Stop on convention centre work ordered

JOHN HARTEVELT AND MICHAEL DALY
Last updated 13:12 19/04/2012
David Shearer
FAIRFAX NZ
DAVID SHEARER: Called the deal "shonky".
JOHN KEY
FAIRFAX
JOHN KEY: Sky City was the best offer because all other parties wanted the Government to pay for the centre.
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Prime Minister John Key ordered officials to stop work on plans for a national convention centre after Sky City indicated it might extend its existing facility, Cabinet papers reveal.

The papers have emerged as Key today said he "advised himself" to chase Sky City for a deal to build a new national convention centre in exchange for changes to gambling laws.

The papers, released by Labour, show Economic Development Ministry officials started looking in to a national convention centre with a feasibility study in August 2009.

Key, as Tourism Minister, was briefed on the study and officials started work on a full business case for a new convention centre.

But after it emerged around the same time that Sky City was considering expanding its convention centre, Key called a halt to work on the business case.

Months later, Key had dinner with Sky City bosses in November 2009 at which a possible National Convention Centre was discussed and the casino bosses "raised issues relating to the Gambling Act," according to Key.

Key today said he had asked Sky City about extending their existing convention centre and they had replied that was "always possible".

Key had told them the Government's preferred position was that it did not have to put any capital in to a centre and certainly did not want to run the project.

He had told them - and every other potential bidder for the build - that the Government was "prepared to look at all options," which "inherently" included the prospect of legal changes allowing more pokie machines and gaming tables for Sky City.

Key said he had told Sky City: "Our preferred position would be a deal where we didn't have to put in any capital. Now, if you can structure such a deal, come back and talk to us.

"Inherent in the view that says if you can come up with a deal that means that the Government doesn't have to put in any money - of course they're going to have to look at other ways of cross-subsidising that."

A few months after the November 2009 meeting, in March 2010, Cabinet agreed to open a tender process for the national convention centre contract.

In June last year, Key announced that Sky City would go in to negotiations with the Government to build the convention centre, with legal concessions to the casino giant to be negotiated in return.

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"Sky City's advantage over a lot of other people is that they get some cross-subsidisation potentially through the extension of more pokie machines but actually they also have a [good] package," Key said today.

"They already have a lot of tourists going up the Sky Tower; they have huge entertainment facilities already so it's less of a hurdle."

Key denied there was anything untoward or improper about the way the deal had been cut.

"People can chase their tail and go round and round in circles all they like and look for every conspiracy they want but unfortunately, you're never going to find one," he said.

But Labour leader David Shearer said the latest details raised questions about the extent of Key's dealings with Sky City.

His dinner meeting with Sky City in November 2009 - months after calling a halt to officials work on a business case for a convention centre - was about "sealing the deal," with Sky City, Shearer said.

"Selling our legislation to a casino in exchange for hundreds of pokie machines is shocking behaviour for a prime minister," Shearer said.

"He directly intervened in the process and agreed to a deal with Sky City almost a year before Cabinet finally decided to call for expressions of interest, in 2010.

"The entire process, which has cost taxpayers hundreds of thousands of dollars, appears to have been just a smokescreen to cover up the fact a deal had already been done."

The whole deal lacked transparency and looked like "a secret deal done behind taxpayers' backs," Shearer said.

BUSINESS BACKS CONVENTION CENTRE

The head of Business NZ has waded into the Sky City debate, saying a world-class convention centre could help bring a significant boost to investment.

Business NZ chief executive Phil O'Reilly said the benefits of an expanded Auckland convention centre should not be overlooked in the current debate.

"Travellers coming to larger international conventions in New Zealand will increasingly see New Zealand as a place to do business. We saw that happen during the Rugby World Cup, with the highly successful Business Club venture. A world-class convention centre could help bring a significant boost to inward and outward investment.

However, he said this was all dependent on size of facilities.

"Size matters when pitching for big events, and New Zealand is currently missing out on large international conventions.

"Big conferences centres like Singapore, Las Vegas and Dubai thrive because their facilities meet size thresholds. New Orleans' recovery from Hurricane Katrina was faster because it quickly rebuilt its very large conference facilities. Attracting big events brings new direct spending as well as much other associated economic activity.

- Stuff

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