Open letter to MPs from Metiria Turei on SkyCity deal
Open letter to MPs from Metiria Turei on SkyCity deal
Contact: Metiria Turei MP
Usually we think of Parliament as blocks or parties, and look past the individual Members to the slots we each fit into. We are all very aware of roles and boundaries within our own caucuses. For Government MPs, that usually means leaving policy implementation to the relevant Ministers.
Sometimes an issue emerges that requires us to examine things more carefully for ourselves. I hope that for you, the SkyCity-New Zealand International Convention Centre (NZICC) deal is one such issue.
In the last couple of weeks I have been reading documents and asking questions of Minister Joyce in the House. I think his answers reveal real gaps between the justification that many Government MPs have given for supporting the NZICC Bill so far and the advice that has been available to Ministers.
I know it's a long shot but I want to make sure that you are aware of the warnings that have been given by the Government's own advisers and which are not reported in the Regulatory Impact Statement (RIS) that accompanied the Bill.
1. The employment benefits of the Convention centre have been misrepresented
The RIS relies on a 2011 NZIER report and information "supplied by SkyCity". The information supplied by SkyCity has not been released. But following an Official Information Act request, the NZIER report was released to us recently. The employment figures referred to in the RIS, 1000 construction jobs and 800 operational jobs at the NZICC, are not contained anywhere in that report. These numbers are not present in earlier Horwath Report either.
The NZIER report looks at the net employment impact in Auckland and nationally of the NZICC and concludes:
New Zealand has a net gain of 120 FTE jobs during construction and 380 in Auckland.
New Zealand has a net gain of 18 FTE jobs during operation and 340 in Auckland.
In other words, all the job gains are in Auckland, with the investment effects of the deal leading to 260 fewer FTE jobs outside Auckland during construction and 322 fewer FTE jobs outside Auckland during operation.
We have also been able to obtain employment figures from Australian convention centres which show far fewer than the 800 jobs (500 FTEs) will be delivered by this deal. The 3500-capacity Sydney convention centre employs 200 FTEs and Melbourne's 5000-capacity convention centre employs 133 fulltime and 273 casual staff.
We are now asking the Minister to produce the SkyCity information which has led to the employment claims. I hope that you will look at it against other evidence - and the evidence of the national employment impact - before you vote on the second reading of the bill.
2. Officials' advice on the harm minimisation measures have been excluded.
The Minister's claim that the "harm minimisation measures … will act together to reduce harm" is not supported by officials' advice. The Ministry of Health described the effectiveness of the voluntary pre-commitment cards as "doubtful" and advised that it was not a new or additional measure. The Ministry of Health cited Australian evidence that the uptake of voluntary pre-commitment is typically low and that many players do not adhere to the limits they set. The addition of three extra host responsibility staff was described as likely to have, at best, a minimal effect. The Ministry of Health clearly pointed out that this aspect of the deal would have limited value unless it was made clear what the extra staff are required to do and that these requirements would be legally enforceable. The Ministry of Health also criticised the ticket-in and ticket-out technology pointing out that it has limited value as a measure to prevent or minimise gambling harm.
3. Advice on increased problem gambling and the costs of it were not available to Cabinet.
It is clear that at the time the Heads of Agreement were approved, advice available on the probable harm resulting from the concessions was either not presented or downplayed to Cabinet. Indeed the Cabinet paper of 22 April refers to a "potential increase in the incidence of problem gambling" and the fact that concessions "might lead to an increase in the number of people seeking help". This language has been toned down from the initial concerns of the Department of Internal Affairs (DIA). In mid-2011 advice from the DIA said that any of the proposed concessions would almost certainly be followed by an increase in the number of people seeking help and citing problems linked with casino machines or casino table games.
It is clear that the inevitability of harm and the inadequacy of mitigating provisions were omitted from the information available to Cabinet.
4. The costs of foregone TVNZ dividends were not included in the costs of the deal.
Although SkyCity's preference to build on TVNZ land was known throughout the negotiations, the cost of this to Government was not included in valuing the deal. On September 4, 2013 it was revealed that TVNZ will be allowed to keep significant dividend payments to the Government to facilitate the sale of the land and consequent relocation of its operations. In essence, this means that the New Zealand taxpayer is helping to funding the sale of the land to SkyCity.
5. The concessions will give SkyCity a much greater economic benefit than identified in the RIS.
Sudhir Kale, a professor of marketing at Bond University in Queensland, has worked as a consultant at casinos on five continents. Kale told Fairfax reporter Matt Nippert in late July that the SkyCity deal was a clear win for SkyCity.
After looking at the numbers in the KordaMentha report, Kale told Nippert that the most striking aspect of the deal for him was the conservative treatment of the concessions given to SkyCity, particularly valuing the extra pokies and gaming tables. Kale calculated the new machines and tables alone will boost SkyCity's profits by nearly $35m annually.
Using KordaMentha's assumptions, Kale's calculations suggested the worth of the extra pokies and table machines alone to be $340m. That is much higher than KordaMentha's assessment, which ranged from a low of $167m to $216m.
It is also important that we also not forget that this whole deal followed a selection process for the preferred NZICC partner that has been strongly criticised by the Deputy Auditor General. Constitutional law expert Stephen Franks has described the SkyCity agreement as "[skirting] important constitutional safeguards."
The issue here is not the benefit or otherwise of building a convention centre.
The issue is whether it is appropriate for Parliament to support a non-transparent process that delivers a very questionable constitutional, commercial and social outcome.
Much of this information was kept from you. More is being revealed every week that shows that the justifications for the deal don't stack up. The question I want to ask you is two-fold: are you sure that the SkyCity deal is the best option for the development of a NZICC; and will you look at all this information with both a critical and compassionate eye?
The Select Committee is due to report to the House on 14 November, 2013 and will again be the subject of a personal vote. I urge you to consider the views being expressed both within and outside Parliament before then.