Q+A: Greg Boyed interviews Steven Joyce
Sunday April 22, 2012
Greg Boyed interviews Steven Joyce
Joyce says government could walk away from Sky City Convention Centre deal:
“We could walk away from it. There’s no doubt about that.”
“It’s quite possible that both parties end up walking away and saying, ‘We can’t get what we want’.”
Minister denies extra pokie machines will increase problem gambling in New Zealand; says there’s no cost in adding hundreds of extra gaming machines:
GREG Are you not adding to that [gambling] problem by allowing another 350 to 500 machines in one spot?
MR JOYCE No, I don’t think you are necessarily at all…
On problem gamblers: “There are some people who, for whatever reason, have problems with gaming in the same way that some people have problems with alcohol. You can’t change that.”
Denies knowing how many extra pokie machines Sky City want from the deal.
Won’t give deadline for negotiations.
Joyce says National’s not selling the law for a convention centre: “it’s basically saying you’ll alter the law to enable economic activity to take place”.
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Interviewed by GREG BOYED
GREG First of all, let’s talk about the nuts and bolts. Would this deal have happened if the 350 to 500 pokie machines had not been offered by the government to SkyCity?
STEVEN JOYCE – Minister of Economic Development
Well, the government hasn’t offered anything. SkyCity has made some requests. The negotiations are going on. But the reality is, if you just go back a couple of steps, when the government decided that we would seek approaches from people in terms of building a convention centre, it was made clear to all parties at the time that we’d look at innovative ways of financing the convention centre, because I think the point’s well made that they don’t pay for themselves, and SkyCity came up with a proposal which was the best proposal of the five that were standing up there.
GREG And for that proposal to happen, the law – gaming law – had to be changed?
MR JOYCE Well, it is quite tricky, because the casino regulations are very tightly prescripted, so the reality is if you’re going to make any changes of the type which is to increase the number of gaming machines, you actually do have to have a legislative change. That’s just the nature of that industry. It’s different to other industries where those sorts of things don’t apply.
GREG So – there is no other way of putting this – for the price of a convention centre, $350 million, the government has changed the gaming law. It’s sold the law.
MR JOYCE The government hasn’t changed anything. It’s not sold the law. I mean, that’s Labour Party...
GREG How’s it not sold the law?
MR JOYCE No, that’s Labour Party spin. I’m sorry. Governments alter laws all the time to encourage economic activity to take place. This whole “sell the law” thing is a Labour Party spin and you shouldn’t buy into it.
GREG But it’s not for an individual company they change the law. They change the law for various reasons, but not because there's $350 million worth of convention centre up for offer.
MR JOYCE I think the difficulty, as I said, in this situation is that the New Zealand casino law is quite strictly prescribed, and so you actually have to alter either the legislation or regulations in order to do that. But, I mean, to suggest there's some sort of “shock, horror” probe is ludicrous. I mean, the previous government, for example, set up the Large-Screen Production Fund, which basically created tens of millions of dollars for the movie industry in New Zealand.
GREG OK, let’s...
MR JOYCE That’s a slightly different approach, but nevertheless those sorts of incentives are placed all the time...
GREG Let’s back this up.
MR JOYCE ...to encourage business to take place in New Zealand, and in terms of the convention centre, we don’t have the ability to host something like around 8300 conventions around the world – international conventions – each year. We host about 30 of them. It’s a very big opportunity for New Zealand. That’s how we pay for it.
GREG Yes, but let’s just back this up. If you hadn’t said... If you’d said to SkyCity, “No, we’re not going to change the gaming law. You can’t have any extra pokie machines. You’ve got 1600. That’s enough,” you wouldn’t have a deal. Is that right?
MR JOYCE There's no doubt about that. I mean, at the end of the day...
GREG So you have sold the law.
MR JOYCE No, it’s not selling the law, Greg. I mean, it’s basically saying you’ll alter the law to enable economic activity to take place, and that’s entirely...
GREG How is this different from what happened with Warner Brothers and the Hobbit movie and the employment law was changed so we could ensure that would happen?
MR JOYCE Well, I’m you raised that, because the government is very focused on ensuring that there's an opportunity for economic growth, and if it hadn’t made the change to that law, then the Hobbit movies would not be being made here today, and the reality is we would not have an international convention centre unless we’re prepared to alter some things. Now, the difficulty with all this is for the Opposition, if I may say so, because it is a very political argument, is that at the end of the day the government’s said we’re going to do a number of things to help the New Zealand economy grow, and the opposition at this stage seems to be saying they’re against all of them. They’re against intensive agriculture. They’re against oil and gas. They’re against a convention centre. They’re against foreign investment in New Zealand. They’re against, frankly, even the ultra-fast broadband, the way it was done. And so what you’re seeing is an opposition that are saying on the one hand, “Let’s have some more jobs,” but on the other hand, “Let’s make sure that you can do nothing to encourage those jobs to occur,” and frankly that’s just naïve.
GREG Let’s talk about cost. There were, I understand, five offers that were tabled. This is the only one that was considered to not cost New Zealanders. Is that right?
MR JOYCE I think that’s right. There's also other aspects to it as well. For example, location. I mean, undoubtedly a CBD location is very important. All the evidence internationally is that you’ve got to have proximity to hotels. There was a very good proposal out at Greenlane at the raceway, for example, but it’s a long, long way from the CBD. It’s a long way from the hotel stock. And so for those reasons, that one is very difficult to make fly. It wasn’t just the cost. It was a range of things.
GREG But cost is the main thing.
MR JOYCE No, no, I’m just telling you that cost is one of the things.
GREG Cost is an issue, though.
MR JOYCE Yeah, yeah.
GREG Let’s talk some numbers here. Between 77% and 85% of problem gamblers in New Zealand use pokie machines as their main mode of gambling. 74,000 New Zealanders are problem gamblers. Every new machine creates a new problem gambler. Of that, five to 10 people are affected. Multiply that by 350 or 500 – do you not see that as a cost?
MR JOYCE Well, no, I think... I think... Well, firstly, there's a couple of assumptions there that necessarily...
GREG Well, these are assumptions the Problem Gaming Foundation’s made, so if they’re incorrect, then they’re incorrect.
MR JOYCE The interesting one is that every new gaming machine creates more problems. Now, the political opposition to this one’s quite interesting, because on the one hand, they’re down at SkyCity trying to say, “Well, there’s empty spaces there, so we don’t need more poker machines.” On the other hand, they’re saying every new poker machine brings in additional cost. You can’t have it both ways. The reality is this: gaming in New Zealand is well-established across a range of areas, and most people cope with it very, very well. It’s the same alcohol. It’s the same with, frankly, sugary foods. But there are some people who, for whatever reason, have problems with gaming in the same way that some people have problems with alcohol. You can’t change that.
GREG Are you not adding to that problem by allowing another 350 to 500 machines in one spot?
MR JOYCE No, I don’t think you are necessarily at all, because you don’t know the substitution effects from other forms of gaming, for example, for...
GREG But this...
MR JOYCE No, no, no...
GREG This is acknowledged as the problem – not Lotto, not horse racing...
MR JOYCE Well, I’m sorry, but I don’t...
GREG It’s the big slice of the pie is pokie machines.
MR JOYCE No, I don’t think that’s correct. Are you actually telling me there are no problem gamblers involved with the racing industry?
GREG No, no, I’m not, but we know that 70% to 80%...
MR JOYCE Well, that’s what you just said.
GREG No, we’re saying the majority is pokie machines, and you’re now putting between 350 and 500 more in a spot where there are already 1600.
MR JOYCE Firstly, those numbers are not necessarily correct at all, because the negotiations are on-going.
GREG So what are the numbers?
MR JOYCE Well, we don’t know the numbers at this point. The negotiations are proceeding with the officials at the Ministry of Economic Development and their advisers. They will come back to me at some point with a recommendation in terms of what the final arrangement should be. I’ll then take it to my Cabinet colleagues, and that’s the way that’s run, and any of these numbers that are being promoted at the moment are being promoted in the media by various groups, and that’s fine. But just getting back to your point – the reality is that there is some problem gambling occurring around New Zealand. There are a range of gaming forms. Now, interestingly, the Opposition are not saying, “Close down casinos and close down gaming,” and if you actually had a principled view on this, that’s what you would be doing, They’re just saying, weirdly, that we have the perfect number of gaming machines in New Zealand right now and that they cause an appropriate level of harm. But if we increase it at all, that would cause a massive increase in harm and we shouldn’t sustain that as a country. Now, if you had the courage of your convictions, if the Labour Party and the Greens had the courage of their convictions, they’d be out saying, “Close the casino down.” They’re not. Why not? Because they know it supplies 3000 jobs for New Zealanders. So what is the magic about the existing number of gaming machines in New Zealand right now?
GREG So, what is the number, Minister? What is the number?
MR JOYCE What number?
GREG You know the number of NGO organisations that could come to a convention centre. We all know the cost of what the convention centre is. Surely the number of machines that are going to be put at SkyCity as a result of this deal – you must know. Is it more than 500?
MR JOYCE No, we don’t know the answer to that question at all at this point,...
GREG When will you know?
MR JOYCE ...because it’s subject to a negotiation, and again I’m not going to put a timing on that. I learnt through the ultra-fast broadband. I said at the outfront of that we would not be putting a deadline on it. The reason you don’t put a deadline on it is actually because it puts the government in a poor position relative to the people they’re negotiating with. They get negotiated up against a hard deadline, and we’re not going down to that, because that wouldn’t be good for New Zealand’s case.
GREG So, when are you going to have a number?
MR JOYCE Well, as I say, we may not even have a deal. I mean, the reality is we’re talking about a negotiation. It’s quite possible that both parties end up walking away and saying, “We can’t get what we want.” That’s an entirely possible outcome of this negotiation, so I think, again, look, it was a slow news week last week. The Labour Party were jumping up and down about something which, frankly, was announced in the middle of June last year, prior to the election, and now they’re suddenly deciding it’s a big issue, and I think frankly it’s just playing politics.
GREG So you could walk away from this?
MR JOYCE We could walk away from it. There’s no doubt about that.
GREG What’s it going to take for SkyCity to walk away from this?
MR JOYCE I have no idea.
GREG What's their bottom line, their number?
MR JOYCE I have no idea.
GREG Goldman Sachs has said for the convention centre to make sense on paper – $350 million – it’s going to have to be at least 350 machines.
MR JOYCE Well, Goldman Sachs, with the greatest respect, are merchant bankers, and as I’ve known from my commercial background, merchant bankers sometimes get it right and sometimes get absolutely the wrong end of the stick, so I wouldn’t take too much by that. They’re just commentators on this from outside the arrangement. They have no more relevance than you or I actually offering an opinion on what it is that we should require.
GREG What would it take for the government to back down, though? This is not a popular decision.
MR JOYCE It’s not a back-down situation at all. The government is interested in doing a negotiation and an arrangement which is fair to both parties – fair to taxpayers and fair to SkyCity shareholders. And if such a deal can be arranged, then that’s something we’ll put before the Parliament. If it can’t be done, we won’t be doing it. But it’s not a case of a back-down. The government is determined to find all sorts of opportunities to grow the New Zealand economy faster and more strongly than previously. This is just one of them We’re taking steps across a range – so in the areas of foreign investment, in the areas of oil and gas exploration and in the areas of intensifying agriculture. The Opposition, the political opposition, is opposing all these initiatives, and they’re saying one the one hand, “Give us more jobs, but whatever you do, let’s just get in a defensive crouch and not actually change anything to allow jobs to occur.”
GREG Let’s talk about the political numbers. United Future are still wavering on which way they feel about this.
MR JOYCE No, I don’t think that’s fair at all. I think both United Future and ACT are saying that they’d like to see...
GREG Well, no, Peter Dunne’s not saying that yet.
MR JOYCE ...the arrangement before they make a call.
GREG Peter Dunne isn’t saying that, and we know the Maori Party, the Mana Party, the Green Party and obviously Labour are against this. You could just not have the numbers.
MR JOYCE Well, as I say, the reality is we’re all at the point where we don’t have an arrangement to even discuss at this point, so again that’s getting ahead of it. I think Peter has quite rightly said that he wants to have a look at whatever the arrangement is, and frankly so does John Banks, and frankly so does the National Party, so let’s just see what the arrangement is that we come to, if one can be finalised, and we’ll put it in front of the parties concerned and see who supports it. And it will be interesting, because once again it’ll be a case of the Opposition deciding either they’re going to be part of the solution in terms of growing New Zealand more strongly, or they’re going to be part of the problem in terms of getting into a defensive crouch and saying, “We do not want anything to do with real economic growth opportunities in this country.”
GREG All right, Economic Development Minister Steven Joyce, thank you.