Fran O'Sullivan: Steven Joyce needs to play cards right or walk away

SkyCity's latest convention centre plans show an impressive international-class complex.

There's an old maxim in poker - "If you don't know who's getting screwed, get up and walk away from the table because it is you."

I'm not sure whether Steven Joyce played a bit of poker back in the day when he owned radio stations. But a politician who cut his commercial teeth in the rock'n'roll era of radio should know a great deal about business risk and just how far to go when playing the odds.

When it came to getting down to it with SkyCity Entertainment - as Joyce and John Key personally did - when they stitched up the bones of the controversial convention centre deal on behalf of the Government, they should have ensured that the officials who scarpered on behind to finalise the agreement made sure there was no room for Sky to play them. But timing is everything.

Smack on Christmas, SkyCity released a stunning convention centre fly through, which indeed shows an international-class complex that any city would be proud to host.

The design is first-class. It is imposing. It stands next to the planned new luxury hotel that SkyCity also now has planned on land previously owned by TVNZ which was thought destined for the convention centre.

Once complete it will be a substantial commercial hub including the convention centre, a major expansion of pokies at the casino (part of the trade-off for SkyCity to build the convention centre "for free"), a new hotel and plenty of new restaurants - all close to a substation on the planned city rail link.

At the right overall price this is a licence to print money.

Why bother to travel far from the convention centre and hotel when there is plenty of entertainment to be had on the doorstep?

But with the new designs came the stinger.

SkyCity boss Nigel Morrison says the company faces a cost blowout from the original estimate of $402 million 18 months ago to between $470 million and $530 million.

New concept designs for international convention centre.

It wants the Government to step in.

Morrison puts the cost escalation down to various design improvements that the Government wants to the convention centre; having to make concessions to protect two heritage buildings and construction cost hikes.

The SkyCity boss is correct to say construction costs have risen across Auckland since the "pokies for convention centre deal" was first mooted. But surely a cost escalator - or contingency - should have been built into the pricing of the $402 million deal in the first place?

This was a totally foreseeable event.

Taxpayers should also expect that if Key and Joyce are going to insert themselves into a competitive process - where other bidders were playing by the announced rules - they would make doubly sure there was no room for screw-ups.

But right now it looks as if Joyce and Key have been comprehensively put on the back foot (if not yet outsmarted) by SkyCity.

If past performance is a predictor (and with this Government it has been) SkyCity will know that while the Government is pushing back on the casino company's demands, it is still sitting "tailend Charlie" in just the same way it ultimately went in assisting the Tiwai Point aluminium smelter operators (after it openly said the smelter firm was playing hardball) and with offering increased tax breaks to US movie investors.

The Auditor-General has already commented unfavourably on the processes around the awarding of the convention tender to SkyCity.

A mid-block air bridge over Hobson Street will provide sheltered pedestrian access.

There's not too many options.

The other bidders for the convention centre have moved on. Prime sites are now being used for other projects.

For instance Chinese company Fu Wah is now building a Park Hyatt hotel across Viaduct Harbour.

So, SkyCity has Joyce (in particular) on the back foot. He is making noises about Auckland Council chipping in. There's even talk about contributions to cover operational costs.

The obvious stance is for Joyce to get SkyCity to knock the centre design back to the original cost.

If not - he should take note of the poker maxim.