Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: SkyCity centre deal smacks of cronyism

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More gaming machines at SkyCity can only lead to more social problems - something John Key should see for himself. Photo / Bradley Ambrose
More gaming machines at SkyCity can only lead to more social problems - something John Key should see for himself. Photo / Bradley Ambrose

The National Government's proposed sweetheart deal with casino operator SkyCity verges on being immoral and smacks of crony capitalism.

This is not the sort of message you will hear from the media celebrities who are the beneficiaries of SkyCity's "Chairman's Card" or are "Ambassadors" for the casino operator in return for perks said to be worth thousands of dollars each year.

They are far too comfortable to shed the spotlight on hard issues involving the casino operator.

But it's a message that the public should send John Key's Government loud and clear. It's not too late to walk away from an iniquitous deal which will see SkyCity underwrite the cost of building a new International Convention Centre adjoining its Auckland premises in return for being allowed to expand its casino business.

Other bidders are in the wings, including an Auckland Council-backed proposal to put the convention centre at its Edge complex.

And none of these offers include "cheque-book legislation" with all its ghastly permutations.

It is also true that SkyCity's deal will save the taxpayer some millions - not just the upfront costs for building the convention centre, but also future costs that might land up on the Government's plate if it has to underwrite financial losses in lean years.

But if the International Convention Centre is worth doing at all (and there are mixed views on its timing), it must stack up on its own economic merits. It cannot be allowed as a backdoor for a major expansion of gambling in Auckland at a time when increasing attention is on its social downsides.

Previous governments put strong rules in place before allowing the casino business to operate here. There is already a cap on the number of casinos in New Zealand.

The Gambling Act 2003 will have to be amended to allow the expansion. And it is notable that the number of additional pokies said to be involved has already climbed from 350 to 500 since the putative deal was announced six months ago. This suggests SkyCity has gained the upper hand in negotiations. But Cabinet ministers refuse to shed any real light on the talks, saying they are "commercial and sensitive".

Pull the other one. The real issue is why should SkyCity be allowed to plonk another 350 to 500 pokie machines at its Auckland casino without having to apply to expand its licence. There needs to be a full investigation into the merits of this by the Internal Affairs Department and the Gambling Commission.

Public submissions should be heard from the Problem Gambling Foundation and other bodies that have to deal with the misery that addictive gambling - particularly on the "pokies" - is causing to vulnerable sections of society.

Changes to the act should take place only via a conscience vote in Parliament. And how can Act's John Banks and the Maori Party MPs vote for this given their previous stances on problem gambling?

The Maori Party said last year that it opposed "in the strongest possible form" any suggestion that would enable SkyCity to benefit from special provisions, including a proposed increase in gaming tables and machines at the Auckland casino.

"Every day we see major downstream effects from problem gambling embedded in our communities - family break-ups, workplace problems, increased pressure on health services and the criminal justice system, and for far too many, there are difficulties in even providing the basic essentials of a family life," the party said.

Yet the Prime Minister claims the expansion of pokie numbers will not materially lead to an expansion of problem gambling. He suggests this is because the casino operator is targeting international clients. He surely can't be serious.

Of course any expansion of these addictive cash-sucking machines will lead to more problem gambling. The Problem Gambling Foundation says one in six New Zealanders say a family member has gone without something they need or a bill has gone unpaid because of gambling.

This percentage is higher among Maori (38 per cent ) and Pacific people (28 per cent). It says news reports of children and babies left unattended in casinos or casino carparks while their parents gamble seem to occur with alarming regularity. This neglect was reported to the Internal Affairs Department 59 times last year, affecting 101 children in casinos alone. The foundation reckons every 10 new machines creates eight people with a problem. It also points to the fact that 265 problem gamblers who had been banned from SkyCity were found on the premises last year.

Key should go down to the casino for a night or two and take a hard look at just who patronises the pokies. I had a look myself this week (and no, I do not have a "Chairman's Card" and nor am I an ambassador for the company). I simply went down to have a look through the operation and to see who was patronising the 1647 machines that are already at the Victoria St operation.

They are not the kind of "international clients" who fly in to play on the gaming tables or in the VIP rooms, but housewives, solo parents and pensioners, with Maori, Pasifika and migrants over-represented among their ranks.

A major study by the Australian Productivity Commission concluded that problem gamblers were responsible for about 40 per cent of the revenue generated by Australian pokie machines. These are the metrics that matter.

Sure the Government can save the taxpayers $200 million or so through this tawdry deal. But what sort of signal does that send to the rest of New Zealand?

- NZ Herald

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