Two weeks ago the Herald ran this op-ed by former Sky-City executive Heather Shotter making an impassioned, Jane-Austenesque plea for taxpayer funding for Sky City’s ‘free’ convention center:
It is widely acknowledged that international convention centres are essential elements that contribute to the growth and development of big cities. Not only do they bring substantial economic benefits, encouraging international business delegate expenditure during the tourism off-season, but if done well, they are pivotal to promoting the unique character or brand of a city to a wide range of international audiences.
But like any large pieces of infrastructure, convention centres come at a considerable cost.
All over the world, other large cities have acknowledged this and their governments see value in funding convention centres, either fully or with partial cash injections, because of the other economic benefit that they drive.
Centres in Sydney, Melbourne, Singapore, Kuala Lumpur and Hong Kong were all constructed as part of comprehensive developments where the government and private sector have worked together to develop world-class conference and exhbition facilities.
Firstly, it is widely acknowledged by pretty much every independent economic analysis of convention centers you can find that they’re a massive scam that construction companies and politicians perpetuate on taxpayers. The promised benefits never match the tax write-offs and other public costs these companies impose, and in the case of casinos they’re completely wiped out by the negative impacts of the business.
Secondly, this reference to regional competitors is very meaningful, because this is a strategy that casinos and convention center construction companies practice all over the world. They play regional (and in this case national) tourist destinations off each other. Here’s a Washington Post article from June 2014:
All those consultants’ reports, it turns out, were based on optimistic assumptions and failed to anticipate the impact of industry consolidation and slower economic growth on the demand for meeting space. Even more curious was the consultants’ failure to take into account all the other cities contemplating subsidized expansions — something they surely knew because the same group of firms had prepared virtually all of the reports.
Rather than acknowledge their mistakes, however, the CIC convinced political leaders that the reason bookings had failed to meet expectations was that they didn’t have a big “headquarters hotel” to offer convention planners, who value such hotels because they reduce the cost and complexity of running such large events. Curiously, the private sector has been reluctant to seize on this golden opportunity to build them, so dozens of cities concluded that they had no choice but to provide subsidies for the hotels as well.
It’s a bit like being an arms company and selling weapons to a bunch of countries at war with each other. If/when National gives Sky their hundred million dollar payout, Sky can then turn around and start lobbying the governments in Brisbane, Melbourne, Sydney etc for tax write-offs or taxpayer cash because they’ll need to compete with Auckland. And, inevitably, in a few years time we’ll be seeing more op-eds in the Herald insisting that this wildly profitable casino company needs more taxpayer money to compete with whatever Sky just secured from state governments in Australia.