Auckland Council and Mayor Len Brown were yesterday blindsided by suggestions from the Government and SkyCity that ratepayer money be used to fund the shortfall in costs for a controversial convention centre.
SkyCity chief executive Nigel Morrison yesterday also confirmed his company wants a taxpayer-funded top-up and was willing to walk away from the deal if it doesn't get it, after last week revealing a rise of up to $130 million for the centre, originally priced at $402 million.
SkyCity was favoured by the Government to build the centre over rival bidders for its willingness to fund and operate the facility itself without taxpayer funds, in return for gambling concessions including more gaming machines and a licence extension.
Mr Morrison said SkyCity "absolutely" wanted a taxpayer top-up and issued a veiled threat to walk away from the project.
"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," he told Radio New Zealand yesterday.
Economic Development Minister Steven Joyce, who has overseen talks with SkyCity, said Mr Morrison was "entitled" to try to seek taxpayer dollars. But "I have some slightly more cynical news for him, which is, that's unlikely to be the case."
Instead, Mr Joyce said any shortfall which could not be covered by removing costly features, downsizing the centre or more effectively managing construction costs could be offset by an operating subsidy from the council. "The other option is asking for the Auckland Council to come in, not necessarily with capital but if you look at the Wellington Council, they've just done a deal to do a convention centre, a much smaller one but they've underwritten some operating costs so that might help."
The Herald understands SkyCity would also like the council to offer millions of dollars in concessions on costly red tape necessary to build the centre. Mr Brown didn't know anything about Mr Joyce's idea or potential concessions for SkyCity and appeared reluctant to get involved.
SkyCity chief executive Nigel Morrison.
"Auckland Council has not been approached," he said through a spokesman. The deal was "between SkyCity and the Government".
But Orakei councillor Cameron Brewer said while it would be "a stretch" for ratepayers, a subsidy for the centre should be considered.
"If this extra cost means a better convention centre and urban design with better interface and interaction with the surrounding streets, then the council should at the very least look at considering a contribution - particularly if it means the council could have greater say in the outcomes."
Labour's Economic Development spokesman, David Clark, said ratepayers and taxpayers would be "appalled to hear that on top of the humiliating terms in the original deal, the Government is now looking to subsidise the casino operator for ongoing operating costs".
"Unfortunately further raids on the public purse are the predictable outcome of a casino deal signed by a Government firmly positioned over a barrel of its own making."
Deal or no deal
*The $402 million bill for Auckland's new international convention centre has blown out to as much as $530 million, SkyCity says.
*It says construction costs of $315 million have increased by $130 million due to new design features and rising building costs. Land costs of $87 million are unchanged.
*The casino operator says it will not make a "donation" by covering the difference itself and wants taxpayer cash.
*If the Government and SkyCity can't agree on how to fund the blowout, either party can walk away from the deal until the signing of the construction contract which is expected late next year.
*SkyCity would forfeit the gambling concessions if the deal fell over before then and would share costs up to that point 50/50 with the Crown.