SkyCity deal is no way to run a country

Whitewash is the only word to describe the deputy auditor-general’s report on the Government’s relationship with SkyCity.

The report dumps all the blame on civil servants. But its description of events makes it very clear the prime minister, his office, his Tourism Ministry, and the Ministry of Economic Development spent a year trying to stitch up a convention centre deal with SkyCity before any other interested party got a glance in.

By doing so, John Key and his officials subverted the normal processes required for government procurement. These are designed to ensure solutions are canvassed widely and the best option chosen. As a result we’ll get the convention centre SkyCity wants to build on terms highly favourable to it, which may not be the convention centre New Zealand needs. Here’s how the prime minister and his colleagues abused the system, according to the chronology of actions described in the deputy auditor-general’s report.

The challenge of building an international-scale convention centre in Auckland has troubled business and Government since the mid-1990s. Competing ideas failed to deliver the optimal solution of type, amenity, place and viability.

Auckland was never short of analysis, particularly government-commissioned studies in 2006 and 2009 by Horwath HTL, New Zealand’s leading tourism sector consultant. Horwath’s 2009 report said there were three options for a convention centre:

Private ownership through a mechanism such as a build, own, operate, transfer scheme.

Direct ownership by the public sector.

Creation of a special purpose entity accountable to the public sector but operating at arm’s length – for example, a statutory body or council-controlled organisation.

After analysis and extensive consultation in the sector, Horwath concluded the third option, public ownership, had the widest support.

But SkyCity had other ideas. Even before the report was delivered in July 2009 it began pushing its own plans. It met senior officials on May 12 and hosted the prime minister at SkyCity on May 14.

The deputy auditor-general reports: “The prime minister’s diary includes a meeting with SkyCity’s chief executive on 14 May 2009 … SkyCity confirmed that this meeting took place. Neither participant can recall the discussion, and think that it was probably just an opportunity for them to meet rather than for any particular purpose.” Continue reading


Rod Oram is a columnist for The Sunday Star-Times.

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