Jane Clifton: Winner takes it all

by Jane Clifton / 22 February, 2013
When it comes to the Sky City deal, taxpayers have been dealt a lousy hand.
Cartoon by Chris Slane

It has long been an accepted feature of being in Government that you can get away with daylight robbery provided you commit it by following the proper channels. However, what the Sky City deal tells us is that it’s now possible to get away with it even if you don’t.

The extraordinary upshot of the Auditor-General’s biff-heavy report on the Government’s casino deal is that, having concluded ministers went about it the wrong way on numerous counts, our top probity official is agnostic about whether the outcome was proper.

It’s hard to escape the impression that this deal has the bureaucracy stumped. The tender process was always going to be unequal, because Sky City’s was a proprietary project. It was never bidding on the same footing as the others, who required Government money, and there was no way the process could be tweaked to even things up.

Nor could the Sir Humphreys find any precedent or parallel for a Government relaxing a law to obtain such a direct benefit from a private entity.

As with the Hobbit, it was a one-off offer. There have always been whispers that various politicians are in the pocket of the booze, racing, tobacco, fisheries or some other sector. But it was rather disarming when National climbed right into Sky City’s pocket in plain sight, and openly waved a white hanky at us from within it.

There’s no disputing that our biggest city lacks an internationalstandard convention centre. And although it would have saved itself on political water-heating bills by doing a partnership deal with, say, Infratil, this is an awful time for the Government to be spending big money on expensive edifices.

Enter the Fantastic Mr Faust. Sky City offered to build a convention centre with entirely its own money, provided the Government allowed it to “enhance its revenue stream”.

The 500 more poker machines it will accordingly be allowed, via a law change, in its Auckland casino represent almost a Faust bargain by proxy. Although not a direct party to the deal, the hollow-eyed addicted gamblers who feed money into slots will be the ones to part with their souls, while the more functional sectors of society enjoy the benefits of the convention centre’s boost to commerce.

Except, of course, that it’s ultimately the Government, courtesy of the taxpayer, that pays for the poverty and misery caused by problem gambling. So it becomes a veritable soul train, in which the Devil gets to clip the ticket all the way around, with the exception of Sky City. Once again, the house wins. Or, to put it another way, there is such a thing as legalised daylight robbery.


The Government is gambling on the fact that, after people have had a righteous old tut-tut about the tastelessness of the deal, they will focus back on wider imperatives, chiefly this country’s desperate need to earn more money and foster job growth. More cynically, it also bets on the strong undercurrent of exasperation with people who let their bad habits get out of control – exemplified recently by the widespread derision of the family who want to sue Coca-Cola because one of their number developed a health-wrecking 10-litre-a-day habit.

When the eternal question of personal versus societal responsibility touches on a dilemma, it’s easier for voters to make a moral trade-off, and the Government is counting on the fact that, with a buzz around the shiny new bauble for Auckland, the moral panic around pokies will subside.

The symbolism may be irreducibly ugly, but Labour is not immune from it. It’s not many years ago that Prime Minister Helen Clark was extolling the advent of jobs and growth from Sky City’s earlier expansion – admittedly at a time when consciousness of pokie addiction was not politically high. Will Opposition MPs now boycott all functions at Sky City’s current and future premises? And most fascinatingly, would a Labour-Green Government renege on the machine quota, and brook whatever almighty legal ructions ensued?


Amazingly, National is prepared to take on a potential legal blizzard with the tobacco industry, in green-lighting mandatory plain-packaging. It will wait to see how Australia fares in the initial round of teeth-baring over whether it is licit, in world-trade terms, to strip merchants of their intellectual property rights by prohibiting branding. But even if Australia appears to win this round, it won’t be the end of it. Tobacco still has deep pockets and you won’t find any white hankies in them.

All of which makes it impossible to distil a coherent theme from National’s approach to the bracketed evils of booze, baccy and betting. It has decided to come down hard on the fags, partly to oblige the Maori Party, but chiefly because the downside – lawsuits aside – is minimal. No one argues that a weak or irresponsible minority is ruining the healthy enjoyment of smoking for everyone else. There are no buts to be butted here beyond the confines of an ashtray.

Yet the evidence for plain packaging as a deterrent is patchy, whereas that for a massive whack onto the price of alcohol is very strong in terms of its potential for curbing excessive drinking. But that, National has set its face against. It would be unpopular as well as inflationary. And clearly the Treasury hasn’t been able to compute the saving to the taxpayer of less problem drinking via higher grog prices versus the economic impact of the higher Consumer Price Index.

It’s ultimately the Government, courtesy of the taxpayer, that pays for the poverty and misery caused by problem gambling. If it has computed the extra impost to the taxpayer of gamblers being further beggared by 500 extra pokie machines versus the benefit of the economic activity stimulated by the new convention centre, we have yet to see it.

But those equations are tangential to the Government, which has a simple twin governing-rod on its every decision these days: will X add to economic growth and jobs, and how likely is X to cost us votes in 20-odd months’ time? The Sky City deal passes both tests. There isn’t anything else alongside the Cabinet paper tick boxes these days. Even the excruciating decisions on Christchurch school closures conform to this, given that the certain loss of votes in the region would be exceeded by protest voting in other regions if the Government was seen to be less than rigorous in its spending decisions there. A further equation here is, the protesting schools and parents are highly unlikely to have been National supporters from the get-go.


It’s ruthless – but how surprising is that? A red herring in this week’s debate about Sky City has been the apparent cosiness of Prime Minister John Key in having wined and dined with the company during the tender process, and its seeming to have preferential access to him. He has form, having overtly buddied up to Hollywood execs, who also got legislation – and money – for letting New Zealand retain the Hobbit production, the cost-benefit ratio of which is also still mysterious.

But equally, if anyone else out there wants to make a serious offer to spend several hundred million dollars building a facility or mounting a project that will bring growth and jobs, they will not find Key unfriendly, or even shy. At least he’s blatant in his schmoozing of big business.

And 99.9 times out of a hundred, he’ll eat your meal and drink your wine … and not change so much as an apostrophe on a minor procedural recommendation by way of a thank-you. That’s pretty ruthless, too.
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