Editorial: SkyCity deal too soft on social issues

File photo / Jason Dorday

Opinion

The enthusiasm of the Tourism Industry Association, Air New Zealand, the Employers and Manufacturers Association and BusinessNZ to the agreement between the Government and SkyCity over a $402 million convention centre in Auckland told one side of the story. Finally, this country will be able to host large international conferences.

The benefits in terms of new business, growth and jobs are readily apparent. The other side of the story is, however, less alluring. That involves a potential social cost because of the increase in pokie machines and gaming tables at SkyCity. For the deal to be worthy of an unqualified welcome, it had to include convincing ways of addressing problem gambling. That, unfortunately, is not the case.

The Government erred from the outset by tying the public need for a convention centre to SkyCity's desire to relax its governing law. The two are not related and should have been considered separately on their own merits.

As it transpired, what might be a good deal for the taxpayer would always have to be juxtaposed with issues of problem gambling. The Government can trumpet that it has thwarted SkyCity's ambition for a further 500 pokie machines on its casino floor.

But the agreed 230 machines, an extra 40-plus gaming tables and several other concessions still represent a substantial expansion. This, with the extension of SkyCity's exclusive licence to 2048, meant the company had to be required to take substantial steps to meet its social responsibilities.

The deal includes, first, a predictive modelling tool that analyses data to identify players at risk of problem gambling. To be of use, that will have to be acted on effectively. Secondly, under a voluntary pre-commitment system, pokie players can elect to restrict the amount of time they play or the amount they spend.

Voluntary action, however, runs counter to the very essence of an addiction. Thirdly, SkyCity will double the number of "host responsibility" specialists. Finally, player identification will be required when buying tickets with a value of more than $500 in non-restricted areas.

In sum, this not a compelling harm minimisation package. It might aid the identification of problem gamblers, but it places a heavy reliance on SkyCity staff responding appropriately. That is not an altogether reassuring scenario.

Social impacts were not part of KordaMentha's independent assessment of the agreement. It considered only the financial implications of the deal, concluding that the value of the concessions made to SkyCity in exchange for the building and operation of the convention centre was reasonable for both parties.

Its assessment did, however, note the importance of the renewal of SkyCity's Auckland licence until 2048. This provides certainty until that date, and will improve investor confidence about the continuity of cashflows from the casino (beyond the former expiry date of 2021).

Equally, the deal removes the opportunity for a government to impose further limits on its licence. This may be especially significant given the proposal by Labour and the Greens to regulate the electricity industry and the heightened regulatory risk of interventionist policies. "This further highlights the benefit to SkyCity from agreeing its licence extension now and having compensation provisions set out in the heads of agreement in the event the regulatory concessions are amended," notes KordaMentha.

Unsurprisingly, shares in SkyCity surged after the deal was announced. That carried its own commentary on the value of the agreement to the company. Auckland, too, will undoubtedly benefit from a large convention centre. But it remains valid to ask if, because of the Government's approach, the financial pluses will come at too high a social price.