If SkyCity isn’t 100% behind project this risky we should stay well clear.

SkyCity chief executive Nigel Morrison has just talked this taxpayer out of an Auckland convention centre.

"Absolutely," he said when asked if he wanted taxpayers to contribute to the project now that the cost had blown out. "This is an unprecedented investment in tourism infrastructure in Auckland. If Auckland doesn't want it, if New Zealand doesn't want it, quite frankly that's fine with SkyCity, we don't have to do this."

If SkyCity doesn't need a convention centre of international scale, we shouldn't invest public funds in one. SkyCity knows this business better than probably anyone in this country, certainly better than the Government or the Auckland Council. Convention centres are a natural fit with big successful casinos.

When SkyCity picked up the tender for a centre of the size and standard long desired by Auckland boosters and endorsed by successive governments, I'd supposed the casino wanted to take its operation to a higher plane. I thought it reasonable of the Government to give the casino more gambling capacity in return to cater for all those corporate delegates in addition to its existing clientele.


It never occurred to me that they were doing us a favour. As a participant in the New Zealand economy I don't want favours from the board and management of SkyCity, I want profitable business decisions from them. I'm old enough to have seen how sick this economy became when too much of its activity hinged on public finance and favours.

A $500 million convention centre is not Christmas in the Park or fireworks at New Year, it's a significant economic investment. I had little confidence in it until SkyCity stepped up. Now that confidence is shot.

Not only has the estimated capital cost risen beyond SkyCity's calculations, but it is believed to be now seeking an operating subsidy, too. Clearly the thing is not economic. In an attempt to justify a public subsidy Morrison has resorted to that old canard, "infrastructure".

Whenever governments decide to support an amenity that cannot pay for itself, they call it infrastructure on the basis that it will generate other activities. They commission a report from accountants who assess the value of the "spin-offs" to the local economy.

These reports are pure snake oil. Everything generates "spin-offs". An economy is a network of paid exchanges of goods and services. Its strength depends on each cog in the network covering its cost and not wasting resources that could be put to more valuable uses.

True infrastructure, such as roads and power lines, are constructions that everybody needs and everybody will use. They are so necessary and so certain to be used that they don't have to be advertised or promoted. If they carry a charge it has to be regulated.

A convention centre is always the first thing to be written on the whiteboard when a seminar is brainstorming ideas for economic development. Everybody in the room will nod. All have visions of executive expense accounts being flashed around their shops, restaurants and tourist excursions.

Nobody likes to point out that a convention centre does not automatically generate wealth. It has to be skilfully and constantly marketed in a world that is well supplied with glittering beacons to the conference trade. The wealth an Auckland facility might generate for the city and the country would depend entirely on the operator's competence and effort.


If SkyCity is not totally committed to the Auckland concept, if "we don't have to do this", it becomes less likely it will put in the necessary marketing investment. If it receives a public subsidy to build and run the facility, it will have less need to make the effort.

When SkyCity puts its hand out for public money, it is not so much the expense the Government needs to worry about, it is the softening of commercial pressure on the centre.

Doubtless we will hear that successful convention centres elsewhere operate with a public subsidy. That is true of agriculture in many of our vital markets, too. It is tough to compete from a place with a small population so far from large markets. We need tough competitors.

It would be nice for Auckland and New Zealand to have a world-class convention centre as part of a grand casino incorporating also a ritzy hotel, over-charging bars and restaurants and a high-end shopping mall. But if we have to make a public investment we should think carefully.

If anything is going to entice conferences to make the long journey to New Zealand it seems unlikely to be our metropolitan attractions. It seems more likely to be our remote natural surroundings. Queenstown or even Christchurch is better situated.

Auckland is a big gamble. If SkyCity is ambivalent it is not worth the risk.