Hard News by Russell Brown


Masters of Reality

It's a week since the Prime Minister's statement, the annual opening act of Parliamentary politics, when the leader traditionally sets out the governing party's plan for the year.

This year, the statement was prefaced with a look at the government's new messaging strategy on Opposition leader Andrew Little. Having presumably despaired of finding anything significant that Little has done wrong, the Prime Ministerial comms team has settled on declaring that he has done nothing and is, in the words of the execrable pun my taxes paid someone to write, "Andrew Do-Little". (Expect the more suck-up ministers to to start including that into their speeches, the way they dutifully prefixed David Cunliffe's name with "tricky".)

Key expanded on his theme by marvelling at how little Labour (the Opposition) had lately achieved compared to his government (the government). His first example, remarkably, was the progress on the Waterview tunnel project. Which was odd, because John Key's government did nearly everything it could to avoid building the project we see taking shape now.

In 2009, Steven Joyce even declared the tunnel cancelled in favour of a cheaper surface road:

A planned five kilometre long tunnel under Auckland's Mount Albert electorate has been cancelled by the Government, which says it is too expensive and will instead build on the surface.

Transport Minister Steven Joyce said the Waterview Tunnel would have cost $2.77 billion while a surface road will cost up to $1.4 billion ...

What emerged after Joyce's announcement was a new clutch of options from NZTA, all involving more road and less tunnel, and more and cheaper cut-and-over tunnelling (the surface option was never going to be entirely on the surface, if only for the need to cross railway lines). Part of the previous tunnel route would instead be an open trench and NZTA was even considering building a new motorway interchange on New North Road, right on top of a residential area.  That was still enough to stitch up poor Melissa Lee, who, as National's candidate in the Mt Albert by-election, had been loyally promoting what would have been an even more ruinous surface road.

The views of interest groups fell as might have been expected, but the New Zealand Herald's editorial response was notable. It said that the government "now runs the risk that the Waterview decision will damage the Government not just in the affected neighbourhood, but more generally. Motorways have divided many older Auckland communities, obliterating some. In most cases the damage was unavoidable; not this time."

Like its original surface-road preference, the government's cost-saving solutions didn't endure. By December 2009, NZTA, which must have been feeling like a political football, announced a reversion to continuous tunnels and a plan that looked much more like what had been on the cards under Labour than the solutions touted in May. Which is what is now being built.

After I had tweeted a comment on the ironies of the Prime Minister's claim, I received a reply from none other than Steve Joyce:

I replied:

The minister said:

What really happened was that the government initially touted a surface road, floated several half-pie solutions and wound up with something not so far from the original tunnel proposal. They backed down in the face of political risk.

All of this is a long way of getting to what happened yesterday around the controversial SkyCity convention centre proposal. Already, David Farrar is enthusing about how the government "held firm" and forced SkyCity to "back down" from its demand for a further cash subsidy (on top of the huge regulatory subsidies already granted) for the convention centre.

What actually happened is a little different. In December, after SkyCity made its bid for public money, Joyce proposed, outrageously, that Auckland ratepayers should provide it. After that idea went down very poorly, John Key warned that a failure to hand more money to SkyCity could result in "an eyesore" in the central city.

In the end, of course, the decision was made that there would be no cash subsidy (apart from the $34 million taxpayers will spend promoting the convention centre, which everyone seems to have forgotten about), and that SkyCity would simply deliver less for the value of the remarkable regulatory subsidies that were supposed to cover the construction of the convention centre. This is being sold as a win.

But SkyCity has already pocketed benefits that were not supposed to be part of the original deal. This section of David Fisher's special report last month on the unusual deal is particularly notable:

After two years hammering out the agreement, SkyCity and the Government have yet to agree a design.

The original timetable shows a final "detailed design" to be completed by July.

The documents the Herald obtained show SkyCity started making changes almost immediately after it secured land from TVNZ in September 2013.

The most significant was the placement of a 300-room hotel on the TVNZ land. SkyCity had said for years the land was needed for the convention centre.

It was one of two "major initial concerns" held by officials. It meant "none of the convention centre is actually built on ex-TVNZ land".

In a briefing document a month later, officials said the change in hotel location made use of land that was "more valuable" and the "value proposition needs to be adjusted".

They drafted "suggested draft terms of reference" for the convention centre "evaluation" but no new valuation was conducted.

So the government ordered TVNZ, a crown-owned company, to sell land to SkyCity – actually making the offer to SkyCity without consulting the TVNZ board. And now SkyCity is to use the land for a hotel that was not part of the original agreement. The land was probably substantially undervalued, so it's quite a steal for the casino. (It's worth noting that a similar thing happened around one of other sweeteners in the deal – the extension of SkyCity's licence. An independent valuation from Korda Mentha found that the licence extension was worth as much as $115 million. SkyCity got it for a value of $75 million.)

But we wouldn't be done without one last act of reality-warping from the Pirme Minister, speaking to Mike Hosking this morning:

Mr Key said there was nothing unusual in the controversial original deal in which the Government agreed to let SkyCity install more pokies and gambling tables in return for the company building the convention centre.

"Helen Clark did the same thing actually, Labour forget that. That's how we got the first convention centre," he said. SkyCity opened its first convention centre in Federal St in 2004, eight years after the casino opened in 1996.

This is a lie, one I covered when it was was first deployed by Farrar in 2013. It is true that SkyCity was granted an additional 230 pokies in 2001 (yes, the same number it got in the current deal, and I don't think that's a coincidence). But the claim that "Helen Clark did the same thing" is simply and demonstrably false.

In 2001 there were no private dinners with the Prime Minister, no preferential treatment for SkyCity, no critical report from the Auditor-General. And, most importantly, the government did not make the decision. That was done by the five-member Casino Control Authority – which was chaired at the time by soon-to-be MP Judith Collins.

What Labour did do was amend the Gambling Act to prevent such a thing happening again.

 Much like the Prime Minister's claim that his government had been "vindicated" by the Auditor-General (who was then obliged to tell a select committe this was not in fact the case), this is simply an invention.

Danyl McLachlan recently wrote a blog post about this phenomenon, titled Key and reality, which concluded:

The same thing is happening with the Sabin scandal. Key’s line is that Helen Clark didn’t stand down as Prime Minister during ‘painter-gate’, so why should Sabin have stood down as Chair of the Law and Order Select Committee while he was being investigated for assault? Of course, assault is a bit more serious than Clark signing a painting. But also, during ‘painter-gate’ and for many years subsequent National screamed that Clark should resign, and that she was our most corrupt Prime Minister ever. Key’s constant refrain that he’s only as bad as, or not much worse than the PM his party denounced as ‘quite simply the most corrupt in New Zealand history’ is a bad, nonsensical argument, and members of the ‘reality based community’ wonder aloud at how he can say such things and remain popular. But it works because the reality-based community is not the important audience, what’s important is that he gets to make it on infotainment shows where he enjoys good relationships with the hosts and there’s no balance or right of reply.

That's what they're betting on here.

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