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Covid and the convention centre

by PCGM
We must have touched a nerve. First Cr Jenny Condie wrote about how fantastic Wellington is, and then Mayor Andy Foster explained why he thinks the convention centre will be a fabulous thing. Good on both of them for joining the public debate, in stark contrast to too many councillors who have gone silent during lockdown (and at most other times, come to think of it).

But do the claims about the convention centre stack up? Let’s find out.

Claim 1: Stopping the convention centre would cause reputational damage

There are times when irony is no match for reality, and the idea that the council’s reputation would somehow be endangered by responding appropriately to a global pandemic is one of them. Perhaps the idea came up in one of those brainstorming sessions amongst the council’s communications people, but it should never have seen the light of day.

For starters, organisations of all shapes and sizes across the entire planet are having to re-shape their plans for the future, and none of them think that re-planning for a very different world is somehow irresponsible. They are merely displaying flexibility in the face of uncertainty – and this is an entirely prudent thing to do when economists are suggesting we may be facing a full-blown depression. No-one is going to be saying to the council “I can’t believe you changed your plans in the face of the pandemic!”

In fact, not changing plans is likely to cause greater reputational damage. Taking a “damn the torpedoes!” attitude and refusing to re-think the city’s major capital projects seems perverse, and may well result in the council gaining a reputation for rigid thinking and blind intransigence. This is unlikely to help the council win friends and influence people, and it’s unlikely to help the election prospects of mayors and councillors who seem to think a lack of mental agility is somehow a skill to be celebrated.

Claim 2: We’ve already spent $60 million

This is interesting but alarming. As wellington.scoop commenter Lance so eloquently put it, “Wow, upwards of $60 million has already been spent on the Convention Centre. Why didn’t that come out at the last election?” It’s an exceptionally good question.

In reality, the fact that we’ve spent money in the past is no justification for spending money in the future. For every $1 that’s been thrown down the convention centre rat-hole, another $2 is scheduled to head in the same direction over the next couple of years – and there’s no getting away from the fact that it’s a lousy investment right now. Continuing with pointless expenditure is just tossing good money after bad, and as anyone in business knows, there are times when you need to cut your losses and just walk away. This is one of those times.

While this is obvious to business people, perhaps it’s less apparent to our councillors because of the dearth of practical business experience around the table – maybe that’s part of the problem. Just a thought.

Claim 3: It’s a contract!

It will be true that the council has signed contracts for the development of the convention centre. But in the commercial world, parties can – and do! – renegotiate contracts all the time. And it’s a pretty good bet that the lawyers are busy all around the planet, re-negotiating contracts of every size and stripe, in an effort to stem losses, change direction and pivot businesses. Billions to trillions of dollars of contracts will be up in the air as we speak.

Councils do need to honour their commitments, but by the same token, the contract for the construction of the convention centre was not brought down from the mountain engraved on tablets of stone by Moses. It is the result of a bunch of people sitting around in meeting rooms trying to find a viable and equitable way forward, and there is nothing so special about the convention centre contract that it can’t be renegotiated in the same way.

Claim 4: It will create jobs

This is true. But so is the counter-factual: if we spend $180 million fixing the Central Library and Civic Square instead, then we will create the same number of jobs. There’s no special magical quality in the employment growth that comes from building convention centres rather than anything else; any project uses the same engineers and digger operators and electricians and plumbers as any other. So spending the money on something the city does want instead of something it doesn’t want will result in the same people doing the same things, merely on a different site.

Claim 5: It is part of our shovel-ready bid to central government

Well, yes it is – and the implication is that if the government stumps up, ratepayers won’t have to find the money needed to build this particular white elephant. The problem is the messaging from the Mayor and Cr Condie – that the convention centre can’t be stopped and will be going ahead anyway.

The astute will have noticed that one of the conditions of the Crown Infrastructure Partners funding was that the projects would either be stopped due to COVID-19, or would not proceed at all. Based on the pronouncements of the council, the convention centre doesn’t qualify – it’s going to happen irrespective of pandemics, climate change, (presumably) asteroid strikes or the end of all intelligent life on the planet. So if the project is going to happen anyway, why would the government need to fund it?

Claims, claims and more claims

In their respective articles, both the Mayor and Cr Condie made plenty of other claims about investing in the vibrancy of the city, the inability of the council to trim its budget, and how rates rises are not only necessary but practically enjoyable. So we’ll be taking a closer look at the business case for the convention centre, and we”ll also see if the council’s accounts might be hiding the very savings that they seem intent on not making. Stay tuned!

19 comments:

  1. denby pokai, 24. April 2020, 12:21

    Thanks for writing a commonsense article about how the council is failing in its duties to its ratepayers.

     
  2. Guy M, 24. April 2020, 14:25

    PCGM – you might want to refer to my comment over here.

     
  3. michael, 24. April 2020, 17:38

    PCGM – I agree, and Guy – why not leave the top floor as a convention centre and repurpose the ground floor exhibition space for council offices and maybe space for NFP organisations etc.

     
  4. Hel, 24. April 2020, 18:12

    Guy, Wellington has been crying out for decent facilities like this for a long time and the proximity to Te Papa opens up a world of opportunities. Bush lawyers and diy engineers, though, know better, believing it has to be better to walk away from a contract and do some half-baked repurposing. PCGM if you think walking away from a contract like this won’t result in serious reputation then you’re fooling yourself.

     
  5. Andrew II, 24. April 2020, 19:31

    I’d wager the Councillors are doing a fine job of managing their reputations.
    1. Sea level rise applies to Civic Square (library) but not the Convention Centre site.
    2. Pay cut then re purposing the savings into other funding is worthy of self congratulatory behavior.
    I’m sure there are other examples.

     
  6. Conor Hill, 24. April 2020, 20:02

    Yes, none of us completed an LGOIMA at the time of election. Did directly ask a Kevin Lavery stand-in at a public meeting what the cost of cancelling would be, but did not get an answer. I imagine a reasonable chunk of that 60 million has been spent since the election – foundations and the like.

     
  7. Peter S, 25. April 2020, 1:59

    I agree that the convention centre contract should be re-negotiated. “Reputational damage” my a**e. As PCGM and others are saying, it would be irresponsible to press ahead with a “glamour” project like this, when the WCC (or actually the ratepayers) are facing financial purgatory with the looming post-covid depression.
    Here’s an idea. Mothball the convention centre and spend the other $120M on something that the citizenry want. The Library! The convention centre can be re-engineered and repurposed for later construction.

     
  8. PCGM, 25. April 2020, 8:47

    Hel – I’m not suggesting that the council walk away from the contract, I’m suggesting they renegotiate it, exactly as Peter S proposes. Is there any reason why it couldn’t be paused for a year until the demand for conferences post-COVID is clearer, for instance? After all, spending a smaller amount of money to put the project on ice might be much cheaper than completing it, incurring the debt to pay for it, and having to subsidise it heavily from the day it opens its doors.

     
  9. Brian Dawson, 27. April 2020, 10:11

    Actually it was the mayor before the previous mayor who kicked off this project. The previous mayor and council inherited a plan already in motion. [via twitter]

     
  10. Dave Armstrong, 27. April 2020, 10:12

    Dead right. I’ve just read some of the press releases from the time of Celia. It’s going to be built by 2017 which will be great for the city. [via twitter]

     
  11. Morris Oxford, 27. April 2020, 10:45

    The technique described by Andrew ll, (“purposing the savings into other funding”) was used by the Justin Lester Memorial Committee as the reason for reinstating parking fees at a time when central businesses badly need extra custom. They wanted to feel-good by giving the money to their favourite charities, an example indeed of “self congratulatory behavior”.

     
  12. Concerned Wellingtonian, 27. April 2020, 11:45

    The 2018 Business Case is clear that consultation had never taken place on a stand-alone convention centre and there had always been a film museum or some other attraction added in order to bring in some money and make it of wider appeal.

     
  13. Guy M, 27. April 2020, 12:50

    Concerned Wellingtonian: you’ve no doubt spotted therefore that there is a large “exhibition space” shown at ground floor level, possibly to be run by Te Papa, as an attraction added in order to bring in some money and make it of wider appeal.

     
  14. Concerned Wellingtonian, 27. April 2020, 14:44

    Thanks Guy M. and sorry. I did mention ‘bringing in some money’ but I didn’t notice any income from the Exhibition Centre flooding in from Te Papa or anyone else mentioned in the Business Case. Perhaps Andy will use his connections and pull off a coup by getting the Exhibition Centre used as a Film Museum.

     
  15. Mike Mellor, 27. April 2020, 15:16

    Morris Oxford: the reason for reinstating parking fees was because, as Cr Sean Rush (hardly a member of the “Justin Lester Memorial Committee”!) remarked, there is no evidence that free parking would give central businesses extra custom. It would just mean ratepayers subsidising people to drive into the city, for no apparent benefit – does that seem sensible to you?

     
  16. Guy M, 27. April 2020, 15:40

    CW: Just saying: Free exhibitions bring more money into the city as a whole – while paying exhibitions bring less people, but more money to the provider. In that aspect, remember that we have Te Papa and Te Papa is free, unlike nearly every other institution in the country. Auckland still hates us for that.

     
  17. Traveller, 27. April 2020, 15:49

    Guy M: exhibitions are costly to mount and (if from offshore) the freight is also costly. Plus there are the staffing costs. If the council plans free exhibitions in the empty space, then there’ll be more substantial costs to be paid by ratepayers.

     
  18. PCGM, 27. April 2020, 18:53

    Guy M and Traveller – On page 63 of the business case it’s noted that “WCC will likely work in partnership with Te Papa for the Exhibition Centre operations and will carry operational risks and rewards.” So we benefit if it’s a heavily-used and financially self-sustaining venue (the business case assumes $600k net a year flowing into WCC coffers), but we’re on the hook to make up the difference if we build it and they don’t come.

     
  19. Pam, 12. May 2020, 17:28

    It is a disgrace that the extravagantly, probably useless (with all the media connections people can make these days) convention centre is still going ahead. Especially when we are told that bookings for the Christchurch convention centre are being cancelled – an ominous warning for Wellington. A further disgrace is the lack of action on the public library. This is an essential place in the Wellington landscape, used by an incredibly wide range of people of all ages and interests. The so-called pop-up libraries may help as a stop-gap, but there is nothing to beat a central facility available to all. To have to trot round the various places is not feasible. We need a central facility where we can search, relax, and enjoy this essential location. Internet and similar media are no substitute. Please make our central library happen again as a matter of urgency.