Monday, February 23, 2015

Sky City tried to cheat us right from the beginning

So, it turns out that Sky City's surprise "cost overrun" on their crony-deal convention centre was their plan all along, and that the government knew about it from the beginning:

Ministerial advice provided to Radio New Zealand shows the Government was told 14 months ago that SkyCity could not find a way to build the centre for the $402 million price tag, to which it had agreed.

The extensively blacked out reports provided under the Official Information Act span a 16-month period, and also show major changes in the design during a year of negotiation between the Crown and the casino operator.

The parties had agreed in May 2013 that SkyCity would build a 3500 seat national convention centre, at its own cost of $315 million.

In return, the Government would extend its casino licence by 35 years and pass legislation allowing an expanded casino operation.

When the deal was signed in July 2013, the agreed price had risen to $402 million. The required legislation passed with a one vote majority in November 2013.

Just four weeks later, in December, officials from the Ministry of Business, Innovation and Employment (MBIE) told Economic Development Minister Steven Joyce that the casino operator had advised for the first time it would not be possible to build the centre as proposed for that price, nor had it been able to come up with an appropriate alternative.

They also changed the design so that we would be getting a smaller convention centre, instead focusing on a new hotel to be built on former TVNZ land. Its hard to escape the conclusion that the whole thing was a shake-down, an attempt to get as much money and land from the government as possible while providing as little as possible in return. But really, do we expect anything different from the gambling industry?

This should be a warning to future govenments not to make these sorts of deals - because the business partner will screw you, and use your public commitment to the deal succeeding to screw further concessions out of you (or provide less for the same price, as has been done here).

But what really bites is that the government has known about this for fourteen months, and kept silent about it. They've been lying to us the whole time! And that's just not something we should accept from them.