SkyCity is holding all the cards in the latest round of negotiations with the Government over its increasingly expensive convention centre, Labour's Economic Development spokesman David Clark says.
Design improvements, a new five-star hotel and inflation have rocketed up the SkyCity convention centre's pricetag by as much as $130 million.
And while additional gambling concessions are off the table to meet any shortfall for the building, taxpayer funding is under discussion.
Mr Clark said unfortunately the cost blowout and new round of negotiations was always going to happen.
"I predicted a blowout of this nature in September last year - before the ink on the deal was dry. It was the logical outcome of a contract negotiated by a Government that had put itself over a barrel."
It would be the taxpayer who would pick up the tab, Mr Clark said.
SkyCity yesterday lodged its resource consent application for the centre, which it's building in return for concessions such as extra gaming machines worth as much as $42 million a year in additional profits.
Announcing the application, SkyCity chief Nigel Morrison revealed the cost of the convention centre had jumped to between $470 million and $530 million.
The casino operator had previously estimated it would cost $402 million, which it agreed to cover in return for extending its Auckland gaming licence until 2048.
SkyCity - which reported a net profit of $123.2 million last year - is now in talks with the Government on how to fund the increased cost.
In August, SkyCity announced it had increased the scope of the project, unveiling plans for a 12-storey five-star hotel.
It's estimated the convention centre could generate $90 million in revenue a year, employ 1000 people during its three-year construction and provide another 800 ongoing jobs.
It would cater for 3500 international conference delegates at any one time and attract an estimated 33,000 more delegates each year.
Mr Morrison said factors driving the increased cost included "design improvements" to meet requirements in the company's contract with the Government, along with significant construction cost inflation.
Design changes included removing pillars from dining and exhibition spaces, and cosmetic enhancements to the exterior of the building.
"Sensitive treatment" of the historic Nelson House and the Albion hotel on the site had also boosted costs, Mr Morrison said.
SkyCity expected further design refinements and a tendering process would ensure a competitive fixed construction cost.
But it and the Government would "work constructively" to identify other options to fund any costs over the original $402 million estimate.
Economic Development Minister Steven Joyce said that could include reducing some of the features or the scale of the project.
Other funding options for addressing any remaining shortfall would also be considered but "would not involve granting SkyCity more or different gambling concessions or making further changes to any legislation that affects casinos or gambling."
Mr Joyce said he couldn't rule out the taxpayer helping to meet part of the shortfall.
"That would be the least preferred option and certainly it would be from my perspective the last resort ... I would not be characterising it as a likely option at all."
Once built, the convention centre was to have been operated and funded by SkyCity, but the Weekend Herald now understands a Government subsidy for ongoing operating costs is being discussed.
Green Party spokeswoman Denise Roche hit out at the idea of taxpayer funding, saying Aucklanders were "already paying for the centre through the carnage that will be wreaked on families by increased opportunities to gamble in the city".
"It would be even more unacceptable for the Government to come cap in hand to the taxpayer to pay for what's been pitched to us -- up till now -- as a 'free' centre."
SkyCity has received favourable treatment from the Government over its convention centre plan ever since gambling concessions in return for building the project were raised when Prime Minister John Key dined with the company's board in November 2009.
An Auditor-General's report found the Government's subsequent dealings with the firm over the matter "fell short of good practice in a number of respects".
These included the casino operator being given information and access to ministers and officials that other bidders did not receive. The casino also had the advantage of knowing the Government did not plan to put any money into the project, enabling it to shape its offer.
The deal gives SkyCity exclusive exemptions from the Gambling Act, allowing it extra poker machines, more electronic games, cashless gaming and early extensions to its exclusive licence.
It also allowed the firm to buy adjoining land from TVNZ for the centre, which it has now decided to use for its new hotel instead.
Shares in SkyCity closed 11c lower at $3.83 yesterday.
Meanwhile, Mr Morrison said the resource consent application contained plans for a dedicated 3000-seat theatre and an exhibition floor the size of Eden Park's rugby pitch. A luxury hotel would be built alongside the centre, with a pedestrian laneway of bars, restaurants and shops running between the two buildings from Hobson St to Nelson St.
The final timeline for the centre's construction is yet to be determined but a binding contract is expected to be signed late next year.
That contract will trigger the start of the gambling concessions.