While the PR blitz to soften ratepayers and taxpayers rages, it’s instructive to remember how we got to this point.

As SkyCity and the Government have managed to get their estimates about the cost of the international convention centre proposed for Auckland so spectacularly wrong, before a sod is turned, maybe it's time to revisit all the facts and figures used to justify the exercise. Perhaps the goose is not as golden after all.

On the eve of Christmas, just 18 months after the two parties signed a deal in which SkyCity would spend $402 million to build the edifice, in return for the Government extending both the timescale and size of their casino monopoly, SkyCity went cap in hand back to the Government with a problem.

Project costs had blown out to $530 million - $70 million to $130 million more than the agreed price.

The gambling empire's cupboards were bare, someone else - namely the Government - would have to cover the shortfall.


Since then, both sides have been shadow-boxing via the media, with Economic Development Minister Steven Joyce unable to resist a dig Auckland's way, suggesting ratepayers could join the party.

Alarmingly, SkyCity's quest for taxpayer dollars doesn't end there. In a paid post on nzherald.co.nz, SkyCity uses Sue Sullivan, chief executive of Conventions and Incentives New Zealand, to lobby for ongoing government subsidies as well. She says New Zealand can't let the planned convention centre slip away "despite the potential for cost overruns", pointing enviously to the annual subsidies rival Australian state governments shower on their convention centres.

Most people, she says, don't realise the high stakes involved "in the boosting of the conference industry here or that public funding of the MICE industry (meetings, incentives, conferences and exhibitions) is common overseas".

She says "our biggest competition is Australia" and "the venues there - Sydney, Melbourne, Brisbane, Adelaide - get subsidies of about $5.26 million-$8.4 million every year from state governments..." She said "I don't think people see how much we stand to lose if we can't compete."

Now to me, that's SkyCity reviving its original demand for an annual government subsidy.

That on top of the generous new casino monopoly they've been granted until 2048, along with increased numbers of pokie machines and gambling tables.

In a 2009 feasibility study, the Ministry of Economic Development argued that an international convention centre would need a total of $10 million in start-up subsidies in its first six years. This included a total of $6 million in the three year pre-opening phase for set-up and marketing. In addition, Tourism New Zealand and Tourism Auckland would be expected to pay for overseas promotion.

Also, the convention centre operators would get a taxpayer subsidy, calculated somehow, on the added benefit their activities brought to the New Zealand economy. This would be used to discount charges and undercut rival venues to attract conferences.


In reality, this was an admission that, as with the film industry, competition between countries and states to attract was so fierce to attract business, that taxpayer dollars were needed to artificially prop up the convention industry worldwide.

In February 2013, there was an apparent flip-flop, with officials at the Ministry of Business, Innovation and Employment telling the Herald's David Fisher that such "subvention" payments had been ruled out.

Later that year, Ms Sullivan's predecessor as conventions industry chief, Alan Trotter, wrote that unless we come up with smart strategies to counter the widespread practice of under the table "incentives in terms of cash or kind ... we risk losing market share". He said one strategy would be "if we can't beat them, we join them".

Whatever the men from the ministry told the Herald two years ago, SkyCity and the convention industry's new mouthpiece obviously don't think it's a dead issue.

There are those arguing that now SkyCity has broken its deal to produce an international convention centre at no cost to the taxpayer, it's time to revisit the four other proposals that couldn't match SkyCity's original "no cost" offer. But that doesn't remove the "subvention" issue.

Since the Rogernomics era, paying subsidies to private enterprises, has been considered a national heresy. How odd, we should be thinking of bending the rules in order to subsidise the working holidays of wealthy American surgeons.