David Fisher is a senior reporter for the NZ Herald.

Revealed: Hard-ball bargaining that led to SkyCity deal

The new convention centre planned for Auckland will cost $400 million.
The new convention centre planned for Auckland will cost $400 million.

Treasury officials warned against the SkyCity cash-for-convention-centre deal, saying there were doubts the taxpayer would get enough out of it.

Officials also expressed concern that the casino company held all the cards in the negotiations. It agreed to build the $400 million centre in return for concessions to give it a bigger and more profitable business.

The details emerged in a release of documents almost a week after politicians voted on the deal to allow SkyCity's Auckland casino extra pokies, increased electronic games, cashless gaming and early extensions to its exclusive licence.

The papers give the most complete insight yet into how the deal came together - but also show SkyCity initially demanded much more.

In documents and letters from 2010, SkyCity's wishlist included significant law changes, an extra casino in Wellington, 900 extra pokies, the casino entry age lowered by two years from 20 and a licence to get into internet gambling.

The papers show the options were first mooted in correspondence with SkyCity eight months before the casino company was selected as the preferred bidder for the convention centre in June 2011.

Papers show the details being discussed even before competing bidders made their pitch to the Government.

The hard-fought deal saw SkyCity return repeatedly to push for concessions which had been ruled out, forcing officials bargaining for Economic Development Minister Steven Joyce to aggressively assert the Crown's position.

The bargaining was informed by advice from other government departments, including a warning from the Treasury. Bureaucrats warned the Government away from the deal, telling Mr Joyce it was doubtful extra conventions would be attracted by the new centre.

He was also told: "[The] Treasury has strong concerns that private benefits to SkyCity will exceed public benefits to New Zealanders".

The Treasury was also concerned that the Government "lacks adequate leverage" in the negotiations and if concessions to SkyCity's demands could not be time-limited then consideration should be given to opening bidding again to others - or funding the centre directly.

Papers show the deal was effectively complete in May 2012 - when SkyCity baulked and insisted on greater protection for its investment and increased benefits.

Another 14 months of haggling followed, with officials juggling new demands from SkyCity right to the end.

Two months ago, pressure for assurances on tax concessions had officials suggesting to Mr Joyce that the casino company be given an "oral" assurance there would be no changes at the next election.

Last night, Mr Joyce said there were no hidden deals with SkyCity. "Anything that is not written down is not happening." He also dismissed the Treasury's concerns. "We were able to prove Treasury was in the wrong on that one."

A SkyCity spokesman said the casino wanted a complex which matched overseas competitors. He said the deal reached was fair for all.

- NZ Herald

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