12 Feb 2015

Govt rules out new gambling concessions

11:27 pm on 12 February 2015

The Government has ruled out making further gambling concessions to SkyCity in exchange for its building an international convention centre in Auckland.

Steven Joyce talks about Sky City deal with the Government.

Economic Development Minister Steven Joyce - pictured discussing the matter in Parliament this week. Photo: RNZ / Alexander Robertson

SkyCity wants the Government to cover a higher bill - up to $130 million more than agreed in 2013 - for building the centre.

Economic Development Minister Steven Joyce would not rule that out, but said it was his least preferred option.

But he did tell Parliament today there would be no further gambling concessions to save the deal.

"The Government has confirmed that there won't be further concessions and any further law changes."

Mr Joyce said he was not prepared to say anything in public that could weaken the Government's position in negotiations.

An artist's impression of the convention centre.

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

An artist's impression of the convention centre.

Photo: SKYCITY

Questions over cost rise projection

A construction cost specialist has questioned the projected rise in the cost of the convention centre and said it would would prompt him to consider putting parts of it back out to tender.

SkyCity said issues including design changes meant the cost of the centre had gone up by $70 to $130 million from its original $400 million.

Prime Minister John Key has said taxpayers may have to help out.

Finance Minister Bill English said yesterday if the Government did decide to spend money on the centre it would have to come out of this year's budget.

Auckland-based Construction Cost Consultants CEO Andy Thomson said he would question why there was such a large percentage rise, and consider going back out to tender to get the best market price.

"My personal view is if I was a shareholder, and as a taxpayer, I would want to get the best price in the market for my project, each person in the design team should be there for a specific period of it and then it goes out to tender once they get to final design."

Mr Thomson was a sub-contractor on the Scottish Parliament building, where the initial budget of £40 million ballooned to 10 times that - and ended up costing over £400 million.

He said to avoid that, everything needed to be counted in the budget from day one.

Mr Thomson said that included making sure that the design was right in the first place and getting the right quantity surveyor to ask questions of the architect.

"Making sure that everything's clear for what's been designed, which is generally a problem is the stuff that we can't see when we're putting budgets together that's on the architectural drawings or an engineer's scope isn't there or something - there's something missing when you're putting your budget together."

SkyCity was one of five organisations that put forward proposals for a convention centre.

Of the other four, Ngati Whatua said it was now working on other plans, and had moved on.

The Edge, which is now Auckland Live, said the selection process was fair and it had no plans to look again at the proposal.

The other two - ASB Showgrounds and Infratil, could not be reached for comment.

Casino consultant Sudhir Kale, who has worked with companies all over the world, said paying the extra should not be a burden to SkyCity.

Mr Kale, now an honorary professor of business at Bond University in Australia, said if they needed another $70 million, there would be plenty of time to pay it back, especially as their gambling licence would not run out until 2048.

SkyCity chief executive Nigel Morrison said the company would struggle to make a profit if it had to cover the full amount of the extra cash needed, but was prepared to negotiate how much it would pay.

Resource consent

Independent commissioners have been brought in to make a crucial call on how planning decisions will be made on the convention centre.

Auckland Council has named three commissioners to decide whether SkyCity's application for resource consent will be subject to a full public process.

Before Christmas, SkyCity lodged a 1700 page application for consent to build the 3000-seat convention centre and adjacent five-star hotel.

The commissioners will weigh up whether the decision should be notified subject to public submissions, and possible appeals to the Environment Court.

If the notified path is chosen, the same three commissioners will be joined by a fourth to preside over the process. No timeframe has been set for a decision on which path will be chosen.

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