus to a casino. That's what's on the table right now and you've just acknowledged you're not ruling that out," Dr Norman said.

"Well, no I didn't say that. I said I'm not going to play the silly game of ruling in or ruling out," Mr English replied.

"It's not a silly game. This is $100 million of taxpayers' money. It's not a silly game Mr English. You're responsible for the spending of taxpayers' money," Dr Norman said.

Outside the select committee Mr English said if the Government did decide to spend money on the centre it would have to come out of this year's Budget.

"Depending whether it's capital or operating it's either from the $1 billion of operating spending or the $800 million of capital. One or the other. Both of them are pretty small pools relative to the demand," he said.

In Parliament during Question Time Prime Minister, John Key, was also forced to defend statements he had made about the convention centre when the Government first struck its deal with SkyCity in 2013.

Labour Party leader Andrew Little in question time.

Labour leader Andrew Little Photo: RNZ / Alexander Robertson

Labour's leader Andrew Little asked Mr Key whether he stood by his statement then that the convention centre would not cost taxpayers or ratepayers a cent.

"I stand by my statement in relation to a $402 million convention centre as agreed on the 5th of July 2013," Mr Key replied.

He repeated that putting money into the centre was the Government's least preferred option.

But Mr Key also made it clear just how important he believed it was that the convention centre be built in Auckland.

"At the core of the whole argument the question that has to be asked is is New Zealand better if it has an international convention centre in Auckland. My view the answer to that is yes."

Economic Development Minister Steven Joyce said the Government was still negotiating with SkyCity over how to meet the shortfall and he was not prepared to say anything in public which would weaken its position.

Mr English said he expected any new agreement would be reached before he delivered the Budget on 21 May.

If any money was given to SkyCity then that would be included in the Budget.

Meanwhile, the Green Party said papers it obtained under the Official Information Act revealed the Treasury advised the Government that SkyCity's new plan to use former TVNZ land for a glitzy hotel made it much more valuable to the casino and the deal should be recalculated.

Greens co-leader Metiria Turei said Mr Key and Mr Joyce had some serious questions to answer about why they ignored official advice.

Ms Turei said as a result SkyCity had more leverage in the negotiations and had got a prime piece of Auckland real estate which it would keep regardless of whether a convention centre was ever built.

SkyCity says Govt 'a tough negotiator'

SkyCity says the Government's being a tough negotiator over its international convention centre deal.

The casino operator hinted today that it may stump up more money than the $400 million it agreed to fund for the project with estimates for the centre now at up to $530 million.

SkyCity said it expected the Government to help plug the funding gap, and Prime Minister, John Key, has not ruled out a taxpayer top-up.

But SkyCity chief executive Nigel Morrison said they were still negotiating.

"We certainly haven't played the Government, the Government's been a very negotiator through out this whole process and all you've got to do is look at the analyst's comments and investor comments about how they regard this deal as a very marginal deal for SkyCity."

The Government has until the end of the month to formally approve plans for the centre.

Earlier Mr Morrison said they could reconsider paying more than the $402 million original estimate.

"We're not saying we won't budge, we're actually trying to work out an outcome, with the Crown that's a fair outcome, that's a win-win for all parties.

"We're talking openly with the government about all forms of solutions."

John Key said yesterday that unless money could be found to cover the shortfall, the convention centre could end up being an ''eyesore''.

Mr Morrison does not agree with the Prime Minister.

"I don't think it would be an eyesore, but I think it certainly wouldn't be the world class facility that would drive the returns for the country, which a convention centre certainly delivers.

"It's not so much about returns for SkyCity, it's about driving international tourism."

Mr Morrison said he was not concerned about Labour's threat to end the deal if they were elected in 2017, and said he expected construction on the centre to have started by then.

The company announced today a fall in its first half net profit.

It fell 10.6 percent to $54.6 million in the six months to the end of December, which was below market expectations. Revenues rose by 6.5 percent to $495.5 million.

Mr Morrison said a poor result from its Adelaide casino because of redevelopment work offset a strong performance from its flagship Auckland operation.

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