Govt hasn't sought the numbers yet for pokies deal: Key

BUSINESSDESK: Prime Minister John Key has yet to discuss the contentious Sky City Convention Centre expansion deal with the government’s support parties United Future and Act.

But Key is confident the business case on a successful deal will win them over on a plan that would give SkyCity Entertainment Group gaming concessions in exchange for subsidising the development of a $350 million convention centre large enough to hold global-sized events, a facility the country lacks.

The government needs United’s Peter Dunne and Act’s John Banks to get legislation through Parliament that would let SkyCity extend its gaming licence and boost its number of pokie machines. That’s on the table after the casino operator offered to build and operate a convention centre in Auckland. Key told reporters at today’s post-Cabinet press conference he expects his support partners will vote for it, though hasn’t yet canvassed them on the legislation.

“I haven’t had any direct discussion with them about it,” Key said. “They will obviously want to look at the deal but my expectation is that yes, they will support it.”

Yesterday, TV3 news reported Banks has relaxed his opposition to gambling, saying his views weren’t important because he doesn’t gamble or drink. He previously opposed extending gambling opportunities when a National Party MP in the 1990s.

Key said “my sense is if we can conclude a deal, then they will see the same benefits which many New Zealanders will see, which is more jobs, better opportunities for our young people, a good environment to be operating in, and 200,000 extra visitor nights coming from overseas.

“I think all of those things make that deal pretty compelling,” he said.

Those visitors will spend “roughly double what the average tourist does at the moment,” Key said.

Brokerage Goldman Sachs last month estimated SkyCity would need 350 to 500 extra machines to profit from the deal, generating as much as $46 million of revenue in the first full year of operation. The opposition Labour Party says the deal means legislative change goes to the highest bidder, as several other parties made proposals.

Key said his preferred option is that taxpayer funds aren’t used for the convention centre, and the current deal “is unlikely to require taxpayer funds, or us running the convention centre.”

According to a 2009 report for the former Auckland City Council by the Ministry of Economic Development, the convention centre would run on an operational breakeven basis, generating $17.7 million in revenue with costs and overheads of some $16.6 million.

That would leave net operating cashflow at $684,000 once an amount of $706,000 had been put aside for an asset replacement fund. Overall there will be an annual increase of $84.5 million increase in tourism-related spending.