Wednesday, 18 April 2012

Upside Down

This convention centre in Auckland...
Yeah, the whole thing with the PM offering to change the law to suit big business stinks to high heaven of corruption and cronyism.  But it's been thoroughly covered across the NZ media and blogosphere, and to be fair it is not out of character at all for our PM.  The real shame is that we will be obliged to refer to him as "the Right Honourable" for the rest of his life, when he is nothing of the sort.
I'm keen to know why we (as a society) are proceeding with it in the first place.  Not the casino bit, the conference centre.
If there is an economic case for it, sure, let's build it.  Hypothetically - It could be that there is a strong case for it, good profits, short payback, in which case private business would be all over it.  Maybe the case is not so strong, but at a local (or regional if such a thing still existed in Auckland) government level some wider benefits to the community could be shown, in which case government could fund it.
But the business case is not even that strong.  Private business and local government won't touch it, because there is no viable business case.  You might think there is, if you read the Herald, where Mr Key is quoted as saying:
Meanwhile, should the deal reach fruition, any changes to the Gambling Act that would be required would not be conscience vote for National MPs.That was because Mr Key regarded the issue as primarily an economic one."It's largely the issue of a piece of infrastructure for tourism and it's an important part of building that tourism model."
typical meaningless crap, and contrasts with what was said by Mr Key on Radio NZ:

" the moment a convention centre, of its own free standing, will not support the return on capital, so if we want to have the convention centre with no government investment, or no local government, they will have to cross-subsidise."
"...will not support the return on capital..." - that'll be why no one with any business sense will go near this convention-centre idea.
Cross-subsidise?  What about user pays?  There's no benefit to the public, so if it can't be self funding there's no good grounds to build it.
I strongly recommend listening to the rest of the Radio NZ interview.  The Greens, who are normally derided as economically illiterate fringe dwellers, pull the whole shonky deal apart in bot economic and probity terms, and give National, who are, incidentally, the notional party of business, a serious lesson in things they should already know backwards and forwards.
So, back to the cross-subsidy.  The Prime Minister apparently believes that because a convention centre for educated and privilege professionals can not make any money, the cost difference is best made up by wringing more money out of the poor, disadvantaged and addicted.
Or maybe I missed something.  I'd like to know how Mr Key reconciles the two statements above, for starters.

The Jesus and Mary Chain - 7", 1985

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