18 July 2013

The Government has just released a lot of background papers about its negotiations with SkyCity over the proposed Convention Centre deal in Auckland. They offer an interesting insight in to how these things happen.

A couple of things struck me immediately about all this. First, SkyCity’s opening bids around the number of additional pokies, tax concessions, and a Wellington casino were just that – starters. No-one could have expected them to be taken seriously or to provide the basis of a deal. Nevertheless, the air of unreality that accompanied them does show that major corporates seeking to negotiate deals with Government often are way out of touch with political reality and have little understanding of how the process actually works. Many of the things SkyCity sought originally were never going to happen, so it was a waste of years even proposing them. (I do wonder what their shareholders may make of that.)

Second, the deal that was eventually struck now looks far less of the “dirty” deal its critics claim it to be. Their criticism rests on more on social concerns and perceptions of cronyism than the specific details, which given the historically political nature of gambling issues is to some extent understandable. For me, the challenge is striking an appropriate balance between social concerns about problem gambling proliferation and commercial opportunity. On the whole, I think the current proposal achieves that, which is why I support it. (I discount the Treasury’s analysis – its advice has seldom proven to be reliable in these areas, and I laugh out loud at those now lapping it up, as they are very ones to attack its advice on other areas of social concern and spending!)

This deal also raises questions about how far Governments should go in seeking to regulate people’s lives in areas that might be regarded as socially or physically dangerous. I am not a gambler, but I do not like the idea of moral rectitude interfering with people’s choices. For most, gambling, playing the pokies or whatever will always be a harmless pastime. And it is big international business. (I well recall when Minister of Internal Affairs and Revenue in 1996 being approached by international internet casino interests  offering to pay up to $500 million a year as a an equivalent to tax, in return for being allowed to use New Zealand domain names, because we were seen as corruption free, and therefore a desirable location.)

Against that backdrop, the SkyCity deal looks fairly modest!