SkyCity report slates Government ministers

05:17, Feb 19 2013

SkyCity remains interested in continuing negotiations over a $350 million convention centre despite a report slating officials and ministers.

SkyCity chief executive Nigel Morrison confirmed the position today.

“We remain willing to invest up to $350 million to develop, own and operate the New Zealand International Convention Centre, provided acceptable returns can be delivered on the total project,’’ Morrison said in a statement.

The comment came after the report by Deputy Auditor-General Phillippa Smith into the negotiations was released.

The report raised concerns about the lack of documentation and analysis for the procurement process.

There was too much focus on the politics and commercial interest and not enough on proper process, Smith's report said.


"Although decisions were made on the merits of the different proposals, we do not consider that the evaluation process was transparent or even handed."

Meetings with between the Government and SkyCity were "materially different in quantity and kind" to those between the Government and other parties.

"The practical effect was that officials worked closely with SkyCity as it put together a detailed proposal from the broad outline that was initially submitted in response to the expression of interest request."

Meanwhile, other parties were told decisions had been delayed.

The report said the process under which the Government sought for expressions of interest for a convention centre in early 2010 had been "poorly planned and executed. Insufficient attention was given to planning and management of the process as a whole, so that risks were not adequately addressed and managed".

The report found that the SkyCity gambling facilities provided a "unique means of funding" the capital costs of a convention centre, avoiding the need for substantial central government funding, and that the Government was entitled to select it.

"During this inquiry, we have not heard any comment to suggest that other submitters did not understand the reasons why the Government might prefer the SkyCity proposal.

"The Government is entitled to decide, as it has, to negotiate directly with SkyCity for a concessions based agreement. The Government will be accountable in the usual way to Parliament and the public for those policy choices."


Prime Minister John Key said earlier his government is "totally vindicated" by the report.

But Key said anyone expecting details of a "cosy sort of little deal" would be disappointed by the report.

"[Of] course we're totally vindicated in the report," he told Radio New Zealand.

Last year, after seeing a draft report, he said he was not losing any sleep over it.

The deal was put on ice while the Government awaited to report. Negotiations would now get underway again, Key said.

"We'd like to agree a deal if we can in the foreseeable future and get on with it."

Labour leader David Shearer remained opposed to the deal with SkyCity, saying any deal on a convention centre must be done in the open and look at multiple bidders.

If the report said the process was fine he would still object to the deal which would build the centre "on the backs of problem gamblers", he said this morning.

 "It's ultimately pulling money out of people's pockets, because they're gambling, and putting it into a convention centre, I think we could be above that in New Zealand."

Green Party co-leader Metiria Turei last April sought the investigation into the deal, which would extend SkyCity's gaming licence and allow it to install more pokie machines.

In return, it would build the convention centre, close to the Sky Tower in Auckland, with no cash contribution from the taxpayer.

"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," Turei said last year.

In 2010, the Government called for expressions of interest in building the convention centre and in June 2011 said it was in exclusive negotiations with SkyCity.

Key said yesterday that the centre was important for New Zealand and would bring in tourist dollars.

The auditor-general's report looked at the overall process for seeking and assessing proposals as well as the adequacy of the assessment of likely costs and benefits.

A senior government source said there had been a difference of opinion inside the auditor-general's office about the final conclusion.