Editorial: Smaller centre probably a better bargain

The original concept design for Sky City's new international convention centre

Opinion

SkyCity's offer to build a convention centre of international scale in Auckland for no public outlay got off to a bad start when the price turned out to be more pokie machines at its casino. The idea that social policy could be traded for economic gain was criticised here. But it does not follow that the smaller convention centre now to be built is a worse bargain for Auckland.

SkyCity is going to build the convention centre it has estimated to be most economic. Its capacity will be less than the 5000 seats of Auckland's civic dreams, and it is probably just as well. The dreamers were making some grand economic assumptions. They commissioned consultants to estimate how much Auckland would be enriched by a facility of their desired scale. Cost was of less concern to them because, as their consultants noted, convention centres normally needed public funds.

Proposals were invited by the previous Government and when they landed on the present Government they all assumed public finance. "Talk to SkyCity," said John Key, who had already done so. He may have been encouraging the casino's interest simply to avoid public expense but there were wider benefits to be gained from private investment. The result was less likely to be an under-used, over-sized white elephant.

The scaled-down design agreed with the Government and announced this week will seat just 2850 delegates. It is not much bigger than a 2500-seat conference centre proposed for Wellington or the 2000-seat centre the Government has promised Christchurch. A smaller facility is also planned for Queenstown.

They add up to a lot of conference capacity for a country of this size in an era when business is unlikely to be splurging on international soirees to quite the degree it was before the global financial crisis. In the circumstances Auckland can be relieved SkyCity is willing to proceed at all with the project that, even at a reduced scale, will cost the company nearly $30 million more than it bargained for.

It appears the economics for the company have been greatly helped by a repositioning of the hotel in its plans. The hotel has been moved from the lowest corner of the site, on Wellesley and Nelson St, to the Hobson St frontage where it might overshadow a convention centre of reduced height. But if that is the way SkyCity can make the convention centre work, so be it.

An imposing building is less valuable than one that can be kept busy. The artists' designs of the structure now proposed look fine but it is more important that the building earns a return on the investment. The operator will have to work hard to win a sufficient share of the international conference trade. That would be a worry if the city was depending on the global marketing efforts of a public body to keep a convention centre working.

Auckland may not be getting the biggest, grandest convention centre in Australasia but it can be competitive. SkyCity has staked the entire cost on its ability to make it pay. That is grounds for confidence.