What’s really worrying us about the Convention deal?

23
Apr

Problem gambling is clearly an issue for our society – often affecting those who are most vulnerable to the financial harm and creating real hurt for many Kiwi families.

Access to any activity with the potential to cause individual harm – from gambling, cigarettes and alcohol, to hunting and even certain sports – should be something we always carefully consider as a society. But in every case there must be a balance between the possibility of harm and the public’s desire to take part. And between the potential for risk and any benefits likely to accrue from the activity.

While the controversial Sky City Convention Centre deal has become the latest focus of this debate, it seems in reality the issue might be more about how the deal was done, than the true consequences of the decision.

At its simplest form, according to the details we’ve seen, the deal involves Sky City building a $350m national convention centre in return for adding up to 500 more slot machines to their current collection of about 1600. Sky City will make all the upfront investment, in return for the opportunity to gain a greater profit – not only from the increased number of slot machines, but also presumably from the boost to the company’s rapidly expanding portfolio of hospitality businesses: hotels, restaurants and bars clustered around the iconic Sky Tower.

On the face of it, this should be a question of balance between the economic stimulus of a national convention centre – not just to Sky City but to all the businesses engaged in tourism or receiving benefit from it in Auckland and the wider region – and the risk of an increase, estimated to be up to several hundred, of the number of problem gamblers in the city.

But what seems to be really driving this debate is the fact that the Government has done a deal. The Prime Minister himself saw the opportunity, and actively pursued it, eventually selecting the option over other bids that required some degree of Government investment.

Interestingly, despite the level of coverage around the decision, and the commentary from both proponents and detractors, the deal hasn’t really hurt National in the public’s eyes – with the Government up 2% in the latest round of polling.

But it does highlight that in some quarters we have a real problem with our elected officials pursuing specific economic opportunities. We seem to like the idea of free trade deals, but get nervous about foreign investments like the Crafar Farms; we love seeing our country on the silver screen, but have a problem with incentives (or even farms) for the people that make the movies; we all want to benefit from tourism, but we’re uncomfortable about making deals in pursuit of this.

Some of these kinds of concerns would be absolutely unheard of in other countries – even our closest neighbours. And perhaps that’s part of what makes New Zealand what it is. But it can also mean we sacrifice out on a lot – including our international credibility – when we drive away these opportunities.

In short, in debates like the Convention Centre, are we in danger of losing our sense of perspective?

Julian Smith | General Manager – MYOB

What others are saying

Author

Angus

April 24, 2012 at 10:14 am

I think the whole Convention Centre issue is a classic case of the head saying one thing while the heart says another. Most of us can see the benefit of a convention centre. The concept is not new and has been around for a couple of decades. It was first raised by David Hay when he was Deputy Mayor of Auckland City. The problem with Convention Centres is that they don’t make money for the operator unless there is an associated activity. They do however bring in loads of additional visitors to the country who we hope will spend money on other activities, boosting the Auckland economy and the tourism industry throughout the country as delegates travel further afield.

John Key knows that Sky City can make the business case stack up with additional gaming. That’s where things lose perspective. Paul Holmes wrote an insightful opinion piece in the NZ Herald over the weekend. In essence he stated that he didn’t have the gambling gene and as such really struggled to ‘get’ why people will so readily part with their hard earned money. I have the same problem. Pokie machines to me seem a futile waste of time and money and some of the stories associated with those who have a problem with gambling tear at the heartstrings, particularly when children are around. Key understands this and counters that the number of pokie machines in greater Auckland are decreasing. The increase for Sky City is the quid pro quo for the development of a Convention Centre.

So, the head says ‘go for it’ and the heart says ‘but not with more pokie machines’. If we step back, the whole issue is really a sideshow. All must surely agree that a Convention Centre is a great idea. Most will have reservations about the social negative of gambling. Sky City has an image problem, pure and simple. But when you take a breath and look at the upside, the proposal stacks up. Instead of local bars subsidising their profits in the suburbs, Sky City gets more of the gambling ‘cake’. The lid on pokie machines continues to sink.

And for John Key? It is probably a very welcome distraction from a flagging economy and the pressing issues of the unstainable retirement age, stubborn youth unemployment & comparisons with the living standards in Australia. He probably can’t believe his luck!

- Author
  
  Julian Smith General Manager - MYOB NZ
  
  April 24, 2012 at 10:44 am
  
  Hi Angus and welcome! There’s no doubt this is an issue that polarises people. Problem gambling is a heinous issue, but I wonder if it’s really a distraction to the real issues here – businesses need to make a good return on any investment. You comments on SkyCity’s “image problem” are spot on! Thanks, Julian.
  
Author

Julian Smith General Manager - MYOB NZ

April 26, 2012 at 1:23 pm

Here is a great interview on TVNZ with Auckland Chamber of Commerce’s Michael Barnett. I think he makes a number of valid arguments in favour of the SkyCity Deal. Do you agree?
http://tvnz.co.nz/breakfast-news/why-auckland-should-say-yes-convention-centre-video-4851548#