Clark David: New Zealand International Convention Centre Bill — In Committee Speaker Recalled In CommitteeText is incorporated into the Bound VolumeClark David: New Zealand International Convention Centre Bill — In Committee Speaker Recalled In Committee[Sitting date: 06 November 2013. Volume:694;Page:14461. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): I am looking forward to taking I hope all four of my calls as one of the members of the Commerce Committee and of course I would be happy to take them consecutively as I have something of an argument to develop. But as ever I am dependent on your grace and favour Mr Chair. On that select committee I have had the dubious pleasure of reading a number of the draft agreements and the negotiating documents and I would like to talk a little about them because they go into the agreement which is the substantive thing that is referred to throughout Part 2 of the New Zealand International Convention Centre Bill. I want to discuss the agreement what it is what it could be and the way in which New Zealand taxpayers and New Zealand members of the public are disadvantaged in the course of this legislation.Before I do that I want to touch briefly on some of the earlier comments. Most recently obviously Mr Joyce as the Minister for Economic Development spoke. There is very little one can say about his contribution other than that it was mostly heat and had very little light. On that occasion the Minister appeared to be all mouth and no trousers.I want to engage more substantively with an earlier contribution because it was a more substantive contribution. That was the contribution of Mr Jian Yang earlier in thedebate. It was the first of only two National contributions so far. Its members are struggling to articulate what is on their consciences I suspect. That member referred to the Tourism Industry Association’s submission. I was on the select committee that heard that submission and I have to say that the Tourism Industry Association’s representative became decidedly uncomfortable when questioned about whether he was comfortable with the deal being funded off the back of problem gambling. Mr Mallard asked several pertinent questions on that front and the representative of the Tourism Industry Association was very reluctant—very reluctant—to commit himself to that proposition. I guess that the Tourism Industry Association’s submission was a line call for it because there would be some more jobs in the sector. But what it did not represent of course in that submission were the potential job losses in Taupō in Hamilton in Rotorua and in other centres that are recorded in the independent economic analysis which suggests that jobs will flow out of other areas of the economy and to that centre that is being built.Iain Lees-Galloway: More jobs out of the regions.Dr DAVID CLARK: So that is more jobs out of the regions—that is quite right—as my colleague says. It is a two-speed economy where Auckland is going ahead to some extent but the rest of New Zealand is being left behind. Unfortunately all of us are worse off with the pressure that that places on Auckland house prices and on various other things going on in that city such as job pressures while the rest of the economy suffers and everybody is dragged down.I come back to the New Zealand International Convention Centre Bill itself other than those contributions that have been made. The agreement is mentioned right through the clauses and right at the start of the substantive provisions right up front. Clause 6(1) states: “The regulatory concession shall be operative at the times and on the conditions that apply to the regulatory concessions in the Agreement.” Everything in the substantive provisions refers back to the agreement. Clause 6(2) states: “The regulatory concessions prevail if a regulatory concession is inconsistent with any provision of the gambling law and the application of the provision of the gambling law is modified accordingly.” That subclause is the one that says that Skycity wins—Skycity wins every time. It trumps gambling law. This agreement that has been signed trumps gambling law. Clause 6(3) which follows that subclause says: “Hang on. If things turn out the other way round and it’s actually advantageous to apply the provisions in gambling law then Skycity wins again.” Skycity wins both ways. This is the ace up both sleeves this provision and this agreement.It is an agreement where the Government has put itself over a barrel—over a barrel of its own making. That is because it was a political deal because the Prime Minister committed to one of the parties that was wanting to bid for the deal early on. He was forced into a corner.The Supplementary Order Papers that have been put forward in the name of Metiria Turei and Denise Roche get to some of these points in the proposed law. They delete some of these clauses make them inactive and try to introduce some fairness for the citizens of New Zealand. I congratulate those members on putting forward a really really good set of Supplementary Order Papers ones with which I personally will be agreeing. I will be supporting them in my conscience vote when it comes time during the voting on the legislation.I want to focus back on the agreement and the concessions made by the Crown during the course of the negotiation of that agreement. Those papers are on the website of the Ministry of Economic Development so members of the public can access them. During the early stages of the negotiation we see the Crown trying to cover off those options that you would expect it to cover off in the interests of the taxpayers the votersthe citizens and the communities of New Zealand. Early on we see the potential for a blowout in costs. In the final agreement it gets to a point where this is to be negotiated over time. Over the stages of development of the proposal the Government can shovel further cash to Skycity if the proposal as it is drafted turns out to cost more than the $402 million currently budgeted. The agreement says that Skycity and the Government can agree to design modifications or walk away from the deal or either party may pay the other cash. They can just hand cash over if it comes to that. We know who will be in the stronger bargaining position in the election year. We know that Skycity will be laying its cards out. It will probably be supplying the numbers just like it did for the original agreement. There was no independent analysis and part-way through the deal Mr Joyce himself brought in extra negotiating muscle recognising the bad deal that was going on for the Government. He brought extra negotiating muscle in and still too much was given away.The bad news of course is that it does not stop there. Treasury warns that the conference market has peaked and that the chances are that in time in the future New Zealand may receive fewer international conferences. In part of course that is because of the rising price of jet fuel. We know that world travel is becoming more expensive and that people are staying local—they are becoming more environmentally conscious. That is one of the challenges that will be faced.The Government here—this Government—has given away the ability to recoup costs if the convention centre is not marketed effectively. It had in its earlier negotiating documents the hope and the sensible measure of saying that if the convention centre was not operated properly it could claw back some of the GDP loss that would accrue. It also had a clause in there saying that it could recoup some of the tax revenue that was lost. It could actually say: “Skycity you’re not doing your job correctly. We will take back some of what we might have expected to have had had you done your job correctly.” So if that conference business does not eventuate the taxpayer has no comeback.The incentives are on Skycity to set up a white elephant. Once it has built the centre—assuming that it builds the centre and it all goes ahead—it has no strong incentive to run it in a highly serviced fashion and to advertise it widely because it has got the concessions it wants. It has got the gambling machines it has got the cash flow and it has got the licence extension. The convention centre becomes just a cost centre for it. It is incentivised to minimise that cost. The worst-case scenario—the very worst-case scenario for the Crown actually not necessarily for Skycity—is that the Crown takes over the running of Skycity. That is what happens if Skycity chooses not to run a white elephant that loses it money once it has got the gambling concessions. It can hand the centre back over to the Crown just like Chorus sending the debt back to the taxpayer. There the Government goes again socialising the losses and privatising the gains. This is another example of that and it is written right here in the agreement that we are debating in the Committee. The Government has negotiated away the rights which it ought to have to ensure that the casino is run correctly—sorry not the casino; it gave up running the casino correctly a long time ago—that the conference centre is run in the interests of New Zealand. It has watered down its negotiating position.In the select committee we heard that class 4 gambling is the worst the most addictive. The pokie machines that are proposed to operate as a part of this deal are the worst kind of gambling. We heard from academics some of whom travelled from abroad to present to the committee. The one example that really stands out in my mind was a Scandinavian country that chose to ban pokie machines. The very interesting thing was that when they banned pokie machines gambling dropped off not just across that area of business but across all types of gambling and that is because problemgamblers are attracted to and are driven by the adrenalin that runs with those pokie machines. That spurs them on to other gambling and other types of gambling—those types of gambling that do not affect people in the first instance and do not necessarily make people problem gamblers. This deal unfortunately sets up a situation where problem gamblers fund the building of the convention centre but—