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Govt confident of SkyCity deal process

UPDATED:  Steven Joyce says the auditor-general's inquiry will not affect its negotiations with SkyCity over a plan to build a convention centre.

Caleb Allison and Businessdesk
Wed, 13 Jun 2012


Economic development minister Steven Joyce says an auditor-general inquiry into the government's proposed deal with SkyCity will not affect negotiations. 

Earlier today deputy auditor-general Phillippa Smith announced an inquiry into the process involved in the deal, which would have seen SkyCity get a wider gambling licence in exchange for building an international convention centre. 

Despite calls from the Greens and Labour for all negotiations to be suspended while the inquiry is conducted, Mr Joyce says they will not be impacted. 

"We have said that the government will only sign up to a deal that is overall in the best interests of New Zealanders.

"This is just another example of the Greens and Labour wanting to halt and delay projects that create jobs and economic growth," he says. 

Mr Joyce says the government is "confident the expressions of interest process was transparent and each application was assessed on its merit".



EARLIER: The deputy auditor-general will launch an inquiry into a proposed deal between the government and SkyCity for an international convention centre.

The Green Party wrote to the Auditor-General Lyn Provost in April asking for an investigation after concerns were raised over the process, which would have allowed Sky City to operate more pokie machines in exchange for the $350 million convention centre.

The inquiry will include:

# An examination of the process for seeking and assessing proposals for a convention centre.

# The adequacy of the assessment of the costs and benefits of each proposal.

# Any other matters the Auditor-General considers it should report on.  

The decision to pursue a deal with SkyCity led to an outcry from anti-gambling advocates, who said an increase in slot machines would harm the poor and vulnerable.

Green Party co-leader Metiria Turei sought an investigation from the auditor-general in April this year.

She says negotiations over the SkyCity convention centre deal should be put on hold pending the investigation.

“I raised concerns about the fairness and adequacy of the process, especially given SkyCity was offered a law change that gave it more pokies in exchange for building the centre, and the deal didn’t appear to consider the huge social and financial costs of increased gambling."

“A deal that gives a casino more pokies and other opportunities to profit from problem gamblers is immoral,” she says.

“It is appropriate that the government’s wheelings and dealings are being looked into.” 

The inquiry will be conducted by deputy auditor-general Phillippa Smith, because auditor-general Lyn Provost has shares in SkyCity.

Ms Turei and Labour leader David Shearer want the government to hold off on any negotiations with SkyCity while the inquiry is underway. 

She says: "the government can't possibly proceed with the SkyCity deal, while the inquiry goes ahead, as its terms of reference cut to the heart of the decision to award the contract to SkyCity in the first place." 

She says the Green party is not against convention centres, but there were "options on the table from other groups who wanted to build a centre which didn't involve trading in the wellbeing of vulnerable people to build it". 

Mr Shearer, meanwhile, echoed the call for negotiations to stop, saying the whole process between the government and SkyCity was suspect. 

"We have a strong reputation internationally for open and transparent government that must be protected." 

The deal

The Ministry of Economic Development carried out an expressions-of-interest process for an international convention centre in 2010.

In June 2011 the government announced it was negotiating with SkyCity, whose proposal had been deemed the best option.

Under the proposed deal, SkyCity would be allowed to extend its gambling licence, including adding more gambling tables and pokie machines. 

However, questions were raised when it was revealed that Prime Minister John Key had met with SkyCity bosses and discussed the deal in late 2009, before the concept was opened to expressions of interest in 2010. 

SkyCity said the land for the centre was about 14,000 sq m, but the design had not been finalised. 

A 2009 feasibility study suggested an optimal floor area of 27,000 sq m. 

Labour comes out swinging

Leader David Shearer has welcomed the inquiry, saying Mr Key's arrangement with SkyCity was "dodgy from the beginning".

"It was stitched up in a way that essentially cut all other bidders out of the running."

Mr Shearer says the inquiry is an opportunity to get to the bottom of the nature of the government's relationship with SkyCity. 

"New Zealanders don't want National selling our legislation by offering the casino more pokies if it builds the convention centre. 

"The whole process surrounding this deal has been shonky, including John Key's overinflated claim that up to 2000 jobs would be created by the convention centre. 

"Estimates from hospitality and travel consultants put the number at more like 320," Mr Shearer says. 

SkyCity's response

In a statement to the NZX from general counsel Peter Treacy, SkyCity says it welcomes the inquiry.

It says it “will, of course, co-operate fully with the auditor-general as and when required over the course of her inquiry."

“From SkyCity’s perspective, we were involved in a competitive selection process, responding to the governments request for expressions of interest to develop a national convention centre,” Mr Treacy says.

Shares of the company declined 3 cents to $3.50 on the NZX today and have dropped 2.9% this year.

Caleb Allison and Businessdesk
Wed, 13 Jun 2012
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Govt confident of SkyCity deal process