Stumping up taxpayer money to help meet SkyCity's cost over-runs on the convention centre is now the Government's "least preferred" option.

Prime Minister John Key backed-up a statement made earlier today by Finance Minister Bill English that, though negotiations were ongoing, giving SkyCity money was the "least preferred" option.

That is in contrast to Mr Key's comments yesterday, in which he suggested taxpayer money would be put up to stop the construction of a possible "eyesore".

MORE: SkyCity half-year profits flat at $66.6m


Speaking as he made his way to question time, Mr Key told reporters he would prefer to see a convention centre built for the agreed $402 million.

He had previously said increased construction costs meant earlier concept drawings would not be able to be used if the budget was not increased.

"We agreed a deal at $402 million...our strong preference is that the SkyCity convention centre is built and paid for by SkyCity."

His comments follow indications from SkyCity chief executive Nigel Morrison that the casino operator was open to contributing more money to funding the centre.

Personal investment

At the announcement of SkyCity's half-term results, Mr Morrison hinted that it might be negotiating with the Government to pay more. But he refused to say what it might want in return.

Asked how much extra SkyCity might contribute to a more expensive centre, Mr Morrison said: "I'm sure it will come out in due course."

However, he did express strong personal feelings about the centre, saying it was significant to him.

"I have invested five years of my life into this thing and it would be a shame if that didn't transform into something physical for the company."


He rejected Mr Key's reference yesterday to a cheaper centre being a potential eyesore.

"I don't think it would be an eyesore. It's about driving tourism. We want to work out an outcome with the Crown that's a win-win for all parties," he said.

Labour leader Andrew Little again criticised the Government as not being straight with the public over the deal.

"SkyCity is not a pauper here, they have a lot of money ...John Key has got to make them stick to their promise."

The Government's change in comments on the deal came after Mr Key's opening address in Parliament yesterday was overshadowed by debate.

Mr English began the change in tone after a finance and expenditure committee earlier today.


He was reluctant to be drawn on stating that walking away from the deal was a better option than putting money in.

Opposition to deal

Mr English, who will deliver a new budget on May 21, said if money was required for the convention centre it would be factored in.

"That's always the case in the budget, whatever you put in, something else misses out."

Act Party leader David Seymour said he thought the original deal was wrong and he was opposed to using taxpayer money for a convention centre.

However, he was in a confidence and supply agreement with the Government and would vote for the budget, even if it contained "an aspect I don't like" in the form of money for SkyCity.

Asked about the possibility of the Government putting in money in exchange for an equity stake or other investment associated with the casino, Mr Seymour rejected the idea outright.


"Successful Government investments are like 95-year-old smokers, they do exist but they are not a very good guide to life.

"The problem once the Government starts getting into these kinds of enterprises is not that they'll all fail, it's that many of them do and you don't know when to stop."

Asked about Labour's criticism of the deal, Mr Morrison said today: "We have a contract with the Crown and we would certainly hope construction is commenced by 2017. It would be certainly very disappointing if it had not."

He rejected claims SkyCity had been manipulative, trying to get more money from taxpayers when it had just announced a big half-year return. "We certainly have not played the Government. The Government has been a very tough negotiator."

He also emphasised that SkyCity had beaten all other parties to the deal.

"There is nobody else coming forward and offering to pay for this convention centre. We were one of five parties that came forward and we came up with what the Government thought was the best opportunity.


"The land is worth over $100 million, next to TVNZ on Hobson St. We do want to do this and we think Auckland has been crying out for a convention centre for 10 years at least. John Banks raised it when he was mayor. It's important."

Mr Morrison said the $470 million-$530 million estimate was a combination of rising building costs and enhancements to the centre.

SkyCity's and the Crown's quantity surveyors had agreed on those new numbers.

Rising building costs

"What was designed and planned over two years ago was in a different economic environment," he said, referring to rapidly rising construction costs and the strong economy.

"If you stripped out the escalation that has come about from a strong economy and construction costs booming, $402 million is probably $440 million, so sure, that might be incompetence."

But enhancements, improvements and changes to the original plans were responsible for most of those cost increases, he said, and all up they would result in a far better centre.


The $470 million-$530 million range was in place to take account of construction cost escalations, he said, although Australia had not experienced such big building rate hikes.

The plans are due to get final tick-off from the Government at the end of the month, although SkyCity is still awaiting Auckland Council's decision on its resource consent, lodged some weeks ago.

"SkyCity is committed to achieving a solution which preserves values for shareholders," the business said in a take-out section in its interim result.