Mai Chen: Money talks but only Parliament can change the law

An artist's impression of the proposed convention centre. Photo / Supplied

The Government has just selected SkyCity as a preferred developer of an international convention centre for Auckland in exchange for considering specific law changes to extend SkyCity's casino licence beyond 2021 and for an increase in gambling tables and machines at its Auckland site. This tells me the following:

* This is a supremely pragmatic Government, which is cash-strapped. Companies can go to the Government with a proposal which will involve large private cash injections, which will create jobs and other benefits for New Zealand or a region, in exchange for law reform which will benefit the company.

Passing laws is a unique ability of Parliament which costs the Government no money. For example, Warner Bros agreed to produce The Hobbit in New Zealand in exchange for employment-law changes.

SkyCity will pay the full $350 million construction cost of a 3500-seat centre convention centre, which is estimated to attract $90 million of international spending a year and create 1000 jobs during construction and 800 permanent jobs.

To deliver an adequate rate of return for SkyCity's shareholders from that investment, the Government will reform the Gambling Act 2003, which places a moratorium on casinos.

* The Government will consider this approach for reforming even contentious issues such as gambling, which have been conscience-vote matters, despite a long history of policy concern about harmful impacts on the public.

It only became legal to operate casinos in New Zealand when the Casino Control Act 1990 was passed. Originally the act made provision for only two licences to be granted, with others to be granted on a two-yearly basis. There were ultimately six venue licences granted, each for a term of 25 years. SkyCity Auckland opened in 1996.

Growing public concern about the social impact of casinos resulted in the current statutory moratorium on casinos under the Casino Control (Moratorium) Amendment Act 1997, extended in 2000 by the Casino Control (Moratorium Extension) Amendment Act 2000.

The moratorium was carried forward into the Gambling Act 2003. This repealed the Casino Control Act 1990 and prohibited indefinitely further venue licences being issued.

* Deals can be done in the backroom, but legislation will only be enacted if it can survive public scrutiny. The lesson the Government learned from The Hobbit legislation is that it cannot pass this type of contra legislation under urgency that bypasses select-committee consideration and stops the public from being able to have a say. It burns up too much political capital.

* The challenge for the companies who propose such deals will be the uncertainty of getting the legislation they need to make the capital outlay commercially viable.

There is always a risk that a minority government might find the public outcry in the run-up to an election too shrill. The company also has to withstand the public scrutiny it comes under from having such deals play out in the public arena. This could affect its corporate reputation.

* The challenge for the Government is the public appearance of a fait accompli, regardless of any select-committee process.

Opponents will argue that regardless of the assessment of potential harm from the law change and no matter what they say, they will not be listened to because they can't privately fund the $350 million convention centre.

If money determines law and policy, then those with money will always win. But a democracy is supposed to be about the power of ideas and a good idea should be able to stand on its own feet without a cash inducement.

Ultimately, Parliament is sovereign in law-making. If the Government does negotiate law reform in exchange for a $350 million convention centre, and gets a majority of MPs to support the measure, then the only sanction will be political, not legal.

It would be difficult for the four other bidders to sue for missing out because they offered too little.

* Mai Chen, a Chen Palmer partner and adjunct professor at the University of Auckland Business School, wrote Public Law Toolbox, to be published in December.